Background
Dana Dreifus worked as a bartender at Diamond Cabaret, a Denver adult nightclub owned by Glenarm Dining Services, Inc. She signed an arbitration agreement requiring binding arbitration of all employment-related disputes. In her initial complaint, Dreifus alleged that her supervisor, John Gay, sent her unwelcome romantic messages over social media that escalated over months despite her repeated rejections.
Dreifus filed a seven-count complaint including sexual harassment under the Colorado Anti-Discrimination Act (CADA), sex discrimination, retaliation, and tort claims for intentional infliction of emotional distress, negligent infliction of emotional distress, negligent supervision, and false representation. Glenarm moved to dismiss and compel arbitration, but the district court denied the motion. Dreifus then amended her complaint to add factual allegations that Glenarm placed her on administrative leave the day before filing its motion to dismiss and terminated her five days later, allegedly in retaliation for her sexual harassment claims and her participation as a witness in a wage theft investigation.
Glenarm renewed its motion to compel arbitration, arguing that only Dreifus’s sexual harassment claim fell within the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), while her retaliation and other claims based on her termination were not sexual harassment-related and thus subject to arbitration. The district court again denied the motion, finding the EFAA applied to the entire case.
The Court’s Holding
The Colorado Court of Appeals affirmed the district court’s order, holding for the first time in a published Colorado opinion that the EFAA applies to an entire case, rather than individual claims, when those claims “relate to” the underlying sexual harassment allegations. The court adopted the reasoning of federal appellate decisions, particularly the Second Circuit’s decision in Olivieri v. Stifel, Nicolaus & Co., which interpreted the EFAA’s language broadly. The court emphasized that the statute refers to “a case” as an undivided whole legal proceeding, not discrete claims.
The court reasoned that Dreifus’s amendments did not add new claims but rather additional factual allegations supporting her existing claims, all of which arose from the same employment relationship and alleged misconduct. Critically, the court found that Dreifus’s retaliation allegations were “related to” her sexual harassment claim because she expressly alleged that Glenarm terminated her, at least in part, as retaliation for filing her sexual harassment and discrimination lawsuit. Following established employment law principles, retaliation for reporting discrimination is reasonably related to the underlying discrimination itself.
The court distinguished unfavorable authority, including the district court’s unpublished order in Butler v. JSerra Catholic High School, where wage and hour claims had no connection to sexual harassment allegations. Here, by contrast, Dreifus’s termination was explicitly tied to her protected activity of reporting sexual harassment and filing suit, making the claims sufficiently related to fall within the EFAA’s exemption.
Key Takeaways
- The EFAA protects an employee’s entire case from compelled arbitration when any claims “relate to” sexual harassment allegations, not just claims that directly assert sexual harassment.
- Retaliation claims arising from reporting sexual harassment are reasonably related to the underlying sexual harassment claim and thus exempt from arbitration under the EFAA.
- Once an employee invokes the EFAA’s protection for sexual harassment allegations, predispute arbitration agreements cannot be enforced for any related claims in that case, even if the employee later amends the complaint to add factual details.
- The scope of the EFAA is broad, but there may be an outer limit where claims are so attenuated from sexual harassment allegations that they fall outside the statute’s protection—though this case does not reach that line.
Why It Matters
This is the first published Colorado appellate decision interpreting the EFAA’s scope and application. The decision significantly expands protections for employees facing sexual harassment in the workplace by preventing employers from using arbitration agreements to sidestep litigation of related employment claims. The court’s broad interpretation means that employees can pursue full litigation of their employment disputes—including retaliation, emotional distress, and tort claims—once any sexual harassment allegation is involved, rather than being forced into piecemeal arbitration of discrete claims. This interpretation aligns with the federal trend favoring expansive application of the EFAA to protect harassment victims.
For employers and attorneys, the decision confirms that California-style arguments about factual independence or temporal separation are unlikely to succeed in Colorado. The emphasis on the EFAA’s textual focus on “a case” and the “related to” standard means that once a sexual harassment claim is pleaded, the entire employment action likely remains outside arbitration. This shifts leverage significantly in sexual harassment and retaliation disputes filed by employees in Colorado state court.