Amended IN Senate March 27, 2019 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 707Introduced by Senators Wieckowski and HertzbergFebruary 22, 2019 An act to amend Section 1280 of, and to add Sections 1281.97, 1281.98, and 1281.99 to, the Code of Civil Procedure, relating to arbitration. LEGISLATIVE COUNSEL'S DIGESTSB 707, as amended, Wieckowski. Arbitration agreements. agreements: enforcement.Existing law regulates arbitrations conducted pursuant to an agreement, as specified.(1) In an employment or consumer arbitration in which the drafting party, as defined, is required to pay certain fees and costs before the arbitration can proceed, this bill would provide that if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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. If the drafting party materially breaches the arbitration agreement and is in default of the arbitration, the bill would authorize the employee or consumer to either withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction, or to compel arbitration in which the drafting party is required to pay reasonable attorneys fees and costs related to the arbitration. If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the bill would provide that the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim, and would further require the court to impose sanctions on the drafting party, as specified.(2) In an employment or consumer arbitration in which the drafting party, as defined, is required to pay certain fees and costs during the pendency of an arbitration proceeding, this bill would provide that if those fees or costs are not paid within 30 days of their 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. If the drafting party materially breaches the arbitration agreement and is in default of the arbitration, the bill would authorize the employee or consumer to unilaterally withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction, or to compel arbitration, as specified. If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the bill would require the court to impose sanctions on the drafting party, as specified. If the employee or consumer compels arbitration, the bill would require the arbitrator to impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.(3) The bill would make related legislative findings and declarations, and would provide that if any provision or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.This bill would express the intent of the Legislature to enact legislation to establish appropriate procedures, sanctions, and remedies applicable when an employer breaches an arbitration agreement imposed as a condition of employment.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) In California, private contracts that violate public policy are unenforceable. Under Section 3513 of the Civil Code, contract terms that require a party to forgo unwaivable statutory rights are unenforceable. Similarly, Section 1668 of the Civil Code provides that contracts exempting parties from responsibility of their own violation of law are also unenforceable. Thus, under these and other contract defenses of general applicability, a mandatory arbitration agreement, like any other agreement, cannot undercut unwaivable state statutory rights by, for example, reducing the limitations period to commence an action or arbitration, eliminating certain statutory remedies, or erecting excessive cost barriers to obtaining them.(b) In Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, the California Supreme Court concluded that when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.(c) A companys failure to pay the fees of an arbitration service provider in accordance with its obligations contained within an arbitration agreement or through application of state or federal law or the rules of the arbitration provider hinders the efficient resolution of disputes and contravenes public policy.(d) The companys strategic non-payment of fees and costs severely prejudices the ability of employee or consumer claimants to vindicate their rights. This practice is particularly problematic and unfair when the party failing or refusing to pay those fees and costs is the party that imposed the obligation to arbitrate disputes.(e) In Brown v. Dillards, Inc. (2005) 430 F.3d 1004, the United States Court of Appeals for the Ninth Circuit held that, under federal law, an employers refusal to participate in arbitration pursuant to a mandatory arbitration provision constituted a breach of the arbitration agreement. In Sink v. Aden Enterprises, Inc. (2010) 352 F.3d 1197, that court held that, under federal law, an employers failure to pay arbitration fees as required by an arbitration agreement constitutes a material breach of that agreement and results in a default in the arbitration.(f) It is the intent of the Legislature in enacting this measure to affirm the decisions in Armendariz v. Foundation Health Psychcare Services, Inc., Brown v. Dillards, Inc., and Sink v. Aden Enterprises, Inc. that a companys failure to pay arbitration fees pursuant to a mandatory arbitration provision constitutes a breach of the arbitration agreement and allows the non-breaching party to bring a claim in court.SEC. 2. Section 1280 of the Code of Civil Procedure is amended to read:1280. As used in this title:(a) Agreement includes includes, but is not limited to to, agreements providing for valuations, appraisals appraisals, and similar proceedings and agreements between employers and employees or between their respective representatives.(b) Award includes includes, but is not limited to to, an award made pursuant to an agreement not in writing.(c) Consumer means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.(c)(d) Controversy means any question arising between parties to an agreement whether such the question is one of law or of fact or both.(e) Drafting party means the company or business that included a predispute arbitration provision in a contract with a consumer or employee. The term includes any third party relying upon, or otherwise subject to the arbitration provision, other than the employee or consumer.(f) Employee means any current employee, former employee, or applicant for employment. The term includes any person who is, was, or who claims to have been misclassified as an independent contractor or otherwise improperly placed into a category other than employee or applicant for employment.(d)(g) Neutral arbitrator means an arbitrator who is (1) selected jointly by the parties or by the arbitrators selected by the parties parties, or (2) appointed by the court when the parties or the arbitrators selected by the parties fail to select an arbitrator who was to be selected jointly by them. the parties.(e)(h) Party to the arbitration means a party to the arbitration agreement: agreement, including any of the following:(1) Who A party who seeks to arbitrate a controversy pursuant to the agreement; agreement.(2) Against A party against whom such arbitration is sought pursuant to the agreement; or agreement.(3) Who A party who is made a party to such the arbitration by order of the neutral arbitrator upon such that partys application, upon the application of any other party to the arbitration arbitration, or upon the neutral arbitrators own determination.(f)(i) Written agreement shall be deemed to include includes a written agreement which that has been extended or renewed by an oral or implied agreement.SEC. 3. Section 1281.97 is added to the Code of Civil Procedure, to read:1281.97. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration administrator, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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 under Section 1281.2.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Compel arbitration in which the drafting party shall pay reasonable attorneys fees and costs related to the arbitration.(c) If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction under paragraph (1) of subdivision (b), the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.(d) If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.SEC. 4. Section 1281.98 is added to the Code of Civil Procedure, to read:1281.98. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days of their 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 the employee or consumer to proceed with that arbitration.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Continue the arbitration proceeding, if the arbitration company agrees to continue administering the proceeding, notwithstanding the drafting partys failure to pay fees or costs. The neutral arbitrator or arbitration company may institute a collection action at the conclusion of the arbitration proceeding against the drafting party that is in default of the arbitration for payment of all fees associated with the employment or consumer arbitration proceeding, including the cost of administering any proceedings after the default.(3) Petition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay under the arbitration agreement or the rules of the arbitration company.(4) Pay the drafting partys fees and proceed with the arbitration proceeding. As part of the award, the employee or consumer shall be entitled to recover all arbitration fees paid on behalf of the drafting party.(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:(1) The employee or consumer may bring a motion, or a separate action, to recover all attorneys fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorneys fees shall be without regard to any findings on the merits in the underlying action or arbitration.(2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.(d) If the employee or consumer continues in arbitration pursuant to paragraphs (2) through (4) of subdivision (b), inclusive, the arbitrator shall impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.SEC. 5. Section 1281.99 is added to the Code of Civil Procedure, to read:1281.99. The court shall impose sanctions against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, including any of the following:(a) A monetary sanction ordering the drafting party to pay the reasonable expenses, including attorneys fees and costs, incurred by the employee or consumer as a result of the material breach.(b) An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action.(c) A terminating sanction by one of the following orders:(1) An order striking out the pleadings or parts of the pleadings of the drafting party.(2) An order rendering a judgment by default against the drafting party.(d) A contempt sanction by an order treating the drafting party as in contempt of court.SEC. 6. If any provision of these sections or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.SECTION 1.It is the intent of the Legislature to enact legislation that establishes appropriate procedures, sanctions, and remedies applicable when an employer breaches an arbitration agreement imposed as a condition of employment.
Amended IN Senate March 27, 2019 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Senate Bill No. 707Introduced by Senators Wieckowski and HertzbergFebruary 22, 2019 An act to amend Section 1280 of, and to add Sections 1281.97, 1281.98, and 1281.99 to, the Code of Civil Procedure, relating to arbitration. LEGISLATIVE COUNSEL'S DIGESTSB 707, as amended, Wieckowski. Arbitration agreements. agreements: enforcement.Existing law regulates arbitrations conducted pursuant to an agreement, as specified.(1) In an employment or consumer arbitration in which the drafting party, as defined, is required to pay certain fees and costs before the arbitration can proceed, this bill would provide that if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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. If the drafting party materially breaches the arbitration agreement and is in default of the arbitration, the bill would authorize the employee or consumer to either withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction, or to compel arbitration in which the drafting party is required to pay reasonable attorneys fees and costs related to the arbitration. If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the bill would provide that the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim, and would further require the court to impose sanctions on the drafting party, as specified.(2) In an employment or consumer arbitration in which the drafting party, as defined, is required to pay certain fees and costs during the pendency of an arbitration proceeding, this bill would provide that if those fees or costs are not paid within 30 days of their 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. If the drafting party materially breaches the arbitration agreement and is in default of the arbitration, the bill would authorize the employee or consumer to unilaterally withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction, or to compel arbitration, as specified. If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the bill would require the court to impose sanctions on the drafting party, as specified. If the employee or consumer compels arbitration, the bill would require the arbitrator to impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.(3) The bill would make related legislative findings and declarations, and would provide that if any provision or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.This bill would express the intent of the Legislature to enact legislation to establish appropriate procedures, sanctions, and remedies applicable when an employer breaches an arbitration agreement imposed as a condition of employment.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO
Amended IN Senate March 27, 2019
Amended IN Senate March 27, 2019
CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION
Senate Bill No. 707
Introduced by Senators Wieckowski and HertzbergFebruary 22, 2019
Introduced by Senators Wieckowski and Hertzberg
February 22, 2019
An act to amend Section 1280 of, and to add Sections 1281.97, 1281.98, and 1281.99 to, the Code of Civil Procedure, relating to arbitration.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
SB 707, as amended, Wieckowski. Arbitration agreements. agreements: enforcement.
Existing law regulates arbitrations conducted pursuant to an agreement, as specified.(1) In an employment or consumer arbitration in which the drafting party, as defined, is required to pay certain fees and costs before the arbitration can proceed, this bill would provide that if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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. If the drafting party materially breaches the arbitration agreement and is in default of the arbitration, the bill would authorize the employee or consumer to either withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction, or to compel arbitration in which the drafting party is required to pay reasonable attorneys fees and costs related to the arbitration. If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the bill would provide that the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim, and would further require the court to impose sanctions on the drafting party, as specified.(2) In an employment or consumer arbitration in which the drafting party, as defined, is required to pay certain fees and costs during the pendency of an arbitration proceeding, this bill would provide that if those fees or costs are not paid within 30 days of their 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. If the drafting party materially breaches the arbitration agreement and is in default of the arbitration, the bill would authorize the employee or consumer to unilaterally withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction, or to compel arbitration, as specified. If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the bill would require the court to impose sanctions on the drafting party, as specified. If the employee or consumer compels arbitration, the bill would require the arbitrator to impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.(3) The bill would make related legislative findings and declarations, and would provide that if any provision or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.This bill would express the intent of the Legislature to enact legislation to establish appropriate procedures, sanctions, and remedies applicable when an employer breaches an arbitration agreement imposed as a condition of employment.
