Rafique v. Premier Financial Alliance, Inc.
4:23-cv-00732
| N.D. Cal. | Dec 27, 2024Background
- Plaintiffs (Aneela Rafique, Haidee Collado, and John Soo-Hoo) brought employment claims against Premier Financial Alliance, Inc. and others in federal court.
- The Court originally stayed the action so claims could be arbitrated per agreements signed by Plaintiffs.
- The parties agreed to arbitrate all Plaintiffs’ claims in a single AAA proceeding; Plaintiffs timely paid all of their required fees for AAA arbitration.
- The AAA repeatedly notified Defendants and their counsel that a $2,100 filing fee was due by a specified deadline (July 22, 2024), warning that failure to pay would result in case closure per California law.
- Defendants failed to pay or respond to multiple notices and follow-ups, and only tried to pay the fee after AAA terminated the proceedings.
- Plaintiffs then moved to lift the stay and proceed in court, arguing Defendants waived their right to arbitrate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of right to arbitrate by nonpayment | Defendants waived arbitration by not paying | Nonpayment was excusable neglect, not intentional waiver | Defendants waived right to arbitrate |
| Application of Cal. Civ. Proc. Code § 1281.97 | Statute mandates waiver for nonpayment | FAA preempts statute; AAA wrong to apply it | Need not reach statute; waiver under contract law |
| Excusable neglect as ground to avoid waiver | No valid excuse; Defendants ignored all notices | Delay justified by attorney illness and confusion over similar cases | No valid excuse; other counsel also received notices |
| Re-opening AAA arbitration upon late payment | Plaintiffs refused; prefer to litigate in court | Sought to re-open upon realizing error, claimed prompt attempt after error realized | Refusal valid; case to proceed in court |
Key Cases Cited
- Brown v. Dillard’s, Inc., 430 F.3d 1004 (9th Cir. 2004) (nonpayment of arbitration fees can constitute waiver of right to arbitrate)
- Sink v. Aden Enterprises, Inc., 352 F.3d 1197 (9th Cir. 2003) (failure to pay arbitration fees after notice supports lifting stay)
- Hill v. Xerox Bus. Servs., LLC, 59 F.4th 457 (9th Cir. 2023) (two-prong test for waiver of right to arbitrate)
- Newirth ex rel. Newirth v. Aegis Senior Cmtys., LLC, 931 F.3d 935 (9th Cir. 2019) (totality of circumstances governs waiver analysis)