Sexual Harassment Claims Against Capgemini Must Be Resolved in Arbitration; Arbitration-Limiting Statute Inapplicable

In Steinberg v. Capgemini America, Inc., 2022 WL 3371323 (E.D.Pa. Aug. 16, 2022), the court granted defendant’s motion to compel arbitration and dismiss plaintiff’s complaint alleging sexual harassment, in light of an arbitration agreement between the parties.

The crux of the parties’ dispute was the applicability of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA).

The court explained this law as follows:

By passing the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), Congress has begun to chip away at the breadth of the FAA. This significant act rightfully pulls back on the long-held presumption towards arbitration where sexual harassment is concerned. The EFAA provides that “at the election of the person alleging conduct constituting a sexual harassment dispute … no predispute arbitration agreement … shall be valid or enforceable with respect to a case which is filed under Federal [or] State law and relates to the … sexual harassment dispute.” EFAA, Pub. L. No. 117-90, 136 Stat. 26 (2022) (codified at 9 U.S.C. § 402(a)). In doing so, the EFAA unequivocally ends the era of employers being able to unilaterally compel arbitration in sexual harassment cases. Unfortunately, the EFAA only applies to any “dispute or claim that arises or accrues on or after the date of the enactment of this Act,” and the EFAA was enacted on March 3, 2022. EFAA, Pub. L. No. 117-90, 136 Stat. 26 (2022) (codified at 9 U.S.C. § 402).

Simply put, if the EFAA applied, then plaintiff’s arbitration agreement is unenforceable regarding sexual harassment disputes. In opposition to defendant’s motion, plaintiff argued that (1) the EFAA applies because the dispute as to arbitrability arose after March 3, 2022 and (2) the Arbitration Agreement is unconscionable.

As to the first point, the court sided with defendant:

Regrettably, I must conclude the EFAA does not apply. In support of her argument, Steinberg attempted to differentiate between “claim” and “dispute,” and alleges a “dispute” as to the arbitrability of the sexual harassment claims did not arise or accrue when the internal harassment occurred nor when the above-captioned case was filed in federal court. Instead, Steinberg argues the dispute arose when Capgemini filed its Motion raising the arbitration clause as an affirmative defense on April 4, 2022. Such a reading is impermissibly broad.

A plain reading of the EFAA makes clear the term “claim or dispute” refers to a claim or dispute of sexual harassment—not a dispute regarding arbitrability. As a result, the relevant date of the “claim or dispute” is, at the latest, when the case itself was filed2 not when a specific Motion disputing arbitrability was filed. When discussing which arbitration agreements are invalid, the law also states “no pre-dispute arbitration agreement or pre-dispute 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.” Congress never referenced a “dispute as to the arbitrability” in discussing accrual in 9 U.S.C. § 401, although they certainly could have done so. Instead, Congress specifically defined “sexual harassment dispute” as a dispute “relating to conduct that is alleged to constitute sexual harassment.” 9 U.S.C. § 401(3) & (4). The dispute in question must pertain to sexual assault or harassment—the statute is not referencing a dispute regarding arbitrability.

Steinberg claims the sexual harassment began “in or about September 2019” and continued until Steinberg was fired on July 31, 2020. (Compl. ¶ 25, 49-50). On August 24, 2020, Steinberg filed her Charge of Discrimination with the PHRC, and the complaint to this Court was filed on February 7, 2022. Mot. Dismiss at 8. All of these dates are before March 3, 2022, when the EFAA was enacted. Accordingly, the EFAA cannot be applied to Steinberg’s case.

[Cleaned up.]

In rejecting plaintiff’s second argument, i.e., that the arbitration clause was unconscionable, the court pointed to the agreement’s delegation clause, which states that ““[a]ny issue concerning the extent to which any Dispute is subject to arbitration, or concerning the applicability, interpretation, or enforceability of these Procedures, including any contention that all or part of these Procedures are invalid or unenforceable, shall be governed by the Federal Arbitration Act and resolved by the arbitrators.”

The court concluded that since plaintiff did not address or challenge the delegation provision in her opposition, it “must treat it as valid and enforce it,” such that plaintiff’s unconscionability objections are to be resolved at arbitration.

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