Court Considers Temporal Applicability of the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021”

On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, codified at 9 U.S.C. § 402 (EFAA). This law, in sum, invalidates any pre-dispute mandatory arbitration clause as it applies to plaintiffs alleging claims of or related to workplace sexual harassment.

In a recent decision, Hodgin v. Intensive Care Consortium, Inc., No. 22-81733-CV, 2023 WL 2751443 (S.D.Fla. March 31, 2023), the court considered the applicability of this law to plaintiff’s claims, holding that – due only to the timing of the pertinent events – plaintiff was not entitled to the new carve-out. The EFAA provides, in pertinent part, that “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.” EFAA § 3. This decision is, accordingly, instructive as to how courts may assess when employment discrimination claims and disputes “accrue” or “arise” within the meaning of this relatively new legislation.

Plaintiff was terminated in November 2021 (before EFAA enactment), filed EEOC charges on January 28, 2022 (before EFAA enactment), received a “right to sue” letter in or about August 2022 (after EFAA enactment), and filed the instant lawsuit on November 6, 2022 (after EFAA enactment).

In reaching its conclusion that the EFAA did not apply, the court explained:

Plaintiff argues that her claim accrued when EEOC sent a right to sue letter. I disagree.

Plaintiff’s claim accrued when she was terminated in November of 2021. See Green v. Brennan, 578 U.S. 547, 556, 136 S.Ct. 1769, 195 L.Ed.2d 44 (2016) (“The [Title VII] claim accrues when the employee is fired. At that point—and not before—he has a “complete and present cause of action.” So at that point—and not before—the limitations period begins to run.”). Granted, Green is not an interpretation of the EFAA, but the EFAA does not define accrue, and thus the term should be given the same legal meaning as that applicable to Plaintiff’s Title VII claims. I was not able to locate circuit precedent on this issue. However, several federal district courts across the country have held that, under the EFAA, “accrue” means what it meant in Green. See Newcombe-Dierl v. Amgen, 2022 WL 3012211, at *5 (C.D. Cal. May 26, 2022); Marshall v. Hum. Servs. of Se. Texas, Inc., 2023 WL 1818214, at *3 (E.D. Tex. Feb. 7, 2023); Walters v. Starbucks Corp., ––– F.Supp.3d ––––, ––––, 2022 WL 3684901, at *3 (S.D.N.Y. Aug. 25, 2022). Notably, Newcombe-Dierl contains the same fact pattern as here in that the Plaintiff received the right to sue after EFAA was enacted.

Separately, I considered whether Plaintiff’s “dispute” arose after March 2022 because she filed suit in November 2022. The court in Walters dismissed that possibility by reasoning that “[a] ‘sexual harassment dispute’ may arise in a lawsuit, in which ‘claims’ are asserted, or in other kinds of proceedings. [EFAA] may therefore refer to ‘claims’ and ‘disputes’ in order [to] encompass various kinds of proceedings.” Walters, ––– F.Supp.3d at ––––, 2022 WL 3684901, at *3. I am not so sure that is right. I read the statute to say that “disputes … arise[ ]” and “claims … accrue[ ].” That is the only way to reconcile the redundancy of saying that a claim arises and accrues—those dates would be the same. Moreover, I do not see how a “dispute” could “accrue.” This interpretation accords with EFAA’s definition of “predispute arbitration agreement” as being “any agreement to arbitrate a dispute that had not yet arisen ….” EFAA § 401(1).

So, when does a dispute arise? A dispute entails disagreement, not just the existence of an injury (which would be the claim accruing). See Dispute, Merriam-Webster’s Online Dictionary 2023, (“to engage in argument: Debate”). At first blush then, one might think that is when the lawsuit is filed. But “dispute” is a broad term that encompasses other forums. Consider the well-known phrase “alternative dispute resolution.” That generally refers to disputes resolved before reaching a court, like with a mediator or arbitrator. In those instances, surely the dispute has arisen. Otherwise, there would be no dispute to alternatively resolve. Thus, to say that a dispute arises only once a lawsuit is filed is far too limiting.

Applying that reasoning here, I find that Plaintiff’s dispute arose when she filed Charges of Discrimination against her employer with the EEOC in January 2022—still before EFAA’s enactment in March 2022. The Charge of Discrimination initiates an administrative process whereby the EEOC attempts to mediate an early resolution and sometimes requests an answer from the employer. By that point, the dispute had arisen because the Plaintiff was now in an adversarial posture with her employer in a forum with the potential to resolve the claim.

[Cleaned up.]

The court further rejected plaintiff’s alternative arguments that the arbitration clause at issue was against public policy and/or unconscionable. As to unconscionability, the court noted, among other things, that plaintiff, a medical doctor, was a “sophisticated actor who could have understood the agreement or even obtained legal counsel to do so.”

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