Court Compels Arbitration of Sexual Harassment Claims Against Indeed

In Gilbert v. Indeed, Inc., et al., 2021 WL 169111 (S.D.N.Y. Jan. 19, 2021), the court, inter alia, granted defendant Indeed’s motion to compel arbitration of plaintiff’s sexual harassment claims.

Plaintiff’s complaint contains allegations of horrific sexual harassment, including rape.

In addressing the enforceability, under New York law, of an agreement to arbitrate statutory discrimination claims, the court discussed the two statutes at issue: (1) the Federal Arbitration Act; and (2) Section 7515 of the New York Civil Practice Law and Rules (which, where applicable, and in sum, precludes mandatory arbitration of statutory discrimination claims).

Here, Judge Liman concludes that in the matter of FAA v. CPLR 7515, the FAA wins.[1]This is, I acknowledge, akin to summarizing World War Two as “Nations fight. The Allies win.”

After summarizing the black-letter law of preemption, the court concluded:

New York State cannot exempt Plaintiffs’ federal employment discrimination and state law claims from mandatory arbitration under the FAA. Congress did not intend that discrimination claims be exempted from the FAA or its requirement that arbitration agreements requiring private dispute resolution be enforced “save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2; see Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991); see also Desiderio v. Nat’l Ass’n of Sec. Dealers, Inc., 191 F.3d 198, 203 (2d Cir. 1999) (Title VII). New York State lacks power to reach a contrary conclusion and to exclude such claims from the FAA when Congress has chosen not to do so. See Southland Corp. v. Keating, 465 U.S. 1, 16 (1984).

The same conclusion also follows for Plaintiffs’ state and city statutory claims. Claims under both federal and state and city discrimination laws generally can be the subject of mandatory arbitration. See, e.g., Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 120 (2d Cir. 2010). Moreover, the Supreme Court has held that the states possess no greater power to exempt from private arbitration and the scope of the FAA statutory claims that the states create than the states have to exempt from the FAA claims based on federal law. In Southland, the California Supreme Court, with the final word on issues of California state law, “interpreted the Franchise Investment Law to require judicial consideration of claims brought under that statute and concluded that the California statute did not contravene the federal Act.” Southland, 465 U.S. at 5. The Supreme Court. with the final word on issues of federal law including preemption, reached the contrary conclusion. “The Federal Arbitration Act rests on the authority of Congress to enact substantive rules under the Commerce Clause” and “[i]n enacting § 2 of the federal Act, Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration.” Id. at 10-1. Thus, “Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements.”

The court was unpersuaded by a contrary state-court decision, Newton v. LVMH Moët Hennessy Louis Vuitton Inc., 2020 WL 3961988 (N.Y. Sup. Ct. July 10, 2020), noting that the “relevant question is not whether the claim [here, sexual harassment] arises from a transaction involving commerce, but rather whether the contract containing the arbitration clause ‘evidenc[es] a transaction involving commerce.'”

The court held that “[t]he contract containing the arbitration clause here manifestly evidences a transaction involving or affecting commerce” (as plaintiff is located in New York, and defendant is a Delaware corporation with operations in various states).

1 This is, I acknowledge, akin to summarizing World War Two as “Nations fight. The Allies win.”
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