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Court Battles Loom Over #MeToo Arbitration Bill’s Unclear Scope

Feb. 16, 2022, 10:30 AM

The landmark bill to guarantee that workers alleging sexual harassment or sexual assault can pursue lawsuits in court contains an ambiguity about its scope that will have to be resolved through litigation, legal scholars said.

Legislation awaiting President Joe Biden’s signature bars the enforcement of arbitration agreements “with respect to a case” that relates to disputes over alleged sexual harassment or assault. That leaves unclear how courts will handle cases that also include other allegations, like race discrimination or wage-and-hour claims, scholars said.

Courts may read that language broadly to decide that the entire lawsuit remains in court, or narrowly to conclude all non-harassment or non-assault claims go to arbitration, said Imre Szalai, a Loyola University New Orleans law professor who has written extensively about arbitration. Another option is for courts to rule claim-by-claim depending on how closely connected the other allegations are to the alleged harassment or assault, he said.

“It’s going to cause a lot of litigation in court, and that undermines the value of arbitration,” Szalai said.

The ambiguity created by the legislation using “case” rather than “claim” could drive strategic litigation choices as courts wrestle with the scope of the law.

The bill’s wording will encourage workers to add claims of sexual assault to avoid having their cases sent to arbitration, said Sarah Rudolph Cole, a law professor at Ohio State University and director of the school’s Program on Dispute Resolution.

Plaintiffs who see their claims split will have to decide whether they’ll want to pursue allegations in both arbitration and court, said Christie Del Rey-Cone, a lawyer with Mitchell Silberberg & Knupp LLP.

“The issue, really, with this statute is it’s letting the courts decide ‘should you be here?’” Del Rey-Cone, who represents employers in workplace matters, said. “Will plaintiffs actually want to do this in more than one venue?”

For employers, defending against claims from the same worker in two separate, simultaneous proceedings could become an expensive venture, said Doug Kauffman, a Balch & Bingham LLP attorney who counsels companies.

Congressional Intent

Speaking on the Senate floor prior to the bill’s passage last week, Sens. Lindsey Graham (R-S.C.) and Joni Ernst (R-Iowa) argued for a narrower reading of its ambiguous language about its scope. Ernst said the measure “shall not be the catalyst for destroying pre-dispute arbitration agreements in all employment matters.”

Graham warned against lawyers trying to “game the system” by mixing sexual harassment and assault claims with other allegations, saying the bill won’t take unrelated claims out of arbitration.

“So if you’ve got an hour-and-wage dispute with your employer, you make a sexual harassment sexual assault claim, the hour-and-wage dispute stays under arbitration unless its related,” Graham said. “That’s the goal.”

But the senators’ comments may have limited impact on how the bill is interpreted by courts, legal scholars said. Many federal judges, particularly those appointed by Republican presidents, use an approach to statutory interpretation known as textualism that largely ignores legislative history and primarily focuses on the words of a law.

The U.S. Supreme Court has specifically said that legislative history shouldn’t be used to evaluate the Federal Arbitration Act, the 1925 law requiring the enforcement of arbitration contracts that Congress amended by making the exception for sexual harassment or assault, said Lise Gelernter, a member of the teaching faculty at the University of Buffalo School of Law.

For example, the high court’s 2001 ruling in Circuit City v. Adams that the FAA applies to employment contracts also said legislative history can’t trump what’s in the statute, she said.

“It’s going to be a headache for litigators on the ground—and for employers and victims—how to approach cases that might have multiple claims,” Gelernter said.

To contact the reporters on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com; Paige Smith in Washington at psmith@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com