Diaz-Roa v. Hermes Law

What’s at Stake

This is the first time the Second Circuit will decide whether the Ending Forced Arbitration in Sexual Assault and Sexual Harassment Act of 2021 (EFAA) saves the whole case from being forced into arbitration when the plaintiff alleges conduct that relates to sexual assault or sex-based harassment, or whether only the sexual harassment or sexual assault claims stay in court while the other claims are split off and forced into arbitration.

Summary

Ms. Diaz-Roa worked for Hermes Law and ClaimDeck for seven years, working her way up from an intern in 2018 to Project Manager for Hermes Law and Head of Product and Chief Operating Officer of ClaimDeck.

Ms. Diaz-Roa received positive performance reviews throughout her time working for the defendants, but it was not a pleasant experience. She alleges that her supervisor Dwayne Hermes encouraged her to flirt or go on dates to boost business. Mr. Diaz-Roa also alleges he regularly commented on her appearance, even comparing her to her a “piece of steak” at a business dinner.

In her complaint, Ms. Diaz-Roa states that in December 2023, she informed Mr. Hermes that she wanted to exercise the stock options given to her in 2020 as part of her compensation package. By that time, they were worth more than $1 million. After Ms. Diaz-Roa allegedly followed up on this request in writing, she was fired, purportedly “for cause.”

Ms. Diaz-Roa then filed a complaint against ClaimDeck and Hermes Law in the Southern District of New York. Among other things, her complaint included claims for sexual harassment under New York city and state law, as well as breach of contract and conversion claims related to her stock options. The defendants responded by filing a motion to compel arbitration, meaning the case would not proceed in court but instead through a private arbitration process. In response to the motion to compel arbitration, Ms. Diaz-Roa argued the arbitration agreement between her and her employers was unenforceable under the EFAA. Further, the unenforceability applies to her entire case because it involves conduct related to sexual harassment. The district court agreed and denied the motion to compel arbitration in full.

Hermes Law and ClaimDeck appealed that decision in the United States Court of Appeals for the Second Circuit. We filed an amicus brief in the Second Circuit supporting the district court’s decision and Ms. Diaz-Roa’s right to keep her full case in court under the EFAA.

Core Legal Issues

Hermes Law and ClaimDeck appealed the district court’s denial on narrow grounds, arguing that even if Ms. Diaz-Roa’s sexual harassment claims belong in court under the EFAA, the district court should have split off her so-called “business dispute” claims and directed them into arbitration.

Public Justice’s amicus brief, joined by the National Women’s Law Center, the National Employment Lawyers Association, and the American Association for Justice, explains why the legislative history supports the district court’s interpretation of the EFAA. Analysis of the law’s plain text and structure shows it was intended to stop arbitration of an entire case if it involves allegations of sexual assault or sex-based harassment, not just those specific claims. Our amicus brief shows strong evidence that Congress deliberately chose to keep cases raising issues of sexual harassment intact so that survivors would not be forced to advance cases with several claims in both arbitration and court. The brief also explains why Congress’s choice makes sense: keeping a case unified is not only consistent with the legislative text and purpose, it is also more efficient for workers, employers, and the court system.