Overview
In a decision that will impact employers, the Missouri Court of Appeals for the Western District recently held in State ex rel. Waddell v. Atkins that an employee’s lawsuit arising out of alleged sexual harassment and sexual assault could proceed in court notwithstanding an arbitration agreement signed by the employee during his reemployment. The court explained that the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) rendered the arbitration agreement unenforceable.
The decision is noteworthy because it addresses both whether the EFAA applies when a plaintiff does not assert standalone claims labeled as sexual harassment or sexual assault and when a dispute arises for purposes of determining whether an arbitration agreement is a prohibited predispute agreement.
Case Details
Plaintiff Alan Waddell alleged that while working for a nursing facility operator, his supervisor subjected him to sexual harassment and sexual assault, and after reporting the alleged misconduct, he was terminated. The employer later rehired him at a different facility and allegedly assured him that he would not have further contact with the supervisor. During the rehiring process, Waddell signed a mutual arbitration agreement.
After resuming employment, Waddell alleged he was instructed to attend a work-related event where the harassing supervisor would be present. Waddell resigned and sued the employer for defamation, tortious interference, and wrongful discharge. He did not plead causes of action for sexual harassment or sexual assault. The defendants moved to compel arbitration based on the agreement signed during his rehire, and the trial court granted that request. Waddell then sought mandamus relief from the appellate court to avoid arbitration based on the protections of the EFAA.
The EFAA provides in relevant part, “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute … no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case … relat[ing] to the sexual assault dispute or the sexual harassment dispute.” 9 U.S.C. § 402(a).
The court concluded that the EFAA applied even though Waddell’s petition did not include standalone sexual harassment or sexual assault claims. The court focused on the EFAA’s express language about a case that relates to a sexual harassment or sexual assault dispute – not a case that states those specific causes of action. Because Waddell’s claims were related to his allegations of sexual assault, sexual harassment, and the employer’s response to those allegations, the court found the lawsuit triggered the EFAA’s protections.
The court also rejected the argument that the arbitration agreement fell outside the EFAA because it was executed after the alleged harassment and assault had occurred. The court explained that the relevant question is not simply when the underlying conduct happened, but whether a legal dispute existed when the arbitration agreement was signed. This distinction is important, since post-dispute agreements are not covered under the EFAA.
The court determined that the parties were not in an active dispute at the time of Waddell’s rehire. Rather, they appeared to have resolved their prior concerns through the reemployment arrangement. According to the court, the dispute at issue arose later, when the employer allegedly required Waddell to interact with the supervisor despite prior assurances to the contrary. As a result, the arbitration agreement was considered a predispute agreement and was therefore subject to the EFAA. Finally, the court held that when the EFAA applies, it may invalidate an arbitration agreement as to the entire lawsuit, not merely those claims most directly tied to sexual harassment or sexual assault allegations. The court therefore directed the trial court to vacate its order compelling arbitration and allow the case to proceed in court.
What This Means
State of Missouri ex rel. Waddell v. Atkins signals that courts are interpreting the EFAA broadly. Employers should not assume that arbitration agreements remain enforceable simply because a plaintiff pleads non-harassment causes of action or involves a prior harassment dispute.
Next Steps
If you have questions about the enforceability of an existing or potential arbitration agreement as a mechanism to resolve past or future employment claims, please contact the author of this post or your regular Lathrop GPM attorney.