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The EFAA—Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act: A Practical Overview

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EFAAIntroduction

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “EFAA”) is one of the most significant statutory changes to federal arbitration law in decades. Codified as Chapter 4 of the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 401–402, the EFAA limits the enforceability of pre-dispute arbitration agreements in cases involving sexual assault or sexual harassment.

Narrow in subject matter but broad in consequence, it affects domestic and international arbitration agreements, overrides delegation clauses, alters who decides arbitrability, and raises difficult questions about timing, scope, and case management. Federal courts—including circuit courts of appeals—have already begun to grapple with these issues, and more appellate guidance will likely be forthcoming.

This post provides a high-level overview of (1) what the EFAA says, (2) how it works in practice, and (3) the key issues courts have addressed so far, without extensive case-by-case discussion and analysis.

What the EFAA Says

 

EFAA Covered Agreements and Covered Disputes

The EFAA applies to two types of contractual provisions:

  1. A “Predispute arbitration agreement,” which is an “agreement to arbitrate a dispute that had  not yet arisen when the agreement was made,” 9 U.S.C. § 401(1); and
  2. A “Predispute joint-action waiver,” which is an “agreement, whether or not part of a predispute arbitration agreement, that would prohibit, or waive the right of, one of the parties to the agreement to participate in a joint, class, or collective action in a judicial, arbitral, administrative, or other forum, concerning a dispute that has not yet arisen at the time of the making of the agreement[,]” id. § 401(2).

The statute applies only if the dispute qualifies as either a “sexual assault dispute,” which is defined by reference to 18 U.S.C. § 2246 or similar state or tribal law, id. § 401(3); or a “sexual harassment dispute,” which is defined broadly as a dispute “relating to conduct alleged to constitute sexual harassment under applicable Federal, Tribal, or State law,” id. § 401(4).

The definitions of sexual harassment and assault  are intentionally expansive and incorporate the relevant substantive law governing the claim.

EFAA Operative Rule

Section 402(a) is the statute’s principal substantive command: Continue Reading »

Modern Perfection, LLC v. Bank of America: Fourth Circuit Says Arbitrator gets to Decide which of Two Contracts’ Conflicting Dispute Resolution Provisions Applies

January 27th, 2025 Application to Stay Litigation, Arbitrability, Arbitrability | Clear and Unmistakable Rule, Arbitrability | Existence of Arbitration Agreement, Arbitration Agreement Invalid, Arbitration Agreements, Arbitration Law, Arbitration Practice and Procedure, Authority of Arbitrators, Challenging Arbitration Agreements, Clear and Unmistakable Rule, Delegation Provision, Existence of Arbitration Agreement, FAA Chapter 1, FAA Section 2, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 3, Federal Arbitration Act Section 4, Federal Subject Matter Jurisdiction, Motion to Compel Arbitration, Practice and Procedure, Richard D. Faulkner, Section 2, Section 3 Stay of Litigation, Section 4, Stay of Litigation, Stay of Litigation Pending Arbitration, United States Court of Appeals for the Fourth Circuit, United States Supreme Court Comments Off on Modern Perfection, LLC v. Bank of America: Fourth Circuit Says Arbitrator gets to Decide which of Two Contracts’ Conflicting Dispute Resolution Provisions Applies

Introduction: Delegation Provisions and Modern Perfection

Delegation Provisions | Arbitrability ChallengeDelegation provisions clearly and unmistakably assign arbitrability determinations to arbitrators, which means they provide for arbitrators to decide arbitrability-related disputes.

Coinbase v. Suski, 602 U.S. 143 (2024) set forth the allocation of power between courts and arbitrators for four “orders” of arbitrability-related disputes:

  1. A “first order” dispute is “[a] contest over the merits of the dispute[,]” the determination of which “depends on the applicable law and relevant facts.” 602 U.S. at 148 (quotation omitted).
  2. A “second order dispute” concerns “whether [the parties] agreed to arbitrate the merits” of the first order dispute. 602 U.S. at 148 (quotation omitted).
  3. A “third order dispute” concerns “who should have the primary power to decide” a second order dispute.” 602 U.S. at 149.
  4. A “fourth order” dispute is one where there are “multiple agreements that conflict as to the third-order question of who decides arbitrability.” 602 U.S. at 149.

Coinbase held that fourth-order disputes are for the courts, which are to decide them based on “traditional contract principles.” 602 U.S. at 149.

In a recent U.S. Court of Appeals for the Fourth Circuit decision, Modern Perfection, LLC v. Bank of America, No. 23-1965, slip op. (4th Cir. Jan. 13, 2025), the Court was faced with what appeared to be a “fourth-order” dispute as defined by Suski. The question was who gets to decide arbitrability questions when one contract contained a broad arbitration agreement and a delegation provision and the other a clause that expressly contemplated judicial resolution of disputes.

The problem was that Suski was not decided until briefing in both the district court and the Fourth Circuit was complete, and the arbitration challengers’ argument centered on the scope of the delegation provisions, not on whether the contracts contemplating judicial resolution of disputes superseded the delegation provisions.

The Suski fourth-order dispute issue was first raised in a Fed. R. App. P. 28(j) letter the challenger submitted once Suski was decided.  Because the argument had not been raised in the parties’ appellate briefs, the Court would not hear it, and ruled that, under the terms of the delegation provisions, the arbitrator gets to decide whether the dispute was arbitrable.

Background

Over a five-year period a bank issued to each of six plaintiffs two Continue Reading »