Teacher’s affair with student leads to limit on arbitrations

Richard A. Schwartz was upset that an arbitration agreement prevented his clients from suing a school over an improper sexual relationship involving an adult teacher and a minor boy. So he got the law changed.

The Brentwood School in West Los Angeles derailed the case with an enrollment agreement -- which included an arbitration clause -- the boy's parents signed when he started at the school. According to court documents, a 45-year-old female teacher drew the 16-year-old into a 15-month sexual relationship. Schwartz said he could not comment on the case specifics because of settlement negotiations. John Doe v. Brentwood School, BC716416 (L.A. Super. Ct., filed Aug. 6, 2018).

"Parents aren't expecting an enroll agreement to cover sexual assault," said Schwartz, a partner with Browne George Ross O'Brien Annaguey & Ellis LLP in Los Angeles. "Parents are signing these enrollment agreements on behalf of their children, who typically aren't 18 and therefore not able to sign a legally binding document."

Gov. Gavin Newsom signed the bill inspired by Schwartz's case, AB 272, on Aug. 31. It allows "a minor to disaffirm a provision in an educational institution's enrollment agreement that purports to waive a legal right" to a "remedy, forum, proceeding, or procedure arising out of a criminal sexual assault or criminal sexual battery." It passed with near unanimous bipartisan support.

Schwartz testified at two legislative hearings, including in the Senate Judiciary Committee in June.

"Right now, California law authorizes schools to force students and parents to sign nonnegotiable enrollment agreements," Schwartz told the committee. "Those agreements often have clauses that, among other things, allow those schools to hide disputes behind the view of a confidential arbitration, even when a student has claims based on proven criminal sexual misconduct."

AB 272's author, Assemblyman Kevin Kiley, R-Rocklin, carried a nearly identical bill in 2020. It passed easily through the Assembly but stalled because of the COVID-19 pandemic, Schwartz said. The attorney reached out to several lawmakers prior with his idea, but said Kiley was the most enthusiastic.

Newsom signed AB 272 two weeks before he survived a recall election in which Kiley was one of his opponents. Kiley and Assemblyman James Gallagher, R-Yuba City, also sued Newsom over his vote-by-mail policies during the pandemic. The two lawmakers, both attorneys, won their initial case but lost on appeal.

The Consumer Attorneys of California and several child advocacy organizations supported AB272. The California Chamber of Commerce opposed, saying the Federal Arbitration Act of 1926 preempted the bill. But Schwartz said the idea behind AB 272 proved so popular that partisan politics were irrelevant.

The federal law preempts state laws that disfavor arbitration. But Kiley told the Senate committee that arbitration clauses in enrollment agreements match the accepted reasons that legislative bodies can cite to discourage arbitration: They are often unconscionable, involve minors who can't sign their own contracts, and are signed under duress, in that minors must attend school.

"The Federal Arbitration Act does not speak to a parent's capacity to contractually bind a minor when it comes to the choice of forum as arbitration, and this is therefore an issue that we can address through state level legislation," Kiley said.

Kiley also cited AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), a U.S. Supreme Court case that is often cited for helping define the limits of the Federal Arbitration Act.

The Supreme Court may dive into arbitration again soon. Last month, the 9th U.S. Circuit Court of Appeals threw out a preliminary injunction blocking AB 51. This is a 2019 California law barring mandatory arbitration as a condition of employment. Two judges found the law was not preempted because "it is solely concerned with pre-agreement employer behavior."

Judge Sandra S. Ikuta dissented, calling the law a "blatant attack" on the Arbitration Act. The Chamber of Commerce filed a 21-day extension to seek an en banc rehearing; it is widely expected to appeal to the Supreme Court if it loses. Chamber of Commerce of the United States v. Bonta, 2021 DJDAR 9599.