Beyond The Legalese®: A Newsletter from Koffsky Schwalb LLC

In this Fall 2026 Newsletter, we discuss a decision holding that the sexual harassment exception to arbitration covers every claim in a case, a ruling that the Rapaport diamond price list may be protected by copyright, and a New York Court of Appeals decision holding that a “sole discretion” clause must still be exercised in good faith.

Please contact us if you have any questions or would like to discuss any legal needs.

Sexual Harassment Exception To Arbitration Law Covers All Claims In A Case

The Federal Arbitration Act strongly affirms the validity of agreements to arbitrate, and courts have upheld arbitration agreements of all kinds. However, in 2022 the President signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”) into law. EFAA enables a plaintiff who alleges conduct constituting sexual harassment or sexual assault to elect to invalidate an arbitration agreement that predates the alleged harassment or assault.

Sexual harassment claims are often accompanied by other claims, such as wage claims and breach of contract. Does EFAA invalidate arbitration agreements as to such claims, or only the sexual harassment claims?

Rapaport Diamond Price List May Be Copyrightable

It is long-standing copyright law that copyright does not protect ideas, but only the expression of ideas. A corollary is that even expression is not protected where there is only one or so few ways of expressing an idea that protection of the expression would effectively accord protection to the idea itself. This is called the doctrine of “merger,” meaning the idea and expression “merge.” This often restricts copyright from highly factual works.

A recent Second Circuit decision held that a list of suggested prices for diamonds might be protected, reversing a dismissal by the lower court. Rapaport USA, Inc. v. Nivoda USA LLC (2d Cir. 2026).

“Sole Discretion” Clause In Real-Estate Investment Contract Had To Be Exercised In Good Faith

Every contract contains an implied covenant of good faith and fair dealing. This includes “a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.”

Nevertheless, the covenant of good faith and fair dealing cannot contradict express terms of the contract. Courts will imply a covenant “only in aid and furtherance of other terms of the agreement of the parties.”

So, what happens when a contract assigns one party the “sole discretion” to determine an issue that will affect the other party’s rights? In 111 W. 57th Inv. LLC v 111 W57 Mezz Inv. LLC (NY 2026), the New York Court of Appeals held that the covenant of good faith and fair dealing does limit such “sole discretion.”

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Business Law | Civil Litigation | Intellectual Property | Employment Law | Real Estate