Ninth Circuit: EFAA Allows Plaintiff to Move From Arbitration to Court

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) allows a plaintiff to escape arbitration and move to the courthouse when discovery in arbitration revealed evidence of a sex-based harassment claim as part of her allegations, the U.S. Court of Appeals for the Ninth Circuit has ruled.

Shortly after experiencing a domestic violence incident and requesting limited accommodations at Structure Therapeutics, Dr. Ding Ding was terminated. She filed an arbitration demand asserting discrimination and harassment based on national origin and her status as a domestic violence victim.

During discovery, Ding uncovered evidence suggesting that her mistreatment was motivated by sex. For example, she learned that before she was hired, her supervisor outlined his “ideal phenotype” for the position, which he conceptualized as a man with an investment banking background. The company’s Board of Directors wanted to emphasize gender diversity and hired Ding instead.

Ding was almost immediately sidelined by her supervisor, and he claimed that male investment bankers had complained that she was “difficult to work with” and “lecture[d] them.” After Ding was terminated, the position was filled by a man. 

Pursuant to her employment agreement, Ding filed a demand for arbitration, asserting claims of discrimination and harassment based on national origin and her status as a domestic violence victim.

When Ding obtained new information during discovery, she withdrew from arbitration and filed a complaint in state court, alleging a sex discrimination claim and a sex-based hostile work environment claim in violation of California’s Fair Employment and Housing Act, as well as discrimination based on her status as a domestic violence victim.

The defendants removed the case to federal court and filed a motion to compel arbitration.

Ding responded by arguing that the arbitration agreement she signed as an employee was invalid and unenforceable under the .

The district court sided with Ding and the federal appellate panel affirmed, with one judge dissenting.

The defendants argued that a plaintiff is categorically barred from making an EFAA election if, like Ding, she first files other claims in arbitration.

The court disagreed.

“A plaintiff’s right under the EFAA to pursue her claims in court is not categorically foreclosed by the earlier filing of an arbitration demand with non-sexual harassment claims,” the court wrote. “The plain text of the EFAA does not limit when a plaintiff may allege a sexual harassment claim or exercise her rights under the EFAA. … Nothing in the text indicates that the earlier filing of other claims extinguishes her rights under the statute.”

When Ding initially filed in arbitration, she was not a “person alleging conduct constituting a sexual harassment dispute,” the court explained; rather, her arbitration demand was predicated on discrimination and harassment claims based solely on national origin and domestic violence victimhood.

“Under the facts of this case, Dr. Ding made an election only one time—when she chose to pursue the newly discovered sexual harassment claim by filing her claims in federal court,” the court said. Under the defendants’ reading of the statute, a plaintiff could lose her ability to have her sexual harassment claim heard in court before she knows she has such a claim.

The court noted that its conclusion “does not mean that a plaintiff may start in arbitration, bring a sexual harassment claim at any time, under any circumstances, and then pursue her claims in court. A plaintiff may waive her EFAA rights under ordinary waiver principles.”

Considering the defendants’ second argument, that Ding failed to state a sexual harassment claim within the meaning of the EFAA, the court again disagreed.

Ding alleged severe or pervasive harassment, beginning with her supervisor’s desire to hire a man instead of her, his sidelining of Ding and her diminishing job responsibilities, as well as his adoption of sexist, unsupported criticisms that she was too aggressive. Her supervisor also allegedly made light of the facial injuries that Ding suffered from a domestic violence incident and told her that she “may be more sensitive to it than others.”

In addition, the alleged conduct created a work environment that was objectively and subjectively offensive, the court found.

“We hold that Dr. Ding can assert her rights under the EFAA despite having initiated and participated in arbitration for a period of time with Structure,” the court wrote. “Both the text of the federal statute and its underlying purpose make clear that Congress intended to afford victims of workplace sexual assault and sexual harassment a genuine choice whether to pursue their claims in a court of law, notwithstanding a preexisting agreement to arbitrate. Where, as here, a plaintiff discovers a basis to pursue claims covered by the EFAA during arbitration, she may elect to end arbitration and proceed in court.”

Further, the court held, because “the EFAA invalidates an arbitration agreement ‘with respect to a case’—rather than a claim—that ‘relates to’ a sexual harassment dispute, 9 U.S.C. § 402(a), Dr. Ding is entitled to bring her entire case in court.”

To read the opinion in Ding v. Structure Therapeutics, Inc., click .

Why it matters: Under this ruling, a plaintiff who progresses deep into the arbitration process can pull her case and start over in court if she learns during the arbitration some basis to assert a sex-based harassment claim. Employers engaged in arbitration should be alert to this potential outcome.