Opinion
B331667
05-15-2024
CITLALI LOPEZ MAYTE MARTINEZ, Plaintiff and Respondent, v. SIMPLIFIED LABOR STAFFING SOLUTIONS, INC., Defendant and Appellant.
Hill, Farrer &Burrill, E. Sean McLoughlin and Clayton J. Hix for Defendant and Appellant. Diefer Law Group, Melissa Newman Avila, Omri A. Ben-Ari and Marcelo Dieguez for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County, No. 22STCV40216 Timothy P. Dillon, Judge. Affirmed.
Hill, Farrer &Burrill, E. Sean McLoughlin and Clayton J. Hix for Defendant and Appellant.
Diefer Law Group, Melissa Newman Avila, Omri A. Ben-Ari and Marcelo Dieguez for Plaintiff and Respondent.
CHAVEZ, J.
Simplified Labor Staffing Solutions, Inc. (appellant), appeals from an order denying its petition to compel arbitration in this sexual harassment and discrimination case filed by respondent Citlali Lopez Mayte Martinez (Martinez). Appellant's petition was denied on the ground that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (9 U.S.C. § 401 et seq.) (EFASASH) prohibits arbitration of respondent's claims. We affirm.
EFASASH is found in chapter four of the Federal Arbitration Act (FAA). (9 U.S.C. §§ 1 et seq., 401 et seq.)
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
According to her complaint, Martinez began working for appellant on January 11, 2022. Throughout her employment, Martinez suffered unwanted severe and pervasive sexual harassment from her supervisor, William Espinoza. Appellant knew Espinoza had a tendency to sexually harass the women who worked for him, but did nothing to prevent further harassment. Martinez complained to appellant about the unwanted sexual harassment by her supervisor, but appellant failed to investigate or prevent further sexual harassment. When Martinez asked for a transfer, appellant did nothing to accommodate her. Martinez developed anxiety and depression, which limited her ability to perform her work. Martinez notified appellant of this mental health disability arising from the pervasive harassment. She sought accommodations for the disability, including time off. On April 20, 2022, in an act of discrimination and retaliation, appellant wrongfully terminated Martinez's employment.
As this case comes to us before trial, all background facts are allegations.
On August 16, 2022, Martinez made a written request to inspect or receive a copy of her personnel and payroll records. In violation of Labor Code section 1198.5, appellant failed to provide Martinez with access to such records.
Martinez filed a complaint with the California Civil Rights Department on December 24, 2022. She received a notice of case closure and an immediate right to sue letter on the same date.
Martinez filed her complaint against appellant and Espinoza on December 27, 2022. She alleged eight causes of action: (1) discrimination in violation of the California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12940 et seq.); (2) harassment in violation of FEHA; (3) retaliation in violation of FEHA; (4) failure to prevent harassment, discrimination and retaliation in violation of Government Code section 12940, subdivision (k); (5) negligent supervision and retention; (6) intentional infliction of emotional distress; (7) wrongful termination in violation of public policy; and (8) failure to permit inspection of personnel and payroll records.
On April 7, 2023, appellant filed a petition to compel arbitration, asserting that Martinez signed a written arbitration agreement requiring her to submit all claims and disputes related to her employment with appellant to binding arbitration. The arbitration agreement provided by appellant states that "arbitration will be conducted under the [FAA]." Appellant further provided its mutual arbitration policy (MAP), which states: "The MAP shall be governed solely by the [FAA], 9 U.S.C. § 1, et seq."
Martinez denies having signed such an agreement. In her opposition, Martinez stated the electronic signature on the document was forged, and she had never seen the document provided by appellant, adding she has no computer or e-mail that would have allowed her to give an electronic signature in English.
On June 20, 2023, appellant filed a notice of hearing on petition, and provided evidence supporting its position that Martinez electronically signed the arbitration agreement. The notice asked the trial court "pursuant to the provisions of the California Arbitration Act (Code of Civil Procedure §§ 1281.2 and 1281.4 et seq.) for an order staying these proceedings and compelling [Martinez] to utilize the agreed upon binding arbitration process."
Following the July 13, 2023 hearing on appellant's petition to compel arbitration, the trial court issued an order denying the petition on the same day. The court noted, "By the terms of the MAP and the Arbitration Agreement, the FAA governs." Under the FAA, the court was required to apply EFASASH. The language of EFASASH unambiguously prohibited arbitration of Martinez's claims. Accordingly, appellant's petition to compel arbitration was denied.
On September 6, 2023, appellant filed its notice of appeal.
DISCUSSION
I. Applicable law and standard of review
The relevant portions of EFASASH read:
"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 jointaction 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).)
"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).)
"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." (9 U.S.C. § 401(4).)
The notes to EFASASH add, "This 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." (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 (Kader).) EFASASH was signed into law on March 3, 2022. (Kader, supra, at pp. 222, 224.)
The trial court denied appellant's petition to compel arbitration on the ground that EFASASH barred enforcement of the arbitration agreement as to Martinez's claims. Because the court's denial of the petition to compel arbitration rests solely on a decision of law, we review the trial court's decision under a de novo standard. (Kader, supra, 99 Cal.App.5th at p. 221.) The interpretation of the arbitration agreement is subject to de novo review. (Macaulay v. Norlander (1992) 12 Cal.App.4th 1, 6.) We also review the trial court's statutory interpretation de novo. (Kader, supra, at p. 221.)
II. EFASASH bars arbitration of this matter
Martinez alleges Espinoza sexually harassed her, and appellant failed to address the situation despite her complaints. There is no dispute that Martinez has alleged acts that arose after EFASASH was signed into law, and each of her causes of action relates to the sexual harassment. As the trial court noted, "the gravamen of her claims is sexual harassment." Because Martinez's allegations concern "conduct constituting a sexual harassment dispute or sexual assault dispute," the alleged predispute arbitration agreement is unenforceable as to this matter under EFASASH. (9 U.S.C. § 402(a).)
