Sexual Harassment Plaintiff May Proceed in Court; Arbitration Not Required

In Newton v. LVMH Moët Hennessy Louis Vuitton Inc., No. 154178/2019, 2020 WL 3961988, 2020 N.Y. Slip Op. 32290(U) (N.Y. Sup Ct, New York County July 10, 2020), a sexual harassment case, the court – citing CPLR 7515 – held that plaintiff was not bound by an arbitration agreement, and thus could proceed with her claim in court.

Framing the discussion, Judge Louis Nock explained:

[New York] has [] “a well-defined and dominant public policy” “against sexual harassment in the work place” (Phillips v Manhattan & Bronx Surface Transit Operating Auth., 132 AD3d 149, 155 [1st Dept 2015] [vacating an arbitration award reinstating an employee accused of sexual harassment because the arbitrator interpreted the employee’s collective bargaining agreement “in a manner that conflicts with a well-defined and dominant public policy. The public policy against sexual harassment in the workplace”], lv denied 27 NY3d 901 [2016]). It is against this public policy backdrop that our Legislature enacted CPLR 7515 in 2018, eradicating **4 mandatory arbitration of sexual harassment claims. It did so by prohibiting such arbitration clauses “entered into on or after the effective date” of the statute (i.e., July 11, 2018) (CPLR 7515 [b] [i]),2 and also, per this court’s interpretation discussed hereinbelow, by declaring then-existing mandatory arbitration clauses, such as the one underlying the instant motion, “null and void” (id., [iii]).

The Court rejected defendant’s argument that the Federal Arbitration Act (FAA) controlled, noting that “claims for sexual harassment, or other discrimination-based claims, cannot reasonably be characterized as claims concerning or ‘arising out of’ ‘a transaction involving commerce.'”

Judge Nock distinguished, and declined to follow, the reasoning of the Southern District of New York’s decision in Latif v Morgan Stanley & Co. LLC, 2019 WL 2610985 (SDNY June 26, 2019) – which applied the FAA to an arbitration clause mandating arbitration of sexual harassment claims – and instead held “that the FAA, by its very own terms, does not apply to the types of claims asserted in this action, which are undeniably not ‘transaction[s] involving commerce’ and which have no interstate qualities.”

Note: On July 23, 2020, defendants filed a Notice of Appeal to the Appellate Division, First Department.

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