A divided Ninth Circuit panel ruled on August 19 that an employee who starts in arbitration is not necessarily stuck there for the rest of her dispute, narrowing how much protection an arbitration agreement gives employers once new facts surface. In Ding v. Structure Therapeutics, the court held that a former chief financial officer could withdraw from arbitration she had already filed and pursue a newly discovered sexual harassment claim in federal court instead, under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.
Dr. Ding Ding was terminated from her CFO role and initially filed a discrimination and harassment claim in arbitration based on national origin and her status as a domestic violence victim. During discovery inside that arbitration, she found evidence her mistreatment was also motivated by her sex. She withdrew and filed the sex based claim in court under the EFAA, which lets victims of workplace sexual harassment void a pre-dispute arbitration agreement. Structure argued she had already made her “election” to arbitrate. Judge Gabriel Sanchez, writing for the majority, rejected that: because Dr. Ding did not know she had a sex based claim when she first chose arbitration, she could not have elected to arbitrate that specific claim, and her later move to court was the real election. Judge Johnnie Rawlinson dissented, arguing the majority’s reading conflicts with the statute’s plain language and the circuit’s own precedent on arbitration waiver.
For HR and legal teams, an existing arbitration proceeding is a weaker shield than it looks once litigation, or an internal investigation, turns up facts an employee did not have at the outset. A harassment case that starts narrow inside arbitration can widen into a sex based claim the employer never expected to resolve in a private forum, and this ruling says the employee makes that call the moment new facts appear, not the employer.
See also: EEOC: Pearson Pays $150K Over Inaccessible Benefits Portal and Cheerwine Pays $36K Over Unlawful Agility Test Firing.
