Ninth Circuit Allows Mid-Arbitration Exit to Court Under EFAA
An employee who discovers evidence for a sexual harassment claim during arbitration can withdraw and pursue their entire case in court, the Ninth Circuit held.
In 'Ding v. Structure Therapeutics,' the U.S. Court of Appeals for the Ninth Circuit held that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) allows a plaintiff to withdraw from arbitration and proceed in court upon discovering a basis for a sexual harassment claim, even if other claims have already been arbitrated for some time. The court found the EFAA election right is not waived by starting arbitration on other claims if the plaintiff was unaware of the harassment claim's basis.
The decision is significant for employers because it creates a pathway for employees to pivot disputes from arbitration to a court setting midstream, introducing procedural uncertainty. The court also held that a sex-based hostile work environment claim under California’s FEHA constitutes a “sexual harassment dispute” under the EFAA, even without overtly sexual conduct. This broad interpretation expands the types of claims that can be used to bypass mandatory arbitration agreements. When the EFAA applies, the court confirmed it invalidates the arbitration agreement for the entire "case," allowing related non-harassment claims to be litigated in court as well.