More EFAA: Mapping the Law’s Boundaries: How Far, How Early, and for Whom?
Two recent Second U.S. Circuit Court of Appeals decisions, and state appellate activity are providing insight into the limits of arbitration in sexual harassment cases.
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, known as the EFAA, has been a focus of courts nationwide, and three recent cases, two from the Second Circuit and one pending in New Jersey, are now helping define how far the statute reaches, when it applies, and who can invoke it.
This is not the first time the Second Circuit has examined this statute; CPR Speaks has previously discussed the EFAA in Puris v. TikTok, Inc., No. 25-322, which at this writing still remains undecided. Find the link to that article here.
When formally invoked, the EFAA enables a “plaintiff who alleges conduct constituting sexual harassment or sexual assault to elect to invalidate an arbitration agreement that predates the alleged harassment or assault,” as noted in the recent decision in Diaz-Roa v. Hermes Law, No. 24-3223 (2d Cir. Sept. 30).
As an amendment to the Federal Arbitration Act, it provides an exception to the otherwise general rule that arbitration agreements must be enforced according to their terms. The act aims to keep employers from "sweep[ing] episodes of sexual assault and harassment under the rug," as then-President Joseph Biden stated when he signed the EFAA into law in March 2022.
In Diaz-Roa, the issue before the court was whether in making such an election pursuant to the EFAA, a plaintiff can invalidate the relevant pre-dispute arbitration agreement as to each of the claims within the plaintiff’s suit, or only as to sexual harassment or sexual assault claims within that lawsuit.
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According to the Second Circuit opinion and court papers, Silvia Diaz-Roa joined Dallas-based Hermes Law P.C. in 2017, and eventually rose to become chief operating officer of Syzygy Legal Tech, Inc., doing business as “ClaimDeck,” a legal-tech company affiliated with the law firm, and which she helped found.
Diaz-Roa signed an arbitration agreement, in which she agreed to arbitrate claims against Hermes Law (other than those concerning unemployment compensation or relating to the disclosure of trade secrets.) She alleged that her employers pushed her to flirt with prospective clients. She charged that CEO Dwayne Hermes made recurring comments about her appearance, and that he compared her to a piece of steak at a business dinner. She also alleges that in February 2024, shortly after telling Hermes she intended to exercise vested stock options worth more than $1 million, she was fired.
Diaz-Roa filed suit against both ClaimDeck and Hermes Law, along with CEO Hermes and his wife, Andrea Hermes, who is the firm’s office manager. Diaz Roa asserted claims for sexual harassment, as well as non-harassment claims in connection with her unlawful termination allegation. The defendants moved to compel arbitration, but the U.S. District Court denied the motion, noting that “if the EFAA is properly invoked and applies, the pre-arbitration agreement is invalid and unenforceable with respect to the entire case,” not to those claims only involving sexual harassment. The defendants appealed.
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The Second Circuit affirmed the lower court’s decision to deny the defendants’ motion to compel arbitration, holding that “when it is applicable, the EFAA enables a plaintiff to invalidate a pre-dispute arbitration agreement as to the entire lawsuit, rather than only the sexual harassment or sexual assault claims contained within that lawsuit.” The appellate court walked through the defendants’ arguments, disposing of each.
The defendants’ principal argument is that "case" in § 402(a) of the EFAA refers to an individual claim, not the whole lawsuit. On their reading, the court should void arbitration only for the sexual harassment claim and anything that "relates to" it, and send the rest to arbitration, even if that split the proceedings in two.
The appellate court relies on statutory interpretation to find otherwise. Under a plain reading of EFAA §402(a), "case" is "read most naturally to refer to an entire lawsuit.” A “‘claim’ denotes something narrower, such as a singular ‘demand for money, property, or a legal remedy to which one asserts a right’ or ‘[a]n interest or remedy recognized at law.’” [Citations omitted.] The court also noted that the EFAA elsewhere uses the word "claim," which suggests Congress chose "case" on purpose.
The result is that a plaintiff who properly invokes the EFAA invalidates the arbitration agreement "as to all claims in that lawsuit, including any non-harassment claims."
The defendants nevertheless argued that the FAA itself uses "case" and "action" interchangeably, supporting their position that "case" should be understood to mean something narrower than the entire lawsuit. The court rejected this argument, explaining that the FAA's use of "case" and "action" refers to judicial proceedings as a whole.
The appeals court also rejected the defendants' reliance on Article III of the Constitution. Although Article III limits federal judicial power to "Cases" and "Controversies," the court explained that a single constitutional case can encompass multiple claims. In other words, Article III does not equate a "case" with a "claim." The fact that a plaintiff may assert multiple claims within a single constitutional case therefore does not support the defendants' claim-by-claim interpretation of the EFAA.
