## Facts

- Mahmoud Latif accepted employment with Morgan Stanley in June 2017 and signed an offer letter incorporating Morgan Stanley’s CARE Arbitration Program agreement.
- The arbitration agreement required final and binding arbitration of “covered claims,” including statutory discrimination, harassment, and retaliation claims, and stated it was governed by the Federal Arbitration Act (FAA).
- Latif alleged that beginning in fall 2017 he experienced harassment based on sexual orientation and religion, including inappropriate touching and sexual advances, and that a supervisor sexually assaulted him in February 2018.
- Latif reported incidents to human resources and was terminated in 2018 after months of internal communications.
- Latif filed federal and state employment-discrimination, hostile work environment, and retaliation claims in federal court in December 2018.
- Defendants moved to compel arbitration and stay the case under the FAA; Latif argued New York CPLR § 7515 invalidated mandatory arbitration for sexual-harassment claims.

## Issues

1. Whether New York CPLR § 7515 can invalidate an FAA-governed employment arbitration agreement as to sexual-harassment-related claims.
2. Whether CPLR § 7515 is preempted or otherwise inapplicable when its prohibition conflicts with the FAA.
3. Whether Latif’s asserted claims fall within the scope of the parties’ arbitration agreement.

## Decision

- The court granted the motion to compel arbitration and stayed the federal action pending arbitration.
- The court enforced the arbitration agreement under the FAA and rejected the argument that CPLR § 7515 rendered the arbitration clause null and void.
- The court held CPLR § 7515 cannot be applied to bar arbitration where doing so would be inconsistent with the FAA.
- The court found Latif’s discrimination, harassment, and retaliation claims—including those tied to alleged sexual harassment and assault—were covered by the agreement.

## Legal Principles

- Under the FAA, written arbitration agreements are enforceable except on generally applicable contract defenses; states may not impose arbitration-specific invalidation rules.
- State laws that single out arbitration or prohibit arbitration of particular categories of claims are preempted to the extent they conflict with the FAA’s objectives.
- A statutory exception within a state anti-arbitration rule for situations “inconsistent with federal law” prevents application where the FAA governs.
- Where an arbitration agreement broadly covers statutory discrimination, harassment, and retaliation claims, such employment claims must be arbitrated absent a valid, generally applicable contract defense.

## Conclusion

The court compelled arbitration of all employment-related claims and stayed the lawsuit, concluding that an FAA-governed arbitration agreement remains enforceable notwithstanding New York CPLR § 7515’s attempt to bar mandatory arbitration of sexual-harassment claims.


Latif v. Morgan Stanley & Co. LLC, No. 18 Civ. 11528 (DLC), 2019 U.S. Dist. LEXIS 107020 (S.D.N.Y. June 26, 2019)