A somewhat divided New Jersey Supreme Court holds that an arbitration agreement announced and “acknowledged” by email to employees was valid and enforceable.
Amy Skuse was a former employee of Pfizer. Prior to her leaving the company, Pfizer released a new arbitration policy which stated that, if an employee remained employed for sixty days after receiving the new “Mutual Arbitration and Class Waiver Agreement,” (“Agreement”), the employee agreed to the Agreement. It stated: “both colleagues and Pfizer agree that arbitration will replace state and federal courts as the places where certain employment disputes are ultimately decided . . . .” Skuse was required to open an email, finish a “training module” discussing the Agreement, and click a box to “acknowledge’ her obligation: “to assent to the Agreement as a condition of her continued employment….” Skuse completed the training module and received an email stating she had completed the Agreement training module on June 9, 2016. She remained employed beyond the sixty-day period before leaving and bringing a claim against Pfizer based on the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49. Pfizer moved to compel arbitration which was granted by the trial court, citing the Federal Arbitration Act and the New Jersey Arbitration Act.
The Appellate Division Decision
The Appellate Division overturned the trial court’s decision. It found that the means by which Pfizer disclosed the Agreement, namely requiring employees to “acknowledge” the obligation under the Agreement as opposed to agreeing to it, sending the agreement by email for employees who received a large volume of emails, and labeling the Agreement as a “training module,” did not adequately demonstrate that Skuse waived her right to bring a claim in court. The Court found that the phrasing of the training module was “inadequate to substantiate an employee’s knowing and unmistakable assent to arbitrate and waive his or her rights of access to the courts.”
The Supreme Court’s Decision: Clear Notice
The New Jersey Supreme Court in Skuse v. Pfizer, Inc., No. A-86-18 (NJ Aug. 18, 2020), reverses the Appellate Division. Citing Atalese v. U.S. Legal Servs. Group, L.P., 219 N.J. 430 (2014) -- which held that the waiver must be clearly established and that must “explain that the plaintiff is giving up her right to bring her claims in court or have a jury resolve the dispute” – the majority find that the Agreement adequately explained that continuing employment would constitute assent to the Agreement’s terms, including arbitration. It also cited Martindale v. Sandvik, Inc., 173 N.J. 76, 92 (2002), stating that continued employment can be consideration to assent to an “employment-related agreement.” The training module clearly stated that continued employment was an assent to the Agreement and that “the employee’s acknowledgement of the Agreement was not required for that Agreement to be enforced….”
Notice and Acknowledgment by Email was OK
The Court also rejected the idea that delivery of the Agreement by email was improper. It agreed that employees may not carefully read every email they received, but this alone would not nullify the Agreement. Skuse completed the training module and signed the acknowledgement of the Agreement. The Appellate Division and Supreme Court both cited Riverside Chiropractic Group v. Mercury Ins. Co., 404 N.J. Super. 228, 238 (App. Div. 2008), stating that when an individual does not read a contract but signs anyway, the petitioner cannot avoid the consequences of the contract. The emails containing the Agreement did not hide the importance of the Agreement and provided a direct link to the Agreement’s text. Skuse was required to complete the module and did so. Her failure to adequately read the Agreement did not prevent her from agreeing to it.
“Training Module” Was Clear
The Supreme Court reversed the Appellate Division’s determination that the use of the term “training module” when referring to the Agreement was misleading. Informing employees about new policies, including the new arbitration agreement would be a form of training. The Court found that the term training would not invalidate the Agreement, as all the language in the e-mails and the Agreement language clearly informed employees about the new policy and what would be required of them should they agree.
“Acknowledgment” by Working was Acceptance
Finally, the Court rejected Skuse’s claim that acknowledging the Agreement instead of agreeing to it invalidated the arbitration provisions. The Appellate Division had relied on Leodori v. CIGNA Corp., 175 N.J. 293 (2003), where the Court ruled that a signature on an acknowledgment form, and the failure to have a signature on the agreement form would not be an consent to the arbitration agreement. The Supreme Court distinguished Leodori because that case had a specific agreement form that was left unsigned, where in the present case Skuse had provided the assent requested by Pfizer by remaining employed over sixty days after the effective date of the Agreement. Furthermore, Skuse’s “acknowledgement” of the Agreement was “her understanding that she ‘must agree’ to the Agreement, and that whether or not she clicked the ‘acknowledge’ button, she would be deemed to have ‘consented to, ratified and accepted’ the Agreement through her continued employment at Pfizer.” The Court upheld the Agreement and affirmed the trial court’s decision to dismiss the complaint and order arbitration.
The Concurrence and Dissent
Justice Albin concurred with the majority that the Plaintiff had agreed to settle any disputes through arbitration, but wrote to discuss the issue of “industry-wide contract[s] of adhesion.” He argued that in the future, when every contract has an arbitration agreement throughout an industry and “employees and consumers have no choice but to waive their right to solve their disputes in a judicial forum,” the courts will have to determine if arbitration agreements in contracts of adhesion would be unconscionable. Chief Justice Rabner dissented, agreeing with the Appellate Division that neither “acknowledgment” of the Agreement nor the continuing employment was sufficient to show that Skuse had clearly assented or agreed to arbitration. Rabner stated that the training module said employees would be required to acknowledge the receipt of the Agreement, not that they agreed with the terms of the Agreement. This distinction and the reliance on the continuing employment consent both failed to show employees clearly agreed to the arbitration Agreement. Failing to show proper assent, the Agreement could not be enforced.
Cameron Michelsen is a 3L at St. John’s School of Law. He is currently an intern with the school’s Securities Arbitration Clinic, assisting investors with disputes against their brokers. He is also a senior staff member of the St. John's Law Review.