Existing law regulates arbitrations conducted pursuant to an agreement, as specified.
(1) In an employment or consumer arbitration in which the drafting party, as defined, is required to pay certain fees and costs before the arbitration can proceed, this bill would provide that if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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. If the drafting party materially breaches the arbitration agreement and is in default of the arbitration, the bill would authorize the employee or consumer to either withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction, or to compel arbitration in which the drafting party is required to pay reasonable attorneys fees and costs related to the arbitration. If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the bill would provide that the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim, and would further require the court to impose sanctions on the drafting party, as specified.
(2) In an employment or consumer arbitration in which the drafting party, as defined, is required to pay certain fees and costs during the pendency of an arbitration proceeding, this bill would provide that if those fees or costs are not paid within 30 days of their 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. If the drafting party materially breaches the arbitration agreement and is in default of the arbitration, the bill would authorize the employee or consumer to unilaterally withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction, or to compel arbitration, as specified. If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the bill would require the court to impose sanctions on the drafting party, as specified. If the employee or consumer compels arbitration, the bill would require the arbitrator to impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.
(3) The bill would make related legislative findings and declarations, and would provide that if any provision or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.
This bill would express the intent of the Legislature to enact legislation to establish appropriate procedures, sanctions, and remedies applicable when an employer breaches an arbitration agreement imposed as a condition of employment.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) In California, private contracts that violate public policy are unenforceable. Under Section 3513 of the Civil Code, contract terms that require a party to forgo unwaivable statutory rights are unenforceable. Similarly, Section 1668 of the Civil Code provides that contracts exempting parties from responsibility of their own violation of law are also unenforceable. Thus, under these and other contract defenses of general applicability, a mandatory arbitration agreement, like any other agreement, cannot undercut unwaivable state statutory rights by, for example, reducing the limitations period to commence an action or arbitration, eliminating certain statutory remedies, or erecting excessive cost barriers to obtaining them.(b) In Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, the California Supreme Court concluded that when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.(c) A companys failure to pay the fees of an arbitration service provider in accordance with its obligations contained within an arbitration agreement or through application of state or federal law or the rules of the arbitration provider hinders the efficient resolution of disputes and contravenes public policy.(d) The companys strategic non-payment of fees and costs severely prejudices the ability of employee or consumer claimants to vindicate their rights. This practice is particularly problematic and unfair when the party failing or refusing to pay those fees and costs is the party that imposed the obligation to arbitrate disputes.(e) In Brown v. Dillards, Inc. (2005) 430 F.3d 1004, the United States Court of Appeals for the Ninth Circuit held that, under federal law, an employers refusal to participate in arbitration pursuant to a mandatory arbitration provision constituted a breach of the arbitration agreement. In Sink v. Aden Enterprises, Inc. (2010) 352 F.3d 1197, that court held that, under federal law, an employers failure to pay arbitration fees as required by an arbitration agreement constitutes a material breach of that agreement and results in a default in the arbitration.(f) It is the intent of the Legislature in enacting this measure to affirm the decisions in Armendariz v. Foundation Health Psychcare Services, Inc., Brown v. Dillards, Inc., and Sink v. Aden Enterprises, Inc. that a companys failure to pay arbitration fees pursuant to a mandatory arbitration provision constitutes a breach of the arbitration agreement and allows the non-breaching party to bring a claim in court.SEC. 2. Section 1280 of the Code of Civil Procedure is amended to read:1280. As used in this title:(a) Agreement includes includes, but is not limited to to, agreements providing for valuations, appraisals appraisals, and similar proceedings and agreements between employers and employees or between their respective representatives.(b) Award includes includes, but is not limited to to, an award made pursuant to an agreement not in writing.(c) Consumer means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.(c)(d) Controversy means any question arising between parties to an agreement whether such the question is one of law or of fact or both.(e) Drafting party means the company or business that included a predispute arbitration provision in a contract with a consumer or employee. The term includes any third party relying upon, or otherwise subject to the arbitration provision, other than the employee or consumer.(f) Employee means any current employee, former employee, or applicant for employment. The term includes any person who is, was, or who claims to have been misclassified as an independent contractor or otherwise improperly placed into a category other than employee or applicant for employment.(d)(g) Neutral arbitrator means an arbitrator who is (1) selected jointly by the parties or by the arbitrators selected by the parties parties, or (2) appointed by the court when the parties or the arbitrators selected by the parties fail to select an arbitrator who was to be selected jointly by them. the parties.(e)(h) Party to the arbitration means a party to the arbitration agreement: agreement, including any of the following:(1) Who A party who seeks to arbitrate a controversy pursuant to the agreement; agreement.