Filed 11/23/22

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

KAIL DE LEON,

Plaintiff and Respondent,

v.

JUANITA’S FOODS,

Defendant and Appellant.

B315394

(Los Angeles County

Super. Ct. No. 20STCV03552)

APPEAL from an order of the Superior Court of 

Los Angeles County, Mel Red Recana, Judge. Affirmed.

Jackson Lewis, James P. Carter and Jessica M. Ewert for 

Defendant and Appellant.

Guerra & Casillas, Ruben Guerra and Tizoc Perez-Casillas,

for Plaintiff and Respondent.

 ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳
2

Code of Civil Procedure sections 1281.97 and 1281.98 

provide that if a company or business that drafts an arbitration 

agreement does not pay its share of required arbitration fees or 

costs within 30 days after they are due, the company or business 

is in “material breach” of the arbitration agreement. (Code Civ. 

Proc., §§ 1281.97, subd. (a)(1); 1281.98, subd. (a)(1).1) In the case 

of such a material breach, an employee or consumer can, among 

other things, withdraw his or her claim from arbitration and 

proceed in court. (§§ 1281.97, subd. (b)(1); 1281.98, subd. (b)(1).)

Following commencement of arbitration proceedings 

between appellant Juanita’s Foods and respondent Kail De Leon, 

Juanita’s Foods failed to pay its share of arbitration fees within 

30 days after such fees were due. Based on that late payment, 

the trial court concluded that Juanita’s Foods was in material 

breach of the parties’ arbitration agreement and allowed De Leon 

to proceed with his claims against Juanita’s Foods in court.

Juanita’s Foods argues that the trial court should have 

considered factors in addition to its late payment—for example, 

whether the late payment delayed arbitration proceedings or 

prejudiced De Leon—to determine the existence of a material 

breach of the arbitration agreement. 

We conclude that the trial court correctly declined to 

consider these additional factors, and we affirm.

1 All subsequent undesignated statutory references are to 

the Code of Civil Procedure.
3

FACTUAL AND PROCEDURAL BACKGROUND

I. The arbitration agreement

The material facts underlying this appeal are not in 

dispute. De Leon filed a civil complaint against Aerotek, Inc. and 

Juanita’s Foods on January 28, 2020, alleging 20 causes of action

relating to his former employment.

2 Aerotek thereafter filed a 

motion to compel arbitration and Juanita’s Foods filed a joinder 

in that motion. 

Aerotek’s motion was based on its arbitration agreement 

with De Leon. The arbitration agreement states that De Leon 

entered into the agreement “[a]s consideration for [his]

application for and/or [his] employment with Aerotek, Inc. . . . .” 

In their arbitration agreement, Aerotek and De Leon agreed that 

De Leon would arbitrate “all disputes, claims, complaints, or 

controversies” he had against Aerotek “and/or any of its clients or 

customers,” and that the parties would “use Judicial Arbitration 

and Mediation Services (‘JAMS’) subject to its then-current 

employment arbitration rules and procedures . . . .” Aerotek and 

De Leon further agreed that the arbitration agreement was 

“governed by the [Federal Arbitration Act, 9 U.S.C. § 1 et seq. 

(FAA)] and, to the extent not inconsistent with or preempted by 

the FAA, by the laws of the state of California . . . .”

2 It appears that Aerotek is a staffing agency that referred 

De Leon to work at Juanita’s Foods. De Leon’s complaint alleged 

that Aerotek and Juanita’s Foods were each his employer.
4

It is undisputed that the arbitration agreement between 

Aerotek and De Leon applies to De Leon’s claims against 

Juanita’s Foods.

3

II. Juanita’s Foods’s failure to timely pay arbitration 

fees

The trial court granted the motion to compel arbitration on 

October 16, 2020. On October 22, 2020, De Leon submitted a 

demand for arbitration to JAMS, identifying both Aerotek and 

Juanita’s Foods as respondents.

JAMS then sent separate invoices dated November 2, 2020, 

to Aerotek and Juanita’s Foods. The invoices billed $1,300 to 

each Aerotek and Juanita’s Foods, and identified the invoiced 

amounts as “Filing Fee[s].” The invoices stated, “For Arbitration 

Cases, please contact your case manager for due date, otherwise, 

payment is due upon receipt.” Aerotek paid the filing fee on 

November 10, 2020, and Juanita’s Foods paid the filing fee on 

November 25, 2020.

On December 3, 2020, JAMS sent a letter to the parties 

confirming commencement of the arbitration proceedings. 