Appellant acknowledges this is a sexual harassment dispute, but argues EFASASH does not apply. However, language in the parties' alleged arbitration agreement undermines appellant's position. The MAP specifically states, "The MAP shall be governed solely by the [FAA], 9 U.S.C. § 1, et seq." Thus, appellant's arbitration policy acknowledges it is governed, in part, by EFASASH. Likewise, the alleged arbitration agreement between appellant and Martinez states that "arbitration will be conducted under the [FAA]." By the terms of the MAP and the arbitration agreement, the FAA governs this dispute.
Appellant argues that the California Arbitration Act (CAA), rather than the FAA, applies to the parties' agreement. Appellant points out "'[t]he state's procedural statutes ([Civ. Code,] §§ 1281.2, 1290.2) apply by default because the Congress intended the comparable FAA sections [citation] to apply in federal court.'" (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 345 (Victrola); see Valencia v. Smyth (2010) 185 Cal.App.4th 153, 177.) However, the Victrola court went on to say, "'The question, therefore, is whether the parties expressly incorporated the FAA's procedural provisions into their agreements.'" (Victrola, supra, at p. 345.) The question of whether the FAA has been incorporated into the agreement "'"is a question of law involving interpretation of statutes and the contract."'" (Id. at p. 346.)
The contract at issue here unambiguously incorporates the FAA. Under the FAA, application of EFASASH is required. (9 U.S.C. § 402.)
The cases cited by appellant in support of its position the CAA, rather than the FAA, applies to this matter are unavailing. Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394 discussed whether a jury trial was required on the question of the existence of an arbitration agreement in California state court under the FAA (9 U.S.C. §§ 1-16). (Rosenthal, supra, at pp. 407-410.) It did not involve the recently enacted EFASASH and does not persuade us the statute is inapplicable.
Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376 is also unhelpful to appellant. The arbitration agreement in question there specifically stated it was to be construed and enforced under the laws of the state of California. (Id. at p. 381.) The Cronus court determined other language in the contract calling for the application of the FAA "'if it would be applicable'" did not preclude the application of Civil Code section 1281.2, subdivision (c) because no conflict existed between the two laws. (Cronus, at p. 394.) In doing so, the Cronus court noted, "Our opinion does not preclude parties to an arbitration agreement to expressly designate that any arbitration proceeding should move forward under the FAA's procedural provisions rather than under state procedural law." (Ibid.)
Here, the parties expressly incorporated the FAA into the alleged agreement through both the MAP and the arbitration agreement itself. The language is unambiguous and is not susceptible to an interpretation that the parties intended California law to apply.
Appellant further relies on Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1342, footnote 3 (Cable Connection), where the arbitration agreement between the parties stated the arbitration would be "governed by the United States Arbitration Act (9 U.S.C. Section 1, et seq.)." Appellant points out the Cable Connection court found under this language, proceedings for judicial review of the arbitration award was not necessarily governed by the FAA, because "[t]he parties' contract did not specify whether enforcement proceedings were to be brought in state or federal court ...." (Cable Connection, at p. 1351, fn. 12.) Appellant argues this court is obligated to follow Cable Connection and must decline to interpret the agreement as allowing application of the EFASASH. Appellant's argument is not well taken. The statutory language of EFASASH is clear, requiring that "no predispute arbitration agreement . . . shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to [a] sexual assault dispute or . . . sexual harassment dispute." (9 U.S.C. § 402(a).) Cable Connection does not address this statutory language and is therefore inapplicable.
Appellant further argues state law cannot be preempted by the FAA absent a showing that interstate commerce dictates the applicable law. (Citing Shepard v. Edward Mackay Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1099-1101 (Shepard); Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 211-214 (Woolls).) Appellant's preemption argument and the cited cases are irrelevant. Martinez was not required to prove that the FAA preempts California law. Nor was she required to prove the involvement of interstate commerce in order to show that federal law applies to the alleged arbitration agreement in this matter. The parties expressly and unambiguously agreed that federal law would govern their agreement. Woolls and Shepard are inapplicable.
In Woolls, the party seeking to enforce arbitration sought to avoid denial of its petition to compel arbitration by arguing that the FAA preempted Business and Professions Code section 7191. (Woolls, supra, 127 Cal.App.4th at pp. 211-214.) In Shepard, the party seeking to enforce arbitration sought a ruling the FAA preempted a California law rendering certain claims inarbitrable. (Shepard, supra, 148 Cal.App.4th at pp. 1097-1102.)
Because Martinez was not required to show federal preemption in this matter, we decline to address appellant's argument that FAA preemption is limited to section 2 of the FAA. (Citing AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333; Perry v. Thomas (1987) 482 U.S. 483, 490-491; Southland Corp. v. Keating (1984) 465 U.S. 1, 16; Cable Connection, supra, 44 Cal.4th at pp. 1350-1351.)
EFASASH bars arbitration of Martinez's claims in this matter.
Appellant asks, in the alternative, that we remand for the trial court to take up the question of what to do with the seven causes of action that are not for sexual harassment. As set forth above, each of Martinez's causes of action "relates to . . .the sexual harassment dispute." (9 U.S.C. § 402(a).) Therefore, EFASASH bars arbitration of all of the causes of action alleged.
DISPOSITION
The judgment is affirmed. Respondent is awarded her costs of appeal.
WE CONCUR: ASHMANN-GERST, ACTING P. J., HOFFSTADT, J.