A recent court of appeal decision in the case of Cvejic v. Skyview Capital, LLC is a stark reminder of the need for employers and their counsel to “pay attention” and promptly pay arbitration fees or risk waiving the hard earned right to arbitrate.
Milan Cvejic was terminated from his employment at Skyview and brought legal action against the company in Superior Court. Like many companies, Skyview had an arbitration agreement in place with Cvejic and filed a motion to compel the matter into arbitration. The court granted the motion and the case was ordered to arbitration through the American Arbitration Association (AAA). The parties litigated the action and a final hearing on the merits was set to occur before an arbitration panel. As is common in most private arbitration matters, arbitration fees were required to be paid in advance of the hearing. Since the law in California requires that the employer bear the full cost of private employment arbitration, Skyview was required to front the fees due by a certain date. The day after payment was due, Cvejic’s counsel confirmed with AAA that Skyview had not paid. During a conference call to discuss, AAA set a new deadline of several weeks out. Skyview complied with this new deadline, but it was approximately 30 days after the initial payment was due.
Cvejic filed in the trial court an Election to Withdraw from Arbitration under Code of Civil Procedure 1281.99 due to the late payment. The court granted Cvejic’s request to withdraw from arbitration, forcing Skyview back into court and awarding Cvejic reasonable expenses for having to file the motion.
Timely Payment of Arbitration Fees
Section 1281.99 was created by the California legislature in 2019 to put pressure on employers seeking to enforce arbitration agreements by requiring the timely payment of arbitration fees. As the Cvejic court explained, “[I]n enacting sections 1281.97 through 1281.99, the Legislature perceived employers’ and companies’ failure to pay arbitration fees as foiling the efficient resolution of cases. This contravened public policy. [Citations.] The Legislature responded by making nonpayment and untimely payment grounds for proceeding in court and getting sanctions.”
Unsuspecting employers reacting to arbitration fee sticker shock (arbitration fees can exceed $50,000 for a 5-7 day arbitration) may be inclined to “slow walk” the upfront payment obligations. However, as Cvejic demonstrates, delay is subject to a waiver of the right to arbitrate, which could derail a well-executed legal strategy to avoid a jury trial.
