A practitioner’s guide to the 2022 Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act

On March 3, 2022, the Federal Arbitration Act was amended to add the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), barring a wide breadth of employment cases from mandatory pre-arbitration, e.g., sexual harassment, pregnancy harassment, gender harassment and/or sexual assault.

Of importance is that the EFAA exempts the entire case as it relates to the sexual assault/harassment claims as alleged.

The operative language provides:

Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.

(9 U.S.C. § 402(a), emphasis added.)

This past April, a motion to compel arbitration in Kennedy v. Meta in San Francisco Superior was defeated, using much of the same legal analysis described below. Kennedy v. Meta (2023) CGC-23-604370.

Applicability

The EFAA only applies to a “dispute or claim that arises or accrues on or after the date of enactment of this act.” (EFAA § 3, 136 Stat. 28.) The EFAA was signed into law on March 3, 2022. (Pub. L. 117-90.)

The law does not have retroactive effect. (Johnson v. Everyrealm (S.D. N.Y. Feb. 24, 2023) 2023 U.S. Dist. LEXIS 31242, 43 [citing to a survey of District Court cases on the subject].) However, an important exception to this is the continuing violation doctrine.

“Essentially, the continuing violation doctrine comes into play when an employee raises a claim based on conduct that occurred in part outside the limitations period.” (Richards v. CH2M Hill (2001) 26 Cal.4th 798, 802.) “Under that doctrine, an employer is liable for actions that take place outside the limitations period if these actions are sufficiently linked to unlawful conduct that occurred within the limitations period.” (Yanowitz v. L’Oreal (2005) 36 Cal.4th 1028, 1060; Fox v. Ethicon Endo-Surgery (2005) 35 Cal.4th at 810 [“Resolution of statute of limitations issues … is normally a question of fact.”].)

While case law on the EFAA is still growing, the issue of the applicability and effect of the continuing violation doctrine on the EFAA was addressed in Olivieri v. Stifel (E.D. N.Y. Mar. 31, 2023) 2023 U.S. Dist. LEXIS 57001. There, noting the lack of retroactivity, Olivieri found that under the continuing violation doctrine, “it is well-settled that those claims accrue on the day of the last act in furtherance of the violation.” (Id. at *12.) Stated otherwise, “for purposes of the EFAA, hostile work environment claims could – in accordance with well-established continuing violation precedent – ‘accrue” as of the date of the “last act that is part of the hostile work environment.’ ” (Id. at *13.) Solidifying this, Olivieri held: “The Court concludes that the term ‘accrue’ should be interpreted in accordance with these well-settled accrual principles that apply to harassment claims—the very claims that are the heart of the EFAA.” (Ibid.)

In fact, citing Olivieri, the Honorable Edward Moreton Jr. of the Los Angeles Superior Court also applied the doctrine to EFAA claims. (Doe v. Second St. (May 2023) 2023 Cal.Super.LEXIS 32955, *13.)

By using the word “pre-dispute,” the EFAA also requires that the dispute at issue arise after the making of the “Arbitration Agreement” or “Joint Action-Waiver.” “The term ‘predispute joint-action waiver’ means an agreement, whether or not part of a predispute arbitration agreement, that would prohibit, or waive the right of, one of the parties to the agreement to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum, concerning a dispute that has not yet arisen at the time of the making of the agreement.” (9 U.S.C. § 401(2).)

Scope of claims

While the term sexual assault seems quite broad and somewhat self-explanatory, one might ask themselves, what is the scope of the term “sexual harassment,” and does it include other gender based claims?

In Kennedy v. Meta, the court ruled that the EFAA bar on arbitration of sexual harassment claims includes “claims” of harassment based on sex and gender since the EFAA defines “sexual harassment” according to “State law”:

“The term ‘sexual harassment dispute’ means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.”

Under California’s broad FEHA definition, ‘harassment’ because of sex has a liberally encompassing definition, including:

“sexual harassment, gender harassment, and harassment based on pregnancy, childbirth, or related medical conditions. Sexually harassing conduct need not be motivated by sexual desire.”

