NJ Supreme Court Makes It Easier for Employers to Implement Mandatory Arbitration

NJ Supreme Court Makes It Easier for Employers to Implement Mandatory Arbitration

The state’s highest court held that an employee’s continued employment can constitute assent to the terms of an arbitration agreement...

The Supreme Court of New Jersey just made it easier for New Jersey businesses to implement employee arbitration programs. In Skuse v. Pfizer Inc., the state’s highest court held that an employee’s continued employment can constitute assent to the terms of an arbitration agreement. In addition, it confirmed that workplace email can be an acceptable method of disseminating mandatory arbitration agreements.

Dispute Over Enforcement of Employee Arbitration Agreement

In November 2017, plaintiff Amy Skuse filed an employment lawsuit against her former employer Pfizer, Inc. (Pfizer), and several other Pfizer officials. Her complaint alleged a violation of the New Jersey Law Against Discrimination (NJLAD), based on religious discrimination, and a failure to provide reasonable accommodation for her religious beliefs. In response to the complaint, the defendants sought to dismiss the suit and compel arbitration under  

According to Pfizer, Skuse electronically received and completed a training module presenting the company's mandatory binding arbitration policy. In May 2016, Pfizer emailed to its workforce what it called a "training module" (or "activity" or "course"). The module described the company's mandatory arbitration policy, as presented in a series of slides on computer screens. One screen provided employees with the opportunity to access a "Resource" link to the full text of the policy. In a separate email, the employer supplied a computer link to Frequently Asked Questions ("FAQs") concerning the policy.

On the third slide of the module presentation, the employees were asked to "acknowledge" it with the click of an electronic button. The module declared that if an employee did not click the acknowledgement, but continued to work for the company for sixty or more days, the employee would be "deemed" to be bound by the arbitration policy. Skuse continued to work for Pfizer for another thirteen months. Following a dispute between Pfizer management and Skuse as to whether she should be required to receive a particular vaccine, Pfizer terminated her employment.

The trial court dismissed plaintiff's complaint with prejudice, and directed her to proceed with arbitration, pursuant to the terms of the company's policy. While the court acknowledged that Pfizer's acknowledgment procedure "nowhere specifically asks plaintiff to confirm that she has received the agreement,” it was persuaded that, given plaintiff’s continued employment well-past the specified sixty days and "[i]n light of the text on the slides and plaintiff’s action or inaction, plaintiff’s apparent intent was to be bound by this agreement." 

The Appellate Division reversed, holding that the mandatory arbitration agreement (“Agreement) was unenforceable. “The wording and method of Pfizer's training module is inadequate to substantiate an employee's knowing and unmistakable assent to arbitrate and waive his or her rights of access to the courts,” the court wrote. In support, the appeals court cited Leodori v. CIGNA Corp., 175 N.J. 293 (2003), in which the Supreme Court of New Jersey held that that "a waiver-of-rights provision must reflect that an employee has agreed clearly and unambiguously to arbitrate the disputed claim." The court further held that such a valid waiver "results only from an explicit affirmative agreement that unmistakably reflects the employee’s assent."

The Appellate Division specifically identified three aspects of Pfizer’s communications to Skuse as grounds for its decision: Pfizer’s use of e-mails to disseminate the Agreement to employees already inundated with e-mails; its use of a “training module” or a training “activity” to explain the Agreement; and its instruction that Skuse click her computer screen to “acknowledge” her obligation to assent to the Agreement in the event that she remained employed for sixty days, not to “agree” to the Agreement.

New Jersey Supreme Court Rules Arbitration Agreement Is Binding

The New Jersey Supreme Court reversed, concluding that the arbitration agreement was valid and binding. “In sum, Pfizer’s Agreement explained to Skuse in clear and unmistakable terms the rights that she would forego if she assented to arbitration by remaining employed at Pfizer for sixty days,” the court wrote. “Although Pfizer’s ‘training module’ was not an optimal method of conveying to Skuse her employer’s arbitration policy, Pfizer’s May 5 and 6 e-mails, the link to the Agreement contained in those e-mails, the ‘FAQs’ page, and the summaries that appeared on the four pages collectively explained, with the clarity that our law requires, the terms of the Agreement to which Skuse agreed by virtue of her continued employment.”

Assent Via Conduct
In reaching its decision, the New Jersey Supreme Court confirmed that conduct can signify assent to an arbitration agreement. It further held that Skuse assented to the Agreement via her continued employment. “We conclude that Pfizer’s Agreement and related communications informed Skuse that if she remained a Pfizer employee more than sixty days from her receipt of that Agreement, she was deemed to assent to it,” the court wrote. “We hold that those communications clearly and unmistakably explained the rights that Skuse would waive by agreeing to arbitration, thus complying with our waiver-of-rights case law.”

Dissemination Through Email
The court next turned to the method by which Pfizer chose to deliver its Agreement, finding that “delivery of the Agreement by e-mail did not warrant its invalidation.” The court agreed that employees “often receive large volumes of e-mails in the workplace, and that it is not always feasible for a given employee to scroll through and carefully read each of the e-mails that he or she receives.” However, it did not share the Appellate Division’s view that the “indisputable challenge faced by many workers” invalidates the Agreement.

“Any contention by Skuse that she completed Pfizer’s e-mailed module without reading its contents or the documents linked to it would have no impact on the analysis,” the court wrote. “Moreover, no principle of New Jersey contract law bars enforcement of a contract because that contract is communicated by e-mail, rather than by the transfer of a hard-copy document.”

