Opinion
G063199
11-19-2024
JACQUELINE LANETTE BRAY, Plaintiff and Respondent, v. FOX RENT A CAR, INC., Defendant and Appellant.
Littler Mendelson, Fermin H. Llaguno, Tracy R. Leidner and Nolan McCready for Defendant and Appellant. Melmed Law Group, Jonathan Melmed, Laura M. Supanich, Kyle D. Smith and Maria Burciaga for Plaintiff and Respondent.
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County, No. 30-202301301322 Richard Y. Lee, Judge. Affirmed.
Littler Mendelson, Fermin H. Llaguno, Tracy R. Leidner and Nolan McCready for Defendant and Appellant.
Melmed Law Group, Jonathan Melmed, Laura M. Supanich, Kyle D. Smith and Maria Burciaga for Plaintiff and Respondent.
OPINION
MOTOIKE, J.
Plaintiff Jacqueline Lanette Bray filed a lawsuit against her employer, defendant Fox Rent A Car, Inc. (Fox), alleging she was sexually harassed during her employment. She asserted claims for sexual harassment, failure to prevent sexual harassment, retaliation, and negligence based on those allegations.
Fox moved to compel Bray's claims to arbitration except for the sexual harassment claim. The trial court denied the motion on the ground the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (9 U.S.C. § 401 et seq.; the Act) applied to prohibit the forced arbitration of claims which relate to a sexual harassment dispute. We affirm.
FACTS AND PROCEDURAL HISTORY
Bray filed a complaint against Fox asserting claims for: (1) sexual harassment in violation of the California Fair Employment and Housing Act (Gov. Code § 12900 et seq.; FEHA); (2) failure to prevent sexual harassment in violation of FEHA; (3) retaliation for reporting sexual harassment in violation of FEHA; (4) retaliation in violation of Labor Code section 1102.5; (5) negligent infliction of emotional distress; and (6) negligent hiring, supervision, and retention of employee.
The complaint contained a statement of facts alleging the following. Beginning in March 2022, a male coworker began sexually harassing Bray by commenting on her appearance on a near daily basis. In April 2022, the same coworker started to physically touch her by, for example, rubbing her shoulders and back on several occasions. Bray complained about the coworker's conduct to two managers but no corrective action was taken. On one occasion in June 2022, while Bray was assisting a customer, the same coworker approached her from behind her desk and ran his hand down her back to her inner thigh. Bray immediately reported the incident to the managers, who assured her they would speak to the coworker who was then permitted to continue working his shift. After the coworker was terminated in August 2022 for being intoxicated on the job and engaging in a physical altercation with a manager, Bray "continued to be sexually harassed on a daily basis by other male workers" as she was subjected to comments like "'I get so nervous around you,'" and "'can I take you out dancing?'" and "'I like you.'" Bray reported each incident to two other managers but no corrective action was taken. On one occasion, a coworker blew kisses at her, called her "'mi novia,'" and wrapped his arm around her as he tried to kiss her. After Bray immediately pushed the coworker away from her, the coworker responded "by swiping his finger from [Bray]'s neck up to her chin." Bray complained to management, but no remedial action, efforts to prevent further harassment, or other corrective action was taken. Bray was thereafter retaliated against for complaining about the sexual harassment through sudden schedule changes and "bogus disciplinary actions" against her. Each of the six claims in the complaint were based on and expressly incorporated the foregoing allegations.
Fox filed a motion to compel arbitration of all of Bray's claims, except for the sexual harassment claim, pursuant to the parties' arbitration agreement (the motion) which, as relevant here, "applies to any dispute arising out of or related to [Bray's] employment with Fox." The parties' arbitration agreement also states it is "governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.)."
The trial court denied the motion, explaining in its minute order: "The plain language of 9 U.S.C. § 402 expressly states that '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.' [Citation.] [¶] Each of Plaintiff's six causes of action relate to the sexual harassment Plaintiff claims she has and continues to experience during her employment with Defendant. Defendant points to other trial court cases wherein some causes of action were sent to arbitration while the sexual harassment claims were stayed. This case is different than those cited by Defendant in that Plaintiff's claims are based solely on sexual harassment. Plaintiff does not allege any wrongful conduct based on any other protected characteristics or activities under FEHA, such as disability or race. Plaintiff's allegations are limited to those relating to the sexual harassment dispute and fall squarely within the protection of 9 U.S.C. § 402."
Fox timely filed a notice of appeal.