Among other things, the letter notified the parties that the “only 

fee a consumer employee may be required to pay is $400 of the 

Filing Fee,” and that “[a]ll other costs, including the remainder of 

3 Although not addressed directly by the parties, we presume 

this is because Juanita’s Foods is one of Aerotek’s “clients or 

customers” within the meaning of the arbitration agreement.
5

the Filing Fee, must be borne by the company.”4 The parties 

thereafter selected an arbitrator from a list provided by JAMS.

Then, on December 17, 2020, JAMS issued separate 

invoices for $5,000 to each Juanita’s Foods and Aerotek. The 

invoices stated in part that the fees were a “[d]eposit for services:

To be applied to professional time (session time, pre and post 

session reading, research, preparation, conference calls, travel, 

etc.), expenses and case management fees.” Juanita’s Foods does 

not dispute that JAMS appropriately allocated these fees 

between Juanita’s Foods and Aerotek.5

The next day, JAMS sent a letter to the parties confirming 

appointment of the arbitrator and attaching the arbitrator’s fee 

schedule. In its letter, JAMS again notified the parties that other 

than “$400 of the Filing Fee,” “[a]ll other costs, including the 

remainder of the Filing Fee, must be borne by the company.” The 

4 JAMS’s correspondence is consistent with the arbitration 

agreement between Aerotek and De Leon. The arbitration 

agreement provided that De Leon would pay any “JAMS filing or 

administrative fee up to the amount of the initial filing fee to 

commence an action in a Court that otherwise would have 

jurisdiction (‘filing fee’),” and that Aerotek would “pay any 

amount in excess of the filing fee” and “any other JAMS 

administrative fees, the Arbitrator’s fees, and any additional fees 

unique to arbitration.”

5 In an email dated February 5, 2021, counsel for Juanita’s 

Foods informed the parties and JAMS that there “was some 

required discussion between Respondents Juanita’s [Foods] and 

Aerotek about responsibility for the entire payment, which was 

resolved yesterday,” and that Juanita’s Foods “informed JAMS 

yesterday of its commitment to pay the other half of the 

arbitration fee in the immediate future.”
6

letter further advised the parties that the “paying party has been 

billed a preliminary deposit to cover the expense of all prehearing work” and that “[p]ayment is due no later” than January 

4, 2021.

6 According to the fee schedule attached to the letter, 

“[a]ll fees are due and payable in advance of services rendered 

and by any applicable due date as stated in a hearing 

confirmation letter.”

On January 4, 2021, the due date for the JAMS invoices, 

JAMS emailed the parties reminding them that the “initial 

retainer payment is due today” and provided them with payment 

instructions. JAMS sent a follow-up email to the parties on 

January 27, 2021, advising them that JAMS still had not 

received the “initial retainer deposit request.” 

JAMS sent another email to the parties on February 4, 

2021, advising them that although Aerotek had paid the 

outstanding fees, JAMS had not received the “outstanding 

balance of $5,000 for the initial retainer in this matter” from 

Juanita’s Foods. Counsel for Juanita’s Foods responded the same 

day, notifying JAMS that it had advised Juanita’s Foods “to pay 

the invoice [as soon as possible].”

On February 5, 2021, counsel for De Leon advised JAMS 

and the parties that De Leon would file a motion to terminate 

arbitration proceedings because of Juanita’s Foods’s failure to 

pay the outstanding balance within 30 days after its due date. 

Later that same day, counsel for Juanita’s Foods advised JAMS 

and the parties that Juanita’s Foods intended to pay the 

6 The letter mistakenly states that “[p]ayment is due no later 

than January 4, 2020.” All parties agree the fees were actually 

due January 4, 2021.
7

outstanding fee “in the immediate future” and asked JAMS to 

proceed with the arbitration.

At first, JAMS responded that it would proceed with 

scheduling an arbitration management conference because 

Juanita’s Foods had “advised that payment . . . is forthcoming.” 

Minutes later, De Leon advised JAMS and the parties that he 

had filed a motion to vacate the order compelling arbitration. 

JAMS then promptly changed course, notifying the parties it 

would not proceed with arbitration proceedings until De Leon’s 

motion was resolved. 

Juanita’s Foods paid JAMS the outstanding fees on 

February 8, 2021. The parties agree that Juanita’s Foods did not 

pay the outstanding fees of $5,000 within 30 days after the due 

date set by JAMS.

III. Motion to vacate order compelling arbitration

De Leon’s motion to vacate the order compelling arbitration

sought termination of the arbitration proceedings with both 

Juanita’s Foods and Aerotek, relying on Juanita’s Foods’s failure 

to pay the outstanding fees to JAMS within 30 days after the due 

date. The trial court concluded that arbitration could continue 

between De Leon and Aerotek because Aerotek had timely paid 

its portion of arbitration fees. That aspect of the trial court’s 

ruling is not before us.

