SAN FRANCISCO (Legal Newsline) - A company whose check to the arbitrators arrived several days late can’t claim it “paid” its fees within a statutory deadline, a California appeals court ruled, reviving a former employee’s chances at pursuing her sexual-harassment claim in court.
A plaintiff identified as Jane Doe sued the jewelry store Na Hoku and former manager Ysmith Montoya for sexual harassment and assault in 2020. The defendants moved to enforce an arbitration agreement and the trial court agreed to transfer the case to binding arbitration. California law dictates a 30-day deadline for paying arbitration fees.
The defendants paid the first round of fees in time for a June 15th deadline. But on Sept. 1, the American Arbitration Association sent a bill for $23,250 in additional fees due by Sept. 1. The letter said the fees could be paid by paper check, credit card or wire transfer.
The AAA sent a reminder on Sept. 28, again citing California law on the 30-day deadline and stating “the last day to remit payment is October 3rd.” Na Hoku mailed the check on Friday, Sept. 30 and informed AAA on the following Monday that the check was in the mail. But the AAA didn’t receive the check until Oct. 5.
The plaintiff then moved to vacate the order compelling arbitration, but the trial court refused, saying Na Hoku “indisputably complied” with the rules by remitting payment by Oct. 3. The law” requires the sum to be ‘paid’ – not necessarily ‘received’ – within the 30 day period. This was done here,” the court concluded.
Doe appealed the order and California’s First Appellate District Court of Appeal, in a Sept. 8 decision, reversed. The central question was what the phrase “paid within 30 days after the due date” in the law means, the appeals court said. The terms are not clear, the court acknowledged, since there is no definition of “paid.” Black’s Law Dictionary defines “pay” but not “paid” as “to transfer money that one owes.”
Legislative history suggests the statute was written to prevent employers from needlessly delaying litigation, the court went on.
“One of the Legislature’s main objectives was to deter employers from strategically withholding payment of arbitration fees so that they could no longer stymie the ability of employees to assert their legal rights,” the court concluded. “We do not find that the proverbial check in the mail constitutes payment and agree with petitioner that real parties’ payment, received more than 30 days after the due date established by the arbitrator, was untimely.”