TikTok Brings #MeToo Arbitration Opt-Out Back to Appellate Level

TikTok‘s appellate fight to send a female executive’s discrimination lawsuit to arbitration gives another federal circuit the chance to decide whether allegations of “sexual” misconduct are required to trigger a #MeToo-inspired opt-out law.

Lower courts are divided on this aspect of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act and, while appearing poised to address the issue in a case involving CVS Pharmacy Inc., the US Court of Appeals for the Third Circuit decided that appeal in April on other grounds. The question was raised again in a Second Circuit brief filed by TikTok and its parent ByteDance Ltd.

Harassment based on sexual mistreatment and that based on gender-related hostility not involving sexual comments, propositions, or touching are both recognized under sexual harassment case law as forms of sex discrimination prohibited by Title VII of the 1964 Civil Rights Act. Any potential distinction didn’t matter prior to the 2022 passage of the EFAA, which lets workers opt to sue in court in cases alleging sexual harassment or assault.

It’s now an issue that calls for clarity, court watchers said.

Employee advocates say Congress didn’t intend any distinction under the EFAA and that workers would face needless extra legal costs if lower courts are required to parse a suit for sexual versus gender-based allegations when deciding motions to compel arbitration, imperiling the #MeToo-spurred law’s purpose of not silencing victims.

Employer advocates counter that keeping claims in court without plausible sexual mistreatment allegations would expand the law beyond what was intended and risk out-sized jury verdicts, giving workers unfair settlement leverage.

The EFAA arose out of allegations against Harvey Weinstein and others and was only meant to shield from arbitration claims asserting sexual harassment or assault, Proskauer Rose LLP’s Anthony J. Oncidi said. It’s been turned into an anti-arbitration poison pill.

“I suspect it wouldn’t have gotten bi-partisan support,” if it had been known how the opt-out would be abused, Oncidi said. The abuse won’t end until Congress or the Supreme Court acts, he said.

TikTok contends Katie Ellen Puris shouldn’t be allowed to “shoehorn” her employment dispute into the EFAA by citing sex bias allegations. The statute specifically refers to sexual harassment, which means unwelcome advances or other physical or verbal contact of a sexual nature, TikTok says.

Puris’ suit cites performance criticisms, the alleged mishandling of her complaint about being sexually harassed by a third party while in France, and her firing. It’s not premised on sexual harassment, TikTok says, seeking to reverse a lower court.

Text Makes Plain

The EFAA says it applies to disputes relating to conduct that’s alleged to constitute sexual harassment under applicable federal, state, or tribal law.

“That part of the statute gives you your answer,” Public Justice’s Shelby Leighton said. It’s clear that in drafting the EFAA, Congress was using “sexual harassment” broadly, she said.

Indiana University law professor Deborah Widiss agreed.

Lower courts have for the most part correctly reached that conclusion, Widiss said. Sexual comments or desire aren’t needed for a Title VII sexual harassment claim and many states and localities have even broader standards, she said.

But the circuits will have to weigh in eventually, hopefully reaffirming long-established case law holding sexual harassment includes the full range of sex-based hostile environments, she said.

Coming Up Constantly

There was no confusion about the difference between a sexual harassment and a gender discrimination claim before the EFAA, Oncidi said. Now employee lawyers are trying to pretend there’s some ambiguity, he said.

The issue is coming up all the time and is part of a larger pattern driven by plaintiffs’ counsel’s aversion to arbitration, the Proskauer lawyer said.

They’re injecting sexual harassment allegations into just about any case they can, including wage-and-hour suits, Oncidi said.

Cases in California, where he practices, are almost always brought in state court and are worth roughly 5-10 times more if they’re going to a jury, Oncidi said. Employee lawyers in the state, who take up to 50% of their client’s recovery, are acutely aware of this and jury verdicts there have become unbelievable, with $10-$20 million awards in single-plaintiff cases not unusual and two workers recently receiving $464 million in a retaliation suit.

Render ‘Meaningless’

It would be almost impossible to draw a line between something that’s sexual and something that’s based on gender, which would require proving what was in someone else’s mind, Leighton said. Forcing plaintiffs to prove that just to stay in court would drive up costs and make exercising EFAA rights unaffordable for many workers, she said.

That would render the #MeToo law “meaningless just as a practical matter,” Leighton said.

A case in which Derek Smith Law Group PLLC’s Daniel Barroukh was involved may illustrate that point.

His client sued after coworkers repeatedly walked into a room where she was breast-milk pumping, including one who watched for several minutes, Barroukh said. The judge found there was no sexual occurrence, so she couldn’t invoke the EFAA, he said.

Barroukh believes the EFAA will start to recognize the vulnerable position pregnant employees are in, especially those breast-pumping, as the Pregnant Workers Fairness Act and similar laws take shape through litigation. The circuits and Supreme Court are unlikely to get into line-drawing, but it would carry huge implications if they did, he said.

Widiss thinks the odds are against the Second Circuit reaching the issue in TikTok.

Puris clearly believed what happened in France was sexual harassment and part of a pattern of sex-based hostility, Widiss said. Retaliation claims are viable if a harassment complaint was made in good faith and Puris met that test, especially under New York’s expansive definition of sexual harassment, she said.

It’s puzzling that employers are spending so much money to litigate over being able to arbitrate, the professor said. That shows arbitration really does disadvantage workers, she said.