New Jersey Courts Cannot Agree on Arbitration Assent By E-Mail

01.08.2019

By: John C. Petrella, Dina M. Mastellone, James W. Sukharev

Can an employee assent to arbitration through inaction?

A recent decision from the U.S District Court for the District of New Jersey in AT&T Mobility Services LLC v. Horowitz addresses the same arbitration agreement considered in a previous decision from a sister court in AT&T Mobility Services LLC v. Jean-Baptiste and is directly at odds on what constitutes “assent” when a company’s arbitration agreement is provided to employees by e-mail.

Facts in Horowitz.  Roy Horowitz was employed at AT&T for over twenty years before his termination in June 2016, at the age of 56.  Kathleen Sweeney was employed at AT&T for over eighteen years before her termination in July 2016, at the age of 51.  In December 2011, Horowitz and Sweeney received an email to their AT&T e-mail addresses which advised them that AT&T created an alternative dispute resolution process which provided for third-party arbitration to resolve disputes between the company and its employees. 

The e-mail further stated participation in the program was optional and advised the employees, “If you do not opt out by the deadline, you are agreeing to the arbitration process as set forth in the Agreement.”  The emails were successfully transmitted to the employees and AT&T records showed that Horowitz and Sweeney clicked on the hyperlink in the email and accessed the webpage containing the text of the Arbitration Agreement.  Neither Horowitz nor Sweeney opted-out of the agreement. 

Following their termination, Horowitz and Sweeney filed a complaint against AT&T alleging violations of the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Act (OWBPA).  Thereafter, AT&T filed a motion to compel arbitration in accordance with the Arbitration Agreement presented to Horowitz and Sweeney via e-mail in December 2011.  In opposing AT&T’s motion to compel arbitration, Horowitz and Sweeney argued that they never affirmatively agreed to be bound by the Arbitration Agreement and that their failure to opt-out of the Arbitration Agreement cannot be considered assent.

District Court’s decision. In considering whether the employees’ failure to opt-out of the Arbitration Agreement constituted assent, the District Court considered New Jersey contract principles, relying primarily on the New Jersey Supreme Court Decision in Leodori v. CIGNA Corp. and the Second Restatement of Contracts §30 (1981).  The District Court emphasized the Leodori Court’s holding “that an arbitration provision cannot be enforced against an employee who does not sign or otherwise explicitly indicate his or her agreement to it.”  (emphasis in original).  The District Court further cited to the decision from the U.S. District Court for the District Court of New Jersey in Schmell v. Morgan Stanley & Co., for the proposition that “the law does not require a signature for a waiver to be valid.”  Moreover, the court quoted the Second Restatement of Contracts § 30 (1981), stating an “offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act.”

The District Court found that Horowitz and Sweeney accepted the terms of the Arbitration Agreement by receiving notice of the agreement, clicking on the link, and failing to opt-out within the deadline.  Moreover, the District Court rejected the employees’ argument that clicking on the hyperlink does not prove they read or fully understood the terms of the Arbitration Agreement, noting that their failure to read the Arbitration Agreement did not excuse them from being bound to the agreement after assenting to it.

Contrast to Jean-Baptiste. In AT&T Mobility Services LLC v. Jean-Baptiste, a sister court in the U.S. District Court for the District Court of New Jersey rendered a decision that was directly at odds with the holding in Horowitz regarding the same Arbitration Agreement.  In sum, the District Court in Jean-Baptiste held that enforceability of said agreement can only result from an “explicit, affirmative agreement that unmistakably reflects the employee’s assent.”

In departing from the holding in Jean-Baptiste, the District Court in Horowitz declared that it “respectfully disagree[d]” with the Jean-Baptiste Court’s holding and interpretation of Leodori, and emphasized that the holding in Leodori provided for circumstances where assent can be given by a party without affirmatively providing a signature.  Specifically, the Horowitz court concluded that “In [Jean-Baptiste], the plaintiff did provide ‘some other unmistakable indication’ that she affirmatively agreed to arbitrate her claims be accessing the Arbitration Agreement and clicking on the ‘Review Completed’ button” without subsequently opting-out of the Arbitration Agreement.

Bottom Line

Courts applying New Jersey’s contract principles to arbitration agreements are split on whether the failure to opt-out of an arbitration agreement after receiving notice is sufficient to signify intent to be bound by the arbitration agreement.  Ultimately, employers bear the burden of obtaining assent to arbitrate disputes.  Despite the holding in Horowitz that an employee who receives notice of an arbitration agreement and fails to opt-out has provided assent, employers are better off obtaining the most unambiguous form of assent possible, such as a signature.

If there is any lesson from the divergent opinions in Horowitz and Jean-Baptiste, it is that ambiguous forms of assent will hinder precisely what arbitration is designed to achieve – efficiency and cost-effectiveness in resolving disputes. 

Tags: Employment Law & LitigationHuman Resource LawHuman Resource Training & Audit ProgramsDina M. MastelloneJohn C. PetrellaJames W. SukharevAT&TArtbitrationNew Jersey

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