DISCUSSION
I. GENERAL LEGAL PRINCIPLES AND STANDARD OF REVIEW
"'Both the California Arbitration Act (Code Civ. Proc., § 1280 et seq.) and the FAA [Federal Arbitration Act] (9 U.S.C. § 1 et seq.) recognize "'"arbitration as a speedy and relatively inexpensive means of dispute resolution"' and are intended '"to encourage persons who wish to avoid delays incident to a civil action to obtain an adjustment of their differences by a tribunal of their own choosing."'"'" (Franco v. Greystone Ridge Condominium (2019) 39 Cal.App.5th 221, 226-227 (Franco).)
"'"There is no uniform standard of review for evaluating an order denying a motion to compel arbitration."'" (Franco, supra, 39 Cal.App.5th at p. 227.) "'"If the court's order is based on a decision of fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the court's denial rests solely on a decision of law, then a de novo standard of review is employed."'" (Ibid.) "We review matters of statutory interpretation de novo." (Borden v. Stiles (2023) 92 Cal.App.5th 337, 346.)
II. BRAY CANNOT BE COMPELLED TO ARBITRATE ANY OF THE CLAIMS IN HER COMPLAINT
The only issue before us in this appeal is whether the trial court erred by finding the Act applicable to render the parties' arbitration agreement unenforceable as to those claims Fox sought to compel to arbitration. For the reasons we explain, the trial court did not err.
A. The Act
The Act, signed by President Joseph R. Biden in March 2022, "represent[ed] the first major amendment of the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) since its inception nearly 100 years ago. This legislation, having bipartisan support, voids predispute arbitration clauses in cases . . . involving sexual harassment allegations." (Murrey v. Superior Court (2023) 87 Cal.App.5th 1223, 1230.)
The Act has prospective effect, applying "to any dispute or claim that arises or accrues on or after [its] date of enactment." (Pub.L. No. 117-90, § 3 (Mar. 3, 2022) 136 Stat. 28, reprinted in notes foll. 9 U.S.C. § 401; see Kader v. Southern California Medical Center, Inc. (2024) 99 Cal.App.5th 214, 224.) The Act was signed into law on March 3, 2022. (Kader, supra, at pp. 222, 224.) In her complaint, Bray alleges the sexual harassment began in March 2022. No party suggests any of Bray's claims are based on conduct that occurred prior to the Act's effective date.
Section 402(a) of title 9 of the United States Code (section 402(a)) provides in relevant part: "[A]t the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute . . ., 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." In addition, any "issue as to whether [the Act] applies with respect to a dispute shall be determined under Federal law." (9 U.S.C. § 402(b).)
The Act includes definitions for key terms. As relevant to the instant case, "[t]he term 'predispute arbitration agreement' means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement," and "[t]he term 'sexual harassment dispute' means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law." (9 U.S.C. § 401(1) &(4).)
B. Overview of Cases Applying the Act
Here, there is no question the parties entered a "predispute arbitration agreement" within the meaning of the Act. Nor do they dispute the FAA's application to that agreement. The resolution of this appeal solely depends on our determination of whether that agreement constitutes one "with respect to a case which is filed under Federal, Tribal, or State law and relates to the . . . sexual harassment dispute" within the meaning of section 402(a). Two California appellate courts and several federal district courts have interpreted and applied this phrase in section 402(a), following the leading district court decision in Johnson v. Everyrealm (S.D.N.Y. 2023) 657 F.Supp.3d 535 (Johnson).
In Johnson, supra, 657 F.Supp.3d 535, the court provided the following analytical framework in determining the Act's application to an arbitration agreement, stating: "[D]efendants' motion to compel arbitration presents, in sequence, two issues. The first is whether the [complaint] 'alleges conduct constituting a sexual harassment dispute,' so as to come within the [Act]. The second is whether, if so, the [Act] makes the arbitration agreement unenforceable as to the entirety of the [complaint]'s claims, or only as to its claims of sexual harassment." (Id. at pp. 550-551; fn. omitted.)
As to the first issue, the Johnson court concluded the complaint before it plausibly pleaded a claim for sexual harassment under relevant state law, triggering the Act's application. (Johnson, supra, 657 F.Supp.3d at p. 558.) In our case, Fox does not contend Bray failed to plausibly plead a claim for sexual harassment in violation of FEHA. In fact, Fox excluded Bray's sexual harassment claim from the scope of its motion to compel arbitration. So, to the extent we were to apply Johnson's analytical framework to the instant case, we would conclude Bray's complaint alleges conduct constituting a sexual harassment dispute under the Act.
