Judge: Martha K. Gooding, Case: 23-01311737, Date: 2023-07-31 Tentative Ruling
Motion to Compel Arbitration – DENIED
The Motion to Compel Arbitration brought by Defendant Orange County Global Medical Center, Inc. (“Defendant”) is DENIED.
Initially, it is undisputed the Federal Arbitration Act (“FAA”) applies to the instant motion. The agreement at issue states: “Both I and the Company agree that any claim, dispute and/or controversy that I may have against the Company…or the Company may have against me, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (‘FAA’), in conformity with the procedures of the California Arbitration Act (Cal. Code Civ. Proc. Sect 1280 et seq….).” (Perez Decl. ¶6 and Exh. 1.)
The parties to an agreement may incorporate the FAA into its terms. Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 346-348. Moreover, Defendant submits evidence that Defendant receives payments from Medicare, in connection with the treatment of some of its patients. (Smith Decl. ¶6.) Reimbursement through Medicare affects interstate commerce. (Summit Health, Ltd. v. Pinhas (1991) 500 U.S. 322, 327; See also Willis v. Prime Healthcare Services, Inc. (2014) 231 Cal.App.4th 615, 625-626.)
The Federal Arbitration Act requires the existence of a valid arbitration agreement before arbitration can be compelled. (See 9 U.S.C. §2). In support of its Motion, Defendant provides an “Employment-At-Will and Arbitration Agreement,” which appears to have been executed between Defendant Orange County Global Medical Center and Plaintiff Sarah Underwood. (Perez Decl. ¶¶5-6 and Exh. 1.) The attachment of this document is sufficient to meet Defendant’s initial burden. (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755.) Plaintiff does not dispute the authenticity of this document or her signature thereon. Consequently, Defendant has sufficiently established the existence of an arbitration agreement. (Ibid.) Similarly, it is undisputed that the broad language of the agreement encompasses Plaintiff’s claims in this action. (See Perez Decl. ¶ 6 and Exh. 1; see also ROA No. 2 [Complaint].)
The sole dispute on this Motion is whether Plaintiff may invoke 9 U.S.C. §402 to render the arbitration unenforceable.
“In March 2022, President Joseph R. Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the Act) (9 U.S.C. §§401, 402), representing the first major amendment of the Federal Arbitration Act (FAA)…since its inception nearly 100 years ago.” (Murrey v. Superior Court (2023) 87 Cal.App.5th 1223, 1230.) This provision is often referred to as the “EFAA.” (Olivieri v. Stifel, Nicolaus & Company, Incorporated (E.D.N.Y. 2023) 2023 WL 2740846 at 1.)
Pursuant to 9 U.S.C. §402(a), “at 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.” (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).) These provisions took effect on March 3, 2022.
Plaintiff executed the arbitration agreement on December 27, 2021, prior to the conduct alleged in her Complaint. (Complaint ¶¶ 7-17; see also Perez Decl. ¶¶ 5-6 and Exh. 1.) Consequently, the arbitration agreement properly constitutes a “predispute” arbitration agreement, pursuant to 9 U.S.C. §401(1). Additionally, Plaintiff’s Second Cause of Action asserts sexual harassment in violation of FEHA and, consequently, includes a “sexual harassment dispute.” (Complaint ¶¶ 28-35; 9 U.S.C. §401(4).)
Based on the above facts, Plaintiff asserts the EFAA applies and the motion to compel arbitration should be denied. In response, Defendant argues the Act does not apply because the alleged sexual harassment predates its enactment.
“[T]he EFAA only applies to any ‘dispute or claim that arises or accrues on or after the date of the enactment of this Act,’ and the EFAA was enacted on March 3, 2022.” (Steinberg v. Capgemini Am., Inc. (E.D. Pa. Aug. 16, 2022, Civ. A. No. 22-489) 2022 WL 3371323 pp. 2.)
“In the EFAA context, at least one court…has observed that ‘a claim normally ‘accrues’ when ‘the plaintiff has a complete and present cause of action.’” (Olivieri v. Stifel, Nicolaus & Company, Incorporated (E.D.N.Y. 2023) 2023 WL 2740846 at 6.) “Where, as here, the ‘continuing violation’ doctrine purportedly applies to a plaintiff’s claims, it is well-settled that those claims accrue on the day of the last act in furtherance of the violation.” (Ibid.)