The defendants further contend that the court's interpretation renders the phrase "relates to" in EFAA § 402(a) superfluous. If the presence of a sexual harassment dispute means that the EFAA applies to every claim in the lawsuit, they argued, there would be no meaningful role left for the statute's requirement that the "case" relate to the sexual harassment dispute.
The Second Circuit disagreed. "Relates to" still serves an important function because it connects the case filed in court to the alleged sexual harassment or sexual assault dispute. The court explained that a case is not an unlimited collection of claims. The Federal Rules of Civil Procedure impose limits on the claims and parties that may be joined in a single action.
Thus, the relatedness requirement prevents a plaintiff from attaching wholly unrelated claims to a sexual harassment claim simply to avoid arbitration. The statute requires that the case relate to the sexual harassment dispute, not that every individual claim within the case do so.
Moreover, as the court explains, “the plain text of the statute contains no such additional ‘relation’ requirement with respect to individual claims. The EFAA demands only that a ‘case’ relate to a sexual harassment dispute, not that each individual claim within the case must do so.” Quoting Kelly v. Rosenberg & Estis P.C., 804 F. Supp. 3d 461, 468 (S.D.N.Y. 2025).
The defendants cited to Mera v. SA Hospitality Group LLC, 675 F. Supp. 3d 442 (S.D.N.Y. 2023) (available at https://bit.ly/3VNQYM7), arguing for the circuit court to adopt the alternative analysis cited there. In Mera, the magistrate judge had split the plaintiff’s case in two—his hostile work environment claims stayed in court because of the EFAA, but his wage and hour claims were sent to arbitration because they did not “relate in any way to the sexual harassment dispute.”
The Second Circuit, however, distinguishes Mera from this present case. The plaintiff’s case in Mera involved claims brought on behalf of a putative class and collective, but his hostile work environment claims were brought on an individual basis. By contrasting, Diaz-Roa is a single plaintiff asserting individual claims.
The defendants then resort to reliance on the FAA’s “liberal federal policy favoring arbitration agreements,” but that argument fares no better. According to the panel opinion, this policy may be “overridden by a contrary congressional demand,” which is the case here.
The Second Circuit opinion counters, “Congress expressly amended the FAA to render pre-dispute arbitration agreements unenforceable for an entire action involving a sexual harassment dispute, marking a deliberate departure from the FAA’s general policy favoring arbitration.” See Olivieri v. Stifel, Nicolaus & Co., 112 F.4th 74, 84 (2d Cir. 2024) (available at https://bit.ly/4hWTzLb).
Finally, the defendants attempt to draw on the EFAA’s legislative history in support of their proposition, but this also was rejected. Although the Second Circuit found legislative history unnecessary considering that the statutory text was unambiguous, it observed and quoted statements by Sen. Kirsten Gillibrand, D., N.Y., and Sen. Dick Durbin, D. Ill., and backed those interpretations.
Additionally, the Sixth Circuit (Bruce v. Adams & Reese; see Caroline Hillier, “EFAA Updates from the 9th, 6th & 2nd Circuits: An Arbitration Restriction’s Judicial Refinement,” CPR Speaks (July 27, 2026) (available at https://bit.ly/4hYmPB8)), and the Second Circuit (Ding v. Structure Therapeutics; see Victoria Tan, “9th Cir. Holds EFAA Election Isn't a One-Shot Deal, Letting CFO's Claims Avoid Arbitration,” CPR Speaks (Oct. 9) (available at https://bit.ly/3TYW8nT)) reached the same result.
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In discussing the outcome with Law 360, Valdi Licul, a partner in New York’s Wigdor LLP and counsel for Diaz-Roa, said the ruling "preserves public accountability, avoids duplicative proceedings, and prevents employers from using arbitration clauses to fragment claims." Grace Elletson, “2nd Circ. Says EFAA Bars Arbitration Of Ex-Exec's Entire Suit,” Law360 (Sept. 30) (available at https://bit.ly/3VKDlgP).
Attorneys for Hermes Law and ClaimDeck have not responded to requests for comment and whether they intended to file a petition for rehearing en banc before the Second Circuit as of this posting.
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Diaz-Roa answers how much of a lawsuit the EFAA covers once it applies. Two other recent matters ask when it applies and who can invoke it.
In another recent Second Circuit case, Newton v. LVMH Moët Hennessy Louis Vuitton Inc., No. 25-1697 (Sept. 21) (available at https://bit.ly/4zDXQKN), Andowah Newton, a former LVMH litigation counsel and vice president of legal affairs, alleged that a colleague sexually harassed and assaulted her at work starting in 2015, and that the company retaliated when she reported it.
