Filed 9/16/26 Nations v. SAS Retail Services, LLC CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
ROBERTA NATIONS,
Plaintiff and Respondent,
A170831
v.
SAS RETAIL SERVICES, LLC, (Contra Costa County
Super. Ct. No. C23-00122)
Defendant and Appellant.
Code of Civil Procedure section 1281.971 deems the nonpayment of
arbitration fees “within 30 days after the due date” a “material breach of the
arbitration agreement” in employment or consumer arbitrations and gives an
employee or consumer the choice to withdraw from arbitration and proceed in
court. Section 1281.99 further allows the employee or consumer to recover
attorneys’ fees and costs incurred because of the material breach. Plaintiff
and respondent Roberta Nations initiated arbitration but withdrew and filed
a complaint in the superior court after defendant and appellant SAS Retail
Services, LLC (SAS) failed to timely pay arbitration fees. SAS moved to
compel arbitration. Nations opposed and moved for attorneys’ fees and costs.
Because the then-governing authorities held that nonpayment could not be
excused, the court declined to compel arbitration and awarded Nations her
1 All statutory references are to the Code of Civil Procedure.
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fees and costs. (See, e.g., Espinoza v. Superior Court (2022) 83 Cal.App.5th
761, 775–778, disapproved by Hohenshelt v. Superior Court (2025) 18 Cal.5th
310, 349 (Hohenshelt).) While this appeal was pending, our high court held
that untimely payment of arbitration fees does not automatically result in
forfeiture of arbitral rights under section 1281.98. Instead, applying general
contract principles, the high court held that forfeiture requires an untimely
payment that is willful, grossly negligent, or fraudulent. (Hohenshelt, at p.
346.)
In light of Hohenshelt, we reverse the orders denying SAS’ motions to
compel arbitration and awarding Nations attorneys’ fees and costs. Because
the record does not allow us to determine, as a matter of law, whether SAS’
nonpayment was willful, grossly negligent, or fraudulent, we remand for
further proceedings so the trial court can make that determination in the
first instance.
I. BACKGROUND AND PROCEDURAL HISTORY
On January 18, 2023, Nations filed a representative wage and hour
action under the Private Attorneys General Act of 2004 (PAGA) in the
superior court. That same day, Nations filed a demand for arbitration with
Judicial Arbitration and Mediation Services (JAMS), alleging individual
wage and hour claims pursuant to the parties’ arbitration agreement. On
May 3, JAMS e-mailed SAS, through its counsel, a request for payment of the
arbitration fees, stating that “payment is due upon receipt,” with an attached
invoice dated May 2. On May 9, JAMS sent another request for payment
“due upon receipt” to SAS’ counsel, as well as her legal secretary, and
attached a copy of the invoice it sent on May 3. Counsel was out of the office
on vacation when JAMS sent the May 3 and May 9 correspondence but
returned on May 12.
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On June 8, 2023, SAS sent its payment of the arbitration fees by
regular mail to JAMS, which JAMS received and deposited on June 10, 2023.
Separately, on June 9, SAS’ counsel paid the fees by credit card. Meanwhile,
on June 8, Nations asked JAMS to “close out this matter [because she] has
elected to proceed in court pursuant to . . . section 1281.97, et seq.”
On June 8, 2023, Nations filed a separate civil action against SAS —
alleging individual wage and hour claims and a claim for breach of the
parties’ arbitration agreement — which the trial court ultimately
consolidated with Nations’ PAGA action. Nations also filed a motion for
attorneys’ fees and costs pursuant to sections 1281.97 and 1281.99. SAS
countered by filing two separate motions to compel arbitration and stay
proceedings, the second apparently duplicative of the first.
The trial court denied SAS’ motions to compel because its arbitration
fee payment was untimely and because relief from section 1281.97 was not
available “under a theory of mistake or inadvertent non-compliance.” The
court made findings as to the events that occurred preceding Nations’
withdrawal from arbitration but made no factual findings determinative of
the nature of SAS’ late payment (be it a mistake, grossly negligent, or
intentional). The court also awarded Nations attorneys’ fees and costs under
sections 1281.97 and 1281.99, in the amount of $10,359.26 ($9,950 in fees and
$409.26 in costs). SAS timely appealed the trial court’s orders denying its
motions and granting Nations’ motion.
II. DISCUSSION
While this appeal was pending, the California Supreme Court in
Hohenshelt held that the untimely payment of arbitration fees does not
automatically result in the loss of arbitration rights under section 1281.98.
Instead, the court held that section 1281.98 requires nonperformance that is
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willful, grossly negligent, or fraudulent. (Hohenshelt, supra, 18 Cal.5th at p.
346.) Both parties agree that Hohenshelt requires reversal of the trial court’s
orders.2 They, however, disagree over whether a remand to determine
whether SAS’ untimely payment was willful, grossly negligent, or fraudulent
is necessary. We conclude that a remand so the trial court can make this
determination is appropriate here.
SAS contends that it did not forfeit its right to arbitrate under
Hohenshelt because it “reasonably believed” that the May 9, 2023
correspondence from JAMS triggered the 30-day payment period, making its
June 8 payment timely. SAS further argues that, even if its payment was
late by one week, its failure to comply with section 1281.97 was a good faith
mistake and cannot, as a matter of law, be willful, grossly negligent or
fraudulent. Nations counters that SAS’ conduct was at least grossly
negligent. According to Nations, the multiple notices received by SAS, SAS’
almost four-week delay in making the payment after counsel’s return from
vacation, the failures of SAS’ counsel to make timely payments in the past,
and the simple nature of the payment obligation establish gross negligence.
Because the trial court did not make the factual findings necessary to
determine whether SAS’ untimely payment was a good faith mistake or
amounted to gross negligence under Hohenshelt, we decline to decide this
issue here. In doing so, we note that Wilson v. TAP Worldwide, LLC (2025)
114 Cal.App.5th 1077 is distinguishable. There, the trial court made factual
findings concerning the late payment that allowed the Court of Appeal to
determine whether the late payment was willful, grossly negligent, or
2 While Hohenshelt interpreted section 1281.98, we agree with Nations
that “[t]he same interpretive framework governs” section 1281.97. SAS also
appears to agree that Hohenshelt’s holding applies to section 1281.97.
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fraudulent. (Id. at pp. 1089–1090 [the trial court’s factual findings
established that the late payment was caused by a “processing delay” and
was not “strategic, willful, grossly negligent, or fraudulent”].) The same is
not true here. Accordingly, we remand so the trial court can determine in the
first instance whether SAS’ late payment was willful, grossly negligent, or
fraudulent under Hohenshelt. In doing so, we express no opinion as to what
that determination should be.
III. DISPOSITION
The orders denying SAS’ motion to compel arbitration and granting
Nations’ motion for attorneys’ fees and costs are reversed, and the matter is
remanded for further proceedings consistent with this opinion.
CHOU, J.
WE CONCUR.
JACKSON, P. J.
BURNS, J.
A170831/ Nations v. SAS Retail
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