What is standard to avoid arbitration by alleging a sexual harassment dispute

Plausibility vs. Mere Allegation: Standard for the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act

Since taking effect in March 2022, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), 9 U.S.C. §§ 401–402, has reshaped employment litigation. By invalidating pre-dispute arbitration agreements and joint-action waivers in cases "relating to the sexual assault dispute or the sexual harassment dispute," the statute handed plaintiffs a powerful tool to maintain claims in public court.

However, a fundamental threshold question has divided federal district courts across the country: What evidentiary or pleading burden must a plaintiff meet at the motion-to-compel-arbitration stage to establish that a "sexual harassment dispute" exists under 9 U.S.C. § 401(4)?

Courts have split into two distinct camps:

1. The Majority Approach (12(b)(6) Plausibility Standard): Requiring the plaintiff to plausibly state a claim for sexual harassment under Federal Rule of Civil Procedure 12(b)(6) before the EFAA can be invoked to invalidate an arbitration agreement.

2. The Minority Approach (Prima Facie / Notice Standard): Holding that the EFAA’s text ("alleged to constitute sexual harassment") requires only a good-faith assertion or facially sufficient claim, arguing that applying Rule 12(b)(6) prematurely merges jurisdictional gatekeeping with merits adjudication.

The Statutory Framework and the Ambiguity

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) (emphasis added).

The statutory phrase "alleged to constitute" is the epicenter of the split:

Does "alleged" mean simply asserting a claim under a relevant statute (e.g., Title VII, or state law)?

Or does "alleged" implicitly incorporate federal pleading standards, requiring the allegation to be legally sound and plausible on its face?

The Two Competing Judicial Frameworks

1. The Majority View: The Rule 12(b)(6) Plausibility Standard

Leading Decisions: Yost v. Everyrealm, Inc. (S.D.N.Y. 2023); Van De Hey v. EPAM Sys. Inc. (N.D. Cal. 2025); Su Ai v. Tencent America LLC (N.D. Cal. 2026).

Courts adopting this approach apply the familiar Iqbal/Twombly standard to evaluate the sexual harassment cause of action when deciding a motion to compel arbitration under Federal Rule of Civil Procedure 12(b)(6).

Preventing "Manufactured" Preemption: The primary policy justification is preventing plaintiffs from using "facially unsustainable" or frivolous harassment claims as a procedural mechanism to bypass valid arbitration agreements for non-harassment claims (e.g., wage theft or breach of contract).

• Statutory Construction: As the court reasoned in Yost and reaffirmed in Tencent America, when Congress uses the legal term "alleged" in federal statutes, it is presumed to legislate against the background of established pleading standards (Rule 8/12(b)(6)).

• Procedural Safeguards: Proponents note that if a plaintiff is compelled to arbitration but later uncovers evidence during discovery establishing a plausible harassment claim, they may petition the federal court to lift the stay under 9 U.S.C. § 3 and invalidate the arbitration agreement retroactively.

2. The Minority View: The "Facial / Good-Faith Allegation" Standard

Leading Decisions: Delo v. Paulson Adee Corp. (S.D.N.Y. 2023); Diaz-Roa v. Hermes Law, P.C. (S.D.N.Y. 2024).

Courts rejecting the 12(b)(6) requirement argue that demanding full plausibility at the threshold stage contradicts the plain language and remedial purpose of the EFAA.

• Plain Text Reading: Congress chose the phrase "alleged to constitute" rather than "conduct that constitutes" or "a valid claim for." Imposing a 12(b)(6) hurdle reads words into the statute that Congress omitted.

• Avoiding Pre-Discovery Merits Decisions: Applying 12(b)(6) forces judges to evaluate the factual sufficiency of a harassment claim before the parties have engaged in discovery—the precise arena where subtle hostile work environment claims are developed.

• Risk of Nullifying Congressional Intent: If a court dismisses a harassment claim under 12(b)(6) and sends the remaining claims to arbitration, it effectively forces the plaintiff into the exact private dispute resolution system Congress sought to eliminate for victims of workplace misconduct.

Implications for Practice

For Employer Defense Counsel

• Filing Early Motions to Compel Supported by 12(b)(6) Challenges: In jurisdictions following the majority rule, treat the opposition to an EFAA assertion as a hybrid Rule 12(b)(6) motion. Attack isolated, offhand remarks or personnel management decisions to show they do not rise to the legal threshold of "severe or pervasive."

• Severability Arguments: If the court finds a weak harassment claim, argue under the majority view that failure to state a plausible claim requires enforcing the arbitration agreement across all counts.

For Plaintiff Counsel

• Plead Fact-Intensive Detail Early: Avoid standard boilerplate allegations or generic statutory recitations when pleading sexual harassment. Include specific dates, direct quotes, frequency, visual/verbal details, and HR reporting efforts to survive a 12(b)(6) challenge on the face of the complaint.

• Preserve the Record for Appeal: In jurisdictions applying 12(b)(6), explicitly preserve the objection that the court is exceeding its statutory authority under 9 U.S.C. § 401(4) by conducting a merits adjudication prior to arbitration discovery.

The judicial rift over the EFAA's pleading threshold highlights a tension between enforcing the Federal Arbitration Act's policy favoring arbitration and honoring Congress's mandate in the EFAA.

Until the Circuit Courts—and ultimately the Supreme Court—resolve this split, the choice of forum and the survival of predispute arbitration clauses will depend heavily on the specific district court judge's interpretation of "alleged to constitute."