The New Jersey Supreme Court also emphasized that Pfizer’s e-mailed communications did not conceal the Agreement or understate its importance. “To the contrary, Pfizer highlighted that Agreement in two e-mails to the employees concerned. Each e-mail provided a conspicuous link to the Agreement itself,” the court noted. “The first prominently announced and explained Pfizer’s new arbitration policy and linked to the ‘FAQs’ page discussing the import of the Agreement and suggesting that an employee might seek to review it with counsel. The second launched the module summarizing the Agreement.”

“Training Module” Terminology
While the New Jersey Supreme Court agreed with the Appellate Division that Pfizer’s characterization of its slides summarizing the Agreement as “training” was a misnomer, it did not find that it impacted the enforceability of the Agreement. “We concur with the Appellate Division that Pfizer should not have labeled its communication explaining its arbitration agreement a ‘training module’ or training ‘activity,’ but we do not view that as a basis to invalidate the agreement,” the court wrote. In support, the court noted that Pfizer’s communications could not be misconstrued as a routine component of a training program, but rather “signaled a fundamental change in the manner in which potential disputes would be resolved.”

Even though the New Jersey Supreme Court did not invalidate Pfizer’s Agreement, it did caution employers from using similar language, writing:

When it disseminates an arbitration agreement, an employer may choose to use tools developed for its training program, such as e-mail notice to employees, mandatory review of an agreement along with other relevant documents within a prescribed period, and digital confirmation that the employee has reviewed the materials provided. Those techniques may highlight the importance of the arbitration materials to the employee and ensure that the communications were received and reviewed. The employer should not, however, label those communications as “training.”

Acknowledge vs. Agree
Finally, the court held that the term “acknowledge” was sufficient to constitute acceptance in the circumstances of the case. “We view Pfizer’s use of the word ‘acknowledge’ — in its request that Skuse click to ‘acknowledge’ her obligation to arbitrate disputes with her employer if she remained a Pfizer employee sixty days later — to be appropriate in the circumstances of this case, given the terms of Pfizer’s arbitration policy and other expressions of assent that immediately preceded that request,” the court wrote.

In so ruling, the New Jersey Supreme Court distinguished the case from Lidori. As explained by the court:

What Skuse was asked to “acknowledge” -- what she did “acknowledge” -- 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. As she clicked the “CLICK HERE to acknowledge” button, Skuse was reminded yet again that if she remained employed at Pfizer for an additional sixty days after receiving the Agreement, she would be deemed to have agreed to that Agreement’s terms. Although the word “acknowledge” could be vague or misleading in a different setting, it was an appropriate term as used here.

Notably, not all of the justices fully agreed with the majority decision. Chief Justice Stuart Rabner dissented, while Justice Barry Albin authored a concurring opinion. Both expressed concerned that the practice used by Pfizer could result in employees being forced to give up their constitutional right to a jury trial as opposed to actually consenting to do so.

In his concurrence, Justice Albin agreed that the totality of the evidence showed that Skuse understood that she was agreeing to submit any employment disputes to arbitration. However, he raised questions about whether such arbitration agreements could be viewed as unenforceable contracts of adhesion. He wrote:

When every employment and consumer contract contains such a clause across an entire profession or industry, when employees and consumers have no choice but to waive their right to resolve their disputes in a judicial forum in order to get a job or buy a good, we will have to address a more profound question. Are such 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 under the Federal Arbitration Act and its state counterpart?

In his dissent, the Chief Justice argued that more should be required before employees waive their right to a jury trial. “More is required to show clear and unmistakable assent in any context,” he wrote. “More should be required before employees are asked to give up their constitutional and statutory rights to have their day in court.”

Chief Justice Rabner also expressed concern that the court’s decision will “usher in a new day for arbitration agreements.” He wrote: “Going forward, what employer will ask an employee to agree to settle a dispute through arbitration and waive the right to proceed in court if it is enough simply to ask the employee to acknowledge she received a statement of company policy and deem consent from her continuing to show up for work?”

 Key Takeaway for New Jersey Employers

The New Jersey Supreme Court’s decision offers key advice for employers seeking to implement an employee arbitration program. It confirms that continued employment is a valid means of assent, as long as the terms are clearly conveyed to employees.

The decision in Skuse v. Pfizer Inc. also confirms that arbitration agreements may be communicated and distributed via electronic communications, such as email. Of course, if using this method, communications should clearly state that they contain an important legal document that may impact the rights of employees. Although the New Jersey Supreme Court determined that the use of the word “acknowledge” was sufficient in this case, employers can help avoid potential scrutiny by using the word “agree.” While the decision is clearly a win for employers, Justice Albin’s concurrence and Chief Justice Rabner’s dissent suggest that mandatory arbitration agreements will continue to be scrutinized. Going forward, the issues raised by the justices are likely to be raised by employees and may end up before the court, as the law surrounding mandatory arbitration continues to evolve.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Joel N. Kreizman, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

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AboutJoel N. Kreizman

Joel N. Kreizman concentrates his practice in Commercial Litigation. He is a former Deputy Attorney General assigned to the Antitrust Bureau of the Division of Criminal Justice and also a former chairman of the Antitrust Law Committee of the New Jersey Bar Association.Full Biography

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