On June 26, 2019, Judge Denise Cote, of the Southern District of New York, granted a motion to compel arbitration of an employment discrimination, retaliation and sexual harassment claim—despite recently passed NY law, NY CPLR § 7515 (“Section 7515”), invalidating provisions that require employees to arbitrate sexual harassment claims.
Judge Cote observed that Section 7515 applies only to the extent not “inconsistent with federal law” and that the arbitration provision at issue was to “be governed by and interpreted in accordance with the Federal Arbitration Act (FAA).” Quoting the U.S. Supreme Court precedent, Judge Cote further recognized that “the FAA reflects both a liberal federal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract.” Ultimately, the Court held that applying Section 7515 to invalidate the arbitration agreement “would be inconsistent with the FAA” and that the FAA’s strong presumption that arbitration agreements are enforceable . . . is not displaced by” the NY law.
This decision, though it may be appealed, is a significant development for employers who wish to continue to use mandatory arbitration agreements in the wake of Section 7515.