Relevant here, the trial court also concluded that Juanita’s 

Foods’s failure to pay the required arbitration fees within 30 days 

after the due date constituted a material breach of the arbitration 
8

agreement pursuant to section 1281.98.

7 Relying on the “plain 

language” of section 1281.98, the court concluded that “a 

defendant is automatically in material breach of the arbitration 

agreement once the defendant fails to pay the arbitration fees or 

costs within 30 days of the due date.” The court thus declined 

Juanita’s Foods’s request that the court consider additional 

factors beyond the late payment—such as whether the late 

payment created delay in the arbitration proceedings or 

otherwise prejudiced De Leon—to determine whether Juanita’s 

Foods materially breached the arbitration agreement. 

Last, although it found that section 1281.98 was 

“unambiguous and clear,” the court also considered the statute’s 

legislative history. The court found that the legislative history 

7 In an order dated July 12, 2021, the trial court noted that 

De Leon’s initial motion to vacate the order compelling 

arbitration relied on section 1281.97, not section 1281.98, and 

that Juanita’s Foods and Aerotek opposed the motion because, 

among other things, the fees at issue were not to “initiate an 

arbitration proceeding.” (See § 1281.97, subd. (a)(1).) The court’s 

July 12 order concluded that it was “not entirely clear whether 

the initial retainer fee at issue here is a fee ‘to initiate an 

arbitration proceeding,’ ” but that regardless of such uncertainty

“it appears the section immediately following CCP § 1281.97, 

section 1281.98, would apply to this matter if [De Leon’s] request 

does not fall within section 1281.97.” Despite acknowledging the 

two statutes were “substantially the same,” the court granted a 

continuance to allow the parties to submit further briefing to 

address the applicability of section 1281.98. De Leon’s amended 

motion cited both sections 1281.97 and 1281.98. Because the 

trial court’s subsequent order vacating its order compelling 

arbitration and Juanita’s Foods’s appeal focus on section 1281.98, 

we do too.
9

failed to support Juanita’s Foods’s contention that “the 

legislature only wanted the statute to apply when there has been 

some kind of delay in the arbitration proceeding.”

The court stayed the lawsuit against Juanita’s Foods

pending the outcome of the arbitration proceeding against 

Aerotek to “address any issues regarding conflicting rulings on 

common issues of law or fact.”

Juanita’s Foods timely appealed.

DISCUSSION

Juanita’s Foods contends the trial court erred by failing to 

consider additional factors aside from its late payment in 

determining the existence of a “material breach” pursuant to 

section 1281.98. We disagree. Like the trial court, we conclude 

that late payment as provided in section 1281.98 constitutes a 

“material breach” without regard to any additional 

considerations. We reach that conclusion based on the statute’s 

plain language. However, like the trial court, we also find that 

the statute’s legislative history supports our interpretation.

I. Standard of review and statutory construction 

principles

Ordinarily, a trial court’s determination that a party 

waived the right to arbitrate is subject to substantial evidence 

review. (Burton v. Cruise (2010) 190 Cal.App.4th 939, 946.) 

Here, however, the parties do not dispute the factual support for 

the trial court’s ruling. Rather, they dispute the proper 

interpretation of section 1281.98. In this circumstance, our 

review is de novo. (Carmel Development Co., Inc. v. Anderson 

(2020) 48 Cal.App.5th 492, 503 [“We review a trial court’s 

interpretation and application of statutes de novo.”]; cf. Ramos v. 
10

Westlake Services LLC (2015) 242 Cal.App.4th 674, 686 [denial of 

motion to compel resting on a decision of law subject to de novo 

review].)

We apply well-established rules of statutory interpretation

in construing section 1281.98. “As in any case involving 

statutory interpretation, our fundamental task here is to 

determine the Legislature’s intent so as to effectuate the law’s 

purpose. [Citation.] We begin by examining the statute’s words, 

giving them a plain and commonsense meaning. [Citation.]” 

(People v. Murphy (2001) 25 Cal.4th 136, 142.) “[W]e must first 

look to the words of the statute because they are the most reliable 

indicator of legislative intent. [Citation.] If the statutory 

language is clear and unambiguous, the plain meaning of the 

statute governs. [Citation.]” (People v. Lopez (2003) 31 Cal.4th 

1051, 1056.)

“If, however, the language supports more than one 

reasonable construction, we may consider ‘a variety of extrinsic 

aids, including the ostensible objects to be achieved’ ” and the 

statute’s legislative history. (People v. Sinohui (2002) 28 Cal.4th 

205, 211.)

