Yesterday, a divided Sith Circuit held that a complaint sufficiently plead a hostile work environment claim and unanimously concluded that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (the “EFAA”) prohibits the mandatory arbitration of the plaintiff’s entire case, including her ADA claims, and not just her sexual harassment allegations under Title VII. Bruce v. Adams and Reese LLP, No. 25-5210 (6th Cir. 2-25-26). As faithful readers may recall, the EFAA created an exception in the Federal Arbitration Act for sexual assault and harassment claims which otherwise would have been subject to a pre-dispute arbitration agreement. First, the Court’s majority found that the amended complaint sufficiently alleged a hostile work environment claim under Civil Rule 8 without having to describe every single instance of inappropriate or humiliating comments. Second, because the EFAA prohibits mandatory enforcement of a pre-dispute arbitration agreement with respect to the entire case, and not just the sexual harassment claims, the entire case, including ADA claims, could not be referred to arbitration. While the Court acknowledge that this could result in the assertion of specious and frivolous sexual harassment claims to avoid arbitration of genuine claims, it believed that this could be consistent with Congressional intent to avoid piecemeal and more expensive litigation of plaintiff claims.
According to the Court’s opinion, the plaintiff worked as a
legal assistant in the Liquor Control group of a law firm, where one of the
attorneys regularly made inappropriate comments and repeatedly extended
invitations to her. She suffered from a
number of mental health issues and was afforded a flexible work schedule. When the group changed law firms, she joined
the new, defendant, law firm, was accepted to law school and was promoted to
paralegal. While the attorney was no
longer regularly in the office, he still made inappropriate comments when he saw
her. Also, the new law firm insisted on
her keeping a regular work schedule. She
was subjected to corrective action for late arrivals, even after she explained
it was because of medication, and ultimately fired her while she was attempting
to have her physician communicate with the firm. She filed suit under the ADA and Title
VII. The law firm moved to dismiss the sexual
harassment claim and to compel the ADA claim to arbitration under her
pre-dispute arbitration agreement. The trial
court denied both motions and the law firm appealed. A divided Sixth Circuit affirmed.
The Sexual Harassment Claim
The Sixth Circuit agreed that if the sexual harassment claim
failed to satisfy Rules 8 and 12(b)(6), it could be dismissed and the ADA claim
sent to arbitration. However, the Court
found that the complaint sufficiently alleged an actionable sexual harassment
claim.
“To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” . . . “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” . . . . Under this standard, “a short and
plain statement of the claim” sufficient to “give the defendant fair notice of
what the . . . claim is and the grounds on which it rests” is enough, and a
complaint “does not need detailed factual allegations.”
. . . .
To invoke the EFAA’s safe harbor, a
plaintiff must “allege[] conduct constituting a sexual harassment dispute,” 9
U.S.C. § 402(a), and a sexual harassment dispute is one “relating to conduct
that is alleged to constitute sexual harassment under applicable Federal,
Tribal, or State law,” id. § 401(4). The EFAA, however, does not itself define
what it means for a plaintiff to “allege” such a dispute.
The Court declined to decide whether the EFAA standard of “alleging”
a sexual harassment dispute means that the claims must satisfy the Rule
12(b)(6) standard or a lower standard.
The Court’s majority held that the plaintiff was not required to allege
facts that would satisfy Title VII’s burden shifting standard. “For our
purposes the question is simply whether Bruce’s complaint “allege[s] sufficient
‘factual content’ from which a court, informed by its ‘judicial experience and
common sense,’ could ‘draw the reasonable inference’” that Bruce was subjected
to a hostile work environment.”
In evaluating whether the complaint sufficiently stated a
claim for hostile work environment, the Court did not consider the allegations
against the lawyer at the initial law firm and only considered the allegations which
involved the defendant law firm. The
defendant law firm employed neither the attorney nor the plaintiff when the
earlier alleged harassment occurred and, thus, could not be vicariously liable
for it. That being said, the Court’s
majority found the complaint sufficiently alleged a hostile work environment
against the defendant employer:
[Her] complaint outlines a
consistent pattern of sexualized jokes and comments directed at her by [the
attorney] throughout her employment with [defendant]. Although [he] was not
always in the office at [defendant], he “continued sexually harassing [her]
when he was in the office” by “making sexual comments and jokes to and about [her],
as well as making inappropriate comments about [her] appearance, clothing, and
private life.” [After giving several explicit examples of his inappropriate
comments], [t]his conduct affected [her] ability to work as a member of the
Liquor Group, as she “went out of her way to avoid” [him], and “hardly spoke to
him” by late 2022. . . .
Viewed in the light most favorable
to [her] and drawing all inferences in her favor, these facts plausibly allege
conduct “sufficiently severe or pervasive to alter the conditions of [her]
employment and create an abusive work environment.” . . . We gather and infer from [her] complaint that [he],
who was among [her] supervisors and responsible for her employment at [defendant],
consistently and continually directed sexualized comments at her in the
presence of other employees at [defendant]. Or in Harris’s terms, [he]
“frequen[tly]” and regularly “humiliat[ed]” [her], thereby “interfere[ing]
with” her ability to perform her job as a member of the Liquor Group. . . . And
it is certainly plausible that a young female paralegal would be humiliated and
intimidated, and that her performance would be affected, by persistent
suggestions from a supervisor that she keep clients happy by visiting them “in
a short skirt,” that she is a “[h]oe,” and that it would be “hot” if she had
sex on a desk in the office—not to mention his delivery of an unsolicited $750
“bonus” from his personal funds. . . .
