 |
Thelen Reid Brown Raysman & Steiner LLP
The decision holds that:
- Summary judgment is the proper disposition of a claim for sexual harassment under the fair employment and housing act when the employee has agreed to arbitrate any dispute arising out of employment, including claims for discrimination, and there are no issues raised in the litigation which are not covered by the arbitration agreement.
- Statutory claims for discrimination under the fair employment and housing act -- including claims for sexual harassment -- are subject to mandatory arbitration when employees sign agreements to arbitrate all disputes arising from their employment.
- In cases of multiple defendants, the fact that claims against some defendants are not arbitrable does not preclude summary judgment in favor of defendants whose claims are arbitrable.
The
California Court of Appeal for the First Appellate District,
Division Three, (San Francisco) has held that an employee
is barred from pursuing claims of sexual harassment under
the Fair Employment and Housing Act ("FEHA") in
a civil trial, and may only pursue those claims in arbitration,
when the employee has signed an agreement to arbitrate any
dispute arising from employment, including claims for discrimination.
The court further held that summary judgment is the proper
method by which to dispose of such claims before trial when
the parties have entered a valid, enforceable agreement
to arbitrate all employment-related disputes. The
Court also held that individual defendants who are not party
to the arbitration agreement may receive the benefit of
the agreement if they were acting as agents of the company.
Accordingly, claims against individual defendants may be
subject to summary disposition like those of the company
defendant. 24 Hour Fitness, Inc. v. Superior Court,
66 Cal. App. 4th 1199, 78 Cal. Rptr. 2d 533, 1998 Cal. App.
LEXIS 809, 98 C.D.O.S. 7471, 98 Daily Journal D.A.R. 10353
(1st Dist. 1998).
In 24 Hour Fitness, the plaintiff, Sierra Munshaw,
had signed an agreement with her employer to arbitrate all
claims arising out of her employment, except those related
to workers' compensation, unemployment insurance, and labor
commissioner matters. This agreement expressly included
claims for discrimination. The arbitration agreement
was contained in the personnel handbook as well as a separate
"Employment Arbitration Procedure Manual." Ms.
Munshaw filed a lawsuit claiming sexual harassment and constructive
discharge against her employer and several individual employee
defendants. She contended that the individual employees
were acting in the course and scope of their employment
when they engaged in the alleged acts of misconduct.
The defendants moved for summary judgment, arguing that
Ms. Munshaw's claims were covered by the arbitration agreement.
Ms. Munshaw raised three arguments in opposition: that the
arbitration agreement was not valid, that the existence
of non-arbitrable claims against some defendants barred
any other defendant from relying on the arbitration agreement
for purposes of summary judgment, and that claims for civil
rights violations are unrelated to the employment relationship
and, therefore, are not within the scope of the arbitration
agreement. The trial court denied summary judgment.
Defendants appealed and the appellate court reversed and
ordered the trial court to grant summary judgment to each
defendant who had demonstrated that the plaintiff's claims
were subject to the arbitration agreement.
For many years, federal and state courts have analyzed whether,
and to what extent, employers may require employees to agree
to binding arbitration as a method for resolving employment-related
disputes. Although generally upholding the concept
that employees could contractually agree to arbitration
of employment-related disputes under certain circumstances,
until recently, California courts have generally held that
agreements to arbitrate do not include claims for civil
rights violations which are statutory in nature. Federal
courts have been in accord. Recently, the Ninth Circuit
Court of Appeals held that Title VII claims, the federal
equivalent of FEHA claims, are not subject to arbitration
agreements signed as a condition of employment. That
court went so far as to assert that state FEHA claims are
subject to the same analysis. Duffield v. Robertson
Stephens & Co. (9th Cir. 1998) 144 F.3d 1182.
The Court in 24 Hour Fitness disagreed. It
held that the Ninth Circuit decision was not binding on
California courts, and it concurred with prior California
appellate decisions which have upheld the arbitrability
of discrimination claims. The Appellate Court concluded
that where a valid, enforceable arbitration agreement existed,
summary judgment before trial was the appropriate mechanism
for resolution of the case -- even if that meant that the
plaintiff had no other remedy against the defendant.
It is possible, and perhaps likely, that plaintiff will
appeal this decision. We intend to monitor future
proceedings in this case.
The 24 Hour Fitness decision, as well as other recent
authority concerning the arbitrability of employment-related
claims including statutory claims, introduces a new era
in a California employer's endeavor to prevent, remedy,
and reasonably adjudicate employment-related claims in the
workplace. These decisions indicate a willingness
by the courts to recognize and uphold contractually agreed
upon resolutions to employment disputes where such agreements
are fair and even-handed. The proper drafting and
dissemination of such policies and procedures is paramount.
If you would like to receive legal reports and updates
more quickly, by e-mail, click
here and fill out the mailing list
form.
For more information about the issues covered in this report, please contact Linda S. Husar in our Los Angeles office at 213-576-8017 or at lshusar@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.
©1998 Thelen Reid Brown Raysman & Steiner LLP
|
