Deadlines: Second Dist. Div. 7 Holds When Employer Fails To Pay Arb Fees In 30 Days, Employee May Withdraw And Proceed In Court
Bright Line Still Applies To The Deadline Employers Have To Pay For Arbitration Cost Or Lose Ability To Arbitrate, But Wait For California Supreme Court Ruling.
In Mone Yvette Sanders v. Superior Court, 110 Cal.App.5th 1304 (2/7 5/6/25) (Feuer, Martinez, Stone), the court held Code Civ. Proc. § 1281.98 is not preempted by the FAA; when an employer fails to pay arbitration fees within 30 days, the employee may withdraw and continue in court, and the trial court—not an arbitrator—decides whether default occurred. The court granted Sanders' writ, directing the trial court to allow her to proceed in court and to consider her request for sanctions under § 1281.99.
COMMENT: The decision aligns with established California appellate precedent grappling with fee-default withdrawal under § 1281.98. But wait for a definitive ruling from the California Supreme Court, which is reviewing the issue in Hohenshelt v. Superior Court, docket no. S284498.
Consumers, Internet Commerce: Ninth Circuit Holds Sign-In Wrap Did Not Result In Binding Arbitration
Judge Ryan Nelson Writes Majority Opinion And Concurring Opinion.
In Godun v. JustAnswer LLC, No. 24-2095 (9th Cir. 4/15/24) (R. Nelson, Paez, Ikuta), plaintiffs alleged that JustAnswer deceptively enrolled them in costly recurring subscriptions after paying $1–$5 for answers online. JustAnswer moved to compel arbitration under Terms of Service containing an arbitration clause, arguing plaintiffs were on inquiry notice and assented via “sign-in wrap” agreements. Applying California law, the Ninth Circuit affirmed the district court’s denial of arbitration, finding no mutual assent. Some payment pages failed the Berman step-one “reasonably conspicuous notice” requirement; others failed step-two because advisals lacked explicit language (e.g., “By clicking…” clauses) linking user action to contractual assent. Neither subsequent texts, emails, nor disclaimers cured the defect. No plaintiff agreed to arbitrate.
Judge Nelson authored the majority to apply binding precedent but wrote separately to signal disagreement with aspects of that precedent—particularly Berman’s explicit advisement rule and certain visual conspicuousness interpretations—urging reconsideration in future cases.
Federal Arbitration Act, Jurisdiction: No Jurisdiction Under Diversity To Confirm A Zero Award
US Supreme Court Rule That One Cannot Look To Underlying Dispute To Establish Jurisdiction Compels Result.
"Vacating the district court’s order granting Tesla, Inc. and Elon Musk’s petition to confirm an arbitration award, the panel held that the district court lacked subject matter jurisdiction to confirm the award pursuant to Badgerow v. Walters, 596 U.S. 1 (2022), which prohibits looking past the face of a petition under 9 U.S.C. § 9 to establish jurisdiction." Tesla Motors Inc.; Elon Musk v. Cristina Balan, No. 23-16045 (9th Cir. 4/14/25) (VanDyke, Collins, Mendoza).
Tesla and Musk sought to confirm a zero dollar arbitration award resulting from a defamation claim brought by Balan, an automotive design engineer who had been a Tesla employee. The district court affirmed the arbitration award.
However, as the Court of Appeals opinion explains, the district court lacked diversity jurisdiction to confirm the award, because on its face the petition to confirm stated the award was zero, that is, below the $75,000 threshold necessary to establish diversity jurisdiction. And under Badgerow v. Walters, a party relying on 9 U.S.C. § 9 to confirm an award cannot make the court look beyond the petition to the nature of the underlying dispute.
Tesla argued that the district court coulda shoulda issued a stay, in which case it would have retained federal jurisdiction. Maybe the district court shoulda, but the matter was dismissed without objection. The district court could not have issued a stay after dismissing the case.
So the order confirming the award was vacated, and the case was remanded to the district court with instructions to dismiss for lack of jurisdiction.
Mediators, Arbitrators: Inactive Licensed Attorneys Cannot Serve As Mediators Or Arbitrators
Inactive Licensed Attorneys Cannot Serve As Mediators Or Arbitrators And That Does Not Violate Equal Protection.
