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The Limits of Latif: Enforcing Mandatory Arbitration Clauses as to Harassment and Discrimination Claims Litigated in New York State Court

On June 19, 2019, the New York State Senate and Assembly passed legislation that would, if signed into law, broaden the scope of last year’s ban on clauses requiring employees to arbitrate sexual harassment claims so as to prohibit such clauses with respect to all types of discrimination claims. As reported on this blog, this ban on mandatory arbitration clauses was deemed invalid, as contrary to federal law, by the June 26, 2019 decision of the U.S. District Court for the Southern District of New York in Latif v. Morgan Stanley & Co. LLC, et al. (S.D.N.Y. No. 18-11528). It is too early, however, to declare the death of New York’s ban on mandatory arbitration clauses in harassment and discrimination claims. Absent diversity of citizenship, plaintiffs’ counsel may choose to assert only state-law claims in an effort to eliminate federal court jurisdiction over an employer’s petition to compel arbitration. As motions to compel arbitration will continue to be decided by New York state courts, employers should be mindful of the relevant New York decisions when drafting arbitration agreements and dispute resolution programs.

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