To be sure, and as [defendant] is
keen to point out, “occasional . . . offensive utterances” that are not
“physically threatening or humiliating” do not render a work environment
hostile and discriminatory. . . . [Defendant] characterizes [her] complaint as
setting forth just “two discrete, one-time comments in a one year period.” . . . We agree with [Defendant] that such a
complaint would be subject to dismissal because a hostile-work-environment
claim premised on three or four instances of harassing comments over an
extended period of time is likely to fail unless those comments are
sufficiently severe to overcome their infrequency. . . .
But drawing all inferences in [her]
favor, [his] conduct was much more frequent. Although [his] office attendance
during [her] year at [defendant] was inconsistent, he “continued sexually
harassing [her] when he was in the office.” . . . His comments were “persistent, ongoing, and
continued up until the day [she] was
fired.” . . . These allegations are sufficient to allow a
plausible inference that Pinson’s comments occurred more than a handful of
times.
The majority rejected the argument that plaintiffs need to
allege all or most of the incidents of humiliating comments supporting a
hostile work environment claim:
[A] demand for a detailed telling
of each offensive utterance, however, is more than Rule 8 requires. First, such
a standard is “incongruous” insofar as it would “require [[her]], in order to
survive a motion to dismiss, to plead more facts than [s]he may ultimately need
to prove to succeed on the merits” at summary judgment or at trial. . . . Second, the . . . argument that the specific contents of each
harassing statement are necessary for us to “independently determine” whether
they add up to a hostile-work-environment claim, . . . would all-but-eliminate any room for
“reasonable inference.” . . . In so doing, it would impose on
hostile-work-environment plaintiffs a heightened pleading standard not unlike
Rule 9’s fraud pleading standard.
The EFAA Standard
The Court observed that the majority of courts to have faced
the issue have denied to refer entire cases – and not merely the sexual
harassment claims – to arbitration based on the language of the EFAA (bolding
added for emphasis):
IN GENERAL.—Notwithstanding any
other provision of this title, at the election of the person alleging conduct
constituting a sexual harassment dispute or sexual assault dispute, or the
named representative of a class or in a collective action alleging such
conduct, no 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.
. . .
The operative word here is “case.”
That is because it is “with respect to a case” that an otherwise-valid
arbitration agreement is invalid and unenforceable. 9 U.S.C. § 402(a). All data
point clearly in the direction of “case” encompassing a plaintiff’s entire
suit.. . . We need look no further than the FAA to find a use of the word
“case” in accordance with these definitions, as Section 7 provides for the
ability to call witnesses “in [a] case” in arbitration. 9 U.S.C. § 7. The use
in Section 7 of the preposition “in” means that “case” makes sense only if read
to refer to a proceeding. . . .
With this understanding of the
meaning of “case” in mind, the EFAA’s text renders an arbitration agreement
“[un]enforceable with respect to” a plaintiff’s entire case, or action, and not
only with respect to certain claims therein. 9 U.S.C. § 402(a). And the cases
the EFAA shields are those that “relate[] to the sexual assault dispute or the
sexual harassment dispute.” “Relate” means “[t]o have some connection to; to
stand in relation to.” . . . When a plaintiff files a case that includes a
sexual harassment claim, that case certainly has “a connection with” and
“reference to” the claim. Thus, we hold that a plaintiff’s case, such as
Bruce’s, that contains a plausibly alleged claim of sexual harassment,
therefore “relates to” a “sexual harassment dispute,” and arbitration may not
be compelled under the FAA. 9 U.S.C. § 402(a).
The Court rejected the employer’s argument that FAA has
traditionally resolved arbitrability on a claim-by-claim basis because of this “case”
language from the EFAA. It also
rejected “the practical concern that plaintiffs will abuse the EFAA to avoid
arbitration of non-sexual-harassment/abuse claims.” “[T]he sole function of the courts—at least
where the disposition required by [a statute’s] text is not absurd—is to
enforce it according to its terms.”
Congress might indeed view the rule
we adopt here as advancing its intent because a construction of the EFAA that
required plaintiffs with both sexual-harassment and other claims to proceed
separately in arbitration and court would discourage such plaintiffs from
accessing the court system, on the pain of the increased costs and
time-commitment in bringing two parallel actions in different fora. Because
A&R has not demonstrated that the effects of our holding will contravene
Congressional policy, much less sufficiently so that we could disregard the
law’s plain text, we are not swayed.
The dissent pointed out, while acknowledging that the complaint
also alleged that comments were continuous, that only three discrete instances of
inappropriate comments were made while the attorney and plaintiff worked for
the defendant employer and this was insufficient to allege a hostile work environment
claim. He would not have drawn an
inference that these were indicative of a “consistent pattern.” He described her allegations as conclusory
and “threadbare.”
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
