Appellants Sarah Anoke and other current or former employees initiated arbitration proceedings with Judicial Arbitration and Mediation Services to resolve employment-related disputes with X. Anoke’s employment contract with X provides for arbitration of such disputes.

On March 7, 2023, the arbitrator emailed an invoice for $27,200, X’s share of the initial fees for the 15 individual arbitrations here, to all counsel. The invoice stated that “[p]ayment is due upon receipt.” Anoke’s counsel mistakenly paid the invoice the same day. As a result, when X’s counsel accessed the arbitrator’s online portal on March 8, the system listed the status of the invoice as “[c]losed” and indicated that $27,200 had been “[p]aid” on the invoice.

Anoke’s counsel notified the arbitrator of the error on March 8, and the arbitrator issued a refund check on March 21. Anoke’s counsel apparently did not notify X that it had paid the fees or requested a refund. Notwithstanding the refund, when the arbitrator emailed counsel for both parties near the end of March to schedule an initial administrative call, the arbitrator represented that – ‘[t]he initial filing fees . . . have now been paid.”

On April 11, the arbitrator emailed counsel for both parties, stating that “[i]t appears [the] billing department may have nulled the original invoice” for the case-opening fees. The email included, as an attachment, a second invoice for X’s share of the case initiation fees, $27,200. The new invoice, dated April 7, indicated that “[p]ayment is due upon receipt.” The arbitrator’s online portal continued to list the earlier invoice as “[c]losed” and “[p]aid.”

On May 5, X remitted payment on the April 7 invoice.

In the superior court, Anoke filed a motion to compel an arbitration in which X is liable for her reasonable attorney fees and costs, a remedy for untimely payment under CCP section 1281.97, subdivision (b)(2).

After a hearing, the court denied relief. The court reasoned that, because the arbitrator nullified the first invoice after Anoke’s attorney mistakenly paid it, and X timely paid the second invoice, X met the statutory deadline. The plaintiffs appealed the denial.

The court of appeal affirmed in the published case of Anoke v. Twitter -A168675 (September 2024).

The purpose of section 1281.97 is “[t]o avoid delay” from nonpayment of the fees needed at the outset of an arbitration, encouraging efficient and prompt resolution of disputes subject to arbitration.

Our Legislature recognized that “[a] company’s strategic non-payment of [arbitration] fees and costs severely prejudices the ability of employees or consumers to vindicate their rights,” particularly when the company refusing to pay the fees is the party who insisted on arbitration in the first place.

By “provid[ing] employees and consumers remedies if a drafting party refuses to pay,” the statute seeks “[t]o ensure that a drafting party cannot unilaterally prevent a party from adjudicating their claims” in arbitration.

Accordingly, section 1281.97 establishes a 30-day time frame for payment of the fees required to initiate an employment or consumer arbitration. As the party that imposed the arbitration clause, the statute refers to X as the “drafting party.” (§§ 1280, subd. (e), 1281.97, subd. (a)(1).) If the fees “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 arbitration[.]” (§ 1281.97, subd. (a)(1).) When the drafting party is in default, the employee or consumer may (as applicable here) compel an arbitration in which the drafting party is liable for reasonable attorney fees and costs. (§ 1281.97, subd. (b)(2).)

Importantly, the “due date” that triggers the 30-day grace period is set by an invoice from the arbitration provider. Once an employee or consumer initiates an arbitration, the arbitration provider must “immediately provide an invoice for any fees and costs required before the arbitration can proceed to all of the parties to the arbitration.” (§ 1281.97, subd. (a)(2).) “To avoid delay” the arbitration provider must issue the invoices “to the parties as due upon receipt,” unless the agreement states otherwise. (Ibid.) In sum, a default occurs when the arbitration fees go unpaid for 31 days after “the due date” (§ 1281.97, subd. (a)(1)) set by an arbitration provider’s “invoice.” (§ 1281.97, subd. (a)(2).)

“That never happened here. After the arbitrator issued the first invoice, properly marked due upon receipt, Anoke’s counsel immediately paid the invoice in full. When the arbitrator issued a new invoice, also marked due upon receipt, X paid the fees within 30 days. Neither invoice was ever past due for 31 days, as the statute requires for a default.”

“Anoke makes several arguments. None has merit.”

“In these unique circumstances, we conclude that Anoke’s counsel “paid” the first invoice. As Anoke acknowledges, the reasons for a late payment are irrelevant.”

Employees Denied Attorney Fees in Employment Law Dispute