June 20, 2024

Hohenshelt v. Superior Court (review granted 6/12/24)

California law (Code of Civil Procedure sections 1281.97-1281.99) provides that where a civil defendant successfully moves to compel arbitration in an employment or consumer case but then fails to timely pay the arbitration service’s fees, the plaintiff has the option of undoing the order compelling arbitration and returning to court and also requiring the trial court or arbitrator to impose monetary sanctions, as well as allowing the trial court or arbitrator to impose issue, evidentiary, or terminating sanctions, or to hold the defendant in contempt.

 In this case, the Court of Appeal, Second Appellate District, Division Eight, issued an opinion agreeing with most of the other Courts of Appeal to have confronted the issue that the Federal Arbitration Act (FAA) does not preempt these provisions.  Justice Wiley dissented, and the California Supreme Court granted review.  The California Supreme Court will address whether these provisions impose a disproportionate burden on arbitration in contravention of the FAA’s mandate that arbitration agreements be treated on an equal footing with all other types of contracts.