WBK Industry News - State Regulatory Developments

CA Arbitration Invoicing Requirements for Consumer, Employee Agreements

California recently enacted Senate Bill 762 (SB 762), amending Cal. Civ. Code § 1657.1 and Cal. Code Civ. Proc. § 1281.97, to impose various requirements on invoicing and payment of fees by companies in the case of arbitrations brought by consumers or employees.

Pre-dispute arbitration agreements that are included in consumer or employment contracts often provide for the company who drafted the contract to pay a majority of the arbitration fees.  This legislation is the latest attempt to address situations where a company may not promptly pay the arbitration fees, which can result in a delay of the arbitration of the consumer’s or employee’s claim.  The law, including the amendments made by SB 762, now requires the drafting party to pay any required fees within 30 days of their due date or such other time as is provided in the arbitration agreement, and also requires timely invoicing of the party who is supposed to pay the arbitration fees, with copies of those invoices to be provided to the other party so that a claimant can calculate the deadline and know when it has been missed.  Failure to pay arbitration fees timely can result in a waiver of the right to compel arbitration, as well as an award of sanctions including attorneys’ fees.  Any extension of payment due dates must be agreed to by all parties to the arbitration.

Finally, SB 762 requires that any time frame specified in a contract of adhesion for the performance of an act to be reasonable, to prevent unfair delays.  Although this provision is drafted so as to be applicable to adhesion contracts in general, it applies in the arbitration context to prevent a drafter from permitting an unreasonably long period of time for the payment of fees necessary to commence an arbitration.