Stephnie Trujillo filed a complaint against her former employer J-M Manufacturing Company (JMM) and four former coworkers David Merritt, David Moore, David Christian, and Chuck Clark.alleging five causes of action: 1) unlawful sexual/gender discrimination; 2) unlawful sexual/gender harassment; 3) failure to prevent sexual/gender discrimination, harassment, and retaliation; 4) retaliation for opposing forbidden practices; and 5) injunctive relief.

On February 22, 2021, JMM reminded Trujillo that in 2012, she executed JMM’s arbitration agreement that required her to resolve any employment disputes by private arbitration. Based thereon, JMM asked Trujillo to submit to arbitration. A dispute arose regarding the applicability and validity of some of the terms of the pre-dispute arbitration agreement.

After weeks of negotiating, the parties entered into a stipulation for arbitration, later signed as an order by the trial court. Court proceedings were stayed and the parties initiated arbitration in May 2021.

JMM timely paid the arbitrator’s invoices for over a year. On October 18, 2022, the arbitrator contacted JMM and requested payment for the invoice with a due date of September 12, 2022. JMM immediately paid the invoice. Later that evening,

Trujillo gave notice of her intent to withdraw from arbitration due to JMM’s late payment. She filed a motion to withdraw from arbitration pursuant to Code of Civil Procedure2 section 1281.98, which the trial court granted.

The Court of Appeal reversed in the published case of Trujillo v. J-M Manufacturing Co., Inc. B331083 (December 2024).

On appeal, JMM and the four coworkers argue the trial court erred in ruling that section 1281.98 applied. Appellants contend the statute does not apply to them because: 1) they entered into a post-dispute stipulation to arbitrate with mutually agreed upon terms, whereas the statute governs mandatory pre-dispute arbitration agreements; and 2) they were not the “drafting party” as defined in section 1280, subdivision (e). The Court of Appeal agreed.

“We decide, in the first instance, whether the parties’ entry into a post-, not pre-, dispute arbitration agreement affects the applicability of section 1281.98. We note that every single appellate opinion we reviewed above involved arbitration arising from a pre-dispute arbitration agreement. Not a single case considered or addressed a section 1281.98 issue arising from a post-dispute arbitration agreement.”

“We conclude the Legislature intended to limit section 1281.98’s applicability to arbitration arising from a pre-dispute agreement. We so conclude because the Legislature provided us with a clear answer by reading section 1281.98 alongside section 1280. Section 1281.98, subdivision (a)(1) refers to the failure to timely pay arbitration fees by ‘the drafting party,’ a term defined by section 1280, subdivision (e) as ‘the company or business that included a predispute arbitration provision in a contract with a consumer or employee.’ ”