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Court of Appeal:
Exception to Arbitration Covers Pre-Enactment Conduct
Opinion Says Legislation Providing That Plaintiff Asserting Sexual Harassment May Elect to Opt-Out of Agreement Applies to Claims Based on Earlier Actions if Pattern of Continuing Behavior
By Kimber Cooley, associate editor
Legislation providing for an exception to the enforcement of arbitration agreements where sexual harassment is alleged applies to claims arising out of behavior occurring before the statute’s effective date so long as the conduct is part of a continuing pattern of malfeasance, Div. Three of this district’s Court of Appeal has held.
The court also declared that other causes of action asserted by the plaintiff, including retaliation and wage order violations, are also exempt from mandatory arbitration under the statute because they are part of the same case.
On Feb. 15, 2023, a former employee, identified as Jane Doe, filed a complaint against Second Street Corp.—which operates as The Huntley Hotel in Santa Monica—and two of its supervisors, Manju Raman and Eman Rivani, alleging that the defendants engaged in a pattern of sexual harassment during her time working as a server at the on-site Penthouse Restaurant.
Specifically, she contends that Raman and Rivani continued to schedule her to work with another waiter, Ryan Jackson, after she reported that he sexually assaulted her in October 2019. She contends that her supervisor Rivani asked her to tell him the details of the assault, a request she refused, and blamed her for the assault.
Doe says she was subjected to a hostile work environment through her final day in May 2022 and would frequently vomit before her shifts. She stopped going to work on the advice of her doctor following an involuntary psychiatric hold for suicidal ideations.
The defendants moved to compel arbitration based on an agreement in Doe’s employment paperwork. Doe objected, citing the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”), codified at 9 U.S.C. §401 et seq. and effective March 3, 2022.
The EFAA creates an exception to the Federal Arbitration Act’s general rule favoring arbitration and provides that “at the election of the person alleging conduct constituting a sexual harassment dispute…no predispute arbitration agreement…shall be valid or enforceable with respect to a case which is filed under Federal…or State law and relates to…the sexual harassment dispute.”
Los Angeles Superior Court Judge Edward B. Moreton Jr. denied the motion to compel, finding that the EFAA rendered the arbitration agreement unenforceable as to all of Doe’s claims. The hotel appealed. Presiding Justice Lee Smalley Edmon wrote the opinion, filed Monday, affirming the denial.
She wrote that “no California case has addressed when a sexual harassment claim ‘accrues’ under the EFAA where, as here, a plaintiff alleges sexually harassing conduct” but said “[w]e agree with…federal authorities…that the EFAA applies where a plaintiff alleges a course of sexually harassing conduct that occurs both before and after the EFAA’s enactment.”
Edmon’s opinion also sides with a federal precedent, holding that “the statute applies to the entire case, not merely to the sexual assault or sexual harassment claims alleged as a part of the case.”
Justice Anne H. Egerton and Los Angeles Superior Court Judge Nicole C. Bershon, sitting on assignment, joined in the opinion.
The defendant argues that Doe’s claim accrued under the EFAA as soon as she could have initiated a legal action, citing cases finding that the EFAA does not apply where all of the alleged sexual harassment occurred before its effective date even if the plaintiff filed suit after the enactment of the statute. Pointing out the factual differences between the present case and the ones cited by the hotel, Edmon instead looked to federal jurisprudence and remarked that “several federal courts have held that where a plaintiff alleges sexual harassment both before and after the EFAA’s adoption, the action accrues on the date of the last alleged act.”
The jurist also cited the 2002 U.S. Supreme Court decision in National Railroad Passenger Corporation v. Morgan, authored by Justice Clarence Thomas, which held that a hostile work environment claim will not be barred even if some conduct falls outside the relevant statute of limitations where the plaintiff can show a pattern of unlawful employment practices and at least one act falls within the applicable time frame.
She acknowledged that the Morgan case and progeny are not directly on-point, but wrote:
“It is against this backdrop that Congress passed the EFAA….Accordingly, we presume that when Congress used the word ‘accrue’ in the EFAA, it intended to import the meaning of ‘accrue’ developed by federal and state courts over many years in the context of sexual harassment claims—that is, that a sexual harassment claim asserting a continuing violation ‘accrues’ on the date of the last act constituting such violation, even if the conduct could have been actionable earlier.”
Unpersuaded by the defendant’s argument that the court should not import a statute of limitations accrual analysis into the EFAA, she commented that “[t]he hotel does not cite any cases adopting a different meaning of ‘accrue’ in this context, nor has the hotel directed our attention to anything in the statute’s legislative history suggesting that Congress intended a different meaning of ‘accrue’ for purposes of the EFAA.”
Turning to Doe’s complaint, Edmon wrote:
“Specifically,…the complaint alleged that beginning in May or June 2021, the hotel sometimes scheduled plaintiff and Jackson to work on the same shift; in November 2021, Rivani insisted that plaintiff describe her sexual assault by Jackson in detail; in February 2022, Raman told plaintiff’s general manager that plaintiff and Jackson had a consensual sexual relationship; in April 2022, Rivani angrily confronted plaintiff when she began crying at work after seeing Jackson; and from November 2021 through May 2022, with knowledge that Jackson had sexually assaulted plaintiff, Rivani regularly scheduled plaintiff and Jackson on the same shifts.”
She continued:
“In short,…the complaint unquestionably asserted actionable sexual harassment that began prior to the EFAA’s enactment and continued through May 2022, after the statute’s effective date….The EFAA therefore applied and rendered the arbitration provision unenforceable, at least as to the causes of action alleging sexual harassment.”
As to the other causes of action, Edmon reasoned:
“[T]he EFAA facially applies to ‘a case which . . . relates to the sexual assault dispute or the sexual harassment dispute.’….By its plain language, then, the statute applies to the entire case, not merely to the sexual assault or sexual harassment claims alleged as a part of the case. It is significant, moreover, that the statute does not require that the pendant claims arise out of the sexual assault or sexual harassment dispute; it is enough that the case relates to the sexual assault or sexual harassment claims.”
Applying the standard to the present case, the presiding justice said:
“Here, although not all of plaintiff’s causes of action arise out of her sexual harassment allegations, the ‘case’ unquestionably ‘relates to’ the sexual harassment dispute because all of the causes of action are asserted by the same plaintiff, against the same defendants, and arise out of plaintiff’s employment by the hotel. Accordingly, the arbitration agreement is unenforceable as to each cause of action alleged in plaintiff’s FAC.”
The case is Doe v. Second Street Corp., 2024 S.O.S. 3381.
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