Filed 7/30/26 Tseng v. Hydrafacial CA2/1
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
JULIE TSENG, B344412
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 23STCV15192)
v.
HYDRAFACIAL, LLC et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los
Angeles County, Steve Cochran, Judge. Reversed.
CDF Labor Law, Todd R. Wulffson, Ashley A. Halberda,
Alessandra C. Whipple, Osaama Saifi and Jefferson Cha for
Defendants and Appellants.
Law Offices of G. Samuel Cleaver and G. Samuel Cleaver
for Plaintiff and Respondent.
_________________________
INTRODUCTION
Defendants Hydrafacial, LLC, Edge Systems Corporation,
and The Beauty Health Company (collectively, Hydrafacial),
along with Peter Kim, appeal the trial court’s order granting
plaintiff Julie Tseng’s motion to vacate a prior order compelling
Tseng’s claims against them to arbitration. The trial court
granted the motion pursuant to Code of Civil Procedure1 section
1281.98 for Hydrafacial’s failure to pay arbitration fees by the
deadline imposed by the statute.
After the trial court ruled, our Supreme Court issued
Hohenshelt v. Superior Court (2025) 18 Cal.5th 310 (Hohenshelt),
which interpreted section 1281.98 to allow a party’s breach of the
payment requirement to be excused under equitable principles.
Appellants contend Hydrafacial’s breach, which involved a
payment that was late by three business days and did not impact
the on-going arbitration proceeding, should be excused under
Hohenshelt.
We agree and reverse.
SECTION 1281.98 AND HOHENSHELT
Section 1281.98 is a provision in the California Arbitration
Act (CAA; § 1280 et seq.) “that governs the payment of fees in
employment and consumer arbitrations . . . [and] establishes a
default rule that when the party who drafted an arbitration
agreement is responsible for paying fees and costs to an
arbitrator, that party must pay an arbitrator’s invoice ‘within 30
days after the due date’ (§ 1281.98, subd. (a)(1)), and ‘the
1 Unspecified statutory references are to the Code of Civil
Procedure.
2
arbitration provider shall issue all invoices to the parties as due
upon receipt’ (id., subd. (a)(2)). The parties may contract around
the default rule by specifying in their agreement ‘the number of
days in which the parties to the arbitration must pay any
required fees or costs’ or by agreeing to an ‘extension of time for
the due date.’ (Ibid.) If the drafting party fails to make timely
payment, it ‘waives its right to compel the employee or consumer
to proceed with that arbitration’ (id., subd. (a)(1)), and the
employee or consumer may choose to ‘[w]ithdraw the claim from
arbitration’ and proceed in court (id., subd. (b)(1)) or ‘[c]ontinue
the arbitration’ if the arbitrator agrees (id., subd. (b)(2)).”2
(Hohenshelt, supra, 18 Cal.5th at p. 322.)
The issue in Hohenshelt was “whether the Federal
Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) preempts” section
1281.98. (Hohenshelt, supra, 18 Cal.5th at p. 322.) Under
2 Under section 1281.99, if “[the] drafting party . . .
materially breaches an arbitration agreement pursuant to . . .
subdivision (a) of [s]ection 1281.98,” the court “shall . . . order[
that] party to pay the reasonable expenses, including attorney’s
fees and costs, incurred by the employee or consumer as a result
of the material breach,” and “may order” an evidence,
terminating or contempt sanction against that party “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.” (§ 1281.99, subds. (a), (b).) In
addition, “If the employee or consumer withdraws the claim from
arbitration and proceeds in . . . court . . . [¶] (1) [they] may bring a
motion, or a separate action, to recover all attorney’s fees and all
costs associated with the abandoned arbitration proceeding[, and]
. . . [¶] (2) [t]he court shall impose sanctions on the drafting party
in accordance with [s]ection 1281.99.” (§ 1281.98, subd. (c)(1),
(2).)
3
section 2 of the FAA, a written arbitration agreement is “valid,
irrevocable, and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract.” (9 U.S.C. § 2.)
