Johnson v. Everyrealm / Yost v. Everyrealm

Johnson v. Everyrealm / Yost v. Everyrealm

In a set of two companion cases against the “virtual real estate” company Everyrealm, Inc. in the Southern District of New York, former employees Teyo Johnson and Katherine Yost brought discrimination, harassment, and retaliation claims. Notably, each plaintiff brought sexual harassment claims, in addition to other claims based on protected classes.

The Access to Justice team filed an amicus brief on behalf of Public Justice, AAJ, NELA, NWLC, RAIN, Lift Our Voices, and Rise, arguing that the recently-passed Ending Forced Arbitration in Sexual Assault and Sexual Harassment Act (EFASASHA) applies to prohibit arbitration of the entire case, not just the sexual harassment claim. The court agreed with Public Justice in this issue of first impression.

Johnson, a Black man, alleged that he was harassed on the basis of his sex and race, including that the company’s female CEO pressured him to have sex with coworkers and clients and made inappropriate race-based sexual comments. Mr. Johnson also brought a whistleblower retaliation claim. Because Mr. Johnson’s employment contract included an arbitration agreement, Everyrealm moved to compel arbitration, but Mr. Johnson, represented by Shane Seppinni of Seppinni LLP, opposed the motion on the ground that EFASASHA prohibited arbitration because his case included sexual harassment claims. Yost also raised harassment claims, including claims based on her sexual orientation and disability statuses.

Public Justice’s brief argued primarily that when a case contains a sexual harassment claim, even if there are other claims, the entire case may not be forced into arbitration. First, the plain language of the statute prohibits forced arbitration in any “case” that “relates to” a “sexual harassment dispute.” Sexual harassment disputes, Public Justice explained further, encompass not just sexual harassment claims themselves but also related claims, such as retaliation. Second, the Act’s legislative history shows a clear congressional intent to exempt entire cases from forced arbitration so as to not split claims. Third, prohibiting forced arbitration only for the sexual harassment portion of the case would mean that plaintiffs with intersectional claims would have to present the same evidence in multiple fora. If claims must be divided between arbitration and the courts, plaintiffs such as Johnson, who brought claims for race-based sexual harassment, would be forced to relive their trauma in multiple jurisdictions. Finally, the brief argued that the issue of whether EFASASHA applies to bar arbitration should be decided before the court decides any claim on the merits and that the court does not have to decide whether the sexual harassment claims are plausible to rule on the application of EFASASHA.

In Johnson, the court agreed that EFASASHA bars entire cases from forced arbitration, not just individual claims, becoming the first court to do so. The court therefore denied the defendants’ motion to compel arbitration for Johnson, and all his claims can proceed in court. The court relied on the text of the statute and determined that it did not even need the extensive legislative history of the Act to come to its conclusion. Finally, the court indicated support for Public Justice’s position that “sexual harassment dispute” includes claims such as retaliation, although it was not necessary for the holding.

There is one caveat to this otherwise heartening success. The court dismissed Yost’s sexual harassment claims and then concluded that EFASASHA therefore did not apply to her claims. Specifically, the court determined that the word “alleged” in the statute meant “plausibly alleged,” and concluded that, because Yost did not plausibly allege her claims, EFASASHA did not apply. That holding is disappointing because it could mean that plaintiffs will need to brief the merits of their claims in court before there can be a determination of arbitrability.

In an encouraging win for workers everywhere, this case ensures that plaintiffs with multiple claims or intersectional claims will have their day in court. Instead of being forced to choose between which claims to bring, or whether to litigate simultaneously in court and arbitration, survivors of sexual harassment will be able to get justice in one public forum.

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