Hohenshelt and the Death of Strict-Liability Forfeiture Under CCP § 1281.98

For five years, every Court of Appeal decision interpreting section 1281.98 reached the same conclusion: late payment of arbitration fees, for any reason, automatically forfeits arbitration rights. Then Hohenshelt changed everything.

The California Supreme Court's 5-2 decision in Hohenshelt v. Superior Court (2025) 18 Cal.5th 310 fundamentally restructured section 1281.98 by 'harmonizing' it with background equitable principles — Civil Code section 3275 (relief from forfeiture), CCP section 473(b) (relief from mistake), and Civil Code section 1511 (excuse for impossibility). The Court held that forfeiture of arbitration rights applies only when nonpayment was 'willful, grossly negligent, or fraudulent.'

Justice Liu's majority opinion explicitly disapproved the entire line of strict-liability Court of Appeal decisions: Gallo, Espinoza, De Leon, Williams, Doe v. Superior Court, Colon-Perez, and Sanders. The practical impact is immediate: employers who lose arbitration rights due to administrative errors — holiday-period invoice processing failures, paternity leave gaps, servicer miscommunication — now have a viable defense.

The brief I drafted applying this decision distinguished every unfavorable appellate authority and demonstrated that a 14-day payment delay caused by a holiday-period administrative error did not constitute willful or grossly negligent conduct. The court adopted the analysis and denied the motion to vacate.