In the years since the enactment of the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), California courts have treated a single sufficiently pleaded harassment claim as rendering an entire case not subject to arbitration, even if other causes of action would have been covered by the employer’s arbitration agreement. Mitchell v. Lilac Solutions, Inc. holds that waiting to build a record against the harassment claim before moving to compel can be deemed a waiver of the right to arbitration by the employer.

In Mitchell, four former Lilac Solutions employees filed suit in Superior Court, asserting thirteen causes of action arising from alleged chemical exposure, wrongful termination, gender and disability discrimination, and sexual harassment. Each had signed an arbitration agreement when hired. Lilac and five individual defendants answered and asserted arbitration as an affirmative defense, then filed a cross-complaint and an amended cross-complaint for trade secret misappropriation. Before moving to compel arbitration, however, they served twelve sets of written discovery, noticed each plaintiff’s deposition and two third-party depositions, issued eleven nonparty subpoenas, responded to thirty-three sets of the plaintiffs’ discovery, and filed seven motions seeking procedural relief. The defendants then moved to compel arbitration only after engaging in this substantive discovery, and five days after the plaintiffs moved to strike the amended cross-complaint under the anti-SLAPP statute.

The trial court found the defendants waived the right to compel arbitration and the Court of Appeal affirmed. After Quach v. California Commerce Club, Inc., waiver occurs when there is clear and convincing evidence that the party knew of its arbitration right and intentionally relinquished it. The inquiry looks to that party’s own words and conduct, not to any prejudice suffered by the other side. The Lilac defendants’ conduct supported the inference. The defendants sought affirmative relief through their cross-pleadings without seeking a stay or any other case-management relief at the time. They substantially invoked the litigation machinery before moving to compel arbitration, including propounding wide-ranging discovery.

The defendants argued that the EFAA made an immediate arbitration motion impractical. Under Quilala v. Securitas Security Services USA, Inc. and subsequent decisions, a qualifying claim may place the entire action outside arbitration. To resolve the tension created by the statute, the defendants claimed they needed discovery before they could demonstrate that the sexual harassment claim was without merit. The court assumed EFAA applied but found defendants’ conduct inconsistent with that asserted strategy: they pursued discovery extending far beyond the harassment allegations, never pursued or announced a targeted dispositive challenge to that claim, and the timing of their motion tracked the anti-SLAPP filing rather than any development in the evidence.

The court did not suggest that an employer must file a doomed motion to compel arbitration whenever a complaint includes an EFAA claim. It pointed instead to measures the defendants never attempted: additional time to respond, a request that the court use its inherent authority to pause or sequence the case, and propounding discovery narrowly directed at the harassment allegations. Those steps would have aligned the defendants’ conduct with their claimed intent to arbitrate.

Importantly, the Mitchell decision did not create or imply a mandatory deadline for moving to compel arbitration, and it does not decide how a harassment claim must be pleaded to trigger the EFAA. Rather, the holding was limited: after Quach, a court may find waiver without any showing of prejudice where the totality of a party’s conduct reflects a deliberate election to litigate. And because waiver is a question of fact, that finding will receive considerable deference on appeal.

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