Aimee is an attorney in the Labor and Employment department. She focuses her practice on representing employers in all aspects of labor and employment law, including employment–related agreements, executive compensation, employee benefits,...Read More by Author
EFAA Update: Only Plausible #MeToo Claims Can Avoid Arbitration
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “EFAA”) has been law for just over a year. The bill (covered by HR Legalist here) was signed by President Biden on March 3, 2022, and amended the Federal Arbitration Act (“FAA”). While the FAA upholds arbitration agreements in general, the EFAA states that preexisting arbitration agreements and class action waivers, at the election of the plaintiff, are not “valid or enforceable with respect to a case” that relates to a sexual assault or a sexual harassment dispute. 9 U.S.C. § 402(a). The EFAA is a game-changer by permitting employees affected by sexual assault and harassment to sidestep forced arbitration agreements and bring their claims to court.
While previous cases involving the EFAA focused on the retroactivity of the law (given its retroactive application to forced arbitration agreements signed before March 3, 2022), a pair of recent employment cases in federal trial-level courts in New York give insight into the potential reach of the EFAA.
In Johnson v. Everyrealm, Inc., the court found the plaintiff’s sexual harassment claims had raised allegations sufficient to avoid dismissal at the outset of the case. Specifically, the plaintiff plausibly alleged a sexual harassment employment claim under the most lenient state statute applicable, though interestingly these claims may not have met pleading standards under Title VII. The court determined that the plain text of the EFAA requires that an entire case be excluded from arbitration if any of the claims plausibly allege sexual harassment. In the context of the EFAA, it has been overwhelmingly determined that a “case” or “action” refers to an overall legal proceeding, which may include claims in addition to sexual harassment claims (such as disability discrimination), whereas a “claim” or “cause of action” refers more narrowly to a specific assertable or asserted right within such a proceeding. Because a plausible sexual harassment claim existed, the entire case remained in court.
On the other hand, in Yost v. Everyrealm, Inc., the court found that the sexual harassment claims could not withstand the defendants’ motion to dismiss for failure to state a claim. Although the plaintiff successfully alleged inappropriate workplace comments, she did not allege a sufficient connection between those comments and any legally protected characteristic applicable to her, even under the more lenient applicable statute. Finding no plausible claims for sexual harassment, these claims were dismissed under Rule 12(b)(6).
The court in Yost next examined whether the EFAA would apply to a case where the only basis for invoking its protections have been found to be implausibly pled. The court held the EFAA does not prohibit the remaining claims from being compelled to arbitration. The plaintiff, and various interest groups, argued even an implausibly pled claim brings a case within the EFAA, so long as the claim was not sanctionably frivolous. The court rejected this argument, finding that requiring a sexual harassment claim to be capable of surviving dismissal at the threshold of litigation fully vindicates the purposes of the EFAA. The stated purpose of the EFAA is to empower sexual harassment claimants to pursue their claims in a judicial, rather than arbitral, forum. See H.R. Rep. No. 117-234, at 3-4 (2022). That purpose is achieved by enabling such a claimant, notwithstanding an otherwise valid arbitration agreement, to bring her claims of sexual harassment in court and to litigate them there through the point of their durable dismissal. Accordingly, there was no reason to apply the EFAA. To the extent that remaining claims were covered by a valid arbitration agreement, such claims must be resolved in arbitration.
Defendant employers seeking to enforce arbitration agreements should be prepared to make an early and aggressive attack on sexual harassment claims, taking into account federal pleading standards under Rule 12(b)(6) and cases interpreting this rule, bearing in mind that, in general, it is relatively easy for an employee to plausibly state a claim for sexual harassment, and that even “he said she said” cases typically meet this burden.
The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.