Labor & Employment Law Daily Wrap Up, ARBITRATION—E.D.N.C.: EFAA did not block arbitration of Black employee’s race bias lawsuit despite allegations of sexual remarks, (Apr 9, 2025)

By Marjorie Johnson, J.D.

Although the employee claimed as part of her discrimination lawsuit that she was subjected to inappropriate remarks relating to her celibacy, the EFAA required her to allege “conduct constituting a sexual harassment dispute.”

A former African-American associate at a Ross Dress for Less store must arbitrate her lawsuit alleging claims of race discrimination in violation of Section 1981, wrongful discharge due to her race in violation of North Carolina public policy, and negligence, since her additional allegations concerning sexual remarks relating to her status as a celibate female did not plausibly constitute “sexual harassment” or “sexual assault” under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA). Granting the retailer’s motion to compel and staying the proceedings pending the outcome of arbitration, a federal district court concluded that the EFAA incorporates a plausibility standard rather than requiring only a plaintiff’s assertion of a “nonfrivolous” claim and the employee failed to meet her burden (Mangum v. Ross Dress For Less, Inc., No. 5:24-cv-00592-D-BM (E.D.N.C. Apr. 7, 2025)).

Arbitration agreement. In November 2016, the employee began working as a full-time associate at a Ross store in Fayetteville, North Carolina. Upon hire, she electronically signed the employer’s dispute resolution agreement (DRA), which required that she resolve "covered disputes" by ''final and binding arbitration and not by a court or jury."

Alleged harassment. The employee claimed that she worked at the store for approximately three years without incident, but that after it became known that she was celibate (which she described as her “sexual orientation”) and desired not to be touched, she began to endure harassment from store management and coworkers. In particular, she alleged that: (1) on December 24, 2019, her shift manager and her supervisor made offensive comments to her about her genitalia and suggested that she engaged in masturbation; (2) on January 4, 2020, the shift manager made offensive comments about her genitalia in front of customers; (3) later that week, her supervisor and another store manager called her the N-word; (4) on January 17, 2020, two coworkers engaged in a conversation about her genitalia; (5) on February 15, 2021, several coworkers called her the N-word.

EEOC charge. On February 12, 2022, she filed an EEOC charge which she claimed alleged a hostile work environment that included racial slurs, sexual harassment, mental anguish, and emotional distress. However, she did not file a copy of her EEOC charge with the court or allege the EEOC issued her a right to sue notice.

Fired. Shortly after she filed the EEOC charge, an unnamed supervisor allegedly invaded her personal space with a knife. She claimed she reported this incident to HR as well as other instances of harassment and was subsequently fired.

EFAA. The employee did not challenge the DRA's validity, but instead argued that the EFAA invalidated the arbitration agreement since she specifically alleged sexual harassment and sexual assault in her amended complaint. In response, the employer argued that the EFAA did not apply since she failed to plausibly allege a sexual harassment claim or a sexual assault claim.

Plausibility standard. Federal district courts are split concerning the appropriate standard to apply to determine whether the EFAA applies, and the Fourth Circuit has not addressed this issue, explained the court. While some federal judges have applied the plausibility standard from Federal Rule of Civil Procedure 12(b)(6) and Supreme Court precedent, others have only required a plaintiff to plead a “nonfrivolous” sexual harassment claim or sexual assault claim, with a determination on the sufficiency of the claim reserved for later adjudication.

Yost decision. The court agreed with a decision by a federal judge in the Southern District of New York, Yost v. Everyrealm, Inc., which concluded that the “term ‘alleged’ as used in § 401(4) is best read to implicitly incorporate the plausibility standard.” In particular, the Yost court reasoned that, “requiring a sexual harassment claim [or a sexual assault claim] to be capable of surviving dismissal at the threshold of litigation fully vindicates the purposes of the EFAA” by empowering “sexual harassment claimants [or sexual assault claimants] to pursue their claims” in court rather than arbitration. Moreover, allowing implausibly alleged claims to defeat arbitration agreements “would affront Congress's intent in enacting the FAA—of which, critically, the EFAA is a part.”

“Sexual assault” or “sexual harassment.” Accordingly, the court examined whether the employee plausibly alleged a “sexual assault” or “sexual harassment” dispute as defined in the EFAA. 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.” 9 U.S.C. § 401(4). The EFAA defines a sexual assault dispute as “a dispute involving a nonconsensual sexual act or sexual contact, as such terms are defined in section 2246 of title 18 or similar applicable Tribal or State law, including when the victim lacks capacity to consent.” 9 U.S.C. § 401(3).

EFAA did not invalidate DRA. The employee’s amended complaint alleged race discrimination in violation of Section 1981, race-based wrongful discharge in violation of North Carolina public policy, and negligence. It did not include conduct constituting a sexual harassment dispute under either North Carolina law or Title VII. Moreover, although she claimed she was subjected to sexual comments and that she filed an EEOC charge using the term “sexual harassment,” the EFAA's plain language required her to allege “conduct constituting a sexual harassment dispute,” which she failed to do.

The case is No. 5:24-cv-00592-D-BM.

Judge: Dever, J.

Attorneys: Lucas F. Colantonio (The Law Offices of Lucas F. Colantonio) for Shaneka Mangum. J. Rodrigo Pocasangre (Constangy, Brooks, Smith & Prophete) for Ross Stores, Inc.

Companies: Ross Stores, Inc.

Cases: Arbitration SexualHarassment SexDiscrimination Discrimination RaceDiscrimination NorthCarolinaNews