California law is in accord: “[W]hen an employer engages in a continuing course of unlawful conduct under the FEHA by refusing reasonable accommodation of a disabled employee or engaging in disability harassment, and this course of conduct does not constitute a constructive discharge, the statute of limitations begins to run not necessarily when the employee first believes that his or her rights may have been violated, but rather, either when the course of conduct is brought to an end, as by the employer’s cessation of such conduct or by the employee’s resignation, or when the employee is on notice that further efforts to end the unlawful conduct will be in vain.” (Richards v. CH2M Hill, Inc. (2001) 26 Cal.4th 798, 823.) Per Richards, “an employer’s persistent failure to reasonably accommodate a disability, or to eliminate a hostile work environment…is a continuing violation if the employer’s unlawful actions are (1) sufficiently similar in kind – recognizing, as this case illustrates, that similar kinds of unlawful employer conduct, such as acts of harassment or failures to reasonably accommodate disability, may take a number of different forms [citation]; (2) have occurred with reasonable frequency; (3) and have not acquired a degree of permanence.” (Ibid.)
Here, the question is whether Plaintiff’s allegations identify a continuing violation post March 3, 2022. Plaintiff’s Complaint alleges she experienced sexually harassing conduct at the hands of her “preceptor” “[a]lmost immediately after beginning her employment with Defendant” in January of 2022. (Complaint ¶¶ 7, 9.) The Complaint alleges inappropriate comments about Plaintiff’s body, inappropriate questions about her dating life, sexual innuendos, inappropriate sexual jokes and non-consensual touching. (Id. ¶ 9(a)-(e).) The Complaint alleges, however, that Plaintiff was reassigned to a new “preceptor” on or about February 20, 2022. (Id. ¶ 10.) Consistent with the above, Defendant offers the Declaration of Jennifer Choe, “the direct supervisor for Plaintiff Sarah Underwood,” who indicates Plaintiff was reassigned to a new “preceptor” on February 23, 2022 and that she raised no other complaints regarding inappropriate conduct by her former preceptor. (Choe Decl. ¶¶ 2, 3, 5-6.)
Although the Complaint does not allege further harassment of an overt sexual nature after her assignment to a new preceptor, Plaintiff does allege retaliation and wrongful termination that occurred thereafter. (Complaint ¶¶ 13-17.) Specifically, the Complaint alleges Plaintiff was “subjected to retaliatory conduct,” as “the harassing preceptor told employees that Plaintiff was moved because she was ‘not smart enough’ to work with him and took further steps to undermine Plaintiff’s job performance by bad-mouthing Plaintiff to Defendant’s employees.” (Id. ¶ 13.) This conduct is alleged to have occurred sometime after March 1, 2022. (Id. ¶¶ 11, 13.)
Defendant argues the above allegations, which expressly refer to retaliatory conduct, are limited to supporting Plaintiff’s claim for retaliation and do not support or extend the claim for sexual harassment. (Reply: 3:5-4:3.)
A similar argument was made by the defendant in Birschtein v. New United Motor Mfg., Inc. (2001) 92 Cal.App.4th 994. Defendant in that action argued that “the alleged conduct falling within the applicable limitations period [i.e. staring] was not actionable because it was not based on plaintiff’s gender; that is, was not ‘harassment…based on sex.’” (Id. at 1000.) But as the Birschtein court explained, “the creation of a hostile work environment, need not have anything to do with sexual advances.” (Id. at 1001, citing Accardi v. Superior Court (1993) 17 Cal.App.4th 341, 348, and adopting the analysis therein.) “It shows itself in the form of intimidation and hostility for the purpose of interfering with an individual’s work performance.” (Ibid.) “To plead a cause of action for this type of sexual harassment, it is ‘only necessary to show that gender is a substantial factor in the discrimination and that if the plaintiff ‘had been a man she would not have been treated in the same manner.’” (Ibid.)
Birschtein cited with approval portions of the opinion in Hirase-Doi v. U.S. West Communications, Inc. (10th Cir. 1995) 61 F.3d 777, which stated: “Coleman’s alleged threatening stares…in apparent retaliation for the complaints about his sexual harassment, were sufficiently related to the prior alleged sexual harassment that they could be found to constitute continuing sexual harassment…” (Birschtein, supra, 92 Cal.App.4th at 1002.)
The court in Birschtein concluded: “What began as Bonilla’s overt acts of sexual harassment…were later transmuted by plaintiff’s reaction (her complaints to management about the offensive conduct) into an allegedly daily series of retaliatory acts – the prolonged campaign of staring at plaintiff – acts that were directly related to, indeed assertedly grew out of, the antecedent unlawful harassment. The Accardi opinion put the matter convincingly when it characterized such a skein of harassment and complaint followed by retaliatory acts as a ‘continuous manifestation of a sex-based animus.’” (Id.) The court in Birschtein concluded plaintiff had sufficiently raised a triable issue as to “whether Bonillia’s apparent retaliatory acts were sufficiently allied with the prior acts of harassment to constitute a continuing course of unlawful conduct.” (Id.)