Morris S. Getzels v. The State Bar of California, No. B338089 (2/4 pub. 6/27/25) (P. J. Zukin, Justice Mori, and Judge Daum (sitting by assignment), held that inactive licensees of the California State Bar cannot serve as mediators or arbitrators under State Bar Rule 2.30.
Getzels had challenged the constitutionality of the rule under the Equal Protection Clause of the state and federal constitutions. But the court held that under a rational basis analysis, the rule passed muster. Mediators and arbitrators perform legal or quasi-legal functions that can subject them to State Bar enforcement procedures and sanctions. Therefore, they should be active members of the Bar and dues paying members. The right of parties to contract with all mediators and arbitrators is not a fundamental constitutional right, and inactive licensees do not qualify as a suspect class subject to strict scrutiny.
We have discussed and commented about the case at greater length in the July 1, 2025 version of the Daily Journal. We point out that under the new Senate Bill 940, disbarred attorneys and an attorneys who flunked the bar exam could eventually become certified mediators and arbitrators, but inactive licensees with sterling reputations could not practice as mediators and arbitrators. Non-licensees can mediate and arbitrate. Since a goal, perhaps the goal, of State Bar enforcement procedures and SB 940 certification is to protect the consumer, it's an odd result. And there you have it.
Comment: Mediators and arbitrators, if you are active licensed members of the State Bar, pay your bar dues, keep up on MCLE requirements, and keep your active status. Or become non-licensed. But avoid inactive license status if you want to continue to mediate and arbitrate.
Sanctions: 4th Dist. Div. 3 Affirms Sanctions For Frivolous Opposition To Proceedings To Confirm Arbitration Award
Once Again, Judicial Review Of Arbitration Awards Is Extremely Limited.
Kenneth J. Catanzarite, representing plaintiffs, filed an opposition to defendant's petition to confirm the award. The court imposed $37,000 in sanctions against Catanzarite for presenting unsupported and meritless arguments, including a claim that the arbitrator had refused to consider evidence, despite no evidence supporting this claim.
Affirmed. "A party’s abstract right to oppose a petition, or to preserve arguments for appeal, is not an entitlement to pursue frivolous arguments in the trial court or this court. Nor are we persuaded by Catanzarite’s contention that his reliance on a case he knew had been explicitly disapproved by our Supreme Court, on the very point he cites no less, demonstrates his argument was a reasonable one to make. We consequently find no abuse of discretion in the trial court’s sanction award against Catanzarite. Plantations’s response to Catanzarite’s opening brief on appeal included a motion for sanctions which we also conclude is meritorious. Catanzarite filed an opening brief in this court which repeats the arguments he made below—including his refusal to acknowledge the binding Supreme Court authority that fatally undermines his claim, and his opposition to the sanctions motion is more of the same." Plantations at Haywood 1, LLC et al v. Plantations at Haywood, LLC, G062909 (4/3 2/10/25) (Goethals, Sanchez, Delaney).
COMMENT. The case reaffirms judicial review of arbitration awards is extremely limited, and challenges must meet specific statutory grounds. Regarding sanctions, the case highlights the serious consequences of filing frivolous motions and appeals.
Section 998 Settlement Offers: Different Code Provisions Govern Post-Judgment Fees And Costs
This Case Involves The (Non) Application Of Civil Code § 998 To Postjudgment Fees And Costs.
The plaintiff, Caesar Elmi, rejected a settlement offer made by the defendant, Related Management Company, pursuant to section 998. The case was later resolved for an amount lower than what was offered, leading to a limitation on Elmi’s recovery of prejudgment costs and attorney fees, specifically limiting them to those incurred before the settlement offer.
After the judgment, Elmi sought additional postjudgment fees and costs for efforts to enforce the judgment. However, the trial court denied the request, stating that section 998 only applied to prejudgment costs and fees, and not to postjudgment enforcement costs.
The court of appeal reversed this decision, clarifying that postjudgment costs, including attorney fees incurred during enforcement, are not governed by section 998. Caesar Elmi v. Related Management Company, L.P., G062788 (4/3 pub. 2/6/25) (Goethals, Moore, Sanchez). Instead, they are governed by other provisions, particularly section 685.040, which allows recovery of costs necessary for enforcing a judgment. Consequently, the case was remanded to the trial court to reconsider Elmi’s request for postjudgment fees and costs.