II. Section 1281.98 

Perceiving that a “company’s failure to pay the fees of an 

arbitration provider” as required by an arbitration agreement or 

applicable law “hinders the efficient resolution of disputes and 

contravenes public policy,” in 2019 the California Legislature 

passed Senate Bill No. 707 and added sections 1281.97 and
11

1281.98 to the California Arbitration Act (CAA) (§ 1280 et seq.).

8 

(Stats. 2019, ch. 870, § 1(c); see also id, §§ 4 [adding section 

1281.97], 5 [adding section 1281.98].) Sections 1281.97 and 

1281.98 “largely parallel” each other. (Gallo v. Wood Ranch USA, 

Inc. (2022) 81 Cal.App.5th 621, 633, fn. 4 (Gallo).) Whereas 

section 1281.97 concerns a failure to timely pay “the fees or costs 

to initiate” an arbitration proceeding (§ 1281.97, subd. (a)(1), 

italics added), section 1281.98 concerns a failure to timely pay 

“the fees or costs required to continue” an arbitration proceeding

(§ 1281.98, subd. (a)(1), italics added).

Subdivision (a)(1) of section 1281.98 provides: “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 after the due 

date, the drafting party is in material breach of the arbitration 

agreement, is in default of the arbitration, and waives its right to 

8 Senate Bill No. 707 also added section 1281.99, which 

establishes various sanctions in the event of a material breach 

pursuant to sections 1281.97 and 1281.98. (Stats. 2019, ch. 870, 

§ 6.) In 2021, the California Legislature amended sections 

1281.97 and 1281.98 to obligate an arbitration provider to supply 

the parties with invoices setting forth the “full amount owed and 

the date that payment is due,” and to set a statutory default due 

date of “due upon receipt” unless the parties agree otherwise. 

(§§ 1281.97, subd. (a)(2); 1281.98, subd. (a)(2); see Stats. 2021, 

ch. 222, §§ 2, 3.) 
12

compel the employee or consumer to proceed with that 

arbitration as a result of the material breach.”

Subdivision (b) of section 1281.98 allows the employee or 

consumer to “unilaterally elect” any of several options if “the 

drafting party materially breaches the arbitration agreement and 

is in default” under subdivision (a). The employee or consumer 

may “[w]ithdraw the claim from arbitration and proceed in a 

court of appropriate jurisdiction” (§ 1281.98, subd. (b)(1)), 

“[c]ontinue the arbitration proceeding, if the arbitration provider 

agrees to continue administering the proceeding, 

notwithstanding the drafting party’s failure to pay fees or costs” 

(§ 1281.98, subd. (b)(2)), “[p]etition 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 provider” (§ 1281.98, 

subd. (b)(3)), or “[p]ay the drafting party’s fees and proceed with 

the arbitration proceeding” (§ 1281.98, subd. (b)(4)). 

Subdivision (c) of section 1281.98 provides that if the 

employee or consumer withdraws the claim from arbitration and 

proceeds in court, he or she “may bring a motion, or a separate 

action, to recover all attorney’s fees and all costs associated with 

the abandoned arbitration proceeding” (§ 1281.98, subd. (c)(1)),

and the “court shall impose sanctions on the drafting party” in 

accordance with section 1281.99 (§ 1281.98, subd. (c)(2)).

Last, subdivision (d) of section 1281.98 provides that if the 

employee or consumer elects to continue arbitration, “the 

arbitrator shall impose appropriate sanctions on the drafting 

party, including monetary sanctions, issue sanctions, evidence 

sanctions, or terminating sanctions.” 
13

The California Legislature’s enactment of Senate Bill 

No. 707 “was aiming to solve a very specific problem—namely, 

the ‘ “procedural limbo and delay” ’ that consumers and 

employees face when they are ‘ “forced to submit to mandatory 

arbitration to resolve a[ ] . . . dispute,” ’ and the business or 

company that pushed the case into an arbitral forum then ‘ “stalls 

or obstructs the arbitration proceeding by refusing to pay the 

required fees.” ’ ” (Gallo, supra, 81 Cal.App.5th at p. 634 [quoting 

legislative history].) Addressing section 1281.97, the Court of 

Appeal in Gallo described the statute as “grant[ing] deliverance 

from this procedural purgatory by deeming late payment to be a 

material breach of the arbitral agreement” that gives the 

employee or consumer the choice to remain in the arbitration at 

the employer’s cost or pursue his or her claims in court. (Gallo, 

at p. 634.)