“This provision establishes ‘ “an equal-treatment principle: A
court may invalidate an arbitration agreement based on
‘generally applicable contract defenses’ . . . but not on legal rules
that ‘apply only to arbitration or that derive their meaning from
the fact that an agreement to arbitrate is at issue.’ ” ’ ”
(Hohenshelt, at p. 341.) A key argument for preemption was
“that outside of section 1281.98, the question of whether a party
has materially breached or substantially performed its
contractual obligations is subject to case-by-case factual
determination . . . [whereas section 1281.98] uniquely penalizes
trivial delays in performance.” (Hohenshelt, at p. 343.)
The court began its analysis by construing section 1281.98.
Courts of Appeal had previously interpreted the statute to
“impose[] an inflexible rule that deems any failure to make timely
payment a material breach, regardless of circumstances, with the
automatic consequence that the drafting party loses its arbitral
rights.” (Hohenshelt, supra, 18 Cal.5th at p. 331.) The court
“reject[ed] that rigid construction and instead conclude[d] that
the statute does not abrogate the long-standing principle,
established by statute and common law, that one party’s
nonperformance of an obligation automatically extinguishes the
other party’s contractual duties only when nonperformance is
willful, grossly negligent, or fraudulent.” (Id. at p. 323.) As an
example of this “long-standing principle,” the court cited Civil
Code section 3275, which “excuses a failure to perform an
‘obligation’ ” if the breaching party “ ‘mak[es] full compensation
to the other party, except in case of a grossly negligent, willful, or
4
fraudulent breach of duty.’ ” (Hohenshelt, at pp. 332, 333,
quoting Civ. Code, § 3275.) The court also indicated that section
473, subdivision (b) was a “path by which a drafting party that
does not timely pay fees can be relieved from forfeiting its right to
arbitration.” (Hohenshelt, at pp. 334-335.) Under this statute, a
court may relieve a party from an order under section 1281.98
that an employee or consumer is entitled to withdraw from
arbitration where the order resulted from the party’s “ ‘mistake,
inadvertence, surprise, or excusable neglect.’ ” (Hohenshelt, at
p. 334, quoting § 473, subd. (b).)
The court ultimately concluded that “section 1281.98,
properly construed, is not preempted by the FAA.” (Hohenshelt,
supra, 18 Cal.5th at p. 323.) The court stated, “We agree that if
section 1281.98 were construed to mean that any failure to make
timely payment, regardless of the circumstances, invariably
results in forfeiture of arbitral rights, the statute would be
anomalous in the context of general contract law principles. As
we have explained, however, a drafting party can avoid forfeiture
of its right to arbitration by showing that the delay was excusable
under . . . the background principles that generally apply to other
contractual obligations.” (Hohenshelt, at p. 343.)
FACTUAL AND PROCEDURAL BACKGROUND
A. The Parties and the Arbitration Agreement
Tseng alleges she worked for Hydrafacial and that she
reported to Kim.
In connection with her employment, Tseng entered an
arbitration agreement with Hydrafacial. Under the agreement,
Hydrafacial was required to “pay the arbitrator’s fees and
arbitration expenses.”
5
B. Tseng Sues Appellants and the Parties Stipulate to
Arbitrate
On June 29, 2023, Tseng sued Hydrafacial and Kim
asserting various claims related to her employment.
On August 11, 2023, the parties executed a joint stipulation
to arbitrate Tseng’s claims pursuant to their arbitration
agreement. On August 15, 2023, the trial court entered an order
on the stipulation, compelling the parties to arbitrate; the court
dismissed Tseng’s complaint without prejudice.
C. Tseng Initiates Arbitration, an Arbitration Hearing
is Scheduled, and the Arbitrator Issues an Invoice
which Hydrafacial Pays Five Days Past the Section
1281.98 Deadline
On August 22, 2023, Tseng filed a demand for arbitration
with JAMS, Inc. (JAMS).
On September 8, 2023, Hydrafacial timely paid JAMS a
retainer invoice for $1,600. On October 11, 2023, Hydrafacial
timely paid a second retainer invoice for $7,500.
The arbitration hearing was scheduled for January 27,
2025.
On September 30, 2024, JAMS issued a retainer invoice in
the amount of $92,800 for the anticipated work of the arbitrator
and a research attorney. The invoice was addressed as payable
by Hydrafacial’s counsel and not Hydrafacial itself. The invoice
was due upon receipt, meaning the deadline to pay for purposes
of section 1281.98 was October 30, 2024.
