What happened
The Ninth Circuit affirmed an order sending former Netflix employee Jessica Combs' employment claims to arbitration, holding in a published opinion that the federal law limiting forced arbitration for sexual harassment disputes did not apply because her claims and dispute predated the statute's March 2022 effective date.
Judge Daniel A. Bress, writing for a panel that also included Judges Susan P. Graber and Anthony D. Johnstone, said the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act lets plaintiffs alleging sexual assault or sexual harassment proceed in court despite predispute arbitration agreements, but only when the statute's timing provision is met.
The panel called that timing question an issue of first impression in the Ninth Circuit and held that the statute can apply either to claims that accrue or disputes that arise on or after March 3, 2022. A claim accrues, the court said, when a plaintiff has a complete and present cause of action; a workplace dispute arises when there is "some aspect of opposition or disagreement" between employee and employer.
Combs alleged that from 2017 to 2021 she complained to supervisors and management about what she described as Netflix's sexually charged workplace environment and specific instances of harassment, that Netflix failed to take corrective action, and that the company fired her in December 2021 in retaliation for those complaints. Netflix removed her 2024 state court suit to federal court and moved to compel arbitration.
The Ninth Circuit said those allegations meant Combs' claims accrued before the EFAA took effect because the alleged harassment and termination occurred between 2017 and 2021. The panel also concluded that a dispute arose by December 2021 at the latest, because Combs allegedly complained internally, Netflix allegedly failed to act, and Netflix allegedly fired her for raising those complaints.
The ruling rejected Combs' argument that no dispute arose until she filed an administrative complaint with California civil rights authorities in August 2023. The panel said a formal external filing may mark the start of a dispute in some cases, but the ordinary meaning of dispute is not limited to lawsuits or agency complaints.
The decision aligns the Ninth Circuit with other appellate courts that have rejected both a narrow rule requiring a formal external complaint and a broad rule treating the underlying alleged misconduct itself as the dispute. For employers and workers litigating older harassment allegations, the opinion makes the EFAA timing inquiry turn on both accrual and the point at which the parties became adverse.
Because the court found that Combs' claims accrued and her dispute with Netflix arose before March 3, 2022, the EFAA did not displace the arbitration agreement, and the panel affirmed the order compelling arbitration.