In Hicks v. CEC Entertainment Holdings I, Inc., 2025 WL 1770787 (D.Del. June 26, 2025), the court denied defendant’s motion to dismiss plaintiff’s retaliation claim, premised on the plaintiff’s termination following her complaint about alleged wrongful activities by her immediate supervisor, including sexual harassment of female employees.
Specifically, the court held that plaintiff’s claims fell within the ambit of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA).
From the decision:
Here, Ms. Hicks alleges that “in 2021[–]2022[ ] and February 2023, [she] made numerous complaints to her superiors concerning wrongful activities including sexual harassment and discriminatory conduct occurring at [CEC’s] Dover, Delaware location” by her immediate supervisor. D.I. 1 ¶ 15. “These complaints included reports of sexual harassment of female crew members, solicitation of female minors for underage sex during work hours at [CEC’s] business location, drug dealings and other wrongful conduct at said premises of CEC.” D.I. 1 ¶ 15. Ms. Hicks further alleges that her complaints “were ignored and never acted upon by [CEC’s] agents until a minor, employed by CEC, became pregnant by” the supervisor. D.I. 1 ¶ 15. Under Cornelius, these allegations are sufficient to allege conduct constituting a “dispute.” CEC does not argue otherwise.
The next question is whether that dispute “relat[es] to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” § 401(4). Ms. Hicks alleges that the conduct she complains of included sexual harassment that was wrongful and illegal. See D.I. 1 ¶ 6 (alleging “ongoing wrongful conduct,” including “sex with minors”); ¶ 15 (describing her complaints with respect to “wrongful activities including sexual harassment”); ¶ 35 (describing how she provided information about “sexual harassment … and other illegal activities”). Courts in other districts have disagreed about whether this portion of the EFAA means that a plaintiff must make allegations of sexual harassment that are sufficient to meet the plausible claim standard under Rule 12(b)(6), or merely a “nonfrivolous” claim. Compare Diaz-Roa v. Hermes L., P.C., 757 F. Supp. 3d 498, 534 (S.D.N.Y. 2024) (“From a textual perspective, the statutory language does not require the person seeking to avoid the effect of an otherwise applicable arbitration clause to plead a claim for sexual assault or sexual harassment much less require the courts to determine that such person pleaded a claim upon which relief can be granted. Congress knows how to use such language when it so chooses.”), with Yost v. Everyrealm, Inc., 657 F. Supp. 3d 563, 585 (S.D.N.Y. 2023) (holding that “the term ‘alleged’ as used in § 401(4) is best read to implicitly incorporate the plausibility standard”). Here, however, CEC does not argue that Ms. Hicks failed to allege conduct constituting illegal sexual harassment. See generally D.I. 12. Indeed, it concedes that Ms. Hicks alleges “heinous” conduct by her supervisor. D.I. 12 at 6. Rather, CEC argues only that the EFAA does not apply because Ms. Hicks does not allege that she herself was the victim of the illegal sexual harassment. D.I. 12 at 4–6. This narrow reading of the EFAA is not supported by its language. Congress used the word “victim” elsewhere in the EFAA. 9 U.S.C. § 401(3). Congress therefore could have limited the definition of “sexual harassment dispute” to sexual harassment of which the complainant claims to be the victim, if it had intended the result that CEC advocates.
The final question is whether Ms. Hicks’s case “relates” to the “sexual harassment dispute” that she alleged. § 402(a). It does. In Olivieri v. Stifel, Nicolaus & Co., 112 F.4th 74 (2d Cir. 2024), the Second Circuit held that the EFAA applied to a claim of wrongful retaliation for having reported sexual harassment. 112 F.4th at 77–78. The court noted that the EFAA defines a “sexual harassment dispute” as “a dispute relating to conduct that is alleged to constitute sexual harassment,” id. at 92 (emphasis in original) (quoting 9 U.S.C. § 401(4)), and held that “retaliation resulting from a report of sexual harassment is ‘relat[ed] to conduct that is alleged to constitute sexual harassment,’ ” id. (alteration in original) (quoting 9 U.S.C. § 401(4)). In Olivieri, the plaintiff who reported the sexual harassment was also the alleged victim of the harassment, but nothing in the court’s opinion (or the EFAA) suggests that the result should be different when the victim of retaliation is not the same person as the victim of sexual harassment. It would have been easy for Congress to draft the EFAA to accomplish that narrower result if it had wanted to do so. It did not, but instead chose more expansive words and phrases such as “dispute,” “the person alleging conduct constituting a sexual harassment dispute,” and “relat[ing] to the … sexual harassment dispute.”
In this case, a sexual harassment dispute is at the core of the Complaint and repeated in each of the Complaint’s claims. In particular, Ms. Hicks’s wrongful retaliation claims (Counts IV and V) are directly premised on the allegation that she was fired because of the sexual harassment dispute.
The court concluded by rejecting defendant’s argument that “Congress intended the EFAA only to protect alleged victims of sexual harassment or sexual abuse, relying on a statement by one Senator,” noting that it was the court’s “job is to attempt to apply the text of the statute.” Specifically, “[t]he text of the EFAA does not limit its reach to victims, but instead gives rights to person[s] alleging conduct constituting a dispute relating to conduct that is alleged to constitute sexual harassment.” [Cleaned up.]