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Exactly one year ago today, on March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”), 9 U.S.C. §§ 401-02.  The EFAA amends the Federal Arbitration Act (“FAA”) to essentially bar compulsory arbitration of claims for sexual assault or sexual harassment as the term has come to be defined under federal or state law.  Thus, at the election of a plaintiff alleging “conduct constituting a sexual harassment dispute,” the EFAA makes pre-dispute arbitration agreements unenforceable “with respect to a case which is filed under Federal, Tribal, or State law and relates to … the sexual harassment dispute.”  9 U.S.C. § 402(a).

The most vexing question posed by the EFAA is this: What happens in the rather common scenario where an employee who signed an otherwise enforceable arbitration agreement brings a lawsuit in court alleging multiple claims, including a claim sounding in sexual harassment.  That was the question presented to the U.S. District Court for the Southern District of New York in Johnson v. Everyrealm, Inc., and employers are not going to like the answer.  The plaintiff in that case asserted a wide range of claims against her former employer: race discrimination, pay discrimination, sex-based discrimination, sexual harassment, whistleblower retaliation under state law, and intentional infliction of emotional distress.  In his employment agreement, the plaintiff “agree[d] that any dispute or controversy arising out of or relating to any interpretation, construction, performance, or breach of this Agreement, shall be settled by arbitration to be held in the State of New York, in accordance with the rules then in effect of the American Arbitration Association.”  The Court acknowledged that under this provision, “[w]ere it not for the EFAA, all claims pursued by Johnson here would be required to be resolved in arbitration.”  At issue was “whether … the EFAA makes the arbitration agreement unenforceable as to the entirety of [the plaintiff’s] claims, or only as to [his] claims for sexual harassment.”  The Court adopted the broader view and denied the employer’s motion to compel arbitration in its entirety.

In reaching this conclusion, the Court relied on a straightforward textual analysis, explaining that: “In its operative language, 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.’  This text is clear, unambiguous, and decisive as to the issue here.  It keys the scope of the invalidation of the arbitration clause to the entire ‘case’ relating to the sexual harassment dispute.  It thus does not limit the invalidation to the claim or claims in which that dispute plays a part….  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).”  (Emphasis in original).  Because it was determined that the Complaint sufficiently alleged a cognizable cause of action for sexual harassment under Title VII, the New York State Human Rights Law, and the New York City Human Rights Law, the Court, based on its reading of the EFAA, declined to compel arbitration of the plaintiff’s other claims and retained jurisdiction over the entire case.

Johnson appears to be the first case to consider whether the EFAA bars arbitration of claims for discrimination, retaliation and the like that are conjoined in a complaint with claims alleging sexual harassment.  So, it remains to be seen whether the Johnson Court’s reading of the EFAA will gain traction with other district courts and ultimately be blessed by a Court of Appeals or the U.S. Supreme Court.  In the meantime, though, Johnson will incentivize arbitration-adverse plaintiff’s lawyers to include sexual harassment claims in a complaint whenever at all possible.  This in turn will prompt employer defendants to attack spurious sexual harassment claims early in the litigation in the hopes of removing those claims from the case as a precursor to seeking an order compelling arbitration.  Let the gamesmanship begin.