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Saheli, EFASHA & “Unexpected Consequences”?

On March 14, 2018 in Saheli v. White Memorial Medical Center, 2018 DJ DAR 2413, the California Court of Appeal held that the Ralph Act (Civil Code Section 51.7) and the Bane Act (Civil Code Section 52.1) are preempted by the Federal Arbitration Act (FAA) to the extent that they condition the enforceability of arbitration agreements on compliance with special requirements not applicable to contracts generally.  As noted by Justice Rubin in concurring opinion, these two acts provide civil remedies for hate crimes, intimidation and violence, hence, “represent part of the arsenal of legislative weapons against hate crimes, threats and intimidation, weapons that include enforcement of criminal laws, complaints to housing, employment and other agencies, and the prosecution of civil lawsuits. [citation omitted].  Our opinion today facilitates the elimination through arbitration clauses of civil trials for Bane Act and Ralph Act violations….”

Justice Rubin further places the Saheli decision in historical context, noting that it “continues the recent march of our nation’s jurisprudence toward eliminating the right to a jury trial (or any trial) in a large number of civil cases by its ever-extending embrace of arbitration.”   “The current accelerated progression of cases that have been judicially removed from the trial courts picked up speed primarily with the United States Supreme Court in AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740….In the six years following AT&T Mobility the United States Supreme Court alone has issued opinion after opinion – 12 in total- either upholding arbitration agreements in the face of various challenges to their enforceability or directing lower courts to reconsider their previous decisions in light of AT&T Mobility.”[1]          After reviewing certain of those decisions, including several pertaining to the nursing home industry, the concurrence remarks:  “But a road well-traveled does not necessarily make the trip satisfying if much is lost along the way.” [Emphasis supplied]

In the wake of the #MeToo movement, bills to prohibit mandatory arbitration of sexual harassment claims have been introduced in many State legislatures, including those of California, Massachusetts, New Jersey, New York, and South Carolina.  Even were they enacted, however, all of these would fall prey to FAA preemption, hence, “perish along the road” Justice Rubin described in the Saheli concurrence.

On December 6, 2017, however, #MeToo manifested in the U.S. Congress with the bipartisan bill[2] called Ending Forced Arbitration of Sexual Harassment Act (EFASHA).  EFASHA would amend the FAA itself by adding new Sections 401 and 402 to provide that no predispute arbitration agreement shall be valid and enforceable if it pertains to a sex discrimination dispute, i.e., a claim based on sex under Title VII of the Civil Rights Act of 1964.  As currently configured, however, EFASHA, by striking the phrase “of seamen” in 9 U.S. Code Section 1, would, in actuality, broadly exclude all employment contracts from the FAA.  As several of the lady justices of SCOTUS have noted in dissents along the above referenced “well-travelled road,” such broad exclusion of all employment contracts from the scope of FAA preemption, no doubt, was Congress’s actual, original intent, notwithstanding that, through result-oriented “non-jurisprudence,” the Roberts Court for over a decade has dictated a narrow, nonsensical (and contrary to legislative history) interpretation to exclude only employment of “seamen” and other transportation workers.

Were it promulgated in its current form, EFASHA, thus, “would reintroduce into this area many of the state law anti-arbitration obstacles that the Supreme Court has consistently rejected over the past 40 years.”    See, Norton Rose Fulbright blog December 14, 2017.  In February 2018, 56 attorneys general members, of the National Association of Attorneys General, wrote Congressional leaders to urge passage of EFASHA, also urging prohibition of contractual clauses requiring confidentiality of such complaints and settlement thereof.

[1] The AT&T Mobility v. Concepcion decision was, of course, the “brainchild” of A. Scalia.

[2] Introduced by Sen. Gillibrand , D-NY, Sen. Bustos (D-Ill), and Lindsey Graham (R-S.C.).