III. The trial court correctly ruled that Juanita’s Foods 

was in material breach of the arbitration agreement

Juanita’s Foods argues the trial court misapplied section 

1281.98 in granting De Leon’s motion to vacate the order 

compelling arbitration. It contends the California Legislature’s 

purpose in enacting section 1281.98 was to prevent delay in 

arbitration proceedings, and that its late payment did not cause 

any delay here. 

In support of its argument, Juanita’s Foods emphasizes 

several facts. It notes that Aerotek and Juanita’s Foods timely 

paid the fees to initiate arbitration; that the parties selected an 

arbitrator and had begun scheduling proceedings; that counsel

for Juanita’s Foods informed JAMS on February 4, 2021, that 

Juanita’s Foods was advised to pay the outstanding fees as soon 

as possible; that JAMS was initially willing to proceed with 
14

scheduling an arbitration management conference even though 

Juanita’s Foods’s portion of the arbitration fees remained 

outstanding after the 30-day deadline; and that Juanita’s Foods 

paid the outstanding fees shortly after the 30-day deadline.

Juanita’s Foods further contends that if anyone is to blame 

for delay here, it is De Leon. It claims that De Leon required 

Aerotek and Juanita’s Foods to compel arbitration instead of 

simply agreeing to arbitrate his claims, and that De Leon sought 

to vacate the order compelling arbitration even though Aerotek 

and Juanita’s Foods, and initially JAMS, were willing to continue 

with arbitration proceedings.

Based on these contentions, Juanita’s Foods claims the trial 

court erred by applying a “hyper-technical reading” of section 

1281.98 that failed to account for whether its late payment 

caused delay or prejudiced De Leon. Notably missing from this 

argument, however, is an examination of the words of the 

statute, “the most reliable indicator of legislative intent.” (People 

v. Lopez, supra, 31 Cal.4th at p. 1056.) Because we find the 

language of section 1281.98 clear and unambiguous, we reject 

this argument.

Section 1281.98 explicitly defines what occurs when “the 

fees or costs required to continue the arbitration proceeding are 

not paid within 30 days after the due date,” namely, that “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 as a result 

of the material breach.” (§ 1281.98, subd. (a)(1).) We find 

nothing in this language that is ambiguous regarding the 

requisite circumstances to determine the existence of a 

statutorily defined material breach of an arbitration agreement. 
15

To the contrary, the statute’s language establishes a simple 

bright-line rule that a drafting party’s failure to pay outstanding

arbitration fees within 30 days after the due date results in its 

material breach of the arbitration agreement. 

Courts construing the similar provisions of section 1281.97 

have reached that same conclusion. For example, in Espinoza v. 

Superior Court (2022) 83 Cal.App.5th 761 (Espinoza),

9 the Court 

of Appeal reversed the trial court’s conclusion that a defendant’s 

late payment of an arbitration provider’s invoice was “in 

‘substantial[] compliance’ with the arbitration agreement and ‘not 

in material breach,’ because the delayed payment was due to 

‘ “clerical error,” ’ and the delay did not prejudice plaintiff.” (Id.

at p. 775.) The Court of Appeal concluded that the “language of 

section 1281.97 is unambiguous.” (Id. at p. 776.) “Under the 

plain language of the statute, then, the triggering event is 

nothing more than nonpayment of fees within the 30-day 

period—the statute specifies no other required findings, such as 

whether the nonpayment was deliberate or inadvertent, or 

whether the delay prejudiced the nondrafting party.” (Ibid.) The 

court concluded that the “plain language therefore indicates the 

Legislature intended the statute to be strictly applied whenever a 

drafting party failed to pay by the statutory deadline.”10 (Ibid.)

9 Because Espinoza was published after the briefing on 

appeal was completed in this case, we requested supplemental 

briefs from the parties addressing its impact, if any, on this case. 

We have read and considered the parties’ briefs.

10 The court in Espinoza found further support for its 

conclusion in the surrounding “statutory scheme” enacted by 

Senate Bill No. 707. (Espinoza, supra, 83 Cal.App.5th at p. 776.) 
16

The Court of Appeal in Gallo reached a similar conclusion 

in rejecting an FAA preemption challenge to sections 1281.97 and 

1281.98. In Gallo, the arbitration provider sent its invoice for 

initiation of arbitration to the defendant’s counsel, but the 

defendant’s counsel failed to pay the invoice within 30 days of its 

due date. (Gallo, supra, 81 Cal.App.5th at p. 631.) The trial 

court thereafter granted the plaintiff’s motion to vacate the 

pending arbitration pursuant to sections 1281.97 and 1281.98. 