(2) Against A party against whom such arbitration is sought pursuant to the agreement; or agreement.(3) Who A party who is made a party to such the arbitration by order of the neutral arbitrator upon such that partys application, upon the application of any other party to the arbitration arbitration, or upon the neutral arbitrators own determination.(f)(i) Written agreement shall be deemed to include includes a written agreement which that has been extended or renewed by an oral or implied agreement.SEC. 3. Section 1281.97 is added to the Code of Civil Procedure, to read:1281.97. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration administrator, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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 under Section 1281.2.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Compel arbitration in which the drafting party shall pay reasonable attorneys fees and costs related to the arbitration.(c) If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction under paragraph (1) of subdivision (b), the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.(d) If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.SEC. 4. Section 1281.98 is added to the Code of Civil Procedure, to read:1281.98. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days of their 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 the employee or consumer to proceed with that arbitration.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Continue the arbitration proceeding, if the arbitration company agrees to continue administering the proceeding, notwithstanding the drafting partys failure to pay fees or costs. The neutral arbitrator or arbitration company may institute a collection action at the conclusion of the arbitration proceeding against the drafting party that is in default of the arbitration for payment of all fees associated with the employment or consumer arbitration proceeding, including the cost of administering any proceedings after the default.(3) Petition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay under the arbitration agreement or the rules of the arbitration company.(4) Pay the drafting partys fees and proceed with the arbitration proceeding. As part of the award, the employee or consumer shall be entitled to recover all arbitration fees paid on behalf of the drafting party.(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:(1) The employee or consumer may bring a motion, or a separate action, to recover all attorneys fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorneys fees shall be without regard to any findings on the merits in the underlying action or arbitration.(2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.(d) If the employee or consumer continues in arbitration pursuant to paragraphs (2) through (4) of subdivision (b), inclusive, the arbitrator shall impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.SEC. 5. Section 1281.99 is added to the Code of Civil Procedure, to read:1281.99. The court shall impose sanctions against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, including any of the following:(a) A monetary sanction ordering the drafting party to pay the reasonable expenses, including attorneys fees and costs, incurred by the employee or consumer as a result of the material breach.(b) An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action.(c) A terminating sanction by one of the following orders:(1) An order striking out the pleadings or parts of the pleadings of the drafting party.(2) An order rendering a judgment by default against the drafting party.(d) A contempt sanction by an order treating the drafting party as in contempt of court.SEC. 6. If any provision of these sections or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.SECTION 1.It is the intent of the Legislature to enact legislation that establishes appropriate procedures, sanctions, and remedies applicable when an employer breaches an arbitration agreement imposed as a condition of employment.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. The Legislature finds and declares all of the following:(a) In California, private contracts that violate public policy are unenforceable. Under Section 3513 of the Civil Code, contract terms that require a party to forgo unwaivable statutory rights are unenforceable. Similarly, Section 1668 of the Civil Code provides that contracts exempting parties from responsibility of their own violation of law are also unenforceable. Thus, under these and other contract defenses of general applicability, a mandatory arbitration agreement, like any other agreement, cannot undercut unwaivable state statutory rights by, for example, reducing the limitations period to commence an action or arbitration, eliminating certain statutory remedies, or erecting excessive cost barriers to obtaining them.(b) In Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, the California Supreme Court concluded that when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.(c) A companys failure to pay the fees of an arbitration service provider in accordance with its obligations contained within an arbitration agreement or through application of state or federal law or the rules of the arbitration provider hinders the efficient resolution of disputes and contravenes public policy.(d) The companys strategic non-payment of fees and costs severely prejudices the ability of employee or consumer claimants to vindicate their rights. This practice is particularly problematic and unfair when the party failing or refusing to pay those fees and costs is the party that imposed the obligation to arbitrate disputes.(e) In Brown v. Dillards, Inc. (2005) 430 F.3d 1004, the United States Court of Appeals for the Ninth Circuit held that, under federal law, an employers refusal to participate in arbitration pursuant to a mandatory arbitration provision constituted a breach of the arbitration agreement. In Sink v. Aden Enterprises, Inc. (2010) 352 F.3d 1197, that court held that, under federal law, an employers failure to pay arbitration fees as required by an arbitration agreement constitutes a material breach of that agreement and results in a default in the arbitration.(f) It is the intent of the Legislature in enacting this measure to affirm the decisions in Armendariz v. Foundation Health Psychcare Services, Inc., Brown v. Dillards, Inc., and Sink v. Aden Enterprises, Inc. that a companys failure to pay arbitration fees pursuant to a mandatory arbitration provision constitutes a breach of the arbitration agreement and allows the non-breaching party to bring a claim in court.