Further, Birschtein considered an argument based on the statute of limitations, holding as follows: “As our analysis of plaintiff’s claims of actionable sexual harassment and retaliation in part one of this opinion demonstrates, beginning with a series of overtly sexual remarks in the fall of 1995, through the staring campaign continuing intermittently through 1996 and 1997, Bonillia’s conduct was arguably sufficiently related and ongoing to constitute a ‘continuing course of unlawful conduct,’ and thus pass muster under the Richards formulation of the continuing violation doctrine.” (Ibid. at 1006.)
Based on the foregoing, this Court finds that Plaintiff Sarah Underwood has sufficiently alleged sexual harassment that occurred after the enactment of the EFAA. As was the case in Birschtein, Plaintiff alleges retaliatory acts that “were directly related to, indeed assertedly grew out of, the antecedent unlawful harassment.” (Birschtein, supra, 92 Cal.App.4th at 1002; See also ¶13 of Complaint.) Consequently, Plaintiff has alleged a “continuous manifestation of a sex-based animus,” that occurred after the effective date of the EFAA. (Ibid.) Although the insults alleged to have occurred in March of 2022 are not of a sexual nature, Birschtein makes clear that “[s]exual harassment does not necessarily involve sexual conduct.” (Id. at 1001.) It is sufficient that Plaintiff has alleged conduct that amounts to “intimidation and hostility for the purpose of interfering with an individual’s work performance” that was substantially based on her gender. (Ibid.)
The allegation that Plaintiff’s former preceptor “told employees that Plaintiff was moved because she was ‘not smart enough’ to work with him and took further steps to undermine Plaintiff’s job performance by bad-mouthing Plaintiff to Defendant’s employees,” in retaliation for her complaints of sexual harassment, is sufficient to meet the above standards. (¶13 of Complaint.)
Based on all of the above, the Court concludes 9 U.S.C. §402 applies to Plaintiff’s claim for sexual harassment, so as to permit Plaintiff to elect to invalidate the arbitration agreement.
The parties offer little discussion of the application of 9 U.S.C. §402 to the remainder of Plaintiff’s action. The statute states that, “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 assault dispute or the sexual harassment dispute.” (9 U.S.C. §402(a) (emphasis added).)
Some authority has interpreted this provision as preventing arbitration of any claims within a case including sexual harassment. In Johnson v. Everyrealm, Inc. (S.D.N.Y., February 24, 2023) ---F.Supp.3d ---- (2023 WL 2216173), the District Court “construe[d] the EFAA to render an arbitration clause unenforceable as to the entire case involving a viably pled sexual harassment dispute, as opposed to merely the claims in the case that pertain to the alleged sexual harassment.” (Id. at 1.) The Complaint in Johnson included claims for race discrimination, pay discrimination, retaliation and intentional infliction of emotional distress. (Id.)
The court in Johnson found the text of the EFAA was “clear, unambiguous, and decisive” in that it “keys the scope of the invalidation of the arbitration clause to the entire ‘case’ relating to the sexual harassment dispute.” (Id. at 17.) “It thus does not limit the invalidation to the claim or claims in which that dispute plays a part.” (Id.) “With the ordinary meaning of ‘case’ in mind, 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).” (Id. at 18.)
A later opinion issued from a different judge in the Southern District of New York stated that “under the EFAA, an arbitration agreement executed by an individual alleging conduct constituting a sexual harassment dispute is unenforceable only to the extent that the case filed by such individual ‘relates to’ the sexual harassment dispute, see 9 U.S.C. §402(a); in other words, only with respect to the claims in the case that relate to the sexual harassment dispute. To hold otherwise would permit a plaintiff to elude a binding arbitration agreement with respect to wholly unrelated claims affecting a broad group of individuals having nothing to do with the particular sexual harassment affecting the plaintiff alone.” (Mera v. SA Hospitality Group, LLC (S.D.N.Y., June 3, 2023) ---F.Supp.3d --- 2023 WL 3791712 at 3.) Based on the above, the court in Mera found that “[s]ince Plaintiff’s wage and hour claims…do not relate in any way to the sexual harassment dispute, they must be arbitrated, as the Arbitration Agreement requires.” (Id. at 4.)
The Mera court distinguished Johnson, noting that “Judge Engelmayer stated that he did ‘not have occasion [in his case] to consider the circumstances under which claim(s) far afield might be found to have been improperly joined with a claim within the EFAA so as to enable them to elude a binding arbitration agreement.” (Mera, supra, 2023 WL 3791712 at 4.)
Here, the Court finds that, similar to the circumstances in Johnson, all of Plaintiff’s claims “relate to” the allegations of sexual harassment. Notably, all of Plaintiff’s claims concern either sexual harassment or retaliation in response to her complaints of sexual harassment.
Consequently, Defendant’s Motion to compel arbitration is denied in its entirety.
Plaintiff is ordered to give notice.