Judge Peter A. Hernandez, Case Number: 22STCV08377, Date: 2025-05-01 Tentative Ruling

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Plaintiff Mohammed “Mo” Sajady’s Motion to Vacate Order Submitting Action to Arbitration is DENIED.

On March 8, 2022, Plaintiff Mohammed “Mo” Sajady (“Plaintiff”) filed a complaint against Defendant Cedars Sinai Medical Center Inc. (“Defendant”) arising from Plaintiff’s employment with Defendant alleging causes of action for:

2. Failure to Prevent Discrimination and Harassment (Cal. Gov’t Code §12940(K)); and

On August 5, 2022, the court granted Defendant’s Motion to Compel Arbitration and stayed the proceedings pending arbitration.

On March 26, 2025, Plaintiff filed this Motion to Vacate Order Submitting Action to Arbitration. On April 18, 2025, Defendant filed an opposition. On April 24, 2025, Plaintiff filed a reply.

“Sections 1281.97 and 1281.98 each prescribe procedures for payment and remedies for nonpayment of arbitration fees and costs by the drafting party, i.e., the company or business that included a predispute arbitration provision in a contract with a consumer or employee.” (Williams v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054, 1065.) “Both sections provide that a drafting party who fails in its obligation to pay fees and costs required to initiate or continue the arbitration within 30 days after the due date is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel the employee or consumer to proceed with that arbitration as a result of the material breach.” (Id., at p. 1066.) “Consequently, even where an arbitration has commenced, the employee or consumer may unilaterally elect[,] among other alternatives, to [w]ithdraw the claim from arbitration and proceed in a court or appropriate jurisdiction.” (Ibid., emphasis in original.) “If the consumer elects to proceed in court to commence or resume litigation, the consumer must . . . seek vacatur of a prior order compelling arbitration and staying the litigation.” (Ibid.)

“After an employee or consumer meets the filing requirements necessary to initiate an arbitration, the arbitration provider shall immediately provide an invoice for any fees and costs required before the arbitration can proceed to all of the parties to the arbitration. The invoice shall be provided in its entirety, shall state the full amount owed and the date that payment is due, and shall be sent to all parties by the same means on the same day.” (Code Civ. Proc. § 1281.97(a)(2).) “To avoid delay, absent an express provision in the arbitration agreement stating the number of days in which the parties to the arbitration must pay the required fees or costs, the arbitration provider shall issue all invoices to the parties as due upon receipt.” (Code Civ. Proc. § 1281.97(a)(2).) California Code of Civil Procedure section 1281.97 contains no exceptions for a party’s delay to timely pay fees and “requires strict enforcement.” (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 775.)

Plaintiff moves to vacate this court’s order compelling arbitration pursuant to California Code of Civil Procedure section 1281.98 on the grounds that Defendant failed to pay the arbitration fees when due. (Motion, at p. 1.) Plaintiff contends that on November 19, 2022, the American Arbitration Association (“AAA”) issued an invoice in the amount of $31,200 due upon receipt to Defendant. (Yellin Decl., ¶¶ 6-7, Exh. A.) On December 10, 2024, the AAA unilaterally withdrew the invoice. (Id., ¶¶ 8-10, Exh. B.) Then, on February 27, 2025, the AAA issued a new invoice. (Id., ¶¶ 15-16, Exh. D.) As such, Plaintiff argues that Defendant’s failure to pay the original invoice within 30 days waives its right to arbitrate, regardless of the fact that the invoice was withdrawn since Plaintiff did not consent to any modifications. (Motion, at pp. 2-4.)

In opposition, Defendant argues that section 1281.98 is preempted by the Federal Arbitration Act (“FAA”) which governs the arbitration at issue. (Opp., at pp. 9-11.) Moreover, Defendant argues that, even if section 1281.98 was not preempted, there was no untimely payment of arbitration fees. (Id., at pp. 13.) Defendant contends that on December 10, 2022, the AAA notified the parties via email that the original invoice had been withdrawn, that no payment was due on the withdrawn invoice, and that a new invoice would be issued. (Id., at p. 5.) On February 13, 2025, Defendant contacted the AAA to determine if another invoice had been issued and to confirm that no payment was due as to the previous invoice. (Ibid.) Subsequently, on February 27, 2025, the AAA issued a new invoice in the amount of $42,900 which was paid by Defendant on March 24, 2025. (Ibid.) Lastly, Defendant contends that Plaintiff unduly delayed pursuing this motion and has waived any right to seek withdrawal. (Id., at pp. 14-16.)

In reply, Plaintiff argues that that the FAA does not apply and that, even if it did, the FAA does not preempt section 1281.98. (Reply, at pp. 2-4.) Moreover, Plaintiff reiterates that the withdrawal of the original invoice without Plaintiff’s consent does not negate the fact that Defendant failed to pay the arbitrator’s fees within 30 days. (Id., at pp. 4-7.)

As an initial matter the court finds that Defendant did not fail to pay the requisite fees as governed by section 1281.98. As noted by Plaintiff, the AAA unilaterally withdrew the November 19, 2022, invoice giving notice to both parties. (Yellin Decl., ¶ 9, Exh. B; Irizarry Decl., ¶ 6, Exh. E.) Such notice stated that payment of the invoice was no longer required and that a subsequent invoice would be provided. (Ibid) Additionally, the notice states that the withdrawal was due to the parties’ continuance of the arbitration hearing and not due to any conduct by Defendant to delay payment. (Irizarry Decl., ¶ 5, Exh. D.) Once the AAA provided a new invoice on February 27, 2025, Defendant submitted payment on March 24, 2025, in compliance with section 1281.98. (Id., ¶¶ 12-14, Exh. H.) There is no indication to the court that either party believed the original invoice was due following the AAA withdrawal notification. There is also no evidence that payment of the subsequent invoice was untimely. Plaintiff also fails to provide any authority stating that the non-payment of a withdrawn invoice equates to Defendant waiving its right to arbitrate. Therefore, Defendant is not in material breach under section 1281.98 and Plaintiff may not withdraw from arbitration.[1]

Plaintiff Mohammed “Mo” Sajady’s Motion to Vacate Order Submitting Action to Arbitration is DENIED.

[1] Even though the court does not reach the issue of preemption, it notes California law is unsettled on whether Code of Civil Procedure Section 1281.98 is preempted by federal law. However, as there was no untimely payment by Defendant, the court need not to address such argument or any subsequent arguments made by the parties.