Aug 5 (Reuters) - A U.S. appeals court on Monday said a

former Chipotle Mexican Grill employee does not have to

arbitrate claims that she was sexually harassed and raped by a

coworker, because she sued the restaurant chain after a federal

law took effect banning agreements to keep such claims out of

court.

A unanimous three-judge panel of the St. Louis-based 8th

U.S. Circuit Court of Appeals said the law that passed Congress

with bipartisan support in 2022 applies to any lawsuit filed

after it was enacted, rejecting Chipotle's claim that it only

covers conduct that occurred after that date.

The ruling is the first of its kind by a federal appeals

court, and could salvage some pending cases and invite new ones

involving conduct that occurred prior to the adoption of the

law. A California state appeals court in January also said the

federal ban applies based on the date a lawsuit is filed and not

when the underlying conduct occurs.

The plaintiff says a coworker raped her in the bathroom at a

Rochester, Minnesota restaurant in 2021 after verbally harassing

her for months, and that Chipotle failed to investigate or

respond after she told a manager about the assault. She had

signed an agreement to arbitrate employment-related disputes

when she was hired, and initially sued Chipotle a few months

after the federal law took effect.

Chipotle and lawyers for the plaintiff did not immediately

respond to requests for comment. Reuters does not identify

victims of rape.

The plaintiff's coworker was arrested and in January

convicted of felony sexual assault, according to Minnesota state

court records.

The plaintiff sued Chipotle in Minnesota state court in July

2022, about four months after the federal law went into effect.

She accused the company of tolerating a hostile work

environment, retaliation, failing to provide a safe work

environment, and intentional infliction of emotional distress

under Minnesota law.

The plaintiff withdrew the lawsuit to participate in an

ultimately unsuccessful mediation before filing a new complaint

in Minnesota federal court in 2023.

Chipotle denied wrongdoing and moved to send the case to

arbitration, citing the agreement the plaintiff had signed. But

U.S. District Judge Donovan Frank in St. Paul last year said the

agreement could not be enforced because of the federal ban on

mandatory arbitration of harassment and assault claims.

The 8th Circuit on Monday affirmed. The law applies to

"disputes" that arise on or after its effective date, and that

term applies to an actual "conflict or controversy," such as a

lawsuit, the court said.

"There was no conflict or controversy between company and

employee as of [the date of the assault] and no 'dispute'

between the parties that could have been submitted to

arbitration at that time," Circuit Judge Steven Colloton wrote.

The court also rejected Chipotle's claim that a dispute

arose once the plaintiff's lawyer sent the company a letter

saying she was considering suing in February 2022, weeks before

the federal law went into effect.

The letter did not establish a dispute or inevitably lead to

a lawsuit, since it could have led to a settlement or the

plaintiff could have chosen not to pursue her claims, Colloton

said.

The panel included Circuit Judges Bobby Shepherd and David

Stras.

The case is No. 23-3201 in the 8th U.S. Circuit Court of

Appeals.

For the plaintiff: Nicholas Nelson of CrossCastle

For Chipotle: Matthew Treco of Martenson, Hasbrouck & Simon

Read more:

U.S. Congress passes ban on forced arbitration of worker sex

abuse claims

House passes bill to end mandatory arbitration of legal

disputes

Sex harassment claim shields whole lawsuit from arbitration,

judge rules

Bill to ban arbitration of sexual harassment claims clears

House

(Reporting by Daniel Wiessner in Albany, New York)