In Yost v. Everyrealm, Inc. (S.D.N.Y. 2023) 657 F.Supp.3d 563, 566, the companion case of Johnson, supra, 657 F.Supp.3d 535, the district court found the Act inapplicable because the plaintiff failed to plead "a plausible claim of sexual harassment in violation of even . . . the most lenient of the three statutes under which [the plaintiff] allege[d] such a claim." The court granted the defendant's motion to dismiss those claims and ordered the plaintiff's remaining claims to arbitration pursuant to the parties' arbitration agreement. (Yost, supra, at p. 567.)
As to the second issue, the Johnson court observed section 402(a) renders pre-dispute arbitration agreements invalid and unenforceable "'with respect to a case which is filed under Federal, Tribal, or State law and relates to the . . . sexual harassment dispute.'" (Johnson, supra, 657 F.Supp.3d at p. 558.) The court explained: "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." (Ibid.) The court thus held "where a claim in a case alleges 'conduct constituting a sexual harassment dispute' as defined, the [Act], 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." (Id. at p. 561.)
The appellate court in Doe v. Second Street Corp. (2024) 105 Cal.App.5th 552, 577 recently adopted the "well-reasoned analysis" of Johnson, supra, 657 F.Supp.3d 535, holding: "As Johnson notes, the [Act] facially applies to 'a case which . . . relates to the sexual assault dispute or the sexual harassment dispute.' [Citation.] 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."
Even more recently, the appellate court in Liu v. Miniso Depot CA, Inc. (2024) 105 Cal.App.5th 791, 796 held: "We agree with our colleagues in Division Three of this appellate district, who recently concluded in Doe v. Second Street Corp. (2024) 105 Cal.App.5th 552 that the plain language of the [Act] exempts a plaintiff's entire case from arbitration where the plaintiff asserts at least one sexual harassment claim subject to the [A]ct."
Several federal courts have also agreed with Johnson's approach. (See e.g., Baldwin v. TMPL Lexington LLC (S.D.N.Y. 2024) 2024 U.S. Dist. Lexis 148291 [forcing a plaintiff to pursue claims on "separate tracks in separate fora would be costly, inefficient and burdensome" and "would deter meritorious harassment claims"]; Scoggins v. Menard, Inc. (S.D. Ohio 2024) 2024 U.S. Dist. Lexis 147638 [by amending the FAA directly, the Act did away with the presumption arbitrable claims must be sent to arbitration thereby "'reinforc[ing] Congress's intent to override-in the sexual harassment context-the FAA's background principle that, in cases involving both arbitrable and non-arbitrable claims, the former must be sent to arbitration'"]; Molcanoff v. SOLV Energy LLC (S.D. Cal. 2024) 2024 U.S. Dist. Lexis 36400 ["the Court holds that, because [the p]laintiff's 2022 retaliation claim alleges conduct constituting a sexual harassment dispute- as defined by 9 U.S.C. 401(4)-, and because the case as a whole relates to that dispute, the [Act] bars enforcement of the arbitration agreement between [the plaintiff] and [the defendant] as to all claims in this case, and as to all [d]efendants in this case"]; Delo v. Paul Taylor Dance Found., Inc. (S.D.N.Y. 2023) 685 F.Supp.3d 173, 180 ["where a dispute presents multiple claims-some related to sexual harassment, others not-the [Act] blocks arbitration of the entire case, not just the sexual harassment claims"].)
Other courts have noted or required that non-sexual harassment-related claims in a complaint be "intertwined" in some way with the sexual harassment-related claims. (See e.g., Williams v. Mastronardi Produce, Ltd. (E.D. Mich. 2024) 2024 U.S. Dist. Lexis 150550 [district court held it "shall follow the majority of district courts" and rule the Act "precludes arbitration of this whole case-especially given the Plaintiff's sexual harassment and racial discrimination claim are at least somewhat intertwined"], italics added; Turner v. Telsa, Inc. (N.D. Cal. 2023) 686 F.Supp.3d 917, 920 (Turner) [court found arbitration agreement unenforceable and denied motion to compel including as to claim for failure to provide wages at termination in violation of Labor Code because its resolution is "intertwined with the resolution of the sexual harassment claims"].)
