Labor & Employment Law Daily Wrap Up, ARBITRATION—6th Cir.: Mortgage underwriter’s claims remanded for determination of when ‘dispute’ arose for purposes of EFAA, (Apr 21, 2025)

By Kathleen Kapusta, J.D.

“Ultimately, the dissenting opinion offers an intriguing tale of how Congress resolved ‘something of a pickle,’ but we need not write a story when the statute gives us the answer.”

The EFAA “applies to claims that accrue after its date of enactment and to disputes, understood as controversies between the parties, that arise after that date,” the Sixth Circuit held in a matter of first impression. Reversing the lower court’s dismissal of a mortgage underwriter’s lawsuit, which included claims of sexual harassment, and its order compelling arbitration, the appeals court explained that although her claim accrued before the EFAA’s enactment date because she quit her job several months prior, all subsequent events, including the filing of her EEOC charge and of her lawsuit, took place after the date of enactment. Dissenting, Judge Thapar argued that “the statute’s structure and its unique context (of bridging the worlds of arbitration and civil litigation) together show that for purposes of the Act’s effective date provision, disputes arise when claims accrue” (Memmer v. United Wholesale Mortgage, LLC, No. 24-1144 (6th Cir. Apr. 18, 2025)).

Lower court proceedings. According to the employee, during her two years with the wholesale mortgage lender, she faced numerous instances of discrimination. She quit her job in July 2021, filed an EEOC charge in April 2022, and filed this lawsuit in April 2023. Granting her employer’s motion to dismiss and compel arbitration, the district court rejected her arguments that her statutory claims were non-arbitrable. It did not, however address her contention that the EFAA applied.

EFAA. After determining on appeal that the parties agreed to arbitrate and that the employee’s claims fell within the scope of the arbitration agreement, the Sixth Circuit addressed the applicability of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) to her claims. In a statutory note, said the court, “Congress provided that EFAA ‘shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act,’ which was March 3, 2022.”

Claim. Turning to the text of the EFAA to interpret this language, the court observed that the statute refers to “any dispute or claim that arises or accrues.” Because Congress used the disjunctive “or,” the court inferred that it meant to differentiate. Here, said the court, Congress used two nouns—dispute and claim—together with two verbs—arises and accrues. In legal parlance, the court reasoned, “the term ‘claim’ is commonly associated with the concept of ‘accrual,’” while word “dispute” does not correspond with the word “accrue.” Further, the court pointed out, on two occasions, the statute refers to “dispute[s] that had not yet arisen at the time of the making of the agreement.”

Although the court noted that the word “claim” has multiple related meanings in the law, it found it has only one meaning in the context of the application note. “A claim accrues,” the court explained, when a plaintiff has a complete and present cause of action. Moreover, said the court, in litigation, the statute of limitations usually runs from the date on which the claim accrued. Noting that when Congress borrows a term of art, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word, the court observed that “when we talk about claims in the context of accrual, we can infer that Congress means something specific: a cause of action that becomes complete and ready to vindicate once certain elements are in place.” Thus, it found that under the EFAA, if a claim—i.e., a cause of action—accrues after March 3, 2022, the EFAA applies.

Dispute. On the other hand, said the court, “dispute,” usually denotes a controversy between parties. Moreover, the EFAA defines a “sexual harassment dispute” as “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” In many cases, the court observed, a dispute will arise after a claim accrues. “Ultimately, when a dispute arises is a fact-dependent inquiry that can be determined in the context of each case.”

Other decisions. In support of its interpretation of the EFAA, the court noted that the Eighth Circuit, in Famuyide v. Chipotle Mexican Grill, Inc., a suit in which the relevant claims accrued before the effective date of the statute, held that the dispute arose once there was a controversy between the parties. And in Cornelius v. CVS Pharmacy Inc., the Third Circuit held that the “ordinary meanings of both ‘dispute’ and ‘arise’” compelled the conclusion that the EFAA applies “when an employee registers disagreement—through either an internal complaint, external complaint, or otherwise—with his or her employer, and the employer expressly or constructively opposes that position.”

Rejecting the dissent’s contention that dispute means claim in the statute’s application note and that Congress used the term dispute only to “speak[] the language of both arbitration and civil litigation,” the court explained that “Considering the ubiquity of claims in both litigation and arbitration, Congress had no need to use the word dispute only to make the statute understandable to the world of arbitration, as the dissenting opinion suggests.’”

Turning to whether the employee’s sexual harassment claim accrued on or after the date of the EFAA’s enactment or the parties’ dispute arose on or after the date of enactment, the court explained that it appeared her claim accrued before the March 2022 date of enactment because she quit her job several months prior to that and thus any injury preceded that date. All subsequent events, however, including the filing of her EEOC charge and her lawsuit, took place after the date of enactment.

Remand. “When the dispute—the controversy between the parties—arose under the facts of this case is a question best answered in the first instance by the district court,” said the court, remanding for the district court to decide and, if needed, obtain a factual record on which to do so.

Dissent. Judge Thapar, dissenting, argued that claims and disputes are terms of art that define legal controversies. “Claims get litigated in courtrooms. Disputes get arbitrated in conference rooms.” The EFAA, Judge Thapar continued, “moves sexual harassment and sexual assault disputes out of the conference room and into the courtroom. In bridging the gap between arbitration and civil litigation, the Act understandably speaks the language of both arbitration and civil litigation. It talks of ‘sexual harassment dispute[s]’ and ‘sexual assault dispute[s].’ That makes sense because the heart of the Act reaches back to those same disputes and explains that they are no longer arbitrable. If the employee-plaintiff decides to ‘file[]’ a ‘case’ in court about a sexual assault or sexual harassment controversy (that is, a sexual assault or sexual harassment ‘dispute’), then the relevant ‘predispute arbitration agreement’ is no longer valid. The courthouse doors, once tightly shut, are now wide open. What would have been an arbitrable ‘dispute’ is now a ‘claim’ that can be litigated.”

The case is No. 24-1144.

Judge: Moore, K.

Attorneys: Carla D. Aikens (Law Offices of Carla D. Aikens) for Kassandra Memmer. James W. Rose (Taft Strettinius & Hollister) for United Wholesale Mortgage, LLC.

Companies: United Wholesale Mortgage, LLC

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