Overview

• In a 5–2 ruling in Hohenshelt v. Superior Court, the California Supreme Court held the Federal Arbitration Act does not preempt California Code of Civil Procedure § 1281.98.
• The court rejected a rigid automatic‑forfeiture rule, holding that late fee payments do not forfeit arbitration rights absent willful, grossly negligent, or fraudulent conduct.
• Justices Carol A. Corrigan and Martin J. Jenkins dissented, arguing the statute as applied conflicts with the FAA, while a concurrence flagged unresolved issues for agreements that expressly adopt FAA or provider rules.
• The matter was remanded to determine whether the employer’s delayed payments were excusable, with the drafting party bearing the burden to show entitlement to equitable relief.
• Parties may contract for different payment timelines, and the decision preserves SB 707’s leverage in mass‑arbitration scenarios even as further state and federal litigation is expected.