Business Litigation & Dispute Resolution

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MONTH-IN-BRIEF (Aug 2019)

Dispute Resolution

A Federal Judge Has Rejected a New York Law Prohibiting Mandatory Pre-Dispute Arbitration of Sexual Harassment Claims

By Leslie A. Berkoff

In a decision from the United States District Court for the Southern District of New York, U.S. District Judge Denise Cote has held, in Latif v. Morgan Stanley & Co. LLC, that Section 7515 of New York's Civil Practice Law and Rules (CPLR), which prohibits mandatory arbitration of sexual harassment claims, is inconsistent with the Federal Arbitration Act ("FAA"), and therefore, is invalid and unenforceable.

In April of 2018, New York State enacted several laws in an effort to address workplace sexual harassment including a prohibition on pre-dispute agreements to arbitrate sexual harassment claims.  In Latif, the plaintiff was hired to work in the New York office of Morgan Stanley and signed an offer letter which included an agreement that all claims against Morgan Stanley (including sexual harassment claims) were subject to mandatory arbitration. Shortly after the employment commenced, plaintiff complained to Human Resources that he had become a target of inappropriate comments concerning his sexual orientation and his religion, and received certain unwanted sexual advances. After a lengthy email discourse concerning these allegations, plaintiff’s employment was terminated.

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