Kelly v. Rosenberg & Estis

Background

Caitlyn Kelly sued Rosenberg & Estis, P.C. and four individual employees over alleged violations of Title VII of the Civil Rights Act of 1964, the New York State Human Rights Law, the New York City Human Rights Law, the Americans with Disabilities Act, and the New York Labor Law. The opinion describes her allegations as including gender and disability discrimination, aiding and abetting, failure to provide reasonable accommodations, unequal pay, retaliation, and sexual harassment.

The defendants removed the case from New York state court to the Southern District of New York and moved to compel arbitration based on an arbitration agreement Kelly had signed. After filing an amended complaint that added sexual-harassment claims, Kelly argued that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) allowed her to avoid arbitration of all her claims. The defendants argued that the EFAA did not apply to claims that were originally filed without sexual-harassment allegations.

Sexual-Harassment Claim

The court held that the EFAA requires a plaintiff to plausibly plead a sexual-harassment claim before the statute can prevent enforcement of an arbitration agreement. The court focused on Kelly’s claim under the New York City Human Rights Law because it uses the most lenient liability standard among the potentially applicable laws.

The court found Kelly’s allegations sufficient. She alleged that employees frequently made unwanted sexual comments, including remarks about her sex life and romantic relationships. The opinion identifies allegations that one male partner compared Kelly to Pamela Anderson and a character from Game of Thrones, said she had not “slept [her] way to the top,” and responded to her reaction by mentioning a possible sexual-harassment claim. Kelly also alleged that another partner asked about her use of drugs during sex and described his own sex life. The court noted that the New York City law does not require conduct to be severe or pervasive and that even one comment may be actionable in appropriate circumstances. The defendants conceded that Kelly had plausibly pleaded a sexual-harassment claim.

Effect on the Entire Case

The court then interpreted the EFAA’s language making a predispute arbitration agreement unenforceable “with respect to a case” that is filed under federal, tribal, or state law and relates to a sexual-assault or sexual-harassment dispute. The court read “case” to mean the legal proceeding as a whole, rather than individual claims within that proceeding.

The court rejected an argument that each non-sexual-harassment claim must independently relate to sexual harassment. It reasoned that the statute refers to the entire “case,” and that Congress used the separate term “claim” elsewhere in the EFAA. The court concluded that Kelly’s case relates to her sexual-harassment dispute because many of her other claims—particularly those involving gender discrimination, hostile work environment, and unequal pay—also concern alleged gender-based mistreatment. The court also concluded that her disability-discrimination and failure-to-accommodate claims relate to the case’s broader allegations of class-based discrimination. The court distinguished a prior decision involving wage-and-hour claims brought on behalf of a collective and class, noting that Kelly’s remaining claims were brought only on her own behalf.

Disposition

The court held that the EFAA bars enforcement of the arbitration agreement as to the entirety of Kelly’s case. It therefore denied the defendants’ motion to compel arbitration. The court stated that the arbitration agreement is, at Kelly’s election, unenforceable, and directed the Clerk of Court to remove the motion at Docket Entry 7 from the list of open motions.