623 F.Supp.3d 333
S.D.N.Y.2022Background
- Walters was hired as a Starbucks store manager in Dec. 2019 and signed Starbucks’ Mutual Arbitration Agreement before starting.
- Between July 2020 and Dec. 2021, Walters alleges repeated unwanted sexual advances and threats from supervisor Mbodje, complaints ignored by HR, and retaliatory conduct by supervisor Tobias; she resigned in Dec. 2021.
- Walters sued (Mar. 7, 2022) for discrimination, hostile work environment, retaliation, and constructive termination under NYSHRL and NYCHRL.
- Defendants moved to compel arbitration and dismiss; the Arbitration Agreement covers employment-related claims and contains a broad delegation clause assigning arbitrability to the arbitrator.
- The court considered whether the Federal Arbitration Act (FAA) mandates enforcement, whether EFASASHA (2021) bars enforcement, and whether the delegation clause dispositively assigns arbitrability to an arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability under FAA | Arbitration agreement should not be enforced because plaintiff’s sexual-harassment claims warrant judicial resolution under new law | FAA requires enforcement of valid written arbitration agreements covering commerce | FAA applies and requires enforcement of the Arbitration Agreement |
| Applicability of EFASASHA (2021) | EFASASHA invalidates arbitration for sexual-harassment disputes filed after enactment; it should apply to her lawsuit | EFASASHA applies only to claims/disputes that arose or accrued on or after Mar. 3, 2022 | EFASASHA does not apply because Walters’s claims accrued before Mar. 3, 2022 |
| Who decides arbitrability / scope of the agreement | Court should decide whether claims fall within arbitration scope | Delegation clause commits arbitrability questions to the arbitrator | Delegation clause is valid and unambiguously assigns arbitrability to the arbitrator; court stays determination of scope for arbitrator |
| State law limit on mandatory arbitration (N.Y. C.P.L.R. § 7515) | NY law prohibits mandatory arbitration for unlawful discrimination claims; it bars enforcement | FAA preempts or displaces inconsistent state law; FAA governs federal arbitration enforcement | C.P.L.R. § 7515 does not bar enforcement where inconsistent with the FAA; FAA controls |
Key Cases Cited
- New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) (FAA governs enforceability of arbitration agreements)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018) (strong federal policy favoring enforcement of arbitration agreements)
- E.E.O.C. v. Waffle House, Inc., 534 U.S. 279 (2002) (employment contracts are transactions "involving commerce" for FAA purposes)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (parties can delegate arbitrability to arbitrator via clear contractual language)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (courts must enforce delegation clauses and send arbitrability questions to arbitrators)
- Rotkiske v. Klemm, 140 S. Ct. 355 (2019) (definition of when a claim "accrues" for statute-of-limitations purposes)
- McGullam v. Cedar Graphics, Inc., 609 F.3d 70 (2d Cir. 2010) (hostile work environment claim accrual principles)
- Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022) (FAA preempts state laws that categorically prohibit arbitration of particular claims)