(Id. at p. 632.) On appeal, the defendant argued that those 

statutes “frustrated the arbitral proceedings,” and thus were 

preempted by the FAA, because, among other things, there was 

no “showing that [the defendant] was to blame for the late 

payment or that plaintiff was prejudiced by it.” (Id. at p. 644.) In 

addressing this argument, Gallo explained that “section 1281.97 

declares any payment that exceeds the arbitration provider’s 

deadline and a statutorily granted 30-day grace period to be a 

The court noted that “[s]ection 1281.99 states that the court ‘shall

impose a monetary sanction’ in the event of a material breach

under section 1281.97 (§ 1281.99, subd. (a), italics added), but the 

court ‘may order’ additional nonmonetary sanctions ‘unless the 

court finds that the one subject to the sanction acted with 

substantial justification or that other circumstances make the 

imposition of the sanction unjust’ (id., subd. (b), italics added).” 

(Ibid.) “Given the Legislature’s express grant of discretion as to 

imposition of nonmonetary sanctions, we may presume the 

Legislature did not intend implicitly to grant that same 

discretion on the issues of material breach and imposition of 

monetary sanctions.” (Ibid.) Because these same provisions of 

section 1281.99, subdivisions (a) and (b) apply equally to a 

material breach under section 1281.98, we find this reasoning 

applicable here.
17

material breach as a matter of law.” (Ibid., italics omitted.) The 

court further explained that section 1281.97 “statutorily defines a 

material breach as a matter of law to be failure to pay anything 

less than the full amount due by the expiration of the statutory 

grace period, rather than leaving materiality as an issue of fact 

for the trier of fact to determine.” (Ibid.)

Because sections 1281.97 and 1281.98 share similar 

provisions, Espinoza and Gallo strengthen our conclusion that 

the trial court correctly construed section 1281.98 in determining 

that Juanita’s Foods materially breached the arbitration 

agreement. That conclusion follows from the plain language of 

the statute and Juanita’s Foods fails to explain otherwise.

11

11 In its reply brief and at oral argument, Juanita’s Foods 

argued that the phrase “fees or costs required to continue the 

arbitration proceeding” in section 1281.98, subdivision (a)(1) is 

ambiguous. It further contends that because JAMS was initially 

willing to proceed with scheduling an arbitration management 

conference despite Juanita’s Foods’s failure to pay outstanding 

fees by January 4, 2021, such fees were not “required to continue” 

the arbitration. We reject this argument for two reasons. First,

it was not clearly raised in Juanita’s Foods’s opening brief. (See 

Hernandez v. First Student, Inc. (2019) 37 Cal.App.5th 270, 277–

278; Provost v. Regents of University of California (2011) 201 

Cal.App.4th 1289, 1295 [“[W]e will not address arguments raised 

for the first time in the reply brief”].) Second, we do not find the 

phrase ambiguous. It refers to those fees and costs described in 

the preceding clause of section 1281.98, subdivision (a)(1), i.e., 

fees and costs imposed on a drafting party “during the pendency 

of an arbitration proceeding” required “either expressly or 

through application of state or federal law or the rules of the 

arbitration provider.” Juanita’s Foods does not dispute that 

JAMS set a due date of January 4, 2021, for its share of 
18

Nor does Juanita’s Foods direct our attention to any 

language in section 1281.98 that grants a trial court discretion to 

depart from the statute’s straightforward material breach rule. 

Instead, Juanita’s Foods maintains that the statute is “silent” 

regarding a trial court’s discretion to consider factors such as 

prejudice or delay caused by the late payment of required 

arbitration fees. In the face of that purported silence, Juanita’s 

Foods contends we should consider the public policy and

legislative history of section 1281.98 to determine its appropriate 

application here.

We disagree. That section 1281.98 says nothing regarding 

a trial court’s discretion to consider these additional factors 

reinforces our conclusion that the statute’s 30-day deadline

establishes a clear-cut rule for determining if a drafting party is 

in material breach of an arbitration agreement. (See Espinoza,

supra, 83 Cal.App.5th at p. 776 [concluding that because the 

Legislature granted trial courts discretion elsewhere in statutory 

scheme enacted by Senate Bill No. 707 “we may presume the 

Legislature did not intend implicitly to grant that same 

discretion on the issue[] of material breach.”].) Adopting 

Juanita’s Foods’s argument would thus be tantamount to rewriting section 1281.98 to create exceptions to the statutory 

definition of material breach where none exists. We lack that 

outstanding arbitration fees. Nor does Juanita’s Foods explain 

what such fees were for if not for the purpose “to continue the 

arbitration proceeding.” (See § 1281.98, subd. (a)(1).) We 

therefore conclude such fees were “required to continue the 

arbitration proceeding” within the meaning of section 1281.98, 

subdivision (a)(1), notwithstanding JAMS’s brief willingness to 

overlook Juanita’s Foods’s nonpayment.
19

power. (Abbott Laboratories v. Franchise Tax Bd. (2009) 175 

Cal.App.4th 1346, 1360 [“This court has no power to rewrite the 

statute to make it conform to a presumed intention which its 

terms do not express.”].)

