A former UWM underwriter just took on forced arbitration - and the Sixth Circuit sided with her. Here’s what every mortgage leader should know about this legal twist
Kassandra Memmer, a former mortgage underwriter at United Wholesale Mortgage, one of the nation’s largest wholesale lenders, sued the company over claims of discrimination and sexual harassment. She said UWM failed to accommodate her during her pregnancy and did not protect her from harassment by a coworker while she was employed between 2019 and 2021.
But instead of proceeding to trial, her case hit a familiar roadblock: a mandatory arbitration clause in her employment agreement. Like many financial services companies, UWM uses arbitration provisions in employment contracts to avoid public courtroom battles, favoring private resolution of disputes. A federal district judge in Michigan agreed with UWM and dismissed the case, ruling that Memmer had signed away her right to sue.
Memmer appealed. And in a decision filed April 18, 2025, the US Court of Appeals for the Sixth Circuit reversed that ruling, sending the case back to the lower court for further consideration. At the heart of the court’s decision is a relatively new federal law: the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, passed in 2022.
That law gives individuals the right to take certain harassment or assault claims to court, even if they previously agreed to arbitration. But the law only applies if the claim or legal dispute “arose” after the law took effect on March 3, 2022. That’s where the Memmer case broke new ground.
Although the alleged harassment occurred before 2022, Memmer filed her complaint with federal regulators in April 2022 and brought her lawsuit a year later. According to the appeals court, that timing might be enough to qualify her case for an exemption under the new law - if the legal dispute itself wasn’t truly in motion until after the law took effect.
The Sixth Circuit didn’t make a final ruling on whether the law applies, but it said the timeline is close enough to merit a deeper look. The case now returns to the lower court, which will examine exactly when the dispute between Memmer and UWM became active.
The outcome could have lasting implications for companies like UWM and others in the mortgage sector that rely on arbitration agreements as a risk management strategy. While arbitration can be efficient and confidential, the new law - and this case - signal that certain claims may no longer be confined to closed-door proceedings.
For mortgage employers, particularly those managing large operations or rapid hiring growth, the case highlights the need to revisit employment contracts and policies in light of changing federal protections. It also underscores the reputational risk of mishandling sensitive workplace allegations in an era of greater transparency and legal scrutiny.
UWM has not publicly commented on the appeals court decision. As the case continues, the mortgage industry will be watching closely to see how courts draw the line on when a legal dispute truly begins - and whether arbitration still offers the protections lenders have long relied on.
