Southern California Medical Center, Inc., is a community clinic that provides care to low income and medically uninsured patients. The Center’s chief medical officer is physician Mohammad Rasekhi. In July 2016, the Center hired Omar Kader to serve as the chief financial officer. Approximately 18 months later, Kader became the chief operating officer. In May 2018, Kader signed his first agreement to arbitrate disputes with the employer.

Kadar claimed in a lawsuit that he was sexually harassed and assaulted by Rasekhi at various times in 2018 and 2019. On June 25, 2019, Kader signed a new arbitration agreement agreeing to arbitrate “employment disputes” with the Center, the human resources provider Modern HR, Inc., or any of their respective employees or officers.

Eight subsequent incidents of sexual harassment and sexual assault allegedly took place between September 2019 and February 28, 2022. Kader alleged that in July 2021, the Center’s chief executive officer Sheila Busheri began making false statements about Kader to justify retaliating against him.

Congress enacted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (the Act; 9 U.S.C. §§ 401, 402), which invalidates predispute arbitration agreements in certain circumstances. The Act became effective on March 3, 2022.

Following the effective date of the Act, Kader filed a complaint with the DFEH in May 2022, and requested an immediate right-to-sue notice. DFEH closed the complaint and issued a right-to-sue notice on May 27, 2022. That same day, Kader filed a complaint against the Center, Rasekhi, Busheri, six of the Center’s board members, Modern HR, and two additional entities.

He alleged causes of action for sexual harassment, discrimination on the basis of race, national origin and/or sex, failure to prevent discrimination and harassment, retaliation, intentional infliction of emotional distress, negligence, sexual battery, and defamation. It was unclear from the complaint whether Kader complained about Rasekhi’s conduct to anyone other than Rasekhi. Kader alleged he felt that he could not report Rasekhi’s conduct to the Center or its related entities without suffering retaliation

The defendants filed a motion to compel arbitration and argued that the Act did not apply because: (1) Kader’s claims accrued prior to the effective date of the Act, and (2) the arbitration agreement was signed after the conduct giving rise to sexual harassment or sexual assault took place.

The trial court denied the motion to arbitrate based on the Act. The Court of Appeal affirmed in the published case of Kader v. Southern Cal. Medical Center, Inc. – B326830 (January 2023).

A statutory note to the Act adds: “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.” (Pub.L. No. 117-90, § 3, reprinted in notes foll. 9 U.S.C. § 401.)

The Center defendants contend the arbitration agreement in this case is not a “predispute” arbitration agreement because the conduct allegedly began before Kader signed the arbitration agreement.

The Court of Appeal concluded the date that a dispute has arisen for purposes of the Act is a fact-specific inquiry in each case, but a dispute does not arise solely from the alleged sexual conduct. A dispute arises when one party asserts a right, claim, or demand, and the other side expresses disagreement or takes an adversarial posture. In other words, “[a] dispute cannot arise until both sides have expressed their disagreement, either through words or actions.”  Until there is a conflict or disagreement, there is nothing to resolve in litigation.

“In the present case, there is no evidence that a dispute existed between the parties prior to or at the time of signing the new arbitration agreement on June 25, 2019. Kader alleged three incidents of sexually harassing or assaultive conduct took place before the agreement was signed, but there is no evidence that any dispute yet existed.”

The dispute in this case arose in May 2022, after the effective date of the Act. The trial court properly concluded that the Act applied to invalidate the predispute arbitration agreement in this case.