110 Cal.App.5th 1304
Cal. Ct. App.2025Background
- Mone Yvette Sanders filed a putative class and representative action against her former employer, Edward D. Jones & Co., L.P., for alleged labor violations, including claims under PAGA.
- An at-issue arbitration agreement compelled Sanders to arbitrate her individual claims while her representative PAGA claims were stayed.
- During arbitration, Edward Jones failed to pay a $54,000 arbitration fee within the 30-day deadline required by California Code of Civil Procedure § 1281.98.
- Sanders sought to vacate the arbitration order and proceed in court based on the untimely payment, invoking her rights under § 1281.98.
- The trial court initially agreed with Sanders but ultimately reversed course, finding that § 1281.98 was preempted by the Federal Arbitration Act (FAA) after new authority was presented.
- The appellate court reviewed whether § 1281.98 is preempted by the FAA or applies to allow Sanders to proceed in court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is § 1281.98 preempted by the FAA? | Not preempted; furthers expeditious arbitration, aligns with FAA’s goals. | Preempted; single out arbitration, conflicts with FAA equal-treatment principle. | Not preempted; aligns with FAA, does not inhibit arbitration’s fundamental goals. |
| Who determines default under § 1281.98? | Default for failure to pay is for court to decide, not the arbitrator. | Arbitrator should decide if employer is in default per arbitration agreement. | Court decides; statute gives employee a unilateral right to proceed in court. |
| Was payment untimely under § 1281.98? | Edward Jones missed 30-day deadline, triggering statute’s consequences. | Fees were paid per JAMS rules, not clearly due within 30 days of the invoice. | Payment was untimely; statute strictly applies regardless of intent. |
| Does the CAA or FAA govern state court process? | CAA procedural rules apply to state court arbitration proceedings. | FAA procedural rules govern, thus CAA provisions like § 1281.98 do not apply. | CAA procedural rules apply absent express agreement for federal procedures. |
Key Cases Cited
- Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468 (state procedural rules can govern arbitration, not preempted by FAA if parties agreed)
- Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 581 U.S. 246 (FAA preemption applies to laws that single out arbitration for special treatment)
- Epic Sys. Corp. v. Lewis, 584 U.S. 497 (FAA promotes efficient, informal dispute resolution)
- Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681 (enforceability of arbitration agreements under FAA)
- Morgan v. Sundance, Inc., 596 U.S. 411 (arbitration agreements are not entitled to special status beyond general contract law)
- Cronus Inv., Inc. v. Concierge Servs., 35 Cal.4th 376 (FAA procedural rules inapplicable to state court proceedings)