Doe v. The Superior Court
| Docket Number | A167105 |
| Decision Date | 08 September 2023 |
| Parties | JANE DOE, Petitioner, v. THE SUPERIOR COURT OF THE CITY AND COUNTY OF SAN FRANCISCO, Respondent; NA HOKU, INC., et al., Real Parties in Interest. |
| Court | California Court of Appeals Court of Appeals |
Petitioner Jane Doe sued real parties in interest - her former employer Na Hoku, Inc. and former manager Ysmith Montoya (collectively real parties) - asserting multiple claims arising from Montoya's alleged sexual harassment and assault of Doe. Real parties successfully compelled the case to arbitration.
September 1, 2022[1] was the "due date" for real parties to pay certain arbitration fees and costs to the arbitrator. Under Code of Civil Procedure section 1281.98 subdivision (a)(1) (section 1281.98(a)(1))[2], these fees and costs had to be "paid within 30 days after the due date" - or by October 3 - to avoid breaching the arbitration agreement. Instead, the arbitrator received the payment on October 5, two days after the statutory 30-day grace period expired. This delay was because real parties opted to mail a check on Friday September 30 for the full amount due on Monday, October 3 even though payment could be submitted by credit card electronic check (also referred to as "ECheck"), or wire transfer.
Petitioner moved to vacate the order compelling arbitration on the basis that real parties failed to pay their arbitration fees and costs within 30 days of the due date as required by section 1281.98(a)(1). After the trial court denied the motion, thus precluding petitioner from withdrawing from the arbitration and pursuing her claims in court, she filed a petition for writ of mandate in this court.
In this writ proceeding, we strictly enforce the 30-day grace period in section 1281.98(a)(1) and conclude fees and costs owed for a pending proceeding must be received by the arbitrator within 30 days after the due date. We do not find that the proverbial check in the mail constitutes payment and agree with petitioner that real parties' payment, received more than 30 days after the due date established by the arbitrator, was untimely. We therefore grant the writ petition.
On November 22, 2021, petitioner filed a complaint against real parties asserting multiple claims arising from several incidents in which Montoya allegedly sexually harassed and assaulted her. Real parties successfully moved to compel arbitration, and the court ordered the case to binding arbitration.
On May 16, the American Arbitration Association (AAA) sent the parties a letter confirming the rules for arbitration and seeking payment of the initial administrative fees. AAA explained: (Underscoring omitted.) On May 24, real parties timely paid their initial administrative fees by credit card.
On September 1, AAA sent the parties another letter and invoice seeking a deposit to cover the arbitrator's anticipated compensation and expenses for the arbitration. The letter stated in relevant part: (Emphasis in original.) The total amount owed was $23,250. The letter provided instructions for online payment and the invoice included a separate page of "Payment Options" which listed three ways to pay: (1) credit card or eCheck; (2) wire transfer; or (3) check to an address in Dallas, Texas. The invoice also noted: "Unless instructed otherwise, invoice balance due upon receipt."
On September 28, AAA e-mailed real parties the following message: The same invoice and "Payment Options" enclosure listing credit card or eCheck, wire transfer, or check were included with the email.
On Friday, September 30, Na Hoku mailed a check for $23,250 to the Texas address provided. On Monday, October 3, counsel for real parties informed AAA that payment had been mailed. On October 5, AAA received real parties' payment and applied it to the case.
Petitioner moved to vacate the trial court's order compelling arbitration on the grounds that real parties had failed to pay their arbitration fees and costs within 30 days of the due date as required by statute. She argued their late payment was a material breach of the arbitration agreement and waived their right to compel arbitration.
Following further briefing and a hearing, the trial court denied the motion. Observing that "the provider's demand was for payment remitted by October 3," the court ruled that real parties "indisputably complied" with the date "having remitted (i.e., sent) the sum in by that date." The court recognized the possible "ambiguity as to whether a 'due' date meant the day the sum had to be remitted or received by the provider" but concluded AAA's second communication "clarified this: The date was for the remitting of the sum." In the trial court's view, because real parties' remittance of payment by October 3 "satisfied the due date imposed by the provider, and that being so, § 1281.98 was complied with as well." The court added,
Petitioner filed the instant petition for writ of mandate or prohibition, or other appropriate relief, requesting we vacate the trial court order denying her motion to vacate. Upon our request, real parties filed an informal response to the petition. Petitioner filed an informal reply. We thereafter issued an alternative writ of mandate directing respondent superior court to set aside and vacate its order denying petitioner's motion to vacate the order compelling arbitration, and to enter a new and different order granting the motion and addressing the request for sanctions in petitioner's motion.
The trial court issued an order declining to comply with the alternative writ. Real parties filed a return to the petition, to which petitioner filed a reply (traverse). We now turn to the merits of the petition.
Petitioner argues the trial court misinterpreted section 1281.98 in allowing real parties more than 30 days to pay arbitration fees and costs. We agree.
Ordinarily, a trial court's determination that a party waived the right to arbitrate is subject to substantial evidence review. (Burton v. Cruise (2010) 190 Cal.App.4th 939, 946.) However, where the parties do not dispute the factual support for the trial court's ruling, but instead dispute the proper interpretation of section 1281.98, the appellate court's review is de novo. (De Leon v. Juanita's Foods (2022) 85 Cal.App.5th 740, 749-750 (De Leon); Carmel Development Company, Inc. v. Anderson (2020) 48 Cal.App.5th 492, 503 [].)
"In 1961, the California Legislature enacted the California Arbitration Act (CAA) (§ 1280 et seq.) as a way to protect the right of private parties to resolve their disputes through the 'efficient, streamlined procedures' of arbitration." (Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621, 633 (Gallo).) In 2019, the California Legislature added sections 1281.97 and 1281.98 to the CAA. (Gallo, supra, at p. 633.) Section 1281.97 sets forth the procedures by which a company that has included a predispute arbitration provision in a contract with an employee must pay its share of initiation fees or costs for the arbitration. (§§ 1281.97, subd. (a); 1280, subd. (e).) Section 1281.98, subdivision (a) (section 1281.98(a)) sets forth the procedures for a company's payment of fees and costs while an arbitration proceeding is pending. Section 1281.98(a)(1) provides in relevant part: "In an employment or consumer arbitration that requires . . . that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel the employee or consumer to proceed with that arbitration as a result of the material breach." (§ 1281.98, subd. (a)(1).)
Section 1281.98, subdivision (a)(2) (section 1281.98(a)(2)) states the arbitration provider ...
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