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Court of Appeal:
Act Nullifying Arbitration Contracts Is Not Retroactive
Wiley Says Statutory Note to Legislation Affecting Sexual Harassment Claims Clarifies That Voiding Applies Only Where Dispute Arises After Enactment
By a MetNews Staff Writer
Div. Eight of this district’s Court of Appeal has held that the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which was signed into law on March 3, 2022 and voids pre-dispute contracts requiring arbitration of sexual assault and sexual harassment claims, nullifies the agreements if the controversy between the parties—as opposed to the filing date of the lawsuit—arose after the effective date of the legislation.
The question as to the effective date of the statute arose after a plaintiff filed a lawsuit against her former employer and coworker after the effective date of the statute—based on alleged conduct occurring in 2021 for which she filed administrative claims that same year—and argued that the arbitration clause in her employment paperwork was voided by the Act because her action was filed weeks after the act was signed into law.
Justice John Shepard Wiley Jr. authored the opinion reversing an order by Los Angeles Superior Court Judge Colin P. Leis denying the employer’s motion to compel arbitration. Acting Presiding Justice Elizabeth A. Grimes and Justice Victor Viramontes joined in the opinion.
Harassment Allegations
Plaintiff Jacky R. worked, from December 2020 to July 2021, as a dietary aid for AG Seal Beach, LLC, a company doing business as Seal Beach Health and Rehabilitation Center. She alleges that several coworkers made sexist comments about her and one employee in particular, Alvaro Esparza, inappropriately touched her, made sexual comments about her body, and assaulted her in 2021.
She maintains that she reported Esparza to her employer in June 2021, but the company undertook a “sham” investigation and reinstated Esparza after a one-week administrative leave. Jacky R. resigned on July 25, 2021 and filed claims with the Equal Employment Opportunity Commission and the California Department of Fair Employment and Housing that same month.
After she was issued a “right to sue” notice from the administrative agencies, Jacky R. filed suit against Seal Beach and Esparza on March 28, 2022. Seal Beach moved to compel arbitration, relying on an agreement between the parties to arbitrate employment-related disputes.
Leis denied the motion to compel, finding that “as of March 3, 2022, these types of arbitration agreements are unenforceable period.”
Statutory Provisions
Jacky R. contends that the statutory language of §402(a), which refers to when a case is “filed” means that the act covers every action filed after March 3, 2022. The section 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.”
Wiley disagreed that the language in subdivision (a) is determinative, and pointed to a statutory note to the act which adds that “[t]his Act, and the amendments made by this Act, shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.”
The jurist said:
“All provisions enacted by Congress, including a provision codified as a statutory note, must be given equal weight regardless of their placement by the codifier.”
He added:
“As for the ‘filed’ language in Section 402, subdivision (a), Congress used this word when describing the kinds of cases the Act reaches but did not use this word in the statutory note governing the Act’s applicability. When Congress includes particular language in one part of a statute but omits it in another, we presume Congress intended a difference in meaning.”
Dispute Timeline
Unpersuaded by Jacky R.’s contention that the statutory note is not binding, Wiley turned to the question of when a “dispute” is deemed to have arisen and found that this occurs not when the lawsuit is filed or when the underlying conduct occurs, but when the two parties enter into a disagreement or an adversarial posture.
Applying that standard, he wrote:
“Jacky R. reported Esparza’s sexual conduct to a supervisor in June 2021. The company then investigated—in a manner Jacky R. disapproved—and determined Esparza should return to work. This response upset Jacky R., she disagreed with it, and she resigned. Around the same time, in July 2021, she filed a discrimination charge against the company with state and federal agencies outlining details of this controversy. Thus, the dispute existed well before March 28, 2022—when Jacky R. filed her lawsuit—and before March 3, 2022—when the Act went into effect.”
He declared:
“The Act does not apply to this lawsuit. The trial court erred in denying Seal Beach’s motion on this basis.”
The case is Jacky R. v. AG Seal Beach, LLC, B328654.
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