Judge Bruce G. Iwasaki, Case Number: 23STCV24321, Date: 2024-03-19 Tentative Ruling

Tentative Ruling: The Motion to Compel Arbitration is denied.

In this employment action, Plaintiff Yongtong “Jade” Liu (Plaintiff) filed a Complaint on October 5, 2023, alleging causes of action for FEHA violations and violations of the Labor Code against her former employers, Defendants Miniso Depot Ca, Inc. and USA Miniso Depot, Inc., and its CEO, Defendant Lin Li (collectively, Defendants).

On January 31, 2024, Defendants filed a motion to compel arbitration pursuant to the parties’ arbitration agreement. Plaintiff opposed the motion. A reply was filed.

Plaintiff’s objections to Defendants’ evidence are ruled as follows: Nos. 1-2 are overruled. (See Wang Reply Decl., ¶¶ 1-5.)

Under Code of Civil Procedure section 1281.2, a court may order arbitration of a controversy if it finds that the parties have agreed to arbitrate that dispute. Because the obligation to arbitrate arises from contract, the court may compel arbitration only if the dispute in question is one in which the parties have agreed to arbitrate. (Weeks v. Crow (1980) 113 Cal.App.3d 350, 352.) Since arbitration is a favored method of dispute resolution, arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question. (Id. at p. 353; Segal v. Silberstein (2007) 156 Cal.App.4th 627, 633.)

Defendants move to compel arbitration of Plaintiff’s claims and stay the action while the arbitration is pending.

Defendants seek to compel arbitration based on an arbitration agreement attached to Plaintiff’s Offer Letter. In support of the existence of an arbitration agreement, Defendants submit evidence that Plaintiff began working for Defendants as an HR Administrator on May 14, 2021. (Wang Decl., ¶ 2, Ex. 1.) In connection to her employment, Plaintiff executed an agreement titled “Restatement of Offer of Employment” and Exhibit B “VOLUNTARY MUTUAL ARBITRATION AGREEMENT AND CLASS ACTION WAIVER” (Arbitration Agreement), obligating her to arbitrate any employment-related disputes with Defendants. (Wang Decl., ¶¶ 2, Ex. 1, ¶¶ 1-2.)

The Agreement provides that Plaintiff and Defendants mutually agreed that “any and all disputes, claims, or causes of action, in law or equity, arising from or relating to your employment, or the termination of your employment, will be resolved, to the fullest extent permitted by law by final, binding, and confidential arbitration in your county and state of employment conducted by the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successors, under the then current rules of JAMS for employment disputes.” (Wang Decl., ¶ 2, Ex. 1, ¶ 1.)

In opposition, Plaintiff argues that Defendants have not submitted admissible evidence of the existence of the arbitration agreement. As noted above, the Court has overruled Plaintiff’s objections to Defendants’ evidence based, in part, on the reply evidence submitted.

Further, Plaintiff submits no declaration of her own otherwise challenging Defendants’ evidence and contesting the authenticity of the Agreement or her signature. Thus, Defendants have met their burden of demonstrating the existence of a valid arbitration agreement.

In opposition, Plaintiff argues that this case cannot be compelled to arbitration based on the Ending the Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the Act and EFAA).

The EFAA amends the FAA.[1] The Act provides, “[A]t 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 ... State law and relates to ... the sexual harassment dispute.” (9 U.S.C. § 402(a).) “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).) “An issue as to whether this chapter applies with respect to a dispute shall be determined under Federal law.” (9 U.S.C. § 402(b).)

In response, Defendants argue that Plaintiff’s allegations of sexual harassment are insufficient to fall within the scope of the Act. That is, Defendants specifically challenge the sufficiency of Plaintiff’s allegations to the sexual harassment cause of action, citing Yost v. Everyrealm, Inc. (S.D.N.Y. Feb. 24, 2023) 2023 WL 2224450. In Yost, the Southern District of New York held “the term ‘alleged’ as used in § 401(4) is best read to implicitly incorporate the plausibility standard.” (Yost v. Everyrealm, Inc., supra, 2023 WL 2224450, at *14–18.)

As Plaintiff notes, there is no controlling authority that employs this sufficiency of the pleadings standard. Further, and more importantly, the Complaint adequately states a claim for sexual harassment. (Compl., ¶¶ 19-20.)

Defendants also suggest that the actionable, relevant sexual harassment occurred before the enactment of the EFAA.

“The EFAA was enacted on March 3, 2022, and does not have retroactive effect.” (Turner v. Tesla, Inc. (N.D. Cal., Aug. 11, 2023, No. 23-CV-02451-WHO) 2023 WL 6150805, at *4.)

Here, Defendant contends that Plaintiff’s allegations indicate she was harassed “at all relevant times during her employment.” (Compl. ¶ 19.) She further contends that she was hired “[i]n or around April 2021.” Accordingly, Defendants claim that Plaintiff contends that her harassment began in 2021 and the claim therefore accrued prior to the enactment of the EFAA.

However, the allegations do not show that the harassment stopped before Plaintiff was constructively terminated in June 2023. (Compl., ¶¶ 9-11.) As such, based on the allegations, the harassment claim continued to accrue into the period after the EFAA was enacted such that the statute applies to Plaintiff’s sexual harassment claim.

Based on the foregoing, the EFAA applies to Plaintiff’s sexual harassment claim.

Further, the EFAA precludes arbitration of all the other claims of the Complaint as well.

In Johnson v. Everyrealm, Inc., Case No. 22-cv-6669, 2023 WL 2216173, at *18 (S.D.N.Y. Feb. 24, 2023), in which he held that “the text of § 402(a) makes clear that its invalidation of an arbitration agreement extends to the entirety of the case relating to the sexual harassment dispute, not merely the discrete claims in that case that themselves either allege such harassment or relate to a sexual harassment dispute (for example, a claim of unlawful retaliation for a report of sexual harassment).” In that case, plaintiff brought racial and pay discrimination claims in addition to sexual harassment claims and, under the court’s holding, those racial and pay discrimination claims were protected by the EFAA because they were part of a case that plausibly alleged sexual harassment claims.

Similarly, in Turner v. Tesla, Inc. (N.D. Cal., Aug. 11, 2023, No. 23-CV-02451-WHO) 2023 WL 6150805, the court found that the plaintiff’s “workplace injury and wage claims relate only to her own experience and employment at Tesla—and are intertwined with her sexual harassment claims.” (Turner v. Tesla, Inc. (N.D. Cal., Aug. 11, 2023, No. 23-CV-02451-WHO) 2023 WL 6150805, at *5.) (But see, Mera v. SA Hospitality Group, LLC (S.D.N.Y., June 3, 2023, No. 123CV03492PGGSDA) 2023 WL 3791712, holding that, in contrast to Johnson, supra, “[s]ince Plaintiff's wage and hour claims under the FLSA and the NYLL do not relate in any way to the sexual harassment dispute, they must be arbitrated, as the Arbitration Agreement requires.” (Id. at *4.) The Court finds the California district court decision in Turner more persuasive and a more efficient use of judicial resources.

[1] Defendants take the position that the “Federal Arbitration Act applies to Ms. Liu’s employment with Miniso as a matter of law.” (Mot., 3:17-18.)

Department 58