In Hohenshelt v. Superior Court, the California Supreme Court held that California Code of Civil Procedure Section 1281.98—a do-or-die statute requiring employers to pay arbitration fees within 30 days or waive the right to arbitrate altogether—is not preempted by the Federal Arbitration Act (“FAA”). While it is not the precise outcome employers may have hoped for, many employers are correctly viewing the decision as a win, because in saving the statute from preemption, the Court effectively defanged it to foreclose its harshest consequences.

For years as we have reported time and time again, the California Court of Appeal had interpreted Section 1281.98 as imposing a strict, inflexible rule: Any late payment by an employer, regardless of the reason, resulted in an automatic forfeiture of the right to arbitrate. Of course, this harsh statute very much reflects the California legislature’s naked and abiding hostility to arbitration, hostility which has had to be curbed by the United States Supreme Court multiple times over the decades.

Citing various “generally applicable state law contract principles” against forfeitures—and overruling no fewer than 11 published Court of Appeal decisions—the Court concluded the statute does not mean what it plainly says when it provides that an employer “waives its right to compel the employee . . . to proceed with that arbitration” if it fails to pay the arbitration fees within 30 days. Period! Cal. Civ. Proc. Code § 1281.98(a)(1).

...

Read Full Story: https://news.google.com/rss/articles/CBMiugFBVV95cUxPMW9mLW1Zd0RqVW9lc0NGZjR5...