(Cal. Govt. C. § 12940(j)(4)(C).) As interpreted by California Courts: “[T]he prohibition against sexual harassment includes … the creation of a work environment that is hostile or abusive on the basis of sex.” (Lyle v. Warner Brothers Telev. Prods. (2006) 38 Cal.4th 264, 277.)

Based on the above, the Honorable Gregory Keosian of the Los Angeles Superior Court, has found that the EFAA logically extends to pregnancy claims. (Burkholder v. House Ninja (2023) 23STCV02678.)

Of note, at least one Court has interpreted “State law” to encompass local/municipal laws barring sexual harassment like the NYCHRL. (Yost v. Everyrealm (S.D. N.Y. Feb. 24, 2023) 2023 U.S. Dist. LEXIS 31246, fn. 10.)

Pleading standard

An issue that is almost sure to arise is whether a pleading suffices. In Yost v. Everyrealm, this issue arose. There, the plaintiff argued that “even an implausibly pled” claim “brings a case within the EFAA, so long as the claim was not sanctionably frivolous.” (Id. at 40-45.) The District Court rejected this argument, and via statutory analysis, found that the legislature – by the use of the phrase “under applicable Federal, Tribal, or State law – was presumed to have intended the “plausibility standard” applicable to FRCP 12(b)(6) motions to apply. That means that the pleading standard of the applicable tribunal (e.g., California) would apply, i.e., the C.C.P. in the Golden State.

Scope of invalidation

While the Court in Kennedy v. Meta succeeded in interpreting the FEHA’s definition of “sexual harassment” to include harassment of sex or gender, the Court did not address the crucial nuance of the EFAA’s barring arbitration of “cases,” rather than “claims.”

This is critical. As below, the term “case” has been construed broadly to include almost all claims related to one’s employment, as applied in California, from FEHA, to Labor Code, to Common Law Tort Claims.

Johnson v. Everyrealm, a recent New York Federal District Court decision, supports this position with persuasive analysis. (Khani v. Ford Motor Co. (2013) 215 Cal.App.4th 916, 922, fn. 1 [Under California law, “Unpublished federal district court decisions may be persuasive authority.”].) There, the district court held:

“[W]here a claim in a case alleges ‘conduct constituting a sexual harassment dispute’ as defined, the EFAA, at the election of the party making such an allegation, makes pre-dispute arbitration agreements unenforceable with respect to the entire case relating to that dispute.”

(Johnson, supra, 2023 U.S. Dist. LEXIS 31242 at 47.)

In arriving at this conclusion, Johnson weaves through a thorough and well thought out statutory analysis that can likely be used to convince the most discerning Judge. Salient portions of the analysis follow:

This text is clear, unambiguous, and decisive as to the issue here. It keys the scope of the invalidation of the arbitration clause to the entire “case” relating to the sexual harassment dispute. It thus does not limit the invalidation to the claim or claims in which that dispute plays a part.

The term ‘case’ is familiar in the law. Dictionaries define a ‘case’ as ‘a suit or action in law or equity,’ or ‘a civil or criminal proceeding, action, suit, or controversy at law or in equity.’ ‘[C]ase’ thus captures the legal proceeding as an undivided whole. It is (sic) does not differentiate among causes of action within it. The term ‘case’ stands in contrast to the terms ‘claim’ and ‘cause of action.’ A ‘claim’ is ‘a right to something,’ or ‘the assertion of an existing right; any right to payment or to an equitable remedy.’ A ‘cause of action’ is ‘the grounds (such as violation of a right) that entitle a plaintiff to bring a suit,’ ‘a group of operative facts giving rise to one or more bases for suing,’ or ‘a factual situation that entitles one person to obtain a remedy in court from another person.’ Case law is, unsurprisingly, in accord. It underscores that a ‘case’ or ‘action’ refers to an overall legal proceeding filed in a court, whereas a ‘claim’ or a ‘cause of action’ refers to a specific assertable or asserted right within such a proceeding.