SECTION 1. The Legislature finds and declares all of the following:(a) In California, private contracts that violate public policy are unenforceable. Under Section 3513 of the Civil Code, contract terms that require a party to forgo unwaivable statutory rights are unenforceable. Similarly, Section 1668 of the Civil Code provides that contracts exempting parties from responsibility of their own violation of law are also unenforceable. Thus, under these and other contract defenses of general applicability, a mandatory arbitration agreement, like any other agreement, cannot undercut unwaivable state statutory rights by, for example, reducing the limitations period to commence an action or arbitration, eliminating certain statutory remedies, or erecting excessive cost barriers to obtaining them.(b) In Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, the California Supreme Court concluded that when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.(c) A companys failure to pay the fees of an arbitration service provider in accordance with its obligations contained within an arbitration agreement or through application of state or federal law or the rules of the arbitration provider hinders the efficient resolution of disputes and contravenes public policy.(d) The companys strategic non-payment of fees and costs severely prejudices the ability of employee or consumer claimants to vindicate their rights. This practice is particularly problematic and unfair when the party failing or refusing to pay those fees and costs is the party that imposed the obligation to arbitrate disputes.(e) In Brown v. Dillards, Inc. (2005) 430 F.3d 1004, the United States Court of Appeals for the Ninth Circuit held that, under federal law, an employers refusal to participate in arbitration pursuant to a mandatory arbitration provision constituted a breach of the arbitration agreement. In Sink v. Aden Enterprises, Inc. (2010) 352 F.3d 1197, that court held that, under federal law, an employers failure to pay arbitration fees as required by an arbitration agreement constitutes a material breach of that agreement and results in a default in the arbitration.(f) It is the intent of the Legislature in enacting this measure to affirm the decisions in Armendariz v. Foundation Health Psychcare Services, Inc., Brown v. Dillards, Inc., and Sink v. Aden Enterprises, Inc. that a companys failure to pay arbitration fees pursuant to a mandatory arbitration provision constitutes a breach of the arbitration agreement and allows the non-breaching party to bring a claim in court.
SECTION 1. The Legislature finds and declares all of the following:
### SECTION 1.
(a) In California, private contracts that violate public policy are unenforceable. Under Section 3513 of the Civil Code, contract terms that require a party to forgo unwaivable statutory rights are unenforceable. Similarly, Section 1668 of the Civil Code provides that contracts exempting parties from responsibility of their own violation of law are also unenforceable. Thus, under these and other contract defenses of general applicability, a mandatory arbitration agreement, like any other agreement, cannot undercut unwaivable state statutory rights by, for example, reducing the limitations period to commence an action or arbitration, eliminating certain statutory remedies, or erecting excessive cost barriers to obtaining them.
(b) In Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, the California Supreme Court concluded that when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.
(c) A companys failure to pay the fees of an arbitration service provider in accordance with its obligations contained within an arbitration agreement or through application of state or federal law or the rules of the arbitration provider hinders the efficient resolution of disputes and contravenes public policy.
(d) The companys strategic non-payment of fees and costs severely prejudices the ability of employee or consumer claimants to vindicate their rights. This practice is particularly problematic and unfair when the party failing or refusing to pay those fees and costs is the party that imposed the obligation to arbitrate disputes.
(e) In Brown v. Dillards, Inc. (2005) 430 F.3d 1004, the United States Court of Appeals for the Ninth Circuit held that, under federal law, an employers refusal to participate in arbitration pursuant to a mandatory arbitration provision constituted a breach of the arbitration agreement. In Sink v. Aden Enterprises, Inc. (2010) 352 F.3d 1197, that court held that, under federal law, an employers failure to pay arbitration fees as required by an arbitration agreement constitutes a material breach of that agreement and results in a default in the arbitration.
(f) It is the intent of the Legislature in enacting this measure to affirm the decisions in Armendariz v. Foundation Health Psychcare Services, Inc., Brown v. Dillards, Inc., and Sink v. Aden Enterprises, Inc. that a companys failure to pay arbitration fees pursuant to a mandatory arbitration provision constitutes a breach of the arbitration agreement and allows the non-breaching party to bring a claim in court.
SEC. 2. Section 1280 of the Code of Civil Procedure is amended to read:1280. As used in this title:(a) Agreement includes includes, but is not limited to to, agreements providing for valuations, appraisals appraisals, and similar proceedings and agreements between employers and employees or between their respective representatives.(b) Award includes includes, but is not limited to to, an award made pursuant to an agreement not in writing.(c) Consumer means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.(c)(d) Controversy means any question arising between parties to an agreement whether such the question is one of law or of fact or both.(e) Drafting party means the company or business that included a predispute arbitration provision in a contract with a consumer or employee. The term includes any third party relying upon, or otherwise subject to the arbitration provision, other than the employee or consumer.(f) Employee means any current employee, former employee, or applicant for employment. The term includes any person who is, was, or who claims to have been misclassified as an independent contractor or otherwise improperly placed into a category other than employee or applicant for employment.(d)(g) Neutral arbitrator means an arbitrator who is (1) selected jointly by the parties or by the arbitrators selected by the parties parties, or (2) appointed by the court when the parties or the arbitrators selected by the parties fail to select an arbitrator who was to be selected jointly by them. the parties.(e)(h) Party to the arbitration means a party to the arbitration agreement: agreement, including any of the following:(1) Who A party who seeks to arbitrate a controversy pursuant to the agreement; agreement.(2) Against A party against whom such arbitration is sought pursuant to the agreement; or agreement.(3) Who A party who is made a party to such the arbitration by order of the neutral arbitrator upon such that partys application, upon the application of any other party to the arbitration arbitration, or upon the neutral arbitrators own determination.(f)(i) Written agreement shall be deemed to include includes a written agreement which that has been extended or renewed by an oral or implied agreement.
SEC. 2. Section 1280 of the Code of Civil Procedure is amended to read:
### SEC. 2.
1280. As used in this title:(a) Agreement includes includes, but is not limited to to, agreements providing for valuations, appraisals appraisals, and similar proceedings and agreements between employers and employees or between their respective representatives.(b) Award includes includes, but is not limited to to, an award made pursuant to an agreement not in writing.(c) Consumer means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.(c)(d) Controversy means any question arising between parties to an agreement whether such the question is one of law or of fact or both.(e) Drafting party means the company or business that included a predispute arbitration provision in a contract with a consumer or employee. The term includes any third party relying upon, or otherwise subject to the arbitration provision, other than the employee or consumer.(f) Employee means any current employee, former employee, or applicant for employment. The term includes any person who is, was, or who claims to have been misclassified as an independent contractor or otherwise improperly placed into a category other than employee or applicant for employment.(d)(g) Neutral arbitrator means an arbitrator who is (1) selected jointly by the parties or by the arbitrators selected by the parties parties, or (2) appointed by the court when the parties or the arbitrators selected by the parties fail to select an arbitrator who was to be selected jointly by them. the parties.(e)(h) Party to the arbitration means a party to the arbitration agreement: agreement, including any of the following:(1) Who A party who seeks to arbitrate a controversy pursuant to the agreement; agreement.(2) Against A party against whom such arbitration is sought pursuant to the agreement; or agreement.(3) Who A party who is made a party to such the arbitration by order of the neutral arbitrator upon such that partys application, upon the application of any other party to the arbitration arbitration, or upon the neutral arbitrators own determination.(f)(i) Written agreement shall be deemed to include includes a written agreement which that has been extended or renewed by an oral or implied agreement.
1280. As used in this title:(a) Agreement includes includes, but is not limited to to, agreements providing for valuations, appraisals appraisals, and similar proceedings and agreements between employers and employees or between their respective representatives.(b) Award includes includes, but is not limited to to, an award made pursuant to an agreement not in writing.(c) Consumer means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.(c)(d) Controversy means any question arising between parties to an agreement whether such the question is one of law or of fact or both.(e) Drafting party means the company or business that included a predispute arbitration provision in a contract with a consumer or employee. The term includes any third party relying upon, or otherwise subject to the arbitration provision, other than the employee or consumer.(f) Employee means any current employee, former employee, or applicant for employment. The term includes any person who is, was, or who claims to have been misclassified as an independent contractor or otherwise improperly placed into a category other than employee or applicant for employment.(d)(g) Neutral arbitrator means an arbitrator who is (1) selected jointly by the parties or by the arbitrators selected by the parties parties, or (2) appointed by the court when the parties or the arbitrators selected by the parties fail to select an arbitrator who was to be selected jointly by them. the parties.(e)(h) Party to the arbitration means a party to the arbitration agreement: agreement, including any of the following:(1) Who A party who seeks to arbitrate a controversy pursuant to the agreement; agreement.(2) Against A party against whom such arbitration is sought pursuant to the agreement; or agreement.(3) Who A party who is made a party to such the arbitration by order of the neutral arbitrator upon such that partys application, upon the application of any other party to the arbitration arbitration, or upon the neutral arbitrators own determination.(f)(i) Written agreement shall be deemed to include includes a written agreement which that has been extended or renewed by an oral or implied agreement.
1280. As used in this title:(a) Agreement includes includes, but is not limited to to, agreements providing for valuations, appraisals appraisals, and similar proceedings and agreements between employers and employees or between their respective representatives.(b) Award includes includes, but is not limited to to, an award made pursuant to an agreement not in writing.(c) Consumer means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.(c)(d) Controversy means any question arising between parties to an agreement whether such the question is one of law or of fact or both.(e) Drafting party means the company or business that included a predispute arbitration provision in a contract with a consumer or employee. The term includes any third party relying upon, or otherwise subject to the arbitration provision, other than the employee or consumer.(f) Employee means any current employee, former employee, or applicant for employment. The term includes any person who is, was, or who claims to have been misclassified as an independent contractor or otherwise improperly placed into a category other than employee or applicant for employment.(d)(g) Neutral arbitrator means an arbitrator who is (1) selected jointly by the parties or by the arbitrators selected by the parties parties, or (2) appointed by the court when the parties or the arbitrators selected by the parties fail to select an arbitrator who was to be selected jointly by them. the parties.(e)(h) Party to the arbitration means a party to the arbitration agreement: agreement, including any of the following:(1) Who A party who seeks to arbitrate a controversy pursuant to the agreement; agreement.(2) Against A party against whom such arbitration is sought pursuant to the agreement; or agreement.(3) Who A party who is made a party to such the arbitration by order of the neutral arbitrator upon such that partys application, upon the application of any other party to the arbitration arbitration, or upon the neutral arbitrators own determination.(f)(i) Written agreement shall be deemed to include includes a written agreement which that has been extended or renewed by an oral or implied agreement.
1280. As used in this title:
(a) Agreement includes includes, but is not limited to to, agreements providing for valuations, appraisals appraisals, and similar proceedings and agreements between employers and employees or between their respective representatives.
(b) Award includes includes, but is not limited to to, an award made pursuant to an agreement not in writing.
(c) Consumer means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.
(c)
(d) Controversy means any question arising between parties to an agreement whether such the question is one of law or of fact or both.
(e) Drafting party means the company or business that included a predispute arbitration provision in a contract with a consumer or employee. The term includes any third party relying upon, or otherwise subject to the arbitration provision, other than the employee or consumer.
(f) Employee means any current employee, former employee, or applicant for employment. The term includes any person who is, was, or who claims to have been misclassified as an independent contractor or otherwise improperly placed into a category other than employee or applicant for employment.
(d)
(g) Neutral arbitrator means an arbitrator who is (1) selected jointly by the parties or by the arbitrators selected by the parties parties, or (2) appointed by the court when the parties or the arbitrators selected by the parties fail to select an arbitrator who was to be selected jointly by them. the parties.
(e)
(h) Party to the arbitration means a party to the arbitration agreement: agreement, including any of the following:
(1) Who A party who seeks to arbitrate a controversy pursuant to the agreement; agreement.
(2) Against A party against whom such arbitration is sought pursuant to the agreement; or agreement.
(3) Who A party who is made a party to such the arbitration by order of the neutral arbitrator upon such that partys application, upon the application of any other party to the arbitration arbitration, or upon the neutral arbitrators own determination.
(f)
(i) Written agreement shall be deemed to include includes a written agreement which that has been extended or renewed by an oral or implied agreement.
SEC. 3. Section 1281.97 is added to the Code of Civil Procedure, to read:1281.97. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration administrator, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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 under Section 1281.2.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Compel arbitration in which the drafting party shall pay reasonable attorneys fees and costs related to the arbitration.(c) If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction under paragraph (1) of subdivision (b), the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.(d) If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.
SEC. 3. Section 1281.97 is added to the Code of Civil Procedure, to read:
### SEC. 3.
1281.97. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration administrator, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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 under Section 1281.2.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Compel arbitration in which the drafting party shall pay reasonable attorneys fees and costs related to the arbitration.(c) If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction under paragraph (1) of subdivision (b), the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.(d) If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.
1281.97. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration administrator, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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 under Section 1281.2.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Compel arbitration in which the drafting party shall pay reasonable attorneys fees and costs related to the arbitration.(c) If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction under paragraph (1) of subdivision (b), the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.(d) If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.
1281.97. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration administrator, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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 under Section 1281.2.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Compel arbitration in which the drafting party shall pay reasonable attorneys fees and costs related to the arbitration.(c) If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction under paragraph (1) of subdivision (b), the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.(d) If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.
1281.97. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration administrator, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days of their 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 under Section 1281.2.
(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:
(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.
(2) Compel arbitration in which the drafting party shall pay reasonable attorneys fees and costs related to the arbitration.
(c) If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction under paragraph (1) of subdivision (b), the statute of limitations with regard to all claims brought in arbitration shall be tolled as of the date of the first filing of a claim in any court, arbitration forum, or other dispute resolution forum.
(d) If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.
SEC. 4. Section 1281.98 is added to the Code of Civil Procedure, to read:1281.98. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days of their 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 the employee or consumer to proceed with that arbitration.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Continue the arbitration proceeding, if the arbitration company agrees to continue administering the proceeding, notwithstanding the drafting partys failure to pay fees or costs. The neutral arbitrator or arbitration company may institute a collection action at the conclusion of the arbitration proceeding against the drafting party that is in default of the arbitration for payment of all fees associated with the employment or consumer arbitration proceeding, including the cost of administering any proceedings after the default.(3) Petition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay under the arbitration agreement or the rules of the arbitration company.(4) Pay the drafting partys fees and proceed with the arbitration proceeding. As part of the award, the employee or consumer shall be entitled to recover all arbitration fees paid on behalf of the drafting party.(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:(1) The employee or consumer may bring a motion, or a separate action, to recover all attorneys fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorneys fees shall be without regard to any findings on the merits in the underlying action or arbitration.(2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.(d) If the employee or consumer continues in arbitration pursuant to paragraphs (2) through (4) of subdivision (b), inclusive, the arbitrator shall impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.
SEC. 4. Section 1281.98 is added to the Code of Civil Procedure, to read:
### SEC. 4.
1281.98. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days of their 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 the employee or consumer to proceed with that arbitration.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Continue the arbitration proceeding, if the arbitration company agrees to continue administering the proceeding, notwithstanding the drafting partys failure to pay fees or costs. The neutral arbitrator or arbitration company may institute a collection action at the conclusion of the arbitration proceeding against the drafting party that is in default of the arbitration for payment of all fees associated with the employment or consumer arbitration proceeding, including the cost of administering any proceedings after the default.(3) Petition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay under the arbitration agreement or the rules of the arbitration company.(4) Pay the drafting partys fees and proceed with the arbitration proceeding. As part of the award, the employee or consumer shall be entitled to recover all arbitration fees paid on behalf of the drafting party.(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:(1) The employee or consumer may bring a motion, or a separate action, to recover all attorneys fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorneys fees shall be without regard to any findings on the merits in the underlying action or arbitration.(2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.(d) If the employee or consumer continues in arbitration pursuant to paragraphs (2) through (4) of subdivision (b), inclusive, the arbitrator shall impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.
1281.98. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days of their 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 the employee or consumer to proceed with that arbitration.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Continue the arbitration proceeding, if the arbitration company agrees to continue administering the proceeding, notwithstanding the drafting partys failure to pay fees or costs. The neutral arbitrator or arbitration company may institute a collection action at the conclusion of the arbitration proceeding against the drafting party that is in default of the arbitration for payment of all fees associated with the employment or consumer arbitration proceeding, including the cost of administering any proceedings after the default.(3) Petition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay under the arbitration agreement or the rules of the arbitration company.(4) Pay the drafting partys fees and proceed with the arbitration proceeding. As part of the award, the employee or consumer shall be entitled to recover all arbitration fees paid on behalf of the drafting party.(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:(1) The employee or consumer may bring a motion, or a separate action, to recover all attorneys fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorneys fees shall be without regard to any findings on the merits in the underlying action or arbitration.(2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.(d) If the employee or consumer continues in arbitration pursuant to paragraphs (2) through (4) of subdivision (b), inclusive, the arbitrator shall impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.