If anything, in arguing a trial court should consider various 

factors in addition to a late payment to determine the existence of 

a drafting party’s material breach under section 1281.98, 

Juanita’s Foods turns the language of the statute on its head. As 

noted, Juanita’s Foods emphasizes that no prejudice occurred 

here in part because JAMS was initially willing to proceed with 

scheduling an arbitration management conference even though 

Juanita’s Foods had yet to pay the overdue fees. In rejecting this 

argument below, the trial court correctly observed that section 

1281.98 accounts for this circumstance already, not by identifying 

it as a mitigating factor to weigh in determining the existence of 

a material breach, but by permitting an employee or consumer to 

continue with arbitration notwithstanding a material breach: 

Under subsection (b)(2), if the “drafting party materially breaches 

the arbitration agreement and is in default under subdivision (a), 

the employee or consumer may unilaterally elect to . . . [c]ontinue 

the arbitration proceeding, if the arbitration provider agrees to 

continue administering the proceeding, notwithstanding the 

drafting party’s failure to pay fees or costs.” (§ 1281.98, subd. 

(b)(2), italics added.) Juanita’s Foods does not address, let alone 

reconcile, this inconsistency in its argument.

Because we reject Juanita’s Foods’s argument based on the 

plain language of section 1281.98, “we need go no further.” 

(Microsoft Corp. v. Franchise Tax Bd. (2006) 39 Cal.4th 750, 758.) 

Even so, we have reviewed the legislative history of Senate Bill 

No. 707, which added section 1281.98 to the CAA, and are 
20

unconvinced that the legislative history supports Juanita’s 

Foods’s interpretation of the statute. 

According to Juanita’s Foods, the intent of the California 

Legislature in passing Senate Bill No. 707 was to prevent the 

party that drafted an arbitration agreement from delaying 

arbitration proceedings through nonpayment or late payment of 

required fees. To be sure, the legislative findings in support of 

the law emphasize that a “company’s failure to pay the fees of an 

arbitration service provider in accordance with its obligations . . . 

hinders the efficient resolution of disputes and contravenes public 

policy,” and that a “company’s strategic non-payment of fees and 

costs severely prejudices the ability of employees or consumers to 

vindicate their rights,” a particularly unfair result “when the 

party failing or refusing to pay those fees and costs is the party 

that imposed the obligation to arbitrate disputes.”12 (Stats. 2019, 

ch. 870, §§ 1(c), (d).)

12 See also Senate Rules Committee, Office of Senate Floor 

Analyses, third reading analysis of Senate Bill No. 707 (2019–

2020 Reg. Sess.), as amended May 20, 2019, page 4 [“Recently, a 

concerning and troubling trend has arisen in arbitration: 

employers are refusing to pay required fees to initiate 

arbitration, effectively stymieing the ability of employees to 

assert their legal rights.”]; Senate Committee on Judiciary, 

Analysis of Senate Bill No. 707 (2019–2020 Reg. Sess.), as 

amended April 11, 2019, page 9 [describing concern of California 

Employment Lawyers Association, one of bill’s sponsors, that 

there is “a glaring loophole in this new era of mandatory 

arbitration: workers and consumers must submit to arbitration, 

while corporations may choose their forum by either submitting 

to arbitration or stalling the process back to court by refusing to 

pay fees.”].
21

But it does not follow from this legislative history that 

section 1281.98 allows a trial court to weigh factors in addition to

late payment—such as the degree of prejudice or delay caused by 

late payment—in determining the existence of a material breach 

under the statute. Quite the opposite, the legislative history 

indicates the California Legislature sought a clear and 

unambiguous rule for courts to apply in determining whether late 

payment of arbitration fees by a drafting party constituted a 

material breach of an arbitration agreement. (See Espinoza, 

supra, 83 Cal.App.5th at p. 777 [rejecting argument that reach of 

Senate Bill No. 707 was limited to circumstances involving 

strategic nonpayment of fees].) 

