Quick Hits
- In Ding v. Structure Therapeutics, Inc., the Ninth Circuit held that a plaintiff’s right to proceed in court under the EFAA is not categorically foreclosed by the earlier filing of an arbitration demand asserting non–sexual-harassment claims.
- The court held that where a plaintiff discovers a basis to pursue claims covered by the EFAA during arbitration, the plaintiff may elect to end arbitration and proceed in court.
- The court further held that a sex-based hostile work environment claim under FEHA constitutes a “sexual harassment dispute” under the EFAA.
Background
The plaintiff, a senior executive at a clinical drug development company, began working as the company’s chief financial officer (CFO). As part of her employment, the plaintiff signed an employment agreement that required the resolution of all employment disputes by arbitration. According to her complaint, upon starting her employment, the company’s chief executive officer (CEO) almost immediately began to sideline her, diminish her job responsibilities, and adopt gendered criticisms that she was “too aggressive.” The plaintiff additionally alleged that after she experienced a domestic violence incident, the CEO allegedly belittled her injuries, questioned her ability to continue in her role, and recommended her termination within two weeks of the incident, citing her “domestic situation” as a factor.
The plaintiff initially filed an arbitration demand asserting claims for discrimination, retaliation, and harassment based on national origin and her status as a domestic violence victim. Over the course of a year, the parties engaged in extensive arbitration proceedings, including preliminary hearings, discovery, and discovery disputes. During that process, the plaintiff uncovered new evidence suggesting that the alleged workplace mistreatment she experienced had been motivated by her sex. She then withdrew from arbitration and filed a complaint in state court, asserting sex discrimination and sex-based hostile work environment claims under FEHA. The company removed the action to federal court and moved to compel arbitration. The district court denied the motion, holding that the plaintiff had properly elected to proceed in court under the EFAA. The company appealed.
The Ninth Circuit’s Analysis
Whether an Employee Can Invoke the EFAA After Already Participating in Arbitration
As to whether the plaintiff properly elected to proceed in court under the EFAA despite having already initiated and participated in arbitration, the Ninth Circuit held that the plain text of the EFAA does not limit when a plaintiff may allege a sexual harassment claim and exercise his or her right under the statute. The court stated that the purpose of the EFAA was to provide alleged victims of workplace sexual harassment or sexual assault a “genuine choice” whether to proceed in arbitration or in court, notwithstanding a preexisting arbitration agreement. The court reasoned that the EFAA suggests only that a plaintiff may not make her “election” until the time she is “alleging conduct constituting a sexual harassment dispute or sexual assault dispute.” According to the court, nothing in the text of the EFAA indicates that the earlier filing of other claims extinguishes a plaintiff’s right to decide whether to arbitrate his or her sexual harassment or sexual assault claims, provided the employee did not know that the plaintiff had a plausible sexual harassment or sexual assault claim.
The court further emphasized the EFAA’s legislative purpose, which is to “restore access to justice for millions of victims of sexual assault or harassment who are currently locked out of the court system.” The legislative history repeatedly emphasized the need to give victims a “real choice” to bring their claims in court. To read otherwise, according to the court, would render a plaintiff unable to have her sexual harassment or sexual assault claim heard in court before she even knows that she has such a claim.
Of note, the court clarified that its holding does not mean that a plaintiff may start in arbitration, bring a sexual harassment claim at any time or under any circumstances, and then pursue the claim in court. A plaintiff may waive his or her EFAA rights under ordinary waiver principles—i.e., where a plaintiff is aware of the facts giving rise to a sexual harassment claim and either unduly delays or decides to pursue that claim in arbitration rather than court. In this case, the district court found no evidence that the plaintiff knew that she had a plausible sexual harassment claim but intentionally chose not to bring it when she initiated arbitration. The Ninth Circuit agreed with the district court’s determination.
Sex-Based Hostile Work Environment as ‘Sexual Harassment Dispute’ Under the EFAA
As to whether the plaintiff had plausibly stated a sexual harassment claim within the meaning of the EFAA, the Ninth Circuit looked to FEHA, under which harassment “because of sex includes sexual harassment” and “[s]exually harassing conduct need not be motivated by sexual desire.”
The court held that because “it is the disparate treatment of an employee on the basis of sex … that is the essence of a sexual harassment claim,” a sex-based hostile work environment claim amounts to sexual harassment under California law even when the harassing conduct is not sexual in nature. With all reasonable inferences drawn in the plaintiff’s favor, the court found that she had plausibly pled a sex-based hostile work environment claim based on alleged conduct including the CEO’s alleged preference for a male CFO, his sidelining of the plaintiff and diminishing of her job responsibilities, his adoption of sexist criticisms from male colleagues, and his belittling of her domestic violence experience before terminating her within two weeks of the incident.
Finally, the court noted that because the EFAA invalidates an arbitration agreement “with respect to a case,” rather than a claim, that “relates to” a sexual harassment dispute, the plaintiff was entitled to bring her entire case in court, including her non–sexual-harassment claims.
Key Takeaways
The Ninth Circuit’s decision in Ding v. Structure Therapeutics addressed a plaintiff’s purported discovery of a sexual harassment claim during pending arbitration. The decision creates uncertainties for employers around a plaintiff’s ability to make a mid-arbitration election to invoke the EFAA and the effect such an election may have on the arbitration as a whole.
Ogletree Deakins’ California offices and Arbitration/Alternative Dispute Resolution Practice Group will continue to monitor developments and will provide updates on the Arbitration/Alternative Dispute Resolution, California, and Employment Law blogs as additional information becomes available.
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