Hohenshelt v. Superior Court, 318 Cal. Rptr. 3d 475 (Cal. Ct. App. 2024)

For the seventh time since they became effective in 2020, the California Court of Appeal has published an opinion holding that Cal. Code Civ. Proc. §§ 1281.97 and 1281.98 truly mean what they say: “[I]f the [arbitration] fees or costs… are not paid [by the employer] 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 … to proceed with that arbitration.” See, e.g., Suarez v. Superior Court, 99 Cal. App. 5th 32 (2024) (intervening national holiday does not extend time for employer to pay fees). Consistent with the holdings of the prior cases, the Court held that the ADR provider has no discretion to extend the period for the employer to pay, and if the payment is received by the ADR provider even one day late, the employer is in “material breach” of the arbitration agreement and irretrievably waives its right to compel arbitration. Like courts before it, this Court held that the Federal Arbitration Act (FAA) does not preempt this strict state statute “because [it] prescribes further—rather than frustrates—the objectives of the FAA… [In fact, the California statute] is a friend of arbitration and not its foe” (citations omitted).

Associate Justice John Shepard Wiley Jr. filed a particularly pithy dissent worthy of the late Justice Scalia in which he first noted that:

California state law disagrees, strongly and persistently, with federal law about whether arbitration is desirable… This California statute “singles out arbitration agreements for disfavored treatment.” No other contracts are voided on a hair‑trigger basis due to tardy performance. Only arbitration contracts face this firing squad.

Justice Wiley then predicted: “By again putting arbitration on the chopping block, this statute invites a seventh reprimand from the Supreme Court of the United States.” He proceeded to recount the six prior instances over the past 37 years in which the Supreme Court of the United States has “rebuked California state law that continues to find new ways to disfavor arbitration.” Finally, Justice Wiley cited approvingly a recent U.S. District Court opinion that “debunks” the argument that the statute is really “pro‑arbitration”: Belyea v. GreenSky, Inc., 637 F. Supp. 3d 745 (N.D. Cal. 2022) (holding that the FAA preempts Cal. Code Civ. Proc. § 1281.97).

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including…

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.