Agree v. Acknowledge: Two Recent New Jersey Arbitration Rulings Highlight the Importance of Ensuring An Employee’s Agreement to Binding Arbitration

Two recent decisions in January 2019 by the New Jersey Appellate Division, Brownlee v. Town Sports International Holdings, Inc. and Skuse v. Pfizer, Inc., illustrate the different consequences for an employer in obtaining its employee’s agreement, acquiescence, or acknowledgement of an arbitration agreement.

Facts in Brownlee

Ms. Brownlee was employed as a Vice President, Field Human Resources with Town Sports International Holdings, Inc. (“TSI”) from January 2011, until her termination in August 2016.  Brownlee filed a complaint in the Superior Court of New Jersey, Hudson County alleging racial discrimination and retaliation in violation of the New Jersey Law Against Discrimination and the New Jersey Family Leave Act.  TSI subsequently moved to compel arbitration pursuant to its Dispute Resolution Rules binding arbitration program. 

Brownlee electronically acknowledged receipt of TSI’s dispute resolution policy during her on boarding process and her employment offer letter provided that her employment with TSI was contingent on, among other things, the onboarding process.  Furthermore, the arbitration provision in the TSI handbook expressly stated, in part, that acceptance of an offer of employment constituted the employee’s agreement to be bound by the terms of the arbitration program.  In her role as Vice President, Brownlee often advised other employees on how to access the TSI handbook, which was available via any TSI network computer or through a website.

The Court’s Decision in Brownlee

The trial court found that Brownlee acquiesced in being subject to the dispute resolution program by continuing to work for TSI once she was aware of the program and granted the motion to compel arbitration.  In particular, the Court held that it would be “inconsistent to find or infer that a manager was unaware of the policy that he or she directly, indirectly, tacitly or expressly acquiesced in or communicated to subordinates.”  On appeal, Brownlee argued she did not assent to be bound by TSI’s arbitration, as acceptance of the dispute resolution program was not an express provision of her employment offer letter.  The Appellate Division rejected this argument, noting that Brownlee’s offer letter conditioned her employment on existing TSI policies including the arbitration program in place at the time.  The Appellate Division also affirmed the trial court’s finding that Brownlee was aware of the dispute resolution policy by virtue of her role as Vice President and that her continued employment at TSI while aware of the policy constituted her acquiescence to it.

Facts in Skuse

Ms. Skuse began her employed with Pfizer as a flight attendant in 2012.  Pfizer had a policy requiring that its flight attendants receive a yellow fever vaccine, which it sought to enforce as against Ms. Skuse around April 2017.  The problem here was that the vaccine apparently contained animal-derived ingredients whereas Skuse was a practicing Buddhist who, as part of her beliefs, did not receive any injections containing any kind of animal protein.  Following a medical leave of absence, and a formal request for an accommodation from the vaccination requirement, Skuse was ultimately terminated in August 2017.  Shortly thereafter, she filed a complaint in Superior Court of New Jersey, Mercer County alleging religious discrimination and and failure to provide a reasonable accommodation in violation of the New Jersey Law Against Discrimination.  Pfizer moved to compel arbitration pursuant to an arbitration policy that it provided to employees via an email link to a training module, which employees were asked to acknowledge electronically upon completion by means of a click box.  The record indicated that Skuse completed the training module on June 9, 2016.

Trial and Appellate Decisions

The trial court found that Ms. Skuse’s “apparent intent was to be bound” by Pfizer’s arbitration policy given her continued employment well past her acknowledgement of the policy and in light of the text of the training module; specifically, one of the slides of the training stated “I understand that I must agree to the [arbitration agreement] as a condition of my employment.”  As such, the trial court granted Pfizer’s motion to compel arbitration.  On appeal, Skuse argued that she never expressed her agreement to the arbitration policy nor was her assent ever requested by Pfizer.  The Appellate Division agreed and reversed the trial court’s judgment, noting at the outset of its opinion that “[t]his case exemplifies an inadequate way for an employer to go about extracting its employees; agreement to submit to binding arbitration.” 

The Appellate Division compared Pfizer’s “inadequate” approach with the similarly unsuccessful attempt by a defendant to enforce arbitration in the landmark case of Leodori v. CIGNA Corp., 175 N.J. 293 (2003).  In Leodori, the employee signed an acknowledgement form for receipt of the employer’s handbook, which contained an arbitration provision.  The acknowledgement form in Leodori did not contain any language specifically referring to arbitration nor did it contain any language indicating that the employee agreed to be bound by the arbitration provision or any other provisions of the handbook.  The New Jersey Supreme Court determined that the arbitration policy was unenforceable as against Leodori and ruled that “an arbitration provision cannot be enforced against an employee who does not sign or otherwise explicitly indicate his or her agreement to it.”

The Appellate Division reiterated that the rule of Leodori makes it clear that “an employee’s mere receipt of the company’s arbitration policy was not enough to make it enforceable against him.”  The Court also took issue with the process by which Pfizer conveyed the arbitration policy, in the form of a training module, stating that “[a]n employer must do more than ‘teach’ employees about the company’s binding arbitration policy.  The employer must also obtain its employees’ explicit, affirmative, and unmistakable assent . . . in order to secure their voluntary waiver of their rights under the law.”  For an employer who seeks an enforceable arbitration agreement from their employee by electronic means the Appellate Division suggested that “the click box . . . should contain the word ‘agree’ or ‘agreement.’ . . .  The weaker term ‘acknowledge’ does not suffice.” 

Bottom Line

Although there are no magic words that will make an agreement enforceable, Brownlee and Skuse demonstrate that employers should use clear and unambiguous language in any electronic media by which employees can signify their agreement to be bound the provisions of an arbitration agreement.  Employers have the burden of obtaining assent to arbitrate disputes and they should not assume that simply presenting their employees with the company’s arbitration policy will be sufficient to compel arbitration.  Employers should specifically take notice of the Appellate Division’s decision in Skuse and make sure that any click box or other electronic signifier should unequivocally show that an employee has agreed to, rather than merely acknowledged receipt of, the provisions of an arbitration agreement. 

For more information on what your company can do to ensure its arbitration agreement will be enforceable, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@genovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com, or 973-533-0777.