Media Coverage
Source: The Recorder
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Taina Rosa, Olivia Thomas
06.11.24
A state appellate court in California recently held that the Federal Arbitration Act (FAA) takes priority over a California law that requires companies to pay their arbitration bills on time or face the potential consequences of claims being sent back to court.
In Hernandez v. Sohnen Enterprises, Justice Carl Moor cites Code of Civil Procedure 1281.97, or California’s “don’t-arbitrate-if-you-pay-late” law, which allows “consumers and employees to elect to avoid arbitration even in cases of minor, inadvertent, or inconsequential delay.”
However, “The FAA preempts the portion of section 1281.97 that dictates findings of material breach and waiver as a matter of law,” unless both parties specifically agree to arbitrate under the terms of the California Arbitration Act.
In an interview with The Recorder, San Francisco Litigation partner Lee Brand said Hernandez is likely headed to the California Supreme Court, given the direct split it had created among the state’s courts of appeal.
“[And] if the California Supreme Court reverses Hernandez, which it may well do, I think there is also a good chance it will go to the United States Supreme Court, which would almost certainly agree with Hernandez that the FAA preempts CCP 1281.97,” Brand said.
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