In contrast, the court in Mera v. SA Hospitality Group, LLC (S.D.N.Y. June 3, 2023) 675 F.Supp.3d 442, 444 applied section 402(a) to deny the defendant's motion to compel arbitration as to the plaintiff's claims brought under the New York State Human Rights Law and the New York City Human Rights Law which "arise from an alleged hostile work environment created by sexual orientation discrimination." (Mera, supra, at p. 444.) The court granted the motion, however, as to the plaintiff's wage and hour claims brought under the Fair Labor Standards Act and the New York Labor Law because they "do not relate in any way to the sexual harassment dispute" and "must be arbitrated, as the Arbitration Agreement requires." (Id. at p. 448.)
C. Applying Any of These Standards, the Trial Court Properly Denied Fox's Motion to Compel Arbitration in Its Entirety.
As discussed ante, there is no question here Bray's complaint contains a claim for sexual harassment which constitutes a sexual harassment dispute within the meaning of the Act. As discussed ante, Johnson, supra, 657 F.Supp.3d at p. 561 held "where a claim in a case alleges 'conduct constituting a sexual harassment dispute'" under the Act, predispute arbitration agreements, at the election of the one making such an allegation, are rendered "unenforceable with respect to the entire case relating to that dispute." If we were to agree with Johnson and the majority of courts that have followed Johnson, because Bray's complaint contained a plausible sexual harassment claim in violation of FEHA, the motion was properly denied as to the remainder of her claims on that basis alone.
Here, however, we do not have to decide whether an arbitration agreement becomes automatically unenforceable as to any and all claims contained in a complaint that also contains a plausibly pleaded sexual harassment claim because we conclude each of the claims in Bray's complaint is at least related to a sexual harassment dispute within the meaning of the Act. (See Olivieri v. Stifel (2d. Cir. 2024) 2024 U.S. App. Lexis 20216 ["retaliation resulting from a report of sexual harassment is 'relat[ed] to conduct that is alleged to constitute sexual harassment'" within the meaning of the Act].)
Bray's retaliation claims and claims for failure to prevent sexual harassment claim, negligent infliction of emotional distress, and negligent hiring, supervision, and retention of employee are all directly based on allegations of sexual harassment and conduct arising from her complaints about her experiences of sexual harassment. Therefore, each claim, at a minimum, relates to, if not constitutes in and of itself, a sexual harassment dispute within the meaning of the Act.
Consequently, at Bray's election, the parties' arbitration agreement is unenforceable with respect to each of the claims set forth in her complaint. (Turner, supra, 686 F.Supp.3d at p. 926 [because the plaintiff's claims for sexual harassment, sex discrimination, retaliation, failure to prevent sexual harassment and wrongful termination in violation of public policy "allege sexual harassment and conduct arising from [the plaintiff's] reports of her experiences of sexual harassment on the job" the arbitration agreement "is unenforceable with respect to these claims"].) As Bray filed an opposition to the motion to compel arbitration, the trial court correctly denied the motion in its entirety.
In its opening brief, Fox argues: "Bray brings six causes of action against Fox but only her first cause of action, which alleges a 'sexual harassment dispute' as defined, may be carved out of the Arbitration Agreement under the exception provided in the [Act]. As to Bray's other claims alleged in her second through sixth causes of action, which on their face are not claims of sexual harassment, federal law mandates that the Arbitration Agreement must be enforced, and they must be compelled to arbitration."
Fox does not cite any relevant legal authority that supports its extremely narrow interpretation of the statute's language. We acknowledge the FAA "reflects a policy favoring arbitration." (Keeton v. Tesla, Inc. (2024) 103 Cal.App.5th 26, 34, review granted September 11, 2024, S286860.) We further acknowledge precedent narrowly construing limitations on the enforcement of arbitration agreements. (See, e.g., Circuit City Stores v. Adams (2001) 532 U.S. 105, 118 [holding 9 U.S.C. § 1 exclusion of FAA to be "afforded a narrow construction" given the FAA's purpose].)
In their appellate briefs, Fox cites to a California Superior Court order in violation of rule 8.1115(a) of the California Rules of Court.
Here, however, the Act constitutes an amendment of the FAA itself and thus not a limitation on the FAA. In any event, Fox's construction of the Act to apply only to causes of action for sexual harassment itself is at odds with the statutory language. Had Congress intended to limit the Act's applicability strictly to plausible claims for sexual harassment, it could have easily done so. Instead, the plain language of the statute provides its application to any case which "relates to the . . . sexual harassment dispute." (§ 402(a).)
DISPOSITION
The order is affirmed. Respondent to recover costs on appeal.
WE CONCUR: O'LEARY, P. J., GOETHALS, J.