A legal battle between a former employee and her previous employer has taken a significant turn, highlighting the complexities of arbitration agreements and their enforcement. Stephnie Trujillo filed a complaint against J-M Manufacturing Company, Inc., in the Superior Court of Los Angeles County on January 12, 2021. The case revolves around alleged unlawful employment practices and the subsequent arbitration proceedings that were agreed upon by both parties.
Trujillo's lawsuit accused J-M Manufacturing Company (JMM) and four former coworkers—David Merritt, David Moore, David Christian, and Chuck Clark—of unlawful sexual/gender discrimination, harassment, failure to prevent such conduct, retaliation for opposing forbidden practices, and sought injunctive relief. Initially bound by a pre-dispute arbitration agreement signed in 2012 requiring disputes to be resolved through private arbitration, Trujillo challenged its applicability after filing her complaint. In response to this challenge, she proposed negotiating a new stipulation for arbitration that would replace the original agreement.
On March 17, 2021, Trujillo circulated a draft stipulation re: arbitration with specific terms including payment obligations for arbitral fees. Despite initial resistance from JMM regarding these terms—particularly concerning the harshness of penalties for late payments—the parties eventually signed a finalized stipulation on April 28, 2021. This stipulation required JMM to "timely pay all arbitral fees and costs of arbitration," with proceedings governed by California law.
Arbitration commenced on May 11, 2021. However, an issue arose when JMM failed to pay an invoice due on September 12, 2022 within the stipulated timeframe. Although they paid immediately upon receiving a reminder from ADR Services on October 18, Trujillo elected to withdraw from arbitration citing Code of Civil Procedure section 1281.98 which considers such delays as material breaches allowing withdrawal from arbitration.
The trial court initially sided with Trujillo’s motion to withdraw but was later reversed upon appeal by JMM who argued that section 1281.98 did not apply since their agreement was post-dispute rather than pre-dispute—a key distinction under California law defining "drafting party" responsibilities only in pre-dispute contexts.
In reversing the trial court's decision, it was determined that section 1281.98’s provisions did not apply because: (a) The parties had entered into a post-dispute stipulation voluntarily rather than being bound by any mandatory pre-dispute agreement; (b) JMM was not considered the "drafting party" under statutory definitions applicable solely to pre-dispute scenarios where employers impose mandatory arbitration clauses unilaterally.
As such rulings demonstrate nuanced interpretations of legislative intent behind statutes like section 1281.98 aimed at curbing abuse in mandatory arbitrations while protecting employees’ rights without unduly penalizing companies engaged in good faith negotiations post-litigation initiation.
Representing Trujillo were attorneys Matthew S. McNicholas and Jason L. Oliver from McNicholas & McNicholas while James R Rosen along with Francesca N Dioguardi represented defendants under Rosen Saba firm guidance before Judge Jon R Takasugi presiding over Case ID B327111 now remanded back for continued arbitration proceedings pending further developments therein.