February 5, 2025

Colon-Perez v. Security Industry Specialists (Jan. 29, 2025, A168297) __ Cal Rptr.3d ____ (2025 WL 322949)

Code of Civil Procedure section 1281.98 provides “[i]n 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 . . . 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.”
 
Plaintiff sued her former employer. The parties stipulated to arbitration but defendant employer then failed to pay an arbitration fee invoice within the 30-day period required by Code of Civil Procedure section 1281.98. Plaintiff therefore moved to vacate the arbitration. The trial court granted plaintiff’s motion to vacate the arbitration, and defendant moved for relief from that order pursuant to Code of Civil Procedure section 473(b). The trial court denied the motion for relief under section 473(b), and defendant appealed.
 
The Court of Appeal affirmed. The court first concluded that section 1281.98 applied and was neither unconstitutional nor preempted by the Federal Arbitration Act. The court then joined those courts that have strictly construed the mandatory relief provision of section 473(b), holding that the mandatory relief provision applies only to relief sought by an attorney from a default, default judgment, or dismissal, and therefore does not apply to an order vacating an arbitration pursuant to section 1281.98.

The court further concluded that granting discretionary relief under section 473(b) would be  inconsistent with the plain, unambiguous language of section 1281.98 and the legislative intent that the 30-day period specified in section 1281.98 be an “inflexible mandate.”