The #MeToo movement highlighted concerns that compelled arbitration of sexual harassment claims can perpetuate unacceptable behavior and minimize its consequences by diverting such claims from public court proceedings into a private forum. In response, Congress enacted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA; 9 U.S.C. §§ 401-402).
As codified, the EFAA amended the Federal Arbitration Act (FAA; § 1 et seq.), and was placed within the FAA’s other provisions. Section 402, added by the EFAA, states, “Notwithstanding any other provision of [the FAA], at the election of the person alleging conduct constituting a sexual harassment dispute . . . , no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the . . . sexual harassment dispute.” (§ 402(a).)
Yongtong “Jade” Liu sued Miniso Depot CA, Inc., USA Miniso Depot, Inc., Lin Li and unnamed Doe defendants on October 5, 2023. Liu alleged that Li was the chief executive officer of the Miniso entities. According to Liu, Miniso owns and operates retail stores which sell “goods such as toys, collectables, stationary, cosmetics, and household items.”
Liu alleged she was hired by Miniso in around April 2021 as a human resources administrator, and was paid an hourly wage. In around January 2022, Miniso changed Liu’s job title and, although her duties “remained generally the same,” she was classified as exempt from various wage and hour requirements imposed by the Labor Code, Industrial Welfare Commission Wage Orders, and regulations. Liu alleged that Miniso misclassified her as an exempt employee, and as a result improperly failed to pay her for all the hours she worked, to pay her the minimum wage, to pay the required rates for overtime, and to provide her with appropriate rest and meal breaks and with accurate wage statements.
Liu, who alleges she “identifies as lesbian and dresses in a unisex non-gender specific style,” further asserted that during her employment “[she] and others in her presence were subjected to unwelcome, severe and pervasive sexual harassment, sex discrimination and race discrimination, sexual orientation/gender harassment and sexual harassment/gender discrimination.”
Liu alleged the following specific incidents and types of offensive conduct: Li and others at Miniso commented on Liu’s appearance during company meetings; Li twice suggested during meetings that if Miniso’s products looked like Liu then no one would purchase them; Li remarked that Liu was unattractive because she was “too skinny” and that she needed to eat more to have more curves. and would comment that “a man should do what a man should do, and a woman should do what a woman should do.”
Liu also alleged that Miniso asked her, in her position in human resources, to participate in practices which she considered to be illegal, including failing to pay female employees “equally or comparably to male counterparts,” “hir[ing] only young Korean employees,” and falsifying “immigration-related documents” to facilitate Miniso hiring Chinese individuals who could not legally work in the United States. Liu alleged she complained about these practices to Li and others and refused to comply. Liu alleged that after she refused to participate in various practices she believed were illegal, she faced increased harassment and discrimination.
Based on these allegations, Liu asserted the following claims: violation of various wage and hour requirements set forth in the Labor Code and California Code of Regulations, title 8, section 11040; sexual harassment in violation of the Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.); sex discrimination in violation of the FEHA; sexual orientation/gender identity harassment in violation of the FEHA; sexual orientation/gender identity discrimination in violation of the FEHA; retaliation for complaining about unlawful activities in violation of Labor Code section 1102.5; retaliation for refusing to participate in unlawful activities in violation of Labor Code section 1102.5; constructive termination in violation of public policy; and intentional infliction of emotional distress. Liu sought compensatory damages, statutory penalties, punitive damages, injunctive relief, and attorney’s fees.
On January 31, 2024, Miniso filed a motion to compel arbitration of all of Liu’s claims under the Federal Arbitration Act. Miniso argued that, under the terms of the arbitration agreement, “Liu must arbitrate her entire [c]omplaint, because it consists solely of Labor Code counts, FEHA claims, and employment and other torts, all of which arise in connection with Liu’s employment with Miniso.” Miniso contended that the EFAA did not apply because Liu’s allegations of sexual harassment failed to state a claim for harassment and, thus, her complaint effectively had no harassment claim. In particular, Miniso argued that Liu’s complaint concerned “mere annoying, offensive, and stray remarks,” which could not state a viable harassment claim under the FEHA.
The trial court denied Miniso’s motion to compel arbitration in the published case of Liu v. Miniso Depot CA, Inc. – B338090 (October 2024)
Miniso’s sole appellate contention is that the trial court erred in concluding the parties’ arbitration agreement was unenforceable as to all of Liu’s claims, and not just as to the two harassment claims. In other words, Miniso contends the trial court should have compelled Liu to arbitrate all of her claims except for the two harassment claims.
“We disagree. Under the EFAA, when a plaintiff’s lawsuit contains at least one claim that fits within the scope of the act, the arbitration agreement is unenforceable as to all claims asserted in the lawsuit.”
“We agree with our colleagues in Division Three of this appellate district, who recently concluded in Doe v. Second Street Corp. (Sept. 30, 2024, B330281) ___ Cal.App.5th ___ [2024 WL 4350420] that the plain language of the EFAA exempts a plaintiff’s entire case from arbitration where the plaintiff asserts at least one sexual harassment claim subject to the act. Here, at least one of Liu’s claims is subject to the EFAA, and thus the trial court did not err in refusing to compel Liu to arbitrate any of her claims.”