We start with the epilogue. Until our high court decided Hohenshelt v. Superior Court (2025) 18 Cal.5th 310 (Hohenshelt), the issue before us was how to interpret an attorney fees provision in Code of Civil Procedure section 1281.98, which allows certain plaintiffs, previously ordered to arbitration, to return to court if the defendant does not pay the arbitration fees within the 30-day deadline in that statute. Prior to Hohenshelt, there was conflicting appellate authority as to whether that consequence applied even to innocent missed deadlines and if so, whether the Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA) would preempt section 1281.98. Hohenshelt resolved those issues, and as set forth in our Discussion, post, the impact of that decision now dominates our analysis, and leads us to the conclusion that plaintiff is not entitled to the award of attorney fees at issue in this appeal.
Returning to where this case started, in an employment arbitration between plaintiff Anthony Wilson, Jr. and defendant TAP Worldwide LLC, the arbitration provider received defendant’s payment of the arbitration fees three days after expiration of the 30-day deadline in section 1281.98. There was evidence defendant initiated an electronic payment on the last day of the 30-day period, a Friday, but the payment was not processed and the arbitration provider did not receive the payment until the following Monday.
Plaintiff filed a motion under section 1281.98 to vacate the order compelling arbitration and return the matter to court. The trial court granted the motion. It found defendant in material breach of the arbitration agreement because defendant failed to pay the arbitration fees within 30 days following invoice of those fees. In so finding, the trial court followed appellate decisions construing section 1281.98’s deadline strictly, regardless of whether defendant missed the deadline inadvertently. The court vacated the order compelling arbitration and imposed $1,750 in sanctions under section 1281.99, reflecting time expended by plaintiff’s counsel to prepare and litigate the motion under section 1281.98.
Plaintiff subsequently filed a motion for over $300,000 in attorney fees and costs pursuant to section 1281.98, subdivision (c)(1), which allows a plaintiff “to recover all attorney’s fees and all costs associated with the abandoned arbitration proceeding.” The trial court granted the motion but reduced the award to approximately $11,000. The court reasoned plaintiff was entitled only to fees and costs incurred for work that would have no utility once the case were returned to court.
Plaintiff then brought this appeal, arguing the trial court misinterpreted the fees provision of section 1281.98, subdivision (c)(1) and plaintiff should be awarded all fees and costs incurred in the arbitral forum, regardless of whether the work underlying those fees and costs would be useful in the court proceedings.
After appellate briefing was complete, our Supreme Court decided Hohenshelt. Hohenshelt held federal law would preempt section 1281.98 if the statute were interpreted to render arbitral rights forfeited even if the failure to pay arbitration fees within the statute’s 30-day deadline was inadvertent or otherwise excusable. To avoid preemption, the Hohenshelt court interpreted section 1281.98 to mandate forfeiture of arbitral rights only when nonpayment was willful, grossly negligent, or fraudulent.
We asked for supplemental briefing regarding the impact of Hohenshelt on this appeal. Here the trial court found defendant had forfeited its arbitral rights despite facts demonstrating defendant missed the 30-day deadline by three days merely because it believed authorizing withdrawal of the payment within the 30-day deadline was sufficient. Under Hohenshelt, the trial court’s strict interpretation of section 1281.98 is preempted. Given the trial court’s findings about how defendant missed the 30-day deadline, we conclude, as a matter of law, that defendant’s untimely payment was not willful, grossly negligent, or fraudulent. Accordingly, we reverse the award of attorney fees.
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