Also on September 30, 2024, the parties executed and
submitted to the arbitrator a joint stipulation to continue the
arbitration hearing to a date in May 2025. The reason for the
6
continuance was to allow time for Tseng to conduct further
discovery.
On October 10, 2024, counsel for Hydrafacial e-mailed
JAMS staff to request they “withdraw” the $92,800 invoice in
light of the parties’ stipulation to continue the hearing or,
alternatively, “continue [the] invoice until the [a]rbitrator has
ruled on [the requested continuance].” On October 14, 2024,
JAMS staff responded: “Yes, after your call with [the arbitrator]
and new [a]rbitration dates are scheduled, our billing department
will continue the [r]etainer to coincide with the new [a]rbitration
dates.” Tseng’s counsel was not copied on this correspondence.
On October 15, 2024, the parties participated in a
conference with the arbitrator, at which they discussed the
requested continuance. The arbitrator indicated that she was not
available in May 2025 and that the only other possible time that
might work for all involved and was not too far into the future
was in the second half of February 2025. The arbitrator proposed
to put a “hold” on those dates and counsel would inform her at a
call scheduled for October 24, 2024, whether the dates would
work.
The following day, Hydrafacial’s counsel e-mailed JAMS
requesting confirmation that the $92,800 invoice “[was then]
stayed as it relates to its payment deadline until there is a
confirmation regarding the arbitration date.” JAMS staff replied,
“Yes, you are correct, the pending invoice is currently stayed as it
relates to its payment deadline until there is a confirmation
regarding the arbitration date. The current deadline is
December 13th.” Tseng’s counsel was not copied on this
correspondence.
7
On October 24, 2024, the parties participated in a
conference with the arbitrator, during which the arbitrator
indicated that the arbitration hearing would not be continued
after all. The arbitrator ruled that Tseng would be allowed to
depose three individuals and a person most qualified from
appellants but denied five other depositions Tseng had requested.
On October 25, 2024, JAMS sent an e-mail to the parties
attaching the September 30, 2024 invoice for $92,800, and
stating, “This is a friendly reminder that the attached [r]etainer
for [a]rbitration fees is due on receipt. The last day to continue or
cancel the above mentioned [a]rbitration without forfeiting fees is
December 13, 2024.” Minutes later, Hydrafacial’s counsel replied
to JAMS’s October 16, 2024 e-mail asking for confirmation that
“the invoice [was not] due until December 13th.” JAMS staff
replied, “Correct. The invoice is due upon receipt and the last
day to continue or cancel the above-mentioned [a]rbitration
without forfeiting fees is December 13, 2024.” Tseng’s counsel
was not copied on this correspondence.
On October 28, 2024, Hydrafacial’s counsel sent an e-mail
to JAMS staff stating, “Would you please re-issue the invoice and
have it directed to . . . HydraFacial. Our client is attempting to
pay but they are not able to do so in the system since the invoice
is not directed to them.” About an hour later, JAMS staff
responded, “Kindly forward a contact name for HydraFacial with
email address and mailing address. Once received, we can
generate a new [r]etainer.” About an hour after that, counsel
provided the requested contact information. The next morning,
JAMS staff e-mailed Hydrafacial’s counsel stating, “Received,
thank you. A revised [r]etainer will be sent out as soon as
possible.” At 5:05 a.m. the following morning, October 30, 2024,
8
JAMS e-mailed to the parties another “[r]etainer” invoice for
$92,800 which was identical to the September 30 invoice except it
was addressed to Hydrafacial, was dated October 30, 2024, and
had a new invoice number. At 11:45 a.m., Tseng’s counsel
responded by e-mail stating, “[Tseng] does not agree to the
reissue of the invoice/extension of the due date.” Later that day,
JAMS sent a letter to the parties with the new invoice; the letter
stated, “JAMS has received a request to reissue the invoice dated
[September ]30[, ]2024. Enclosed is an invoice responsive to the
request. Consistent with . . . [s]ections 1281.97-1281.87 the
invoice dated [September ]30[, ]2024 was due upon receipt. The
enclosed invoice is not intended to and does not extend the due
date for payment of the [September ]30[, ]2024 invoice.”
On October 30, 2024, Hydrafacial paid a separate JAMS
invoice in the amount of $5,169.37. Tseng makes no claim this
payment was untimely.
