Second Circuit: One EFAA Claim Takes Whole Case Out of Arbitration
The Second Circuit held in Diaz-Roa v. Hermes Law that a properly invoked EFAA claim voids a predispute arbitration agreement for the entire lawsuit, not just the harassment claim, aligning the Second, Sixth and Ninth Circuits.
In Diaz-Roa v. Hermes Law, P.C. (No. 24-3223-cv, decided September 30, 2026), the Second Circuit rejected the argument that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act reaches only the harassment claim. Because the statute speaks of a "case" rather than a "claim" — and uses both terms — the panel held that the arbitration agreement becomes unenforceable as to every claim in the proceeding, including the plaintiff's conversion claim over stock options, once the EFAA is properly invoked as to a sexual harassment dispute.
The practical consequence for major-firm clients is broad: employers relying on broad predispute arbitration agreements with employees, contractors, or interns may be unable to compel arbitration of otherwise arbitrable claims — trade secret, wage, or equity-related — once a covered claim is pleaded in the same suit. Companies with dual-entity employment arrangements (here, a law firm and an affiliated venture) face compounding exposure.
Two questions remain open in the Second Circuit: whether a plaintiff must plausibly plead a covered claim or need only assert a nonfrivolous one, and how the EFAA operates in class, collective, and multi-plaintiff actions. Both are worth tracking, along with any petition for review, as other circuits weigh in.