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Federal Judge Denies Employer’s Motion to Compel Arbitration Under “Ending Forced Arbitration Act"

On February 24, 2023, U.S. District Judge Paul A. Engelmayer of the Southern District of New York, denied, in its entirety, an employer’s motion to compel arbitration under an arbitration agreement it had with a former employee.

The former employee, Teyo Johnson, brought his lawsuit alleging (1) race discrimination,

(2) pay discrimination, (3) sexual harassment, (4) discrimination on the bases of gender and

and ethnicity, (5) whistleblower retaliation, and (6) common-law intentional infliction of emotional distress.

Judge Engelmayer first determined that all plaintiff’s claims were covered by the arbitration agreement that he agreed to at his hiring. Judge Engelmayer then cited the relevant portion of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFAA”):

“…[N]o predispute arbitration agreement or predispute joint-action waiver 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." 9 U.S.C. § 402(a) [emphasis added].

The issue then to be decided was whether the acts plaintiff complained of related to the sexual harassment dispute. The EFAA defines a "sexual harassment dispute" as "a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law." 9 U.S.C. § 401(4). The EFAA further provides that its application "shall be determined by a court, rather than an arbitrator under federal law.”

The defendant employer (“Everyrealm Inc.”) argued that plaintiff did not allege sufficient facts in his complaint to support a claim of sexual harassment thereby making the EFAA inapplicable. Judge Engelmayer, however, determined that plaintiff had pleaded sufficient facts to support sexual harassment claims under the New York City Human Rights Law.

Defendants then argued that if the EFAA applied it did so only as to the claims concerning sexual harassment. Plaintiff argued that the EFAA applied to the entire case, including those claims not implicating sexual harassment laws. Judge Engelmayer agreed with plaintiff and held the EFAA applied to the entire case.

In a companion case, the same Court held that when a plaintiff fails to sufficiently plead a claim for sexual harassment, the EFAA is inapplicable. That is, if a court finds that a plaintiff alleged insufficient facts to support a sexual harassment claim then the EFAA does not apply and an arbitration agreement may be enforced.

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