Labor & Employment Law Daily Wrap Up, COVERAGE, LIABILITY—9th Cir.: Employee’s sexual harassment claims against Netflix must proceed to arbitration, (Jul 9, 2026)

By Nicholas Kaster, J.D.

The allegations leading to the dispute accrued before the EFAA’s effective date, rendering it inapplicable.

Affirming a district court’s grant of a motion to compel arbitration of a former Netflix employee’s claims for sexual harassment, the Ninth Circuit, interpreting the timing provisions of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), found that the EFAA would apply either to “claims that accrue” or “disputes that arise” on or after March 3, 2022. Because the employee’s allegations concerned situations that took place between 2017 and 2021, the dispute arose and the claims accrued prior to the EFAA’s effective date, and thus must proceed to arbitration (Combs v. Netflix, Inc., No. 25-3164 (9th Cir. July 8, 2026)).

Sexual harassment complaints. According to the employee, between 2017 and 2021 she repeatedly complained to Netflix about instances of sexual harassment and Netflix’s sexually degrading culture. She claimed that she brought these issues to the attention of her supervisors, “only to be ignored and discarded.” She asserted that she complained to Netflix regarding the uncomfortable nature of the sexually charged atmosphere she and other female employees were subjected to, but no action was taken to remedy the situation and the harassment continued. After she brought these matters to the attention of her supervisors, the employee alleged that she “experienced retaliation, humiliation, and targeted harassment.

Termination. Netflix fired the employee in December 2021. Although Netflix informed the employee that it was terminating her because she failed to comply with the company’s COVID-19 vaccination policy, she alleged that the real reason she was fired was “in retaliation for submitting complaints regarding the sexually charged atmosphere in the workplace.”

Lawsuit. In August 2023, the employee filed an administrative complaint against Netflix with the California Department of Fair Employment and Housing. On July 29, 2024, the employee sued Netflix in California state court, raising various state law claims of discrimination, harassment, and hostile work environment. Netflix removed the case to federal court based on diversity of citizenship and moved to compel arbitration.

On March 3, 2022, Congress enacted the EFAA, which specifies that the EFAA “shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.”

The district court granted Netflix’s motion, concluding that the employee’s claims accrued and the dispute arose before the EFAA’s effective date. Because the EFAA did not override the parties’ arbitration agreement, and because the employee did not dispute the validity of that agreement or that her claims fell within the arbitration clause, the district court ruled that the suit was required to go to arbitration. The current appeal ensued.

Claims fell within EFAA. Here, the Ninth Circuit concluded that there was no question that the complaint alleged conduct constituting unlawful sexual harassment. The employee’s claims would therefore presumptively fall within the EFAA, and, absent anything further, she could elect to proceed in court rather than through arbitration.

EFAA’S timing provisions. However, Congress also included a timing provision in an EFAA statutory note, which reads: “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,” i.e., March 3, 2022. Although not part of the U.S. Code, this statutory note is congressionally enacted and is binding law.

The key question on appeal was how to interpret and apply this timing provision.

Two separate concepts. Because of the parallelism in the phrases “dispute or claim” and “arises or accrues,” the Ninth Circuit read the EFAA’s statutory note as referring to two separate concepts: “disputes that arise” and “claims that accrue.” Thus, the appellate court concluded that the EFAA would apply either to “claims that accrue” or “disputes that arise” on or after March 3, 2022.

Accrual. A claim accrues, said the appeals court, when the plaintiff has a “complete and present cause of action”—i.e., when she has the right to file suit and obtain relief. Applying this framework, the court found that the employee had a complete and present cause of action before the EFAA’s March 3, 2022, effective date, given that she alleged harassment and a subsequent termination that took place between 2017 and 2021.

Disputes arise. The more difficult question was what it means for a “dispute” to “arise.” The employee argued that no dispute arose in this case until August 2023, when she filed her formal complaint against Netflix with the California Department of Fair Employment and Housing. But the Ninth Circuit embraced the interpretation of the Third Circuit: that a dispute arises for purposes of the EFAA “when an employee registers disagreement—through either an internal complaint, external complaint, or otherwise—with his or her employer, and the employer expressly or constructively opposes that position.” As ordinarily understood, a “dispute” requires “some aspect of opposition or disagreement” between the parties as to a particular issue.

Middle ground. The Ninth Circuit noted that when a dispute arises for EFAA purposes will be a “fact specific inquiry” in every case. But it rejected two more extreme interpretations of “dispute” that would raise or lower the bar for finding that a dispute has arisen.

One such interpretation holds that a “dispute” does not arise until a formal complaint is filed with an external body, like a court or the California state agency with whom the employee filed her complaint in August 2023. The appeals court found this interpretation too narrow. However, the Ninth Circuit also rejected the more extreme position on the opposite end of the spectrum: that a dispute arises whenever the underlying challenged conduct occurred.

This interpretation would be too broad, said the court, for it would mean that a “dispute” arises whenever a “claim” accrues. Such an interpretation would render Congress’s use of these independent concepts superfluous. Instead, said the Ninth Circuit, a “dispute” requires “some aspect of opposition or disagreement” between the parties. And in the particular context of an employer-employee relationship, such a “dispute” arises “when an employee registers disagreement—through either an internal complaint, external complaint, or otherwise—with his or her employer, and the employer expressly or constructively opposes that position.”

Although this formulation means that a “claim” will typically “accrue” before a “dispute” arises, that may not always be the case depending on the rules of accrual for continuing violations, such as hostile work environment claims. Again, the court emphasized, when claims accrue and disputes arise under the EFAA will turn on the facts presented in each case.

EFAA inapplicable. Treating the allegations in the complaint as true, the Ninth Circuit concluded that a dispute arose between the employee and Netflix prior to March 3, 2022, meaning that the EFAA did not apply to her claims.

Considering the allegations as a whole, said the appeals court, a “dispute” between the employee and Netflix easily arose by December 2021 at the latest. When she repeatedly complained to Netflix about the sexualized company culture and the inappropriate actions of her co-workers, and when Netflix then allegedly failed to take any corrective action, there was plainly “some aspect of opposition or disagreement” between the parties. Netflix’s alleged inaction shows that the company, at a minimum, constructively opposed the employee’s position.

When an employee complains to her employer about the actions of co-employees, a dispute arises once the employer responds negatively, or constructively so, to the employee’s complaints. And certainly, a dispute had arisen by December 2021, given that Netflix allegedly opposed the employee’s complaints to such an extent that it fired her for raising those complaints.

The court recognized “that it may not always be easy to tell when an employee first registers disagreement with his or her employer or when an employer disagrees with a position of an employee.” If the employee here had not made internal complaints to Netflix, the situation would be different, said the appellate court. But, considering the entirety of the employee’s alleged interactions with Netflix, the court had little difficulty concluding that their dispute arose before March 3, 2022. Accordingly, the employee’s claims must proceed to arbitration.

The case is No. 25-3164.

Judge: Bress, D.

Attorneys: Michael Charles Patrick Clark (Brown, Clark, Le & Cevallos) for Jessica Combs. Karin Bohmholdt (Greenberg Traurig) for Netflix, Inc.

Companies: Netflix, Inc.

Cases: CoverageLiability Arbitration Discharge Discrimination SexualHarassment Retaliation AlaskaNews ArizonaNews CaliforniaNews HawaiiNews IdahoNews MontanaNews NevadaNews OregonNews WashingtonNews GCNNews