On November 4, 2024, Tseng’s counsel e-mailed JAMS,
with a copy to Hydrafacial’s counsel, to inquire whether
Hydrafacial had paid the $92,800 invoice and, if so, when it had
made the payment. Minutes later, Hydrafacial’s counsel
responded, “A revised invoice was issued on October 30, 2024, as
such payment is not due.” Tseng’s counsel e-mailed again, asking
JAMS staff to respond and asking Hydrafacial’s counsel to
confirm the invoice had not been paid. Just over three hours
later, JAMS staff replied indicating that its “billing department
posted [Hydrafacial’s] payment to their account today.”
9
D. Tseng Moves to Vacate the Trial Court’s Order
Compelling Arbitration on the Ground Appellants
Failed to Timely Pay the Arbitration Fees
On November 8, 2024, Tseng filed a motion pursuant to
section 1281.98 to set aside the dismissal of her action and vacate
the order compelling arbitration. Tseng adduced evidence that
JAMS sent its invoice for $92,800 on September 30, 2024, and
Hydrafacial failed to pay within 30 days as required by section
1281.98. Tseng contended that application of section 1281.98 was
not discretionary and there were no exceptions, such as “for
inadvertence, error, or neglect.” Citing multiple cases, she
further contended “[t]he Courts of Appeal have consistently ruled
that [section] 1281.98 . . . must be strictly applied, without
exception or excuse for clerical error, inadvertence, neglect, or a
lack of prejudice to the employee.” Tseng also contended that she
did not agree to extend the payment due date. Tseng indicated
she would bring a separate motion to recover her attorney’s fees
and costs “incurred as a result of the abandoned arbitration
hearing.”
E. Hydrafacial and Kim Oppose the Motion
Hydrafacial and Kim opposed the motion, contending that
Tseng had agreed to extend the due date for payment of the
JAMS invoice in the parties’ stipulation to continue the
arbitration hearing date, which sought a continuance of the
hearing “ ‘and arbitration related deadlines.’ ” Hydrafacial and
Kim adduced evidence, summarized above, of the parties’
stipulation to continue the arbitration hearing, JAMS’s
confirmation that the invoice was “ ‘stayed . . . until there [was] a
confirmation regarding the arbitration date,’ ” JAMS’s issuance of
a revised invoice on October 30, 2024, and Hydrafacial’s payment
10
of the invoice on November 4, 2024. They also argued, in the
alternative, that the FAA preempted section 1281.98. They
pointed out that the Supreme Court had accepted review in
Hohenshelt on the preemption issue. Lastly, Hydrafacial and
Kim contended that the parties’ arbitration agreement provided
that the FAA’s procedural rules would govern instead of the
CAA’s procedural rules, including section 1281.98.
In reply, Tseng contended that in their stipulation to
continue the arbitration hearing the parties only agreed to
continue four specific deadlines referenced in the stipulation,
which did not include the due date for payment of the arbitrator’s
invoice. Tseng also pointed out that the arbitrator had rejected
the requested continuance and that JAMS had clarified on
October 30, 2024 that payment was due based on the date the
invoice was initially issued, September 30, 2024. In addition,
Tseng contended that the FAA did not preempt section 1281.98
and the parties’ arbitration agreement did not provide the FAA
would govern to the exclusion of California law such as section
1281.98.
F. The Trial Court Grants Tseng’s Motion to Return the
Claims to Court
On January 23, 2025, the court granted Tseng’s motion,
concluding Tseng had not agreed to extend the payment due date,
so payment of the invoice was due by October 30, 2024, and
Hydrafacial was “a few days late, having paid it a few days into
November.” The court stated, “These payment deadlines are
rather strictly enforced. So the motion to set aside and vacate
the dismissal is granted.”
Hydrafacial and Kim timely appealed the trial court’s
order, which is appealable under section 1294, subdivision (a).
11
(Cvejic v. Skyview Capital, LLC (2023) 92 Cal.App.5th 1073,
1077).
DISCUSSION
A. Standard of Review
In deciding whether to compel arbitration, “the trial court
sits as a trier of fact, weighing all the affidavits, declarations, and
other documentary evidence, as well as oral testimony received at
the court’s discretion, to reach a final determination.” (Engalla v.
Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)
“If the superior court’s decision regarding arbitrability is
based on resolution of disputed facts, we review the decision for
substantial evidence.” (Baker v. Italian Maple Holdings, LLC
(2017) 13 Cal.App.5th 1152, 1158.) In such a case “ ‘[w]e must
accept the trial court’s resolution of disputed facts when
supported by substantial evidence; we must presume the court
found every fact and drew every permissible inference necessary
to support its judgment, and defer to its determination of
credibility of the witnesses and the weight of the evidence.’ ”
(Engineers & Architects Assn. v. Community Development Dept.
(1994) 30 Cal.App.4th 644, 653.) But “ ‘where the trial court’s
denial of a petition to arbitrate presents a pure question of law,
we review the order de novo.’ ” (Mendez v. Mid-Wilshire Health
Care Center (2013) 220 Cal.App.4th 534, 541.) Similarly, in
reviewing a question of law involving contract interpretation with
no extrinsic evidence, we apply a de novo standard of review.
(Valencia v. Smyth (2010) 185 Cal.App.4th 153, 161-162.)
12
B. The FAA’s Procedural Rules Do Not Apply to the
Exclusion of Section 1281.98
Appellants initially contend that section 1281.98 does not
apply at all here. They claim the parties agreed that the FAA’s
procedural rules would apply to the exclusion of the CAA’s rules,
including section 1281.98. We disagree.
The key provision in the arbitration agreement states that
claims subject to the agreement “shall be submitted to and
determined exclusively by final, binding, private arbitration
pursuant to the terms of this [a]greement, the [FAA], and all
other applicable federal and state laws (to the extent not
preempted by the FAA).” (Italics added.) This provision states
that “state laws” apply to the arbitration “to the extent not
preempted by the FAA.” This clearly includes section 1281.98,
which the Hohenshelt court concluded is not preempted by the
FAA.
Appellants also ignore that, in accord with the arbitration
agreement’s reference to state law, the parties agreed in their
joint stipulation to compel arbitration that California law would
govern the payment of the arbitration fees and costs. The
relevant provision states, “Pursuant to the terms of the [p]arties’
[a]rbitration [a]greement, [Hydrafacial and Kim] will pay the fees
and costs of arbitration as required by California law, and such
fees and costs shall be paid in accordance with applicable
California law.”3
3 Appellants also cite a provision in the “JAMS
Employment Arbitration Rules & Procedures” attached to the
arbitration agreement. This provision governs “[p]roceedings to
enforce, confirm, modify or vacate” an arbitration award, not
13
C. Appellants Have Not Forfeited Their Excuse Claim
Tseng contends appellants have forfeited their claim that
Hydrafacial’s breach of section 1281.98 should be excused under
equitable principles because they did not present such an
argument to the trial court. Tseng relies on the general principle
that “issues not raised in the trial court cannot be raised for the
first time on appeal.” (Wisner v. Dignity Health (2022) 85
Cal.App.5th 35, 44.) As our Supreme Court has explained,
“ ‘ “ ‘ “No procedural principle is more familiar to this Court than
that a constitutional right,” or a right of any other sort, “may be
forfeited in criminal as well as civil cases by the failure to make
timely assertion of the right before a tribunal having jurisdiction
to determine it.” ’ ” ’ ” (Keener v. Jeld-Wen, Inc. (2009) 46 Cal.4th
247, 264.)
“There is an exception, however, in cases where a new point
of law is decided after the trial[.]” (In re Marriage of Moshcetta
(1994) 25 Cal.App.4th 1218, 1227; see Fisher v. City of Berkeley
(1984) 37 Cal.3d 644, 654, fn. 3 [“It is well settled that a court
will consider on appeal a new point of law decided while the
appeal is pending”].) “ ‘A court may refuse to follow the doctrine
[of not hearing new arguments on appeal] where, after trial,
there is a change in judicially declared law which validates a
theory that would have been rejected if presented under the case
law as it existed at the time of trial.’ ” (In re Marriage of
whether a dispute should be compelled to arbitration, and has no
relevance to appellants’ preemption claim. Even if it had some
relevance, the provision states that the proceedings are governed
by “the [FAA] . . . or applicable state law” (italics added), and
appellants misleadingly quote the provision to omit the reference
to “applicable state law.”
14
Moshcetta, at p. 1227, fn. 12; see Guardianship of Stephen G.
