The 9th U.S. Circuit Court of Appeals ruled Thursday that the Forced Arbitration for Sexual Assault and Sexual Harassment Act (EFAA) lets plaintiffs bring sex‑based claims in court even when they first learn of the alleged misconduct during an arbitration proceeding.
Court finds EFAA rights survive earlier arbitration demands
In a 2‑1 decision, the panel sided with a former chief financial officer of Structure Therapeutics, a California‑based clinical drug developer. The employee had originally filed an arbitration demand asserting discrimination based on national origin and domestic‑violence victim status. Over a year of discovery, evidence emerged suggesting a sex‑based hostile work environment.
The company moved to compel arbitration, arguing that the plaintiff could not later invoke the EFAA after starting arbitration on other claims. It also claimed the employee knew the facts underlying the sexual‑harassment claim at the time of her initial filing, which would constitute a waiver.
The majority held that “a plaintiff’s right under the EFAA to pursue her claims in court is not categorically foreclosed by the earlier filing of an arbitration demand with non‑sexual harassment claims.” The court stressed that the statute’s plain text does not set a deadline for when a sexual‑harassment claim may be raised.
Because the employee was not alleging sex‑based harassment when she first sought arbitration, the court said she could not have triggered an EFAA election at that moment. Allowing the contrary, the judges warned, would strip individuals who uncover such claims later of their choice.
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Limits on switching from arbitration to court
The ruling also warned that the decision does not give plaintiffs carte blanche to start arbitration, add a sexual‑harassment claim at any point, and then move the case to court. Waiver principles still apply if a plaintiff unduly delays filing or intentionally pursues arbitration for the same claim.
Structure’s argument that the employee waived her rights because she allegedly knew the relevant facts was rejected. A lower court had already found no evidence that she possessed that knowledge at the time of the arbitration demand.
The panel concluded that the plaintiff had plausibly pleaded a sex‑based hostile work environment claim, satisfying the pleading standard required for EFAA coverage.
A lone dissenting judge argued that the statute’s language does not allow a plaintiff to make more than one election regarding arbitration, suggesting a stricter interpretation.
“We are analyzing the court’s ruling, which we just received, and determining next steps,” a Structure spokesperson said in an email.
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Congress enacted the EFAA in 2022 after years of advocacy, invalidating arbitration agreements that block court lawsuits for sexual assault or harassment. Since then, federal courts have grappled with how the law applies in varied contexts.
For instance, the 8th Circuit issued a 2024 decision in favor of a Chipotle employee.
In practice, this decision means that workers who discover harassment only after an arbitration has begun retain a path to court, provided they did not already know the facts and they raise the claim promptly. It highlights the need for thorough discovery and careful timing in disputes that could fall under the EFAA.
The 9th Circuit’s interpretation aligns with earlier rulings that emphasize the statute’s purpose: to keep arbitration from shielding employers from liability for sex‑based misconduct. As lower courts continue to apply the law, employers may need to revisit arbitration clauses to ensure compliance.
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