1281.98. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days of their 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 the employee or consumer to proceed with that arbitration.(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following:(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.(2) Continue the arbitration proceeding, if the arbitration company agrees to continue administering the proceeding, notwithstanding the drafting partys failure to pay fees or costs. The neutral arbitrator or arbitration company may institute a collection action at the conclusion of the arbitration proceeding against the drafting party that is in default of the arbitration for payment of all fees associated with the employment or consumer arbitration proceeding, including the cost of administering any proceedings after the default.(3) Petition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay under the arbitration agreement or the rules of the arbitration company.(4) Pay the drafting partys fees and proceed with the arbitration proceeding. As part of the award, the employee or consumer shall be entitled to recover all arbitration fees paid on behalf of the drafting party.(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:(1) The employee or consumer may bring a motion, or a separate action, to recover all attorneys fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorneys fees shall be without regard to any findings on the merits in the underlying action or arbitration.(2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.(d) If the employee or consumer continues in arbitration pursuant to paragraphs (2) through (4) of subdivision (b), inclusive, the arbitrator shall impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.
1281.98. (a) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days of their 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 the employee or consumer to proceed with that arbitration.
(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following:
(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.
(2) Continue the arbitration proceeding, if the arbitration company agrees to continue administering the proceeding, notwithstanding the drafting partys failure to pay fees or costs. The neutral arbitrator or arbitration company may institute a collection action at the conclusion of the arbitration proceeding against the drafting party that is in default of the arbitration for payment of all fees associated with the employment or consumer arbitration proceeding, including the cost of administering any proceedings after the default.
(3) Petition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay under the arbitration agreement or the rules of the arbitration company.
(4) Pay the drafting partys fees and proceed with the arbitration proceeding. As part of the award, the employee or consumer shall be entitled to recover all arbitration fees paid on behalf of the drafting party.
(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:
(1) The employee or consumer may bring a motion, or a separate action, to recover all attorneys fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorneys fees shall be without regard to any findings on the merits in the underlying action or arbitration.
(2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.
(d) If the employee or consumer continues in arbitration pursuant to paragraphs (2) through (4) of subdivision (b), inclusive, the arbitrator shall impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.
SEC. 5. Section 1281.99 is added to the Code of Civil Procedure, to read:1281.99. The court shall impose sanctions against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, including any of the following:(a) A monetary sanction ordering the drafting party to pay the reasonable expenses, including attorneys fees and costs, incurred by the employee or consumer as a result of the material breach.(b) An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action.(c) A terminating sanction by one of the following orders:(1) An order striking out the pleadings or parts of the pleadings of the drafting party.(2) An order rendering a judgment by default against the drafting party.(d) A contempt sanction by an order treating the drafting party as in contempt of court.
SEC. 5. Section 1281.99 is added to the Code of Civil Procedure, to read:
### SEC. 5.
1281.99. The court shall impose sanctions against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, including any of the following:(a) A monetary sanction ordering the drafting party to pay the reasonable expenses, including attorneys fees and costs, incurred by the employee or consumer as a result of the material breach.(b) An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action.(c) A terminating sanction by one of the following orders:(1) An order striking out the pleadings or parts of the pleadings of the drafting party.(2) An order rendering a judgment by default against the drafting party.(d) A contempt sanction by an order treating the drafting party as in contempt of court.
1281.99. The court shall impose sanctions against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, including any of the following:(a) A monetary sanction ordering the drafting party to pay the reasonable expenses, including attorneys fees and costs, incurred by the employee or consumer as a result of the material breach.(b) An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action.(c) A terminating sanction by one of the following orders:(1) An order striking out the pleadings or parts of the pleadings of the drafting party.(2) An order rendering a judgment by default against the drafting party.(d) A contempt sanction by an order treating the drafting party as in contempt of court.
1281.99. The court shall impose sanctions against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, including any of the following:(a) A monetary sanction ordering the drafting party to pay the reasonable expenses, including attorneys fees and costs, incurred by the employee or consumer as a result of the material breach.(b) An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action.(c) A terminating sanction by one of the following orders:(1) An order striking out the pleadings or parts of the pleadings of the drafting party.(2) An order rendering a judgment by default against the drafting party.(d) A contempt sanction by an order treating the drafting party as in contempt of court.
1281.99. The court shall impose sanctions against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, including any of the following:
(a) A monetary sanction ordering the drafting party to pay the reasonable expenses, including attorneys fees and costs, incurred by the employee or consumer as a result of the material breach.
(b) An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action.
(c) A terminating sanction by one of the following orders:
(1) An order striking out the pleadings or parts of the pleadings of the drafting party.
(2) An order rendering a judgment by default against the drafting party.
(d) A contempt sanction by an order treating the drafting party as in contempt of court.
SEC. 6. If any provision of these sections or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.
SEC. 6. If any provision of these sections or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.
SEC. 6. If any provision of these sections or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.
### SEC. 6.
It is the intent of the Legislature to enact legislation that establishes appropriate procedures, sanctions, and remedies applicable when an employer breaches an arbitration agreement imposed as a condition of employment.