A New York County Supreme Court justice this month ruled in favor of an employee's right to trial by jury in a sexual harassment case, even though the employee signed an employment agreement that included an arbitration clause.

Justice Louis Nock found that a New York state law passed since the signing of the agreement applied, rendering it null and void.

Andowah Newton, a vice president of legal affairs at the luxury goods company LVMH Moet Hennessy Louis Vuitton, sued the company in 2019 alleging she had been harassed by another LVMH employee, according to court papers.

Aubrey Smith of Winston & Strawn, which is representing LVMH, filed a motion to compel arbitration a week after Newton filed her complaint. Smith argued that the Federal Arbitration Act required arbitration of Newton's claims, because she had agreed to a binding arbitration clause.

Newton's attorney at the time, then-Pierce Bainbridge partner Carolynn Beck, argued that the arbitration agreement was "unconscionable," illegal under New York law and unreasonably favorable to LVMH.

"Forcing Ms. Newton, as a condition of employment, to pursue her claims of sexual harassment in clandestine arbitration proceedings shows just how hopelessly out-of-touch Louis Vuitton is with the current times," Beck wrote. Beck has since changed firms, and Newton is currently seeking new counsel, according to a representative.

In his decision, Nock noted that the New York state legislature prohibited mandatory arbitration clauses related to discrimination in 2018, before Newton filed her suit in April 2019. The law also rendered existing clauses null and void, Nock found.

"The arbitration clause underlying the instant motion is precisely such a contractual provision," Nock wrote.

Nock found that the state law, and not the FAA, applied because all the alleged conduct took place in LVMH's New York offices and did not involve interstate commerce. Other disputes about terms of employment might be related to commerce and therefore subject to the FAA, he wrote in a footnote, but not sexual harassment or other discrimination.

LVMH intends to appeal, according to court filings.

According to Newton's complaint, the harassment began soon after she started working at LVMH and continued for years.

Newton sought to handle the situation informally at first, and as the harassment continued, she was urged to confront her harasser and was reprimanded for doing so after the company conducted a "sham" internal investigation, according to the complaint. She then complained to human resources, which led to retaliation and to an external investigation also described as a "sham" in the complaint.

Newton, who is Black and Latina, said in a statement that the ruling is a victory for "all targets of harassment and discrimination—particularly women of color."

"LVMH has attempted to silence me for years, seeking personal sanctions against me, reprimanding me, and suggesting that I apologize to the senior, white member of its management team who harassed me—this exemplifies the dehumanization to which millions of women, people of color, and other survivors of sexual harassment and discrimination are subjected when they report gross misconduct," she said. "That silence is exactly what perpetuates harassment and discrimination. That is why Congress should ban forced arbitration in all sexual harassment and discrimination cases nationwide."

In a statement, a spokesperson for LVMH said the company is disappointed with Nock's ruling.

"We believe that our position is overwhelmingly supported by legal authorities, including multiple opinions from the United States Supreme Court," the statement said. "We intend to appeal this ruling, and we look forward to having the issue reviewed and decided by the state court's Appellate Division. Further, as we have said previously, the allegations in this matter were thoroughly investigated and are entirely without merit."

Read more: