The First District Court of Appeal’s decision in Quilala v. Securitas Security Services USA, Inc. underscores the significant reach of the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) in California employment disputes and the judiciary’s principal role in determining the availability of arbitration when sexual assault or harassment claims are alleged. In that case, Francisco Quilala sued his former employer, Securitas, asserting twenty-two causes of action arising from his employment, including claims for sex, gender, and sexual orientation harassment under the Fair Employment and Housing Act (FEHA). He alleged that supervisors questioned his sexual identity, asked intrusive questions about his sexual activity, spread rumors about his sexual orientation, repeatedly mocked him as “Mrs. Quilala,” and then reduced his hours, removed him from an assignment, and ultimately terminated his employment after he complained. When Securitas moved to compel arbitration under a predispute arbitration agreement signed during onboarding, the trial court denied the motion, concluding that the EFAA barred enforcement of the agreement, and Securitas filed an appeal.

The Court of Appeal held that trial judges possess an independent duty to determine whether a dispute falls within the scope of the Federal Arbitration Act (FAA). Because the EFAA serves as a statutory limitation on the FAA’s enforcement mandate, the court held that judges must evaluate its applicability as a "gateway" question of arbitrability before compelling arbitration. In this instance, the trial court raised the EFAA on its own initiative in a tentative ruling, even though the plaintiff had not cited the statute in his opposition. The appellate court emphasized that since the EFAA expressly mandates its applicability be “determined by a court, rather than an arbitrator,” a judge is empowered to raise the issue regardless of whether it was briefed by the parties, provided that fundamental due process is respected.

The appellate court further clarified that the trial court satisfied due process by identifying the EFAA as a potential bar in its tentative ruling and granting the parties an opportunity to argue the matter at the subsequent hearing. Under this framework, there is no obligation for a court to solicit supplemental briefing before relying on the statute. Additionally, the court ruled that a plaintiff “elects” to proceed in court for purposes of the EFAA simply by filing a lawsuit and opposing a motion to compel arbitration. No formal or express invocation of the EFAA is required for a claimant to benefit from its protections, as the act of seeking relief in a judicial forum sufficiently demonstrates that choice.

Substantively, the opinion also clarified the threshold for alleging a sexual harassment dispute sufficient to trigger the EFAA in the employment context. Securitas argued that Quilala’s allegations did not rise to the level of actionable harassment, but the court, applying current FEHA standards, held that conduct altering the conditions of employment need only be “sufficiently pervasive” or “extremely serious” and must be evaluated in light of Government Code section 12923 and recent California Supreme Court authority. The court concluded that repeated derisive references to “Mrs. Quilala,” intrusive and humiliating questions about sexual activity, and adverse actions allegedly tied to perceived sexual orientation described more than “simple teasing” and plausibly alleged a hostile work environment. Because Quilala stated a cognizable sexual harassment claim under FEHA, the court held that the dispute qualified as a “sexual harassment dispute” within the meaning of the EFAA, rendering the predispute arbitration agreement unenforceable once the plaintiff elected to remain in court.

Finally, the Court of Appeal confirmed that once the EFAA applies, it does so at the level of the “case” rather than individual claims, and employers cannot salvage arbitration of non-harassment causes of action by attempting to carve them out. Relying on the statute’s use of the term “case,” and in line with prior California decisions such as Doe v. Second Street Corp., Liu v. Miniso Depot CA, Inc., and Casey v. Superior Court, the court held that the presence of a qualifying sexual harassment claim brings the entire lawsuit within the scope of the EFAA. As a result, none of Quilala’s remaining claims – including those involving wages or general wrongful termination – could be compelled to arbitration. For employers, Quilala serves as a timely reminder that even a single adequately pled sexual harassment claim can invalidate enforcement of an otherwise enforceable arbitration agreement for the entire action and that courts, not arbitrators, will be the ones to make that determination in the first instance.

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