Appellate Division Decision Confirms Continued Employment May Constitute Assent to an Employer’s Emailed Arbitration Agreement

By Stark & Stark on February 22nd, 2021

Posted in Employment Law

Once again, but not surprisingly, an arbitration agreement conveyed by an employer and confirmed by an employee via email has been upheld by the New Jersey courts.

In a recent decision, Jasicki v. Morgan Stanley Smith Barney LLC, the New Jersey Appellate Division affirmed the motion court’s dismissal of an employee’s claims of sexual harassment, compelling arbitration.  Holding the employee agreed to the company’s mandatory arbitration program communicated via a company-wide email by (1) opening the email, (2) failing to opt-out of the arbitration program, and (3) continuing her employment, the Appellate Division validated email arbitration agreements in the employment context under these circumstances, despite the employee’s assertion she never actually read the email.  In doing so, the Appellate Division reinforced our courts’ approval of these less traditional and more controversial vehicles for securing employee assent to arbitration agreements.  In short, quoting its decision in Jaworski v. Ernst & Young, the Appellate Division wrote: “An email, properly couched, can be an appropriate medium for forming an arbitration agreement.”

The plaintiff employee became employed by Morgan Stanley in 2011.  In September 2015, the employer sent a firm-wide email describing an expansion in their mandatory arbitration policy (the CARE Arbitration Program) for workplace claims.  The email’s subject line referred to the new arbitration program and the body of the email expressly stated, among other things, that the employee’s decision to continue working and not opt-out would constitute assent to the program.  The email provided: “If you remain employed and do not timely complete, sign and submit an effective CARE Arbitration Program Opt-Out Form, the [f]irm’s records will reflect that you have consented and agreed to the terms of the Arbitration Agreement and the arbitration provisions of the Care Guidebook.”  The employee did not complete and return the opt-out form and continued with her employment.

In May 2019, the employee filed a three-count complaint under the New Jersey Law Against Discrimination alleging disparate treatment and hostile work environment, sexual harassment and discrimination, and retaliation.  She alleged she endured sexual harassment and after rejecting the advances of her supervisor, he retaliated against her.

The employee argued the mere receipt of an email, without further action, could not bind her to arbitrate her claims, and she asserted she never actually reviewed the email.  She also argued the email’s references to the arbitration policy were not sufficient to form an express or implied contract.  The employee did not dispute that she did not return the opt-out form and continued her employment after receiving the email.  In short, the employee submitted that she never truly assented to the CARE Arbitration Program through her actions or inactions and, thus, did not waive her right to assert her legal claims against the company in court.

Defendants moved to dismiss the complaint and compel arbitration arguing the employee agreed to the company’s arbitration program when she failed to opt-out (as permitted and instructed) and continued with her employment.  Further, the employer argued the employee had actual notice of the email and its contents because: (i) she had sent several emails around the same time she received the arbitration email; (ii) the company did not receive an out-of-the-office auto-reply to the arbitration email; and (iii) using metadata, the company demonstrated plaintiff received and opened the arbitration email because it was marked as “read.”

Dismissing the employee’s complaint, the motion court held: plaintiff took action to mark the email as “read”; the email’s language was clear, understandable, and sufficient to place the employee on notice of the arbitration agreement; the email stated continued employment beyond the opt-out deadline constituted assent to the arbitration agreement; and the employer permitted its employees to opt-out and reject the arbitration policy (and provided instructions on how to do so), which the employee did not complete.

In its decision, the Appellate Division began by reiterating New Jersey’s strong preference to enforce arbitration agreements as a “favored method of resolving disputes”—a policy maintained by most jurisdictions— and noted that the failure to read a contract generally will not assist a party to avoid the contract.

Next, the Appellate Division compared the case to Skuse v. Pfizer, Inc., a 2020 New Jersey Supreme Court ruling with a similar fact pattern.  In Skuse, Pfizer’s human resources department disseminated a mass email to its workforce announcing and providing a hyperlink to its new arbitration policy.  Included in the email was bolded text stating the employee’s acknowledgement was not necessary for the policy to be enforceable and that continued employment for 60 days would constitute assent to arbitration.  A subsequent email delivered by Pfizer that same day instructed the employee to take a four-slide training module, which utilized “click-wrap” asking the employee to acknowledge the agreement.  The third slide contained a provision that stated the employee must agree to the arbitration and class action waiver agreement as a condition of continued employment, and that receipt of the agreement, even without actual acknowledgment of it, would ratify it.  Below this statement was a box instructing the employees to “CLICK HERE to acknowledge” before proceeding to the fourth slide.  The fourth slide thanked the employees for reviewing the agreement.

In Skuse, the Appellate Division actually sided with the employee and invalidated the arbitration agreement.  The Appellate Division took judicial notice that “people frequently skim (or scroll through without reading) written material sent to them digitally” and the clicked-assent was ambiguous.  However, on further appeal, the New Jersey Supreme Court reversed, stressing it did not matter whether the employee skimmed or intently read the email because she received the email which clearly set forth the employee’s rights and responsibilities concerning the arbitration policy.  While the Supreme Court expressed Pfizer’s training module “was not an optimal method of conveying to Skuse her employer’s arbitration policy,” the emails, links, module and summaries collectively explained with adequate clarity what the law required, and Skuse manifested her asset to arbitration through her continued employment with the company.

Returning to Jasicki, the Appellate Division held the employee had assented and was bound by Morgan Stanley’s arbitration program.  The court noted, similar to the Supreme Court’s ruling in Skuse, the employee received the email and her failure to review it could not overcome the employer-provided notice and express terms of the arbitration policy.  Further, the Appellate Division noted the agreement was not unilaterally imposed; the employee had the opportunity to opt out but did not.  Like Skuse, the court noted, in line with the email’s express language, the employee’s decision to continue working evidenced her assent to the agreement.

As the Supreme Court indicated in Skuse, an employer’s dissemination of an arbitration agreement via mass email, with hyperlinks or training modules, and establishing agreement via continued employment, may seem unscrupulous and is less than optimal.  It certainly is different from the more traditional, straightforward, paper or electronic arbitration agreement signed by the employee at inception of employment.  It is important to note that the precedent established by our courts is based on continued employment as adequate legal consideration under New Jersey law, which is not the case in all states.  In New Jersey, however, the jurisprudence has become quite clear: continued employment will constitute assent to an employer’s arbitration program when communicated via email so long as the email, and any links contained therein or training modules attached thereto, unambiguously conveys the necessary terms of a legally valid compulsory arbitration agreement.

If you have any questions about establishing an arbitration program for your workforce, please contact our labor and employment lawyers at Stark & Stark.

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