Labor & Employment Law Daily Wrap Up, ARBITRATION—E.D. Cal.: EFAA precludes arbitration of construction company employees’ claims based on supervisors’ harassment, (Feb 7, 2025)

By Kathleen Kapusta, J.D.

“Federal district courts in and outside the Ninth Circuit are split as to the appropriate standard for determining ‘the allegations that are necessary to invoke the EFAA in the first place and to determine whether the statute is applicable to the case.’”

Denying a construction and engineering company’s motion to compel arbitration of various FEHA claims filed by four former male employees who alleged they were sexually harassed by a superintendent and foreman and wrongfully or constructively discharged them after they complained, a federal district court in California found that at least one of their claims alleged conduct constituting a sexual harassment dispute; the core of their case alleged conduct constituting sexual harassment; and their sexual harassment hostile work environment claim was temporally within the scope of the EFAA. Thus, the EFAA rendered the arbitration agreement unenforceable (Pena Cardenas v. F.D. Thomas, Inc., No. 2:24-cv-01814-DAD-JDP (E.D. Cal. Feb. 5, 2025)).

Alleged harassment. All three employees worked for the company through May or June 2022; one started in 2016, another in 2018, and the third in 2020. Two of them alleged that a company foreman sexually harassed them, including through inappropriate comments, groping, and “humping.” The third employee alleged that a superintendent physically groped his buttocks and groin almost every other shift they worked together.

According to one of the employees, he was fired four days after he reported the harassment to HR, a company vice president, and a union representative.

All three employees sued the company, asserting claims for sexual harassment, retaliation, and failure to prevent harassment and retaliation in violation of FEHA, constructive and wrongful termination, and negligent retention and supervision. After removing the case to federal court, the company moved to compel arbitration. In response, the employees argued that the arbitration agreement was unenforceable pursuant to the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA).

Pleading standard. As an initial matter, the court noted that some courts “evaluate EFAA arguments using the pleading standards of Federal Rule of Civil Procedure 12(b)(6)” while others apply a more liberal standard according to which a plaintiff need only “plead nonfrivolous claims relating to sexual assault or to conduct alleged to constitute sexual harassment, with the sufficiency of those claims to be reserved for proper merits adjudication.” Here, the court found that the more liberal pleading standard was applicable.

Sexual harassment dispute. Turning to whether the employees’ sexual harassment hostile work environment claim was non-frivolously pled such that it alleged conduct constituting a sexual harassment dispute, the court noted that the first element of a FEHA claim requires that the plaintiff belongs to a protected group, for instance based on sex, and the third element requires that “the harassment complained of was based on sex.” Noting that the employees provided allegations of “sex-specific and derogatory terms” such as “I don’t give a f**k about you, you son of a bitch... give me your dick,” the court found they provided nonfrivolous support for the first and third elements.

As to the second element, which requires that the plaintiff was subject to unwelcome sexual harassment, the employees alleged they rejected the advances, one verbalized that he was hurt after the groping, and another alleged that he made constant attempts to prevent the foreman’s physical advances. There allegations were also sufficient, said the court, to provide nonfrivolous support for the second element of their claim.

The employees also provided nonfrivolous support for the fourth element—“the harassment complained of was sufficiently pervasive so as to alter the conditions of employment and create an abusive working environment.” They alleged that the harassment occurred frequently—three to four times per week, on average every other shift, or constantly—and that it went beyond a mere offensive utterance to aggressive groping that resulted in one employee burning his finger, the physical groping of another’s buttocks and groin, and the groping of the third employee’s genitals.

Regarding the fifth element, respondeat superior, because the employees alleged they suffered harassment from two supervisors, their allegations provided nonfrivolous support for this element. Accordingly, the court found that they pled a nonfrivolous claim for FEHA sexual harassment hostile work environment and, as such, one of their claims alleged conduct constituting a sexual harassment dispute.

Entire case. The company next argued that even if their sexual harassment hostile work environment claim was nonarbitrable, the employees should nonetheless be compelled to arbitrate their remaining, nonsexual harassment claims. For their part, the employees pointed out that the EFAA’s standard bars forced application of an arbitration agreement to “‘a case’” that “relates to the... sexual harassment dispute” and the EFAA in turn defines a sexual harassment dispute as “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable law.”

They satisfied the EFAA’s standard, they argued, because each of their causes of action relates to the sexual harassment they suffered and the EFAA renders an arbitration clause unenforceable as to an entire case involving a sexual harassment claim even where the case’s other claims do not relate to the alleged sexual harassment.

Agreeing with the employees, the court found that the core of their case alleged conduct constituting sexual harassment under California law and as such the EFAA bars the entire case from forced arbitration.

EFFA’s temporal scope. Finally, the company argued that the employees’ claims were not within the temporal scope of the EFAA because it does not apply retroactively and their claims predate its March 3, 2022, enactment date. Here, the court noted that the EFAA “applies to continuing violations that occur, at least in part, after the statute’s effective date, even if some of the conduct constituting the continuing violation occurred earlier.”

As to whether the employees alleged that any act in furtherance of the hostile work environment occurred on or after enactment of the EFAA, the court noted that their complaint did not provide specific dates for alleged incidences of sexual harassment. But each employee alleged his employment with the company ended after March 3, 2022. Further, one alleged that the foreman made inappropriate and harassing comments “at least three to four times per week with multiple incidents of” the foreman “pinning and holding [him] down while humping him.” Another alleged he “typically worked under” this foreman’s “supervision” and he “would see [the foreman] every shift he worked” and the foreman’s sexually harassing comments continued throughout his employment.

Another alleged he “typically worked with the superintendent” who, beginning in 2019, “would make sexually harassing comments and physically grope [his] buttocks and groin from behind on average every other shift they worked together.” In sum, said the court, the employees’ complaint includes specific allegations of repeated sexual harassment that started before enactment of the EFAA and continued throughout until each employee’s employment with the company ended.

While the company argued that their allegations were too “temporally ambiguous” to substantiate application of the EFAA, it cited no authority for this proposition. Accordingly, the court found the employees alleged a continuing violation such that their claim for sexual harassment hostile work environment accrued after enactment of the EFAA. Thus, it denied the company’s motion to compel arbitration.

The case is No. 2:24-cv-01814-DAD-JDP.

Judge: Drozd, D.

Attorneys: Jonathan Melmed (Melmed Law Group) for Francisco Miguel Pena Cardenas, Fernando Verdusco, and Jesus Acevedo, Jr. Desiree Jean Trung Ho (CDF Labor Law) for F.D. Thomas, Inc.

Companies: F.D. Thomas, Inc.

Cases: Arbitration SexualHarassment StateLawClaims Discharge CaliforniaNews