With the ordinary meaning of ‘case’ in mind, the text of § 402(a) makes clear that its invalidation of an arbitration agreement extends to the entirety of the case relating to the sexual harassment dispute, not merely the discrete claims in that case that themselves either allege such harassment or relate to a sexual harassment dispute (for example, a claim of unlawful retaliation for a report of sexual harassment). If further confirmation of that understanding were needed, a surrounding EFAA provision—the one that sets the EFAA’s effective date—uses the narrower teini ‘claim.’

(Id. at 39-47, internal case citations omitted.)

As applied, the plaintiff in Johnson (a male) had brought claims for (i) race discrimination, (ii) pay discrimination, (iii) sexual harassment, hostile work environment, and discrimination on the basis of gender, race and ethnicity, (iv) whistleblower retaliation, and (v) intentional infliction of emotional distress. Regardless of their gender, gender identity, or sexual orientation – anyone can be a victim of “sexual harassment.” (Johnson at 2.)

In a footnote, the district court observed that – notwithstanding that the majority of the claims had nothing to do with sexual harassment (including tort claims) – “all arise from his employment,” indicating any claims tied to a “sexual harassment” claim may not be arbitrated. (Id. at fn. 23.)

Of note, the holding of Johnson v. Everyrealm was also adopted by Judge Moreton of the Los Angeles Superior Court in Doe v. Second St.

But at least one court has found limits to the “entire case” scope. In Mera v. SA Hospitality Group, the S.D. N.Y. slightly limited this broad approach, ruling wage and hour claims did not relate in any way to the plaintiffs’ sexual harassment dispute. (Mera v. SA Hosp. Grp. (S.D. N.Y. 2023) 2023 U.S. Dist. LEXIS 96912, 7-10.) This conclusion was in part reached because the plaintiff had brought his FLSA claim as a collective action (similar to a class action) and the fact that it was plead as to a “broad group of individuals in addition to Plaintiff,” appeared to have offended the court’s sensibilities. (Ibid.) This is because: “To hold otherwise would permit a plaintiff to elude a binding arbitration agreement with respect to wholly unrelated claims affecting a broad group of individuals having nothing to do with the particular sexual harassment affecting the plaintiff alone.” (Ibid.) How other courts would rule of course remains to be seen.

Am I too late – can I amend?

Notably, the plaintiff in Johnson v. Everyrealm did not initially include of a claim of “sexual harassment” in his federal complaint. However, the court gave this omission no weight.

As this fact pattern is instructive, it follows: Shortly after the plaintiff filed his originating complaint – that contained no claim for “sexual harassment” – the defense moved to compel arbitration. (Johnson, supra, 2023 U.S. Dist. LEXIS 31242 at 3-4, fn. 2.) In response to the motion, the plaintiff amended his complaint where he asserted claims of “sexual harassment” for the first time. Unsurprisingly, based on this amendment, plaintiff argued that the EFAA precluded arbitration to his entire case. (Ibid.)

Again unsurprisingly, the defense argued that plaintiff’s “sexual harassment” claims “were fabricated as a ploy to bring this case within the EFAA and avoid arbitration,” and contradicted the initial Complaint, which identified the gravamen of the action as related to race related claims. (Ibid.) The Court rejected these arguments, holding that it must accept a well-pleaded complaint as true so long as it does not contradict an earlier pleading, and because plaintiff did not remove any allegations form the original complaint, but rather supplemented with additional allegations, the amendment was not a permissible contradiction. (Ibid.)

Who decides: court v. arbitrator

We have to thank the legislature for thinking through the issue of who determines the application of the EFAA. The answer – providentially – the Court, even if the agreement at issue contains a clause delegating said determination to an arbitrator:

An issue as to whether this chapter applies with respect to a dispute shall be determined under Federal law. The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement, and irrespective of whether the agreement purports to delegate such determinations to an arbitrator.

(9 U.S.C. § 402(b).)

In conclusion, we hope that this article was not only informative, but will be useful in practice. While Federal case law – particularly District Courts within the Second Circuit – is burgeoning with case law interpreting the EFAA, California courts appear to be at the starting end of things, particularly in terms of citable decisions. Nonetheless, much guidance is available.