In Waiguchu v. Morgan Stanley & Co. LLC, No. 1:25-CV-7443-GHW, 2026 WL 892069 (S.D.N.Y. Apr. 1, 2026), the court, inter alia, held that plaintiff did not plausibly plead conduct constituting sexual harassment for purposes of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA). In reaching this conclusion, the court underscored the crucial difference between discrimination based on sex, on the one hand (which does not trigger the EFAA’s protections), and sexual harassment (which does).
From the decision:
Ms. Waiguchu’s allegations that she was subjected to differential treatment and “microaggressions” based on her gender do not constitute sexual harassment conduct under the EFAA. Alleged differential treatment on the basis of her gender and race is the consistent theme of Ms. Waiguchu’s complaint. For example, Ms. Waiguchu alleges that her managers at Morgan Stanley were “belittling and condescending.” Compl. ¶ 31. Mr. Krause called her “defensive and judgmental” and “berated” her during a meeting. Id. ¶¶ 19, 26–27. He made jokes about her intelligence and subjected her to microaggressions. Id. ¶¶ 29, 34, 39, 41. Ms. Waiguchu alleges that Mr. Krause’s treatment of her and her single Black female colleague differed from that of her white, male colleagues. Id. ¶ 46 (“Ms. Waiguchu experienced an escalating pattern of targeted monitoring and micromanagement that differed from her white and male colleagues.”).
Ms. Waiguchu also alleges that her other managers targeted, micromanaged, and demeaned her. Id. ¶¶ 59, 62 (describing Mr. Stetter as “less friendly” and “less communicative with [Ms. Waiguchu] compared to her white and male colleagues”); id. ¶ 71 (“Ms. Chotani routinely approved remote work and early departures for white and male employees … while denying similar flexibility to Ms. Waiguchu.”).
These allegations of differential treatment do not constitute “sexual harassment” conduct for purposes of the EFAA. While this conduct was unwelcome to Ms. Waiguchu, and may form the basis for a claim of discrimination as differential treatment on the basis of Ms. Waiguchu’s gender, the drafters of the EFAA did not extend its protection to all categories of gender-based discrimination, as described by the Court in Owens. The allegations of differential treatment and microaggressions in the complaint are not conduct constituting “sexual harassment” under the EFAA.
The two instances in which Ms. Waiguchu alleges she was shouted at do not plead conduct that constitutes “sexual harassment” for purposes of the EFAA. Ms. Waiguchu pleads two instances during the course of her employment at Morgan Stanley in which her supervisor shouted at her. First, where Mr. Krause “berated” her during a meeting, “repeatedly shouting at her to ‘listen’ ” and lecturing her; and second, where Mr. Krause “shouted at her in front of multiple colleagues, once again targeting her for her supposed ‘negative personality trait’ of defensiveness.” Compl. ¶¶ 27, 39. The Court believes that hostile abusive conduct, such as shouting, can constitute “sexual harassment.” See Owens, 786 F. Supp. 3d 831. However, Ms. Waiguchu’s complaint does not adequately plead it in this case. Mr. Krause did not use gendered terms. Cf. Toomey, 2026 WL 458244, at *6 (finding plaintiff sufficiently alleged sexual harassment where she was “berated … in gendered terms” by being called a “bitch,” a word that “often reflects an intensely degrading hostility towards women”). In both instances, Mr. Krause allegedly berated Ms. Waiguchu in a group setting regarding her work performance. While Mr. Krause’s disproportionately hostile and rude feedback regarding Ms. Waiguchu’s work may have been motivated by Ms. Waiguchu’s gender, as she alleges, his conduct did not rise to the level of “sexual harassment” targeted by the EFAA.
Accordingly, the court held that plaintiff’s claims are not excluded from the scope of the Arbitration Agreement, and granted defendant’s motion to compel arbitration.