Date: August 07, 2019
“The #MeToo movement inspired a slew of states to propose limits on arbitration—the widespread practice that keeps workplace disputes in a private setting and out of public courts.
The practice became a target in recent years of lawmakers and advocates who said it shielded harassers from being held accountable.
But those efforts may prove futile. A recent ruling by a New York judge telegraphs that attempts by states to limit arbitration run afoul of a powerful federal law that governs such contracts.
Mahmoud Latif, a former Morgan Stanley trade associate, asked a federal appeals court to test this tension between state anti-harassment proposals and the Federal Arbitration Act, which has been bolstered by the U.S. Supreme Court in recent years.
“The New York case is a fantastic illustration of the situation the legal system is in right now,” said David Horton, a law professor at the University of California, Davis. “There is growing consensus that certain types of arbitration are unfair. But as a matter of doctrine, it’s clear under precedent that laws cannot be passed that exempt claims from arbitration. There’s a clash of values.”