(1995) 40 Cal.App.4th 1418, 1422-1423 [“Courts have often
entertained new arguments on appeal when they rest on new
authority that the appellant could not fairly be expected to
anticipate”; citing cases].) “Ultimately . . .—and within the
bounds of due process—application of the rule is discretionary
with the reviewing court.” (In re Marriage of Moshcetta, at
p. 1227.)
We apply this exception here because at the time the trial
court decided Tseng’s section 1281.98 motion Hohenshelt had not
yet been decided. At the time the trial court decided the motion,
every Court of Appeal which had addressed whether a breach of
the timely payment requirement under section 1281.98 or the
analogous requirement under section 1281.97 (applicable to fees
and costs “to initiate an arbitration proceeding”) could be excused
on equitable grounds had rejected such a theory. (See, e.g.,
Williams v. West Coast Hospitals, Inc., (2022) 86 Cal.App.5th
1054, 1074; De Leon v. Juanita’s Foods (2022) 85 Cal.App.5th
740, 752-753; Espinoza v. Superior Court (2022) 83 Cal.App.5th
761, 775-778; Gallo v. Wood Ranch USA Inc. (2022) 81
Cal.App.5th 621, 644.4)
We decline to penalize appellants’ counsel for failing to
foresee that the Hohenshelt court would overturn the
interpretation of section 1281.98 consistently adopted by the
Courts of Appeal and thereby avoid preemption concerns.
Although counsel was aware that the law regarding section
1281.98 might change because the Supreme Court had accepted
4 All of these cases are disapproved in Hohenshelt, supra,
18 Cal.5th at p. 349.
15
review in Hohenshelt, the court had declared only that it had
accepted review to decide whether section 1281.98 was
preempted by the FAA and, as appellants point out, they did
raise such a preemption argument to the trial court.5
D. Hydrafacial’s Breach Was Excusable
Under Hohenshelt, “a drafting party cannot avoid
discharging the other party’s contractual duty to proceed in
arbitration if it willfully withholds fees necessary to move
arbitration forward. Conversely, if the drafting party acted in
good faith, it may seek relief under [section 473, subdivision (b)
or Civil Code sections 1511 or 3275], and its claim should be
evaluated under the usual principles in law and equity governing
relief from forfeiture or default, including whether the other
party has been prejudiced.” (Hohenshelt, supra, 18 Cal.5th at
p. 344.) The court cited with approval five factors articulated by
the Court of Appeal in Magic Carpet Ride LLC v. Rugger
Investment Group, L.L.C. (2019) 41 Cal.App.5th 357, 365 as
relevant to the determination whether a party has substantially
complied with a contractual obligation: “ ‘(1) “the extent to which
the injured party will be deprived of the benefit which he
reasonably expected”; (2) “the extent to which the injured party
can be adequately compensated for the part of that benefit of
5 Tseng also contends that, after Hohenshelt was decided,
appellants should have sought reconsideration of the trial court’s
ruling under section 1008, subdivision (c), which permits
reconsideration based on a “change of law.” This argument fails
because Hohenshelt was decided many months after the court’s
order, and subdivision (c) only permits the court to reconsider its
prior order at such a late date based on a change in the law; it
does not provide parties with the ability to seek such relief.
16
which he will be deprived”; (3) “the extent to which the party
failing to perform or to offer to perform will suffer forfeiture”;
(4) “the likelihood that the party failing to perform or to offer to
perform will cure his failure, taking account of all the
circumstances including any reasonable assurances”; and (5) “the
extent to which the behavior of the party failing to perform or to
offer to perform comports with standards of good faith and fair
dealing.” ’ ” (Hohenshelt, at p. 344.)
