The court in De Leon v. Juanita's Foods, Inc., No. B315394 (Cal. Ct. App., Nov. 23. 2022) made it clear that if a business or employer fails to pay its arbitration fees on time, it will be found in material breach of the arbitration agreement. Juanita's Foods paid its arbitration fees a few days late and despite its assurances that payment was coming and a subsequent payment in fact made, the court held that it was in material breach and refused to consider any other factors to mitigate the late payment. Following clear precedent, the clear language of the statute, and stated legislative intent, the court found that Code of Civil Procedure sections 1281.97 and 1281.98 provide a bright line rule that courts must follow to the letter.
Background Facts
De Leon brought a suit against Aerotek, Inc. and Juanita's Foods which contained twenty allegations regarding his previous employment. Aerotek filed a motion to compel arbitration and Juanita's Foods joined in the motion pursuant to an arbitration agreement entered into between the parties. The arbitration agreement stated, "De Leon enters into the agreement as consideration for his application and/or his employment with Aerotek, Inc.....De Leon will arbitrate all disputes, claims, complaints, or controversies he has against Aerotek and/or any of its clients or customers." The agreement also required that the parties use JAMS arbitration and mediation services. The parties stipulated that the arbitration agreement was governed by the provisions of the Federal Arbitration Act, 9 U.S.C. '1 et seq. (FAA) and conceded that the arbitration agreement applies to De Leon's complaint against Juanita's Foods as well as Aerotek.
The court granted the motion to compel arbitration and both Aerotek and Juanita's Foods were identified as respondents. JAMS sent invoices to both Aerotek and Juanita's Foods for the amount of $1,300 each. Both paid their filing fee in a timely manner. JAMS then sent a letter to all parties confirming the start of arbitration and also notifying them that the "only fee a consumer employee may be required to pay is $400 of the filing fee and that all other costs, including the remainder of the filing fee, must be borne by the company." Soon thereafter, JAMS sent invoices to Aerotek and Juanita's Foods for $5,000 each. This fee was a "deposit for services" and would cover items such as session time, pre and post session reading, research, preparation, conference calls, travel. etc. The letter also instructed that all fees were due before services could be rendered. JAMS sent the parties a follow-up letter informing them that they had not received the...
