FAA won't preempt arbitration fee payment statute

The California Supreme Court (5-2) did some fancy maneuvering to save Code of Civil Procedure section 1281.98 from being preempted by the Federal Arbitration Act in Hohenshelt v. Superior Court (08/11/2025) [PDF]

That section governs the payment of fees in employment and consumer arbitrations. If the drafter does not pay its arbitration fees on time, then it waives the right to arbitrate.

The court “properly construed” the statute so it does not apply where nonpayment of fees results from a good faith mistake, inadvertence, or other excusable neglect.

The court declared that—as now interpreted—the statute does not
- deviate from generally applicable state law contract principles.
- disfavor arbitration or interfere with fundamental attributes of arbitration.
- invent special, arbitration-preferring procedural rules.

I’m not convinced. Neither are the two dissenters, who argued that section 1281.98 singles out arbitration contracts for disfavored treatment, and thus violates the equal treatment principle and is preempted by the FAA.