Metropolitan News-Enterprise

 

Tuesday, August 9, 2022

 

Page 1

 

C.A.: Agency Bringing FEHA Action Not Bound by Employer-Employee Arbitration Agreement

 

By a MetNews Staff Writer

 

The California Department of Fair Employment and Housing cannot be required to arbitrate an action for discrimination it brings on behalf of an employee who contractually agreed to such means of resolving any disputes with his employer, the Third District Court of Appeal has held.

“We conclude the Department cannot be required to arbitrate in that situation because it did not agree to do so,” Acting Presiding Justice Adrienne Grover wrote, in an opinion filed Friday.

The opinion involves a dispute between a man denominated “John Doe” and his employer, Cisco Systems, Inc. In a separate opinion on Friday arising from the same case, the Third District ordered the Santa Clara Superior Court to reconsider an order denying the department permission to refer to the employee in papers it files using a pseudonym, as recited in a news story above.

Grover’s View

In her opinion affirming an order by Judge Drew C. Takaichi denying Cisco’s motion to compel arbitration, Grover said:

“[W]e acknowledge that arbitration agreements can be enforced against third parties in certain situations….Nonsignatories have been bound by arbitration agreements when the nonsignatory assumed the obligations of the party who signed the agreement; when an agency relationship exists between the nonsignatory and the signer; and when the nonsignatory is the alter ego of the signer….Cisco’s theory is along those lines: that the Department is bound by the arbitration agreement because it is Doe’s proxy in this action and is not acting independently.

“The plain language of the Government Code sections giving the Department authority to enforce employment discrimination laws indicates otherwise.”

Under statutory law, Grover pointed out, either the department or an employee may bring an action under the Fair Employment and Housing (“FEHA”).

Not Mere ‘Proxy’

Were the department “merely a proxy” for the employee, she said, “the employee would decide whether to bring an action, and the Department would be limited to pursuing only the relief that could be obtained by the employee.”

The justice pointed out:

“But under the relevant legislation, the Department has discretion to decide whether to file suit…, and it can seek remedies beyond those available in a suit brought by an employee.”

These factors, Grover reasoned, “confirm that the Department operates as an independent party in an enforcement lawsuit.”

The fact that the department is seeking remedies that would be to the advantage of the employee, she said, “makes the employee a real party in interest, but it does not undermine or conflict with the Department having an independent interest in FEHA enforcement.”

Appellate Brief

In its appellant’s brief, Cisco argued that agreed to arbitrate any disputes with Cisco “and would have been required to do so had he filed the civil action.” The fact that “he is the real party in interest” while the department “is the nominal plaintiff in this case does not change that fact,” insisting that the department’s claims “are no greater than Doe’s and, thus, must be arbitrated.”

The department countered that Cisco was seeking to reduce it “to mere pro bono counsel for aggrieved employees.” It maintained that the department actually “is a public prosecutor charged with representing the interests of the public; it is not, as Cisco would have it, counsel to individual complainants.”

The case is Department of Fair Employment and Housing v. Cisco Systems, 2022 S.O.S. 3495.

 

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