“The California Legislature had a good reason for declaring 

untimely payment a material breach as a matter of law rather 

than leaving materiality a question of fact in this context: 

Employees and consumers were facing either the complete denial 

of any relief or delays in obtaining relief by virtue of the 

‘ “perverse incentive” ’ companies and businesses had to push 

claims into arbitration and then to refuse to pay the resulting 

arbitration fees; in such circumstances and to combat those 

incentives, the Legislature reasoned, no breach was immaterial 

to the stranded employee or consumer.” (Gallo, supra, 81 

Cal.App.5th at p. 644, quoting Assem. Com. on Judiciary, 

Analysis of Sen. Bill No. 707 (2019–2020 Reg. Sess.) as amended 

May 20, 2019, p. 8.) Indeed, the California Legislature was 

concerned that “when the drafting party fail[ed] to properly pay 

for the arbitration, existing law [did] not provide the employee 

and customer with a clear means to redress their harms.”

(Assem. Com. on Judiciary, Analysis of Sen. Bill No. 707 (2019–

2020 Reg. Sess.), as amended May 20, 2019, p. 6.) That problem 
22

was fixed with the “material breach and sanction provisions” of 

the statute, which constitute a “strict yet reasonable method to 

ensure the timely adjudication of employee and consumer claims 

that are subject to arbitration.” (Id. at p. 9; see also Espinoza, 

supra, 83 Cal.App.5th at p. 777 [“Although strict application may 

in some cases impose costs on drafting parties for innocent 

mistakes, the Legislature could have concluded a bright-line rule 

is preferable to requiring the nondrafting party to incur further 

delay and expense establishing the nonpayment was intentional 

and prejudicial.”]) Applying section 1281.98’s material breach 

provisions in a straightforward fashion, as the trial court did 

here, is therefore consistent with the statute’s legislative 

purpose.

13

13 According to Juanita’s Foods, the “Legislature, in drafting 

Senate Bill 707, did not anticipate a defendant eager to arbitrate 

against a recalcitrant Respondent; instead, it worried about only 

the opposite.” We have doubts about whether this accurately 

describes the events here. For one thing, JAMS gave Juanita’s 

Foods ample notice regarding the deadline for the fees in 

question. If Juanita’s Foods was eager to arbitrate it would have 

paid those fees on time, or within 30 days of the due date, even if 

it was still resolving fee-sharing matters with Aerotek. 

Moreover, it does not appear that De Leon was recalcitrant. He 

submitted his arbitration claims to JAMS within a week of the 

trial court’s order compelling arbitration. Nor can he be blamed 

for quickly seeking to pursue his claims in court after Juanita’s 

Foods materially breached the arbitration agreement—he had a 

right to do so pursuant to section 1281.98, subdivision (b)(1).
23

In sum, we conclude the trial court did not err in ruling 

that Juanita’s Foods materially breached the arbitration 

agreement by its late payment of required arbitration fees.14

14 Juanita’s Foods’s remaining arguments lack merit. It 

complains that the trial court’s ruling will allow De Leon’s claims 

against Juanita’s Foods to proceed in court, while his similar 

claims against Aerotek will proceed in arbitration, resulting in 

duplicative effort and waste of judicial resources. Even if this 

were correct, it is not sufficient to overcome the plain language of 

section 1281.98, which, as we have already described, compelled 

the trial court’s ruling. Also, Juanita’s Foods overlooks the trial 

court’s order staying litigation against it pending the outcome of 

the arbitration proceedings against Aerotek. As the trial court 

found, that measure will minimize the potential for conflicting 

rulings on common issues of law or fact.

In its reply brief and in its supplemental brief addressing 

the impact of Espinoza on this case, Juanita’s Foods also argues

that only the arbitrator, not the trial court, had authority to 

determine whether Juanita’s Foods materially breached the 

arbitration agreement pursuant to section 1281.98. We do not 

address this argument, which was raised for the first time in the 

reply brief. (Gallo, supra, 81 Cal.App.5th at p. 646 [declining to 

address argument that “whether [party] ran afoul of section 

1281.97 was a question that should have been presented to the 

arbitrator, and not the trial court,” where, among other things, it 

was “not brought to our attention until the reply brief”]; see also

Hernandez v. First Student, Inc., supra, 37 Cal.App.5th at pp.

277–278; Provost v. Regents of University of California, supra,

201 Cal.App.4th at p. 1295.)
24

DISPOSITION

The order granting De Leon’s motion to vacate the order 

compelling arbitration as to Juanita’s Foods is affirmed. De Leon 

is entitled to his costs on appeal.

CERTIFIED FOR PUBLICATION

EDMON, P. J.

We concur:

EGERTON, J.

RICHARDSON (ANNE K.), J.*

*

 Judge of the Los Angeles Superior Court, assigned by the 

Chief Justice pursuant to article VI, section 6 of the California 

Constitution.