Death By a Single Claim: How One Harassment Claim Nukes Arbitration for the Whole Case

In Bruce v. Adams & Reese, LLP (6th Cir. February 25, 2026), the Sixth Circuit became the first federal court of appeals to rule on whether the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”) applies to the entire case or only to individual harassment claims, and it held that it applies to the entire case. 

As background, Randi Bruce sued her former employer asserting a hostile work environment claim based on sexual harassment under Title VII of the Civil Rights Act and failure-to-accommodate claims under the Americans with Disabilities Act (ADA). Bruce alleged that a supervisor made repeated sexually charged comments about her appearance, clothing, and personal life over the course of her employment.

Bruce signed a broad pre-dispute arbitration agreement at the beginning of her employment, which required her to arbitrate all employment disputes. The employer filed a motion to dismiss the sexual harassment claim for failure to state a claim under Rule 12(b)(6) and simultaneously moved to compel arbitration of the ADA claims.

The U.S. District Court for the Middle District of Tennessee denied both motions, finding that Bruce had plausibly alleged sexual harassment and that the EFAA precluded arbitration of the entire case. The employer appealed under the Federal Arbitration Act (“FAA”).

In a split 2–1 decision, the Sixth Circuit affirmed, and turned its analysis on the EFAA’s provision, which provides that “no predispute arbitration agreement … shall be valid or enforceable with respect to a case … that relates to a sexual harassment dispute.” The court’s reasoning was based on the following:

• Congress used the word “case” rather than “claim,” and held that “case” refers to the entire civil proceeding, not a single cause of action. Had Congress intended to limit the EFAA to individual claims, it knew how to say so.
• If the EFAA only applied to the harassment claim itself, the phrase “a case which is filed under Federal, Tribal, or State law and relates to the sexual harassment dispute” would be superfluous. Congress could have simply struck that language and limited the bar to the harassment claim alone.
• Congress drafted numerous whistleblower protection statutes that restrict arbitration only for claims “arising under” specific sections. The EFAA’s broader language was a deliberate choice, and the court declined to read a narrower limitation into the statute.

The court found Bruce had adequately pleaded a sexual harassment claim under the Rule 12(b)(6) plausibility standard, holding that a plaintiff need only allege sufficient facts to permit a reasonable inference that she was subjected to a sexually hostile work environment. The complaint identified three instances of sexual-based comments and a broader allegation that the supervisor “would” engage in harassing conduct when present in the office. 

The court rejected the employer’s policy arguments, which included the FAA’s long-standing presumption favoring arbitration and warnings that plaintiffs would abuse the EFAA to escape arbitration on unrelated claims.

As the court noted, its holding aligns with a growing body of district court decisions from courts in New York, California, New Jersey, and the District of Columbia, which have reached the same conclusion. Further, this issue is currently pending in a number of other circuits, which, if any go the other direction could mean a circuit split and a potential move to the Supreme Court. 

Implications for Employer-Side Counsel

The practical consequence of Bruce is that plaintiffs’ attorneys now have incentive to file a sexual harassment claim alongside any other employment claim to defeat an arbitration agreement. Even thin harassment allegations can control the forum for the entire lawsuit if they survive the motion to dismiss stage or are otherwise clearly pleaded, as the court noted that if the sexual harassment claim were dismissed, the remaining claims would be arbitrable. 

This makes the Rule 12(b)(6) motion to dismiss an important piece of motion practice in any EFAA case, meaning it will also be important to ensure full copies of all records submitted to the Equal Employment Opportunity Commission to see if such a claim was presented at the administrative stage, as failure to do so would bar a Title VII court challenge. 

There are also tax implications per Internal Revenue Code §162(q), which was enacted as part of the same #MeToo-era legislative wave as the EFAA and provides that settlement payments in sexual harassment cases subject to a nondisclosure agreement are not tax deductible, nor are related attorney’s fees. As such, what may have been a strategic harassment claim now drives confidential resolution costs up for employers.

Employer Best Practices 

In light of Bruce, employer-side counsel should review their arbitration agreements and consider doing the following:

1. Include EFAA carve-out language. Expressly acknowledge the EFAA in the arbitration agreement and include a clause confirming that the agreement does not apply to claims that are non-arbitrable under federal law. This avoids arguments that the agreement is unconscionable or was presented in bad faith.
2. Draft robust severability provisions. Ensure the arbitration agreement contains a well-crafted severability clause that explicitly preserves the enforceability of arbitration as to all non-EFAA claims if a court finds that the EFAA renders arbitration unenforceable for any particular claim or case. While Bruce may limit the functionality of such provisions within the Sixth Circuit, other circuits are pending, and a strong severability clause may support partial enforcement arguments in those other jurisdictions.
3. Consider post-dispute arbitration agreements. The EFAA applies only to pre-dispute agreements. If an employment dispute arises and the parties wish to arbitrate, a post-dispute agreement to arbitrate remains fully enforceable. Employment counsel should be prepared to propose arbitration as an alternative forum during early-stage settlement discussions.

Conclusion

Bruce v. Adams & Reese is a landmark decision that recalibrates the balance between arbitration and litigation in employment disputes. The Sixth Circuit’s holding that a plausible sexual harassment allegation can render a pre-dispute arbitration agreement unenforceable for the entire lawsuit requires immediate attention from employer-side counsel as an arbitration agreement is no longer a guaranteed exit from court.