She filed suit in New York state court in 2019, but the court compelled arbitration under the agreement she signed when she was hired. LVMH fired her in December 2022. She then filed suit in federal court for retaliation and tried to amend her complaint to bring her arbitration claims into the same case, arguing the EFAA let her void the arbitration agreement.
The Second Circuit split its decision. It revived her retaliation claims, holding she plausibly alleged protected activity when she declined, or failed to respond to, her new supervisor’s request to meet and discuss settling her pending claims. In context, the court reasoned, an employer could understand that refusal as continued opposition to the alleged discrimination, though it cautioned this is not a per se rule.
But the court affirmed the denial of her motion to amend. The EFAA applies only to disputes or claims that arise or accrue on or after March 3, 2022—the EFAA’s effective date—and the claims Newton wanted to add had accrued earlier.
The court also rejected her “continuing violation” argument, which would have treated her older claims as re-accruing after the statute took effect. It found the pre- and post-EFAA conduct too dissimilar, since the key actors had changed and the alleged conduct shifted from harassment and slow-burn retaliation to a single termination.
Newton connects to Diaz-Roa in a way that is potentially easy to miss. Newton ended up with some claims in court and others in arbitration, which resembles the claim-splitting the Diaz-Roa defendants asked for. But the panel was careful to explain that the split came from the EFAA’s non-retroactivity and the case’s unusual procedural posture, not from the meaning of “case.”
It also noted that the “entire lawsuit” question was pending before the Diaz-Roa panel, stating, “We express no opinion on this question.”
Read together, the two decisions fit as a pair. Newton limits when the EFAA can be invoked, and Diaz-Roa, decided days later, determines how much it can sweep in once properly invoked. A plaintiff who clears Newton’s timing hurdle gets the benefit of Diaz-Roa’s breadth, while a plaintiff with older, pre-March 2022 claims does not.
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State courts are grappling with the EFAA as well, as seen in the recently argued case of Chen v. New York Jets LLC, No. A-000934-25 (N.J. Super. Ct. App. Div.) (Docket available at https://bit.ly/4hI09X4; defense brief available at https://bit.ly/4jVfEfA).
According to court papers, Elaine Chen, a longtime finance executive and vice president at the NFL’s N.Y. Jets, was fired in 2025, after the team investigated an anonymous email accusing its president of harassing women. Chen says she was fired for stating that she had heard of harassment but did not know specifics.
The Jets say they found no evidence of the underlying allegations and instead found a “conspiracy” involving Chen’s husband, who also worked for the team and allegedly tried to delete thousands of texts with her. Alex Ebert, “NY Jets Sexual Harassment Case Tests Limits of Arbitration Ban," Bloomberg Law (Oct. 7, 2026) (available at https://bit.ly/4s6YG05).
The trial court denied the Jets’ motion to compel arbitration, finding her claims sufficiently related to the harassment allegations to fall under the EFAA, and the Jets appealed.
As described in the Bloomberg Law article, at oral argument in New Jersey’s Appellate Division on Oct. 7, the Jets contended that applying the EFAA here would “be stretching [it]beyond its text” and “opening the flood gates to courts for matters that belong in arbitration.” Id. Chen’s counsel responded that the statute applies “at the election of the person alleging conduct constituting a sexual harassment dispute” and that “[t]he whole situation arose from a sexual harassment dispute.” Id.
The panel of judges, Bloomberg Law reported, appeared wary of both sides’ framing. One judge described a “continuum of plaintiffs” the statute might cover and asked whether Chen is simply the “next point” along it, while another suggested the case “has nothing to do with harassment or abuse,” and that harassment was only “coincidentally” part of the underlying facts. Id.
No decision has been issued yet.
Chen tests the same phrase Diaz-Roa leaned on: “relates to.” The Second Circuit held that the language is satisfied when the case as a whole relates to a sexual harassment dispute, and that it limits plaintiffs from attaching unrelated claims to avoid arbitration. Chen asks the next question: how loose can that relationship be, and can a plaintiff who is not the alleged victim of the harassment satisfy it?
If the New Jersey court adopts the Jets’ narrower view, the relatedness requirement plaintiff Diaz-Roa described as a safeguard could become a real gatekeeper. If it adopts Chen’s, the statute’s reach could extend well beyond the harassment victim’s own suit.
Taken together, the cases show the EFAA’s boundaries being drawn along three lines: how far it reaches (Diaz-Roa), when it applies (Newton), and who can invoke it (Chen). Employers shaping arbitration strategy and plaintiffs’ counsel pleading around the statute should read all three together.
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The author is the CPR Institute’s 2026-2027 academic year intern from the Howard University School of Law ADR Program in Washington, D.C., where she is a second-year student.
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