Tuesday, November 18, 2025
Page 3
Court of Appeal:
Error to Find Filing Date Controls Arbitration Exception
Opinion Says Whether Statutory Exemption for Sexual Harassment Claims Governs Also Depends on When Dispute Arose, Rejects Assertion That Complaint Is Always That Moment
By Kimber Cooley, associate editor
Div. Three of the Fourth District Court of Appeal held yesterday that a trial judge erred in denying an employer’s motion to compel arbitration of claims based on a 2022 federal law providing that a party asserting sexual harassment claims may opt-out of alternative dispute resolution proceedings, saying that the jurist wrongly looked only to whether the plaintiff filed her complaint after the law’s enactment and did not consider when the underlying dispute arose.
At issue is the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFAA”), codified at 9 U.S.C. §401 et seq. which provides:
“Notwithstanding any other provision of this title, at 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 Federal, Tribal, or State law….”
Much of the litigation surrounding the act concerns whether a plaintiff’s claims are covered. A statutory note to the legislation specifies that “[t]his 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,” which occurred on March 3, 2022.
Justice Thomas A. Delaney authored yesterday’s unpublished opinion, joined in by Acting Presiding Justice Joanne Motoike and Justice Eileen C. Moore, writing:
“The trial court [concluded that] the EFAA applied because [the plaintiff] filed her case after the date of its enactment. We conclude filing a case after the EFAA’s enactment is only one of the requirements for the application of the EFAA. The claims involved also must have accrued on or after the enactment date or a dispute between the parties must have arisen on or after that date in order for the EFAA to apply. The undisputed facts here show neither occurred. Accordingly, the EFAA did not apply, and the trial court erred in denying the motion to compel arbitration.”
Sexual Harassment Allegations
Seeking to invoke the act’s opt-out provision was Cynthia Padock, who filed a complaint against her former employer, Dollar Tree Stores Inc., on Nov. 3, 2023. She asserted multiple causes of action under the California Fair Employment and Housing Act based on allegations that she suffered sexual harassment during her employment at the discount retailer, between May and November of 2021.
Padock allegedly complained about the harassment to employees in the human resources department on Nov. 8, 2021. She claimed that she never returned to work after promises to transfer her to another location were never fulfilled.
Dollar Tree moved to compel Padock to submit her claims to arbitration, citing an agreement that she allegedly signed when hired by the company. She opposed the motion based on the EFAA, arguing that her claims fell within the scope of the law because both her complaint and a claim with the California Civil Rights Department were filed after the law’s enactment.
Orange Superior Court Judge Glenn R. Salter noted that “case law is hopelessly split” on whether the EFAA applies in cases where the sexual harassment occurred before the effective date of the legislation. However, on April 17, 2024, he resolved the split in favor of the plaintiff, finding that the filing date of her complaint was determinative.
Filing Date
Delaney acknowledged that Div. Three of the Fourth District Court of Appeal, in the 2023 decision in Murrey v. Superior Court, held that the EFAA “is only applicable to cases filed after its enactment.” However, he opined:
“The court did not address whether there are any other requirements for the applicability of the EFAA. Specifically, it did not address the statutory note to the EFAA, which provides that the EFAA applies only where a claim accrues or a dispute arises on or after March 3, 2022….Although the statutory note was not codified, it is legally binding.”
He noted that Padock did not assert that her claims accrued at the latest on Nov. 8, 2021, when she was allegedly constructively terminated. She instead argued that the dispute at issue did not arise until after she filed her claim with the Civil Rights Department and her complaint in the Orange Superior Court.
Rejecting this characterization, Delaney wrote:
“We disagree….[T]he federal courts have split on when a dispute arises under the EFAA. Some courts have found ‘the existence of a claim necessarily encompasses an underlying dispute…’….The majority of district courts, however, have determined that a dispute arises ‘when a person asserts a right, claim, or demand and is met with disagreement on the other side. A dispute cannot arise until both sides have expressed their disagreement, either through words or actions.’ ”
Dispute Arose
The jurist continued:
“Even under the more lenient definition of dispute…, a dispute arose between Padock and Dollar Tree concerning her sexual harassment claims by, at the latest, November 8, 2021. According to her complaint, Padock had repeatedly complained to her manager, who did nothing to address the harassment. On November 8, 2021, Padock complained to Dollar Tree’s HR department, but was ignored which resulted in her constructive termination.”
Unpersuaded by Padock’s assertion that a dispute arises only when the parties are opposed to one another in a forum with the power to resolve the controversy, he remarked:
“[A]lthough a dispute arises when parties are in an adversarial posture in a forum with the potential to resolve the claim, a dispute may also arise when an employee complains to her manager and [human resources] about sexual harassment and the employer constructively disagrees with that claim by failing to address the harassment and terminating her. That is what occurred here.”
He added:
“Here, although Padock filed her case after March 3, 2022, her claim accrued and a dispute had arisen before March 3, 2022. Thus, the EFAA does not apply. Accordingly, the trial court erred in denying Dollar Tree’s motion to compel arbitration.”
The case is Padock v. Dollar Tree Stores Inc., G064222.
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