Second Circuit Holds EFAA Invalidates Arbitration Agreement as to Entire Case

The Second Circuit held in Diaz-Roa v. Hermes Law, P.C., No. 24-3223-cv, 2026 WL 2931801, at *1 (2d Cir. Sept. 30, 2026), that “when it is applicable, the [Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (‘EFAA’)] enables a plaintiff to invalidate a pre-dispute arbitration agreement as to the entire lawsuit, rather than only the sexual harassment or sexual assault claims contained within that lawsuit.”

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The plaintiff in Diaz-Roa had signed an agreement requiring arbitration of nearly all claims against employer. Id. at *1. She later sued her employer and related defendants in federal court, asserting sexual-harassment claims as well as non-harassment claims based on allegations that the defendants terminated her employment to prevent her from exercising vested stock options. Id. at *1–2. The plaintiff argued that the arbitration agreement was unenforceable under section 402(a) of the EFAA, which provides that a pre-dispute arbitration agreement is unenforceable “with respect to a case” that relates to a sexual-harassment or sexual-assault claim. 9 U.S.C. § 402(a). The question on appeal was whether the EFAA permits a plaintiff to invalidate the arbitration agreement as to the entire lawsuit or only the sexual-harassment or sexual-assault claims within it. Diaz-Roa, 2026 WL 2931801, at *1.

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The Second Circuit held that Section 402(a) permits a plaintiff to invalidate the arbitration agreement as to the entire lawsuit. The court reasoned that the ordinary meaning of the term “case” refers to a lawsuit as a whole, whereas a “claim” refers to an individual demand for relief within that lawsuit. Id. at *5–6. Congress’s use of “claim” elsewhere in the EFAA reinforced the court’s conclusion that the statute’s use of “case” in Section 402(a) was deliberate. Id. at *6. Accordingly, when the EFAA applies and the plaintiff elects to invoke it, the arbitration agreement is unenforceable as to all properly joined claims, including claims that do not independently relate to the alleged harassment or assault. Id. at *6, *8, *11. The decision therefore gives the EFAA broad practical effect: when the Act applies, a plaintiff may elect to litigate her entire lawsuit—including claims that otherwise would be arbitrable—in court.

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