The undisputed evidence already in the record establishes,
as a matter of law, that appellants are entitled to relief under
Civil Code section 3275 and the foregoing principles. (See Wilson
v. TAP Worldwide, LLC (2025) 114 Cal.App.5th 1077, 1090
[concluding as a matter of law that “[the] defendant’s untimely
payment was [not] strategic, willful, grossly negligent, or
fraudulent, the prerequisites for forfeiture of arbitral rights and
abandonment of the arbitration as interpreted in Hohenshelt”].)6
When the arbitrator’s invoice was originally issued on
September 30, 2024, Hydrafacial, Kim, and their counsel
reasonably assumed that the payment date was going to change
6 Tseng contends we should presume the trial court found
that appellants were not entitled to equitable relief. (See
Denham v. Superior Court (1970) 2 Cal.3d 557, 564 [a trial court’s
order “ ‘is presumed correct,’ ” and “ ‘[a]ll intendments and
presumptions are indulged to support it on matters as to which
the record is silent’ ”].) Such a presumption is not warranted
here because appellants did not argue for equitable relief as
Hohenshelt had not yet been decided. Furthermore, at the
hearing the trial court expressed its understanding that “[t]hese
payment deadlines are rather strictly enforced,” indicating it
understood it did not have discretion to excuse Hydrafacial’s
breach on equitable grounds.
17
because the parties were requesting a continuance of the
arbitration hearing. At a conference to discuss the requested
continuance, the arbitrator indicated she would be willing to
grant a continuance of about a month. JAMS then confirmed to
appellants’ counsel that it issued the invoice based on the
existing arbitration hearing date and would “continue the
[invoice] to coincide with the new [hearing date].”7 It was not
until October 24, 2024, six days before the deadline to pay under
section 1281.98, that the arbitrator decided not to grant any
continuance. At that point, Hydrafacial began the process of
paying the invoice, encountered difficulty in making payment
because the invoice was payable by its counsel instead of
Hydrafacial, and then requested JAMS to reissue the invoice to
show its name as opposed to its attorneys. Although counsel had
received the invoice more than three weeks before and arguably
should have realized earlier that there might be a problem with
the format of the invoice, the failure to request a revised invoice
earlier was not the product of gross negligence, willfulness, or
fraud as opposed to a simple mistake that was not recognized
until Hydrafacial attempted to pay the invoice as is and
encountered difficulty doing so. JAMS reissued the invoice two
7 The trial court found that Tseng did not agree to extend
the payment deadline by stipulating to continue the arbitration
hearing. We concur with Tseng that this finding is supported by
substantial evidence. But even though Tseng herself did not
agree to extend the payment deadline, appellants reasonably
believed based on correspondence from the JAMS administrator
that JAMS would withdraw the invoice in the event the
arbitration hearing was continued and reissue it later based on
the new hearing date, resulting in a new due date.
18
days after Hydrafacial’s request to correct it on October 30, 2024,
the date payment was due. Hydrafacial paid the invoice five
calendar days (and three business days) after that, on November
4, 2024, without any disruption to the arbitration proceeding.
Tseng contends that Hydrafacial acted willfully because it
“knew for certain by the October 30, 2024 deadline, that the
deadline had not been extended.” She further contends that on
remand she might be able to adduce evidence that Hydrafacial
had the ability to pay the invoice that day and intentionally chose
not to do so. Even assuming appellants’ counsel understood that
Hydrafacial’s deadline to pay the invoice in compliance with
section 1281.98 was October 30, and Hydrafacial had the ability
to pay that day, there is no evidence that Hydrafacial’s failure to
pay until November 4 was “willful” in a manner precluding
equitable relief because nothing suggested Hydrafacial was
attempting to undermine the arbitration proceeding. In
Hohenshelt, the court held that equitable relief was unavailable
where “[the] drafting party . . . willfully withholds fees necessary
to move arbitration forward.” (Hohenshelt, supra, 18 Cal.5th at
p. 344, italics added.) The court also concluded that in enacting
section 1281.98 “the Legislature was concerned about cases
where willful nonpayment of fees by a defendant stymies the
ability of employees and consumers to have their claims resolved
in arbitration pursuant to a predispute arbitration agreement.”
(Hohenshelt, at p. 337.) Nothing suggests Hydrafacial acted with
any intention to disrupt the arbitration, and the delay in
payment had no impact on the progress of the arbitration.
Furthermore, as appellants point out, they had actively
participated in the arbitration up to that point and already paid
three prior arbitration invoices.
