Background
Tiffany Phillips, a Black woman, began working for Brink’s Incorporated in 2018. In late 2022, a coworker showed her a private text message chain involving other Brink’s employees. The chain contained virulent racial slurs — including the n-word and comparisons of Black employees to monkeys — as well as sexualized comments targeting Phillips by name, including a supervisor’s message using graphic anatomical language to describe her. Employees also sent pictures of black cats that Phillips interpreted as targeting her. She reported the messages to a superior, who soon resigned; she then routed the messages to Brink’s human resources department through another employee. Phillips alleged that Brink’s, her new supervisor Nelson Alvarez, and the in-house investigator Elizabeth Gramigna failed to take any meaningful corrective action.
On March 21, 2025, Brink’s terminated Phillips, citing an internal investigation conclusion that she had engaged in a culture of favoritism. Phillips filed suit in April 2025 alleging: (1) hostile work environment based on race and sex; (2) race discrimination for her termination as a Black woman; (3) retaliation for complaining about the hostile work environment; and (4) aiding and abetting by Alvarez and Gramigna — all under the New Jersey Law Against Discrimination (NJLAD), N.J.S.A. 10:5-1 to -50. Brink’s moved to dismiss and compel arbitration, relying on Mutual Arbitration Agreements Phillips had signed in 2021, 2023, and 2024. Brink’s conceded that the Ending Forced Arbitration of Sexual Assault and Harassment Act of 2021 (EFAA), 9 U.S.C. §§ 401-02, barred arbitration of her sex-based claims, but argued her race-discrimination count was separately arbitrable.
The trial court agreed with Brink’s on a claim-by-claim basis. It found the arbitration agreement valid under the Federal Arbitration Act (FAA) and state law, determined that counts one, three, and four were inextricably intertwined with sex-based claims and thus non-arbitrable, but severed count two — the standalone race-discrimination claim — and ordered it to arbitration. Phillips appealed, arguing the EFAA shields her entire case from arbitration, not merely the claims that touch on sexual harassment.
The Court’s Holding
The Appellate Division reversed the portion of the trial court’s order compelling arbitration of count two. Applying de novo review, the panel relied squarely on its recent decision in McDermott v. Guaranteed Rate, Inc., 483 N.J. Super. 264 (App. Div. 2025), which was issued after the parties finished briefing this appeal. In McDermott, the panel interpreted the EFAA’s plain text — which renders pre-dispute arbitration agreements unenforceable with respect to a case relating to a sexual harassment or sexual assault dispute — to invalidate arbitration agreements as to the entire case, not merely discrete claims sounding in sexual harassment. Congress’s deliberate use of the broader term case rather than claim or count was the textual anchor for that holding, and the panel found it controlling here as well.
The court rejected the trial court’s reliance on the inextricably intertwined standard, which McDermott had expressly disavowed. Under McDermott, it is sufficient that the non-sexual-harassment claims arose from the same employment and are materially and substantially informed by the nature of the sexual-harassing employment relationship. Phillips’s race-discrimination count easily met that standard: the text message chain that formed the evidentiary backbone of all four counts contained both racial and sexual content simultaneously. The claims arose from the same set of facts — the same coworkers, the same text chain, the same supervisory response, the same termination — making claim-level severance incompatible with Congress’s intent to let plaintiffs choose a single forum free from coerced arbitration. Because the EFAA expressly overrides any contrary FAA provision (notwithstanding any other provision of this title), it supersedes the FAA’s general policy favoring arbitration.
Key Takeaways
- Under the EFAA, once a plaintiff files a case that relates to a sexual harassment or sexual assault dispute, no claim in that case — including race-discrimination or other non-sex-based counts — may be compelled to arbitration; the statute operates case-wide, not claim-by-claim.
- The inextricably intertwined test is not the correct standard for EFAA analysis; what matters is whether the non-sexual-harassment claims have a nexus with — that is, arose from the same facts as — the sexual harassment dispute, a far more plaintiff-friendly inquiry.
- The EFAA expressly overrides the FAA’s pro-arbitration default, so employers cannot rely on an otherwise valid arbitration agreement to sever and route race, retaliation, or other employment claims to arbitration once a sexual harassment claim is in the case.
Why It Matters
Phillips, following McDermott, significantly narrows the circumstances in which New Jersey employers can enforce workplace arbitration agreements in multi-claim discrimination lawsuits. Before McDermott, trial courts bifurcated cases by claim type, routing sex-based claims to the Law Division while sending everything else to the arbitrator. That approach is now off the table. Any case that includes a viable sexual harassment or sexual assault claim — however small relative to the overall complaint — renders the pre-dispute arbitration agreement wholly unenforceable as to every claim in the action.
For practitioners, the message is immediate and concrete. Defense counsel advising employers on arbitration program design must account for the EFAA’s case-wide reach: if an employee can plead any sexual harassment component, arbitration clauses lose their value for the entire dispute. Plaintiff-side counsel should ensure sexual harassment claims are properly pleaded alongside race, retaliation, and other employment claims when the underlying facts support them, preserving access to a judicial forum for the full case. New Jersey employers who rely heavily on mandatory arbitration to manage litigation risk in harassment-adjacent termination cases should revisit those programs in light of the evolving federal and state law landscape.