The Arbitrability of Non-Sexual Harassment Claims Under the “Ending Forced Arbitration of Sexual Harassment and Sexual Assault Act”
By Gregory Feit
Our firm previously reported on the passage of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) (codified at 9 U.S.C. §§ 401-02), which amended the Federal Arbitration Act.
Broadly speaking, the EFAA prohibits the compulsory enforcement of pre-dispute arbitration agreements with respect to claims for sexual harassment or sexual assault. More specifically, the EFAA provides, in pertinent part and with regard to claims accruing on or after March 3, 2022:
[A]t the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute . . . , no pre-dispute arbitration agreement . . . shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.
Note the term “case” in this language. As courts have begun to apply the EFAA, an interesting question has arisen concerning the use of the term and how it factors into evaluating the proper scope of the statute. That question: If a single case includes both claims for sexual harassment and claims that do not directly pertain to sexual harassment, does the EFAA preclude enforcement of an otherwise applicable arbitration agreement only as to the former set of claims (such that the latter, i.e., non-sexual harassment claims, can be severed from the case and resolved through arbitration), or does the EFAA also apply to the latter set of claims (such that none of the claims can be forced into arbitration)?
As discussed below, although only a handful of lower courts have addressed this issue so far, there seems to be significant potential for divergence of opinion. Once more and more judges encounter the issue, and once lawsuits percolate up through appeals, it seems almost certain that the United States Supreme Court will need to weigh in.
The Expansive Approach
An early and perhaps the most significant decision to date to address the issue was Johnson v. Everyrealm, Inc., 2023 WL 2216173 (S.D.N.Y. Feb. 24, 2023). The plaintiff’s causes of action there included not only sexual harassment claims, but also claims for race discrimination and pay discrimination and whistleblower retaliation under the New York Labor Law (NYLL). In denying the defendant employer’s motion to compel arbitration, the court construed the EFAA as blocking arbitration not only of the sexual harassment claims, but also of all other claims in the action.
According to Johnson’s textual reasoning, the EFAA “makes a pre-dispute arbitration agreement invalid and unenforceable ‘with respect to a case which is filed under Federal, Tribal, or State law and relates to the . . . sexual harassment dispute,’” thereby “key[ing] the scope of the invalidation of the arbitration clause to the entire ‘case’ relating to the sexual harassment dispute,” and not merely “to the claim or claims in which that dispute plays a part.” (emphasis in original). Furthermore: “With the ordinary meaning of ‘case’ in mind, the text of § 402(a) makes clear that its invalidation of an arbitration agreement extends to the entirety of the case relating to the sexual harassment dispute, not merely the discrete claims in that case that themselves either allege such harassment or relate to a sexual harassment dispute (for example, a claim of unlawful retaliation for a report of sexual harassment).”
This is a broad application of the EFAA.
A few other courts have adopted Johnson’s logic. In Turner v. Tesla, Inc., 2023 WL 6150805 (N.D. Cal. Aug. 11, 2023), the complaint likewise set forth both sexual harassment and non-sexual harassment claims, including retaliation for reporting workplace injuries and failure to pay wages owed after plaintiff’s termination. The court rejected Tesla’s argument that those latter claims were legally distinct from or “untethered” to the sexual harassment claims. Instead, the court found such claims to be “inherently intertwined” with or “substantially related” to the sexual harassment claims, because, e.g., resolution would likely involve many of the same witnesses, plaintiff was asserting wrongful termination for reporting both the alleged harassment and her injuries, and the alleged failure to pay wages post-termination arose out of the same underlying facts as her harassment claims.
Similarly, in Delo v. Paul Taylor Dance Foundation, Inc., 2023 WL 4883337 (S.D.N.Y. Aug. 1, 2023), the court emphasized that the EFAA focuses on a “case” in its entirety and that it therefore applied there to block enforcement of the parties’ arbitration agreement as to all claims brought in the action, including plaintiff’s claims for familial status discrimination and retaliation under the Fair Labor Standards Act (FLSA). And in Watson v. Blaze Media LLC, 2023 WL 5004144 (N.D. Tex. Aug. 3, 2023), where plaintiff’s causes of action included religious discrimination claims in addition to sexual harassment claims, the court relied on the same rationale to deny defendant’s motion to compel arbitration as to all of plaintiff’s claims, not just the sexual harassment claims.
An Apparently More Restrained Approach
A contrary result was reached in Mera v. SA Hospitality Group, LLC, 2023 WL 3791712 (S.D.N.Y. June 3, 2023). There, the plaintiff asserted claims under the New York State and New York City Human Rights Laws, alleging that he had been subjected to sexual harassment by his former restaurant employer on the basis of his sexual orientation. He also asserted wage and hour claims under the FLSA and NYLL.
Unlike the court in Johnson, the Mera court concluded that the arbitration agreement at issue was unenforceable only with respect to plaintiff’s sexual harassment claims. It held that “under the EFAA, an arbitration agreement executed by an individual alleging conduct constituting a sexual harassment dispute is unenforceable only to the extent that the case filed by such an individual ‘relates to’ the sexual harassment dispute . . . ; in other words, only with respect to the claims in the case that relate to the sexual harassment dispute.” Because plaintiff’s wage and hour claims “do not relate in any way to the sexual harassment dispute,” those claims had to be arbitrated.
This reasoning – which assumes the divisibility of a “case,” and which focuses on the specific relationship of particular claims within a case to sexual harassment allegations (and not to the relationship of the “case” as a whole thereto) – seems facially irreconcilable with the case-focused analysis in Johnson.
The Mera court did, however, seek to explain why it believed Johnson was “inapposite.” It noted that plaintiff Mera also sought to pursue class relief under federal and state wage laws on behalf of all non-exempt employees at the restaurant, and that the only legally distinct claims as to Mera himself were his sexual harassment claims. Mera also cited Johnson’s footnote statement that it (i.e., the Johnson court) “did not have occasion to consider the circumstances under which claim(s) far afield might be found to have been improperly joined with a claim within the EFAA so as to enable them to elude a binding arbitration agreement.” The implication from the Mera court seems to have been that plaintiff Mera was attempting to escape a binding arbitration agreement by tacking on sexual harassment claims to what was fundamentally a wage and hour case.
Nonetheless, Mera’s central holding – that claims that “do not relate in any way to the sexual harassment dispute” remain subject to arbitration – appears hard to square with the expansive approach taken in Johnson.
As of publication date, no appellate-level court has addressed the issue of whether the EFAA can be employed to block the arbitration of non-sexual harassment claims in a case where the plaintiff also asserts sexual harassment claims. Given the complicated and important questions in play, however, the stage appears to be set for substantial differences of opinion to develop. Indeed, it seems very likely that the extent, if any, to which non-sexual harassment claims are exempt from arbitration under the EFAA will ultimately be a matter for the U.S. Supreme Court to have to decide.
This article is intended as a general discussion of these issues only and is not to be considered legal advice or relied upon. For more information, please contact RPJ Attorney Gregory Feit who counsels clients on employment law, litigation, arbitration, negotiation, and trial advocacy. Mr. Feit served is admitted to practice in New York.