In employment litigation, it is commonly assumed that plaintiffs (claimants in arbitration) will initiate the demand for arbitration. Yet, the plaintiffs in Arzate v. Ace American Ins. Co., challenged this common practice. ((2025) 108 Cal. App. 5th 1191.)
In Arzate, a wage and hour class action, the trial court granted defendant’s motion to compel arbitration and required the parties to initiate the arbitration within 30 days in accordance with the parties’ arbitration agreement. But neither party initiated arbitration. Four months later, the plaintiffs filed a motion asserting that defendant’s failure to timely initiate the arbitration process constituted a waiver of its right to arbitrate. The trial court agreed with plaintiffs, interpreting that the contractual language – “the party who wants to start the arbitration procedure [is] to submit a demand” – required the defendant to initiate arbitration. Since the defendant did not do so, it waived its right to arbitrate.
On appeal, the California Court of Appeals reversed the trial court’s decision, highlighting the importance of reading the entire arbitration agreement. As stated by the appellate court, given the context, the arbitration language referring to “[t]he party who wants to start the arbitration procedure” must refer to an initiation of the action by a plaintiff. “It would be anomalous to require the defending party, against whom relief is sought, to present its opponent’s case.” Additionally, the court noted that the parties’ arbitration agreement incorporated the American Arbitration’s Employment Arbitration Rules and Mediation Procedures (“AAA Rules”), which state that an arbitration “may be initiated either jointly or by the initiating party,” with the AAA Rules defining “initiating party” as the “claimant.” Thus, claimants have the responsibility of initiating arbitration against their employers where valid and enforceable arbitration agreements exist.
If you have any questions about arbitration agreements, including their enforceability and interpretation, please feel free to contact us.