19
Application of the factors articulated in Magic Carpet
confirms that appellants are entitled to equitable relief here. As
to the first and second factors, Tseng was not deprived of any
“ ‘ “benefit which [she] reasonably expected.” ’ ” (Hohenshelt,
supra, 18 Cal.5th at p. 344.) Tseng expected to be benefited by
Hydrafacial paying for the arbitration and Tseng received that
benefit when Hydrafacial made the payment and JAMS accepted
it. In other words, Tseng was not prejudiced by Hydrafacial’s
delay in payment.8 As to the third factor, Hydrafacial “ ‘ “will
8 Tseng contends she was prejudiced because “[s]ome
degree of prejudice is assumed for a violation of section 1281.98
because any breach is a material breach of [a] time is of the
essence contract.” We are not persuaded. Tseng relies on a
passage from Hohenshelt where the court referred to the
Legislature’s “conclu[sion] that late payment and the resulting
delay in vindicating [the] plaintiffs’ rights can cause
nonpecuniary harm in the form of ‘extreme hardship’ due to loss
of ‘livelihood.’ ” (Hohenshelt, supra, 18 Cal.5th at p. 343, italics
added.) Such harm did not occur here because there was no delay
in the arbitration.
Tseng also contends she “had to expend time and resources
remaining vigilant to make sure JAMS maintained the payment
deadline, including identifying the misdated October 30 invoice
and objecting. She also had to expend attorney time meeting and
conferring with Hydrafacial about their failure to timely pay
invoices. And she had to expend the time and resources to draft,
file, and argue her motion to return the case to the [s]uperior
[c]ourt.” We disagree that Tseng was prejudiced under the facts
here simply because she decided to invoke section 1281.98 in an
effort to have her case returned to court. Furthermore, even if
Tseng was required to monitor the situation because Hydrafacial
delayed in paying, she could be “ ‘adequately compensated’ ”
20
suffer forfeiture” ’ ” (ibid.) of its contractual arbitration rights
unless it is granted equitable relief. As to the fourth factor,
Hydrafacial had “ ‘ “cure[d] [its] failure” ’ ” (ibid.) by making
payment on November 4, 2024, before Tseng halted the
arbitration. As to the fifth and final factor—whether
Hydrafacial’s “ ‘ “behavior . . . comport[ed] with standards of good
faith and fair dealing,” ’ ”—there is no evidence that Hydrafacial
took any action to derail the arbitration. Although its counsel
initially espoused the questionable position that the payment
date had been extended by the revised invoice, Hydrafacial did
not insist on that position and instead paid the invoice later the
same day.
Tseng contends that Hydrafacial acted “willfully” in
delaying payment because its counsel argued at the hearing on
Tseng’s motion, “It does not make sense to make a $92,000
payment for an arbitration that has been moved out many, many
months.” But as already noted, willfulness in this context relates
to conduct intended to deny an employee’s ability to pursue relief
through arbitration. At most, counsel’s statement indicated that
Hydrafacial did not want to pay the arbitration expenses any
earlier than it had to, which makes sense from an economic
standpoint. Tseng did not adduce any evidence or identify any
facts she could develop on remand that (when weighed with the
evidence already in the record) could show Hydrafacial intended
to avoid its payment obligation or engaged in conduct which
(Hohenshelt, supra, 18 Cal.5th at p. 344) for any expenses
incurred to do so, and nothing in this opinion prevents her from
seeking such compensation.
21
might have led the arbitrator to interrupt or halt the arbitration
proceeding.
Tseng lastly contends that appellants cannot obtain relief
under Civil Code section 3275 because the statute conditions
relief “upon [the breaching party] making full compensation to
the other party” and appellants “made no effort to compensate”
her. This argument fails because the statute requires
compensation as a condition for granting relief, not as a
precondition to seeking relief. Nothing in this opinion prevents
Tseng from seeking such compensation under section 1281.99,
subdivision (a), which entitles her to recover her “reasonable
expenses, including attorney’s fees and costs, incurred . . . as a
result of” Hydrafacial’s breach. As the Hohenshelt court noted,
section 1281.99, subdivision (a) essentially implements the
“compensation requirement [in Civil Code section 3275].”
(Hohenshelt, supra, 18 Cal.5th at p. 333.) We express no opinion
on whether Tseng is entitled to recover any such expenses.
22
DISPOSITION
We reverse the trial court’s order vacating its prior order
compelling arbitration. The parties shall bear their own costs on
appeal.
NOT TO BE PUBLISHED
WEINGART, J.
We concur:
ROTHSCHILD, P. J.
M. KIM, J.
23