The Second Circuit recently issued an important decision interpreting the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”). When a plaintiff properly invokes this law, does the arbitration exception cover only the sexual harassment claim, the entire lawsuit, or perhaps the harassment claim along with any other claims related to the harassment? The Second Circuit held that the entire lawsuit can proceed in court. See Diaz-Roa v. Hermes Law, P.C., No. 24-3223-cv (2d Cir. Sept. 30, 2026) (click here for a copy of the decision).
The plaintiff alleged sexual harassment, along with claims that her employer terminated her job to prevent her from exercising valuable stock options. The plaintiff elected to proceed in court under the EFAA, and the employer argued that her non-harassment claims, for conversion of the stock options, should still be sent to arbitration.
The Second Circuit’s reasoning focused on a simple distinction and textual argument: Congress used the word “case,” rather than “claim,” in the EFAA. As a result, the EFAA makes a predispute arbitration agreement unenforceable with respect to the entire case relating to a sexual harassment or sexual assault dispute. A case can contain multiple claims, and the statute does not require each individual claim to relate to the harassment or assault.