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NJ Supreme Court Clears Hurdles for Employee Arbitration Agreements 

From JDSupra, Thomas Linthorst, Jason Ranjo, Richard Rosenblatt and Samuel Shaulson discuss a recent New Jersey Supreme Court case in which the court said that continued employment could be a way to demonstrate consent to an arbitration agreement. Thomas, Jason, Richard and Samuel write:

In Skuse v. Pfizer Inc., the New Jersey Supreme Court allows continued employment as a means for consent to an agreement to arbitrate and confirms online communication and delivery to employees regarding arbitration agreements.

The New Jersey Supreme Court overturned an appellate court decision and enforced an arbitration agreement between Pfizer and a former employee on August 18. The Skuse v. Pfizer, Inc.[1] decision clarified that an employee may manifest consent to an agreement to arbitration by continued employment. The court further held that an employer may distribute arbitration agreements through links in a workplace email, clearing these potential hurdles for employers considering adopting employee arbitration programs.

BACKGROUND

In Skuse, the plaintiff received two emails explaining her employer’s new arbitration program (which linked to the agreement) and an FAQ document, and she took a “training module” that required her to “acknowledge” that her continued employment for 60 days would manifest her assent to arbitration. The plaintiff remained employed for another 13 months. She then brought employment claims in New Jersey state court, where Pfizer moved to compel arbitration. The trial court compelled arbitration, but the appellate division reversed, finding that the employer’s communications to the plaintiff were insufficient to establish a clear and unmistakable agreement to arbitrate.

The New Jersey Supreme Court reversed the appellate division and reinstated the trial court’s order. In its majority opinion—delivered by Justice Patterson, with Justices LaVecchia, Fernandez-Vina, and Solomon joining in full—the court held that the employer’s communications with the plaintiff and her continued employment beyond 60 days together demonstrated the plaintiff’s clear and unmistakable assent to arbitrate. In reaching this conclusion, the court broke ground in several respects that should prove helpful to employers in enforcing arbitration agreements in New Jersey and beyond.

DECISION

First, the court recognized that conduct (specifically, continued employment) can be a valid means of assent to an arbitration agreement. The court reasoned that by communicating to employees that their continued employment beyond 60 days would manifest their consent to arbitrate, the employer adequately “informed employees, with the clarity that [New Jersey] waiver-of-rights laws require [that such conduct] would constitute acceptance of the Agreement’s terms.” As the court acknowledged, the employee “had the option to leave her employment if it was unacceptable that most potential disputes between her and [the employer] would be arbitrated rather than resolved by a jury or judge.”

Second, the court held that distribution by email, with a link to the arbitration agreement, was effective, even if the plaintiff claimed she did not review it. Although the court agreed with the appellate division’s observation that many New Jersey workers “receive large volumes of e-mails in the workplace, and that it is not always feasible to . . . carefully read each of the e-mails,” the court rejected any purported failure to review the employer’s communications as a basis upon which to invalidate the agreement. In so holding, the court relied upon the general contract principle that “‘one who does not choose to read a contract before signing it cannot later relieve himself of its burdens,’” and held that any contention that the plaintiff did not read the relevant communications “would have no impact on the analysis.”

Finally, the court rejected the appellate division’s interpretation of Leodori v. CIGNA Corp.[2] to the extent it required a signed, written agreement stating, “I agree” to arbitration. The court recognized that the holding in Leodori turned on the fact that the employer asked the employee to sign a form as the means of agreeing to arbitration, which he refused to do, and in that context, continued employment could not be considered assent.

Distinguishing Leodori, the court observed that in this case, “[n]o form intended to confirm the [plaintiff’s] assent was left unsigned,” and that “[n]o writing – paper or digital – was designated by the employer to be the employee’s expression of assent, let alone refused by [the plaintiff].” Rather, the employer’s “prescribed form of assent here was [the plaintiff’s] decision to remain employed after the effective date of the arbitration policy.”

Justice Albin authored a short concurring opinion, agreeing with the majority’s conclusion that, based on a totality of the evidence, the “plaintiff clearly and unmistakably understood that she was agreeing to submit any disputed employment issue to an arbitrator.” Yet, Justice Albin questioned whether, when “employers and corporations . . . develop the perfect, unassailable arbitration clause,” thereby creating industrywide arbitration requirements, those agreements are “contracts of adhesion contrary to New Jersey’s most fundamental public policy – the constitutional right to a civil jury trial – and therefore unconscionable and unenforceable.” He did not, however, reach a conclusion on that issue, noting that “this is not the time or the case.”

Chief Justice Rabner dissented, finding that neither the “acknowledgment” of the employer’s arbitration program, nor the “one-sided declaration that consent would be deemed by default” (i.e., continued employment), established clear and unmistakable assent to arbitration.

PRACTICAL CONSIDERATIONS

Skuse recognizes the modern realities of employer communications and agreements with large employee populations. By affirming continued employment as an acceptable means of assent, the court relieves employers and employees of the burdens of a written signature on arbitration agreements, or any need by the employer to insist on a signature in lieu of termination of employment.

It further confirms that such agreements may be communicated and distributed electronically, including by email with embedded links, which eases the administrative and logistical burdens associated with implementing companywide arbitration programs, and allows for those communications to occur through the means by which employers now most frequently communicate with employees.

Although legal challenges to arbitration agreements will remain, Skuse clarifies New Jersey law on at least two important issues for employers considering implementing employee arbitration agreements.

 

Source: NJ Supreme Court Clears Hurdles for Employee Arbitration Agreements | Morgan Lewis – JDSupra

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