Two significant holdings today.  The first, from the Second Circuit, deals with the application of the EFAA to on-going claims of a hostile environment.  The second, from the D.C. Circuit, addresses the scope of FISA’s arbitration exception.

Accrual of Hostile Work Environment Claims under the EFAA

On May 3, 2022, the President signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”).  The Act prohibits the enforcement of predispute arbitration provisions as to claims “alleging conduct constituting a sexual harassment dispute or sexual assault dispute” and applies to “any dispute that arises or accrues on or after the date of enactment of this Act.”  In Olivieri v. Stifel, Nicolaus & Co., Inc., 2024 U.S. App. LEXIS 20216 (2^nd Cir. August 12, 2024), Circuit Judge Robinson, writing for himself; Circuit Judge Raggi; and District Judge Rakoff, sitting by designation, decides when a claim of on-going sexual harassment “accrues.”

Plaintiff alleged that, beginning in 2018, her supervisor sexually harassed her through unwanted touching and references to the supervisor’s sex life.  She further asserted that Stifel failed to respond to her complaints about this conduct.   In October 2021, Olivieri went on maternity leave.  She returned to work on March 10, 2022, i.e., after the effective date of the EFAA.  She alleges that, after her return, Stifel retaliated against her for her pre-leave complaints of harassment.

Stifel moved to compel arbitration, relying upon a pre-dispute arbitration provision in Plaintiff’s employment agreement.  After first granting the motion, the District Court reconsidered its ruling and denied arbitration under the provisions of the EFAA.  This appeal ensued.

Since the complaint involves both pre-EFAA and post-EFAA conduct, the case raises the issue of when the claim “accrue[d].”  If the accrual date was before March 3, 2022, the arbitration mandate applied; if after that date, EFAA prohibited enforcement of the provision.

In Olivieri, the Second Circuit holds that the date of accrual is “informed” through the application of the federal common law’s statute of limitations doctrine.  Therefore, Judge Robinson opines, hostile work environment claims “are subject to the continuing violation doctrine because, unlike discrete acts, ‘[t]heir very nature involved repeated conduct’. . . A hostile work environment generally doesn’t occur on any one day; it emerges ‘over a series of days or perhaps years.’” (Internal citations omitted; brackets in opinion).  Since some of Olivieri’s hostile environment claims post-dated her return to work and the enactment of the EFAA, the Court holds that Act prohibits enforcement of the mandatory arbitration clause.

Olivieri makes it clear that, in the Second Circuit, claims asserting the existence of an ongoing hostile work environment are subject to the continuing violation doctrine and, therefore, can be subject to the EFAA even if the conduct began before the effective date of the Act. The opinion raises two interesting issues, though, that will have to be fleshed out in future cases.

First, it relies on “the ongoing nature of a hostile work environment claim, which is a singular claim predicated on a series of acts over the course of time.”  But, is a hostile work environment always “ongoing?”  Can there be break in the employer’s retribution such that a “series of acts” is broken?  What if, in 2024, a new HR Director arrives who is receptive to claims of harassment, but, after he or she leaves in a couple of years, the replacement is hostile to such claims and refuses to adequately consider a claim which occurred in 2000?  Does the EFAA still apply to hostile environment allegations based on a failure to respond to that earlier event?

Second, what is the scope of the continuing violation?  In a footnote, the court notes that Defendants raised in their reply brief the question of whether, even if arbitration of the hostile environment claims is barred by the EFAA, does that proscription apply to Olivieri’s claims of sexual assault and harassment by her supervisor. However, since those claims were not addressed in Stifel’s initial briefing “Defendants’ claim-splitting argument [has been] abandoned.”

More to come.

Delegation of Arbitrability

Bangart v. Bonaventure of East Wenatchee LLC, 2024 U. S. App. LEXIS 20879 (9^th Cir. August 19, 2024)(Judges W. Fletcher, Bea, and Owens), is a two-paragraph reversal of the District Court’s refusal to compel arbitration of a wrongful discharge claim.  The opinion is useful to drafters looking for language which will delegate arbitrability claims to the arbitration panel; the court holds that a contract providing that “any legal dispute. . . concerning the scope, validity, enforceability or breach of this Agreement, shall be resolved by final and biding arbitration[,]. . . not by [a] court.” (Brackets in opinion), serves that purpose.

International Arbitration; FSIA; Energy Charter Treaty

While the Foreign Sovereign Immunities Act, 28 U.S.C.  § 1602, et seq., provides foreign states and their instrumentalities with some protection from actions in the U.S., it contains an exception for actions brought to enforce certain arbitration agreements “made by the foreign state or for the benefit of a private party” or to confirm awards in such proceedings “if . . . the agreement or award is or may be governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards.”  Nextera Energy Global Holdings B.V. v. Kingdom of Spain, 2024 U.S. App. LEXIS 20711 (D.C. August 16, 2024)(Pillard, J. writing for himself and Rogers, J, with Pan, J. dissenting in part), deals with the scope of that exception.

Because of their ruling on the arbitration exception, the judges find it unnecessary to address the issue of whether a sovereign, by ratifying the New York or ICSID Conventions, waives its FISA immunity.  Thus, that question “remains’ unsettled in our Circuit.”

Nextera is a complicated decision of interest only to international arbitration practitioners, so I won’t try to go into detail here.  But, I wanted to flag the opinion for those seeking enforcement of awards which might be affected by the Achmea doctrine.

Have a good week.  Sorry to have been away from the keyboard for a couple of weeks.

David Reif, FCIArb
Reif ADR
Dreif@reifadr.com