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Acknowledgement is Short of Agreement to Arbitrate

Lately, it seems like a new opinion about the enforceability of arbitration provisions in New Jersey comes out every day. In a newly published Appellate Division opinion, written by the Presiding Judge of the Appellate Division, Jack Sabatino, P.J.A.D., the court held a click through arbitration agreement was unenforceable. At the outset, the Court described the case as exemplifying the "inadequate way for an employer to go about extracting employees' agreement to submit to binding arbitration for future claims and thereby waive their rights to sue the employer and seek a jury trial." The plaintiff, here, alleged religious discrimination in violation of the New Jersey LAD (stemming from a mandatory vaccination policy).

Phizer e-mailed its workforce a "training module," which described the company's mandatory arbitration policy. The module contained a series of slides about the policy and link to access the full text of the policy. It also sent a separate e-mail with FAQ's concerning the policy. On a third slide of the module presentation, the employees were asked to "acknowledge" it by clicking the button. If you didn't click to acknowledge and continued to work for the company, the employee (after 60 days) would be bound by the policy. The module did not request that the employee provide a signature, nor did the "click" box memorialize an express "agreement"; rather, they were only asked to "acknowledge".

The Court focused on Leodori v. CIGNA, 175 N.J. 293 (2003) and Atalese v. US Legal Services Group, LP, 219 N.J. 430 (2014), collectively holding that binding arbitration must result from an explicit, affirmative, clear and unambiguous choice to waive one's rights. Under the facts in the Phizer case, the Appellate Division refused to enforce arbitration, reversing the trial court.

The Court explained that Phizer sent a company-wide mass e-mail transmission assigning to each employee the module training "to review" the "Mutual Arbitration and Class Waiver Agreement and Acknowledgement." Phizer gave a deadline for completion and made it a condition of employment, albeit it did not condition employment based on signing. Rather, it would be binding after 60 days. The Plaintiff certified that she never saw the e-mail and never took the training. Phizer's Enterprise Learning Architect explained how the system works and that the Plaintiff had indeed accessed and completed the on-line training, having clicked through all the slides. Plus, he indicated that each employee has a unique log in and is prohibited from sharing that information. The Plaintiff did not disprove that testimony.

The trial court dismissed the case, sending it to arbitration, but found that the Phizer's process never expressly asked the Plaintiff to confirm the agreement. However, she had stayed well beyond the 60 days, per company policy. The Plaintiff appealed and NELA-NJ filed an amicus. On appeal, the Court inferred as true that the Plaintiff used and reviewed the Training Module and, unlike, the actual "physical" signatures addressed in Leodori, Phizer used digital techniques.

The Appellate Division's holding provided an interesting analysis of how many hours employees spend each weekday checking e-mail (3.1 hours), together with other statistics on the rapid growth of email traffic, thereby making it difficult for employees to keep up and taking judicial notice that in order to deal with this deluge, people frequently skim or scroll through them without reading and bypassing links. "Such habits, although perhaps not always commendable, have become digital survival mechanisms used to separate the proverbial wheat from the chaff."

While the Court did not "mean to discourage employers from using e-mail to disseminate company policies and announcements," companies must ensure that important messages are actually read and understood with the employees' knowing and explicit assent. The Court found that a waiver of rights is not a training exercise and that the employer must do more than teach the employee about the binding arbitration policy - it must obtain explicit, affirmative and unmistakable assent to ensure their voluntary waiver. The Court called the "click box" a critical shortcoming, which simply "acknowledged receipt" and not an unmistakable assent or "agreement".

The Court did say that the process could be cured - for instance, describing the process more accurately - not "training" or "click here to convey your agreement to the terms of the binding arbitration policy and your wavier of your right to sue." The weaker term "acknowledge" does not suffice. The Court also said that Phizer may have used the word acknowledge to strategically omit the word "agree" to avoid some employees from balking at or questioning the policy; however, Phizer held the card because it could have discharged the employee if they refused. Lastly, the Court distinguished certain case law on whether staying after 60 days was an enforceable "waiver," finding that it was not in light of Leodori's requirements for an express, clear and unambiguous waiver.

What we can take away from this decision is that while arbitration is favored as a matter of public policy, the court will scrutinize the process and language for waiving a right to trial or trial by jury. Also, this case could be used to challenge other "electronic" policies where an employee might claim that he or she did not understand the import of the policy at issue, or allege that he or she never saw it. The case provides a good opportunity for employers to review their current waiver policies and electronic delivery system.

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