Don’t Fear The Click-Box: NJ Supreme Court Upholds Electronic Employee Arbitration Agreements

On August 18, 2020, in a landmark decision for employers, the New Jersey Supreme Court released its long-awaited opinion in Skuse v. Pfizer (A-86-18) (082509), holding that an employee must arbitrate her employment discrimination claims agreed to in an electronic employee arbitration agreement. The decision reverses the Appellate Division’s January 2019 decision, which had imposed heightened requirements on employers obtaining employees’ assent to arbitration agreements.

Facts

In 2016, Pfizer notified its employees by e-mail of a new arbitration policy (Policy), including a link to the company’s new Arbitration Agreement (Agreement), as well explanatory documents. The explanatory documents stated that if an employee continued to work for Pfizer for sixty days after receiving a copy of the Agreement, the employee would be deemed to have assented to the Agreement, waived the right to litigate in court certain employment-related claims, including claims under the New Jersey Law Against Discrimination (NJLAD), and agreed to arbitrate those claims instead. Amy Skuse, a Pfizer flight attendant, opened the e-mails that linked to the Agreement, completed a “training module” regarding the Policy, and clicked a box on her computer screen that asked her to “acknowledge” her obligation to assent to the Agreement as a condition of her continued employment.

Skuse continued to work for Pfizer for another thirteen months. After a dispute between Skuse and the company regarding whether she should be required to adhere to the company’s vaccination policy, she was terminated. Skuse filed her complaint in state court alleging Pfizer violated the NJLAD. Pfizer moved to dismiss the complaint and compel arbitration.

The Trial and Appellate Court Decisions

The trial court found that 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 and dismissed Skuse’s complaint.

On appeal, Skuse argued that the click-box acknowledgement was inadequate to express her agreement to the arbitration policy. 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 noted three aspects of Pfizer’s communications as grounds for its decision: (1) use of e-mail to inform employees of the Agreement, as employees are “inundated” with volumes of e-mails; (2) use of a “training module” to explain the Agreement; and (3) the click-box acknowledgement of the Agreement. The Appellate Division stated that for an employer who seeks an enforceable arbitration agreement from their employee by electronic means, that “the click box . . . should contain the word ‘agree’ or ‘agreement.’ . . . The weaker term ‘acknowledge’ does not suffice.”

The New Jersey Supreme Court Decision

On August 18, 2020, the New Jersey Supreme Court reversed the Appellate Division’s determination and reinstated the trial court’s judgment dismissing the complaint and ordering arbitration. The N.J. Supreme Court held that Pfizer’s communications “clearly and unmistakably” conveyed the rights that employees would waive by agreeing to arbitration, and that continued employment would constitute assent to arbitration in accordance with the Agreement’s terms. In its opinion, the court specifically noted state law precedent supporting that Pfizer’s e-mail delivery of the Agreement did not warrant invalidating it. The court concurred with the Appellate Division’s finding that Pfizer should not have labeled its communications explaining the Agreement as a “training module” or “training activity.” However, it held that the use of these terms did not invalidate the Agreement.

Finally, the court disagreed with the Appellate Division’s analysis regarding Skuse’s acknowledgement of the arbitration agreement in two regards. Specifically, the court found that Skuse assented to the Agreement in accordance with Pfizer’s designated method of expressing assent – continued employment for an additional sixty days after she received the Agreement. Second, the court found that Pfizer’s click-box “acknowledgement” sufficiently referred to the arbitration Agreement and its terms. In effect, use of the word “acknowledge” rather than “agree” did not invalidate the employee’s assent to the terms of the arbitration agreement.

Bottom Line

The Skuse case reinforces employers’ ability to enforce arbitration agreements. Arbitration as an alternative dispute resolution forum provides employers and employees alike many benefits, including the ability to choose an experienced arbitrator in a specialized field to preside over a dispute, the ability to resolve the dispute out of the public eye, and an expedited conclusion of the dispute. Further, arbitration of employment claims is critical to divert cases from the overburdened courts. The Skuse case also reestablishes that employers may continue to rely on longstanding contract law precedent to enforce arbitration agreements. Namely, employers may continue to rely on e-mail delivery of arbitration agreements to employees. In addition, the use of the word “acknowledge” in a click-box or electronic signature does not doom an arbitration agreement. Nevertheless, employers have the burden of obtaining valid assent to arbitrate disputes and should have all agreements to arbitrate reviewed by counsel.

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 Law & Litigation Practice Group, via email here, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Counseling & Compliance Practice Group, via email here, or 973-533-0777.