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Employment Law Blog

NJ Supreme Court Set to Tackle Arbitration Agreements in the Digital Age

August 1, 2019

The New Jersey Supreme Court recently granted certification in Skuse v. Pfizer, Inc., 457 N.J. Super. 539 (App. Div. 2019), an Appellate Division case that addresses the appropriate manner in which employers should seek an employee’s agreement to arbitrate, when consent is sought through electronic means, such as online modules. The Court’s view on this issue will shed light on how employers can achieve legally enforceable arbitration agreements through the use of digital techniques.

Skuse
examined two issues: (1) the enforceability of an arbitration agreement that was transmitted to employees through a mandatory online “training module”; and (2) whether an employee who did not acknowledge his/her agreement to be bound by the arbitration agreement was nevertheless bound by “default” because she continued to work for the company for more than sixty days after receiving the arbitration agreement. On the second issue, the Skuse panel expressly acknowledged that it was diverging from the view taken by a sister panel in a previous published case, Jaworski v. Ernst & Young U.S. LLP, 441 N.J. Super. 464 (App. Div. 2015), which was almost certainly a critical factor in the Supreme Court’s decision to grant certification.

In Skuse, Pfizer presented its mandatory arbitration policy to thousands of employees as part of a four-slide “training module” or “activity” or “course” sent via mass email.  The email in turn linked to the company’s computer-based training portal. In a separate email, Pfizer provided a link to frequently asked questions concerning the arbitration policy which included questions such as “Do I have to agree to this?” and “Can I change any parts of the terms of the Arbitration Agreement?” The first slide stated that employment was conditioned on the parties’ agreement to resolve certain disputes through arbitration; that the agreement was contained in the Mutual Arbitration and Class Waiver Agreement that would be available to review and print of the following slide; that it was important the employee be aware of the terms of same; and that the employee would be asked to acknowledge receipt of the agreement. The second slide provided employees with access to a “resource” link to the full text of the policy. On the third slide of the module, employees were asked to “acknowledge” the policy by clicking a box or electronic button. Further, this slide expressly stated that continuing to work for the company for more than sixty days would constitute agreement to the policy. The final slide of the module thanked employees for reviewing the arbitration agreement and provided an email address where they could direct any questions.

Three months after being terminated from Pfizer for her failure to receive a yellow fever vaccination, employee Amy Skuse filed a Complaint against Pfizer alleging violation of the New Jersey Law Against Discrimination, N.J.S.A. 10:5-41 to 49, based on religious discrimination and failure to provide reasonable accommodation for her religious beliefs against receiving injections containing animal protein. In response to the Complaint, Pfizer filed a motion to dismiss the action and to compel Skuse to submit the claims to binding arbitration pursuant to the arbitration agreement Skuse admittedly “acknowledged.”

The trial court granted Pfizer’s motion. In reversing the trial court’s decision, the Appellate Division held that Pfizer’s procedure was inadequate to substantiate Skuse’s knowing and unmistakable assent to arbitrate any claims. In so holding, the court re-emphasized the Supreme Court’s holding in Leodori v. CIGNA Corp., 175 N.J. 293 (2003), which requires explicit, affirmative, and unmistakable assent to arbitration.

Importantly, in its decision, the Appellate Division provided guidance as to best practices for seeking an employee’s legally binding assent to arbitration policies transmitted through electronic means. The following represents a summary of these best practices:

  1. A company’s binding arbitration agreement should be conveyed in a manner that emphasizes the “legal significance and necessary mutuality of contractual process.” Pfizer’s conveyance of its arbitration agreement through a “training module” or “training activity” failed in this respect. To this end, the Appellate Division clearly stated: “obtaining an employee’s binding waiver of his or her legal rights is not a training exercise.”

  2. An arbitration policy must be “presented in a fashion that produces an employee’s agreement and not just his or her awareness or understanding.” Stated differently, an employee’s mere receipt or acknowledgement of the company’s arbitration policy is not enough to make it enforceable against him. The employee must voluntarily agree to the policy. Thus, the acknowledgment “click box” on the third slide of Pfizer’s training module critically failed to extract Skuse’s “explicit, affirmative agreement.”

  3. The material terms of an arbitration agreement cannot be inconsistent or vague.  With regards to Pfizer’s training module, the Appellate Court found that although the Company intended for the employee’s click of the acknowledgment box to substitute for a physical signature and thus represent an agreement to the policy, the term “acknowledge” near the click button was made vague by language in the opening slide explaining that the employee would be asked at the end of the presentation to “acknowledge receipt” of the agreement, without mentioning the employee’s need to also convey his assent to the terms of the policy. Further, the court found that the final slide of the module merely thanked the employee for “reviewing” the document. Finally, Pfizer referred to the entire process as a “training activity,” thus further confusing whether the employee was engaging in an agreement and waiver of rights. 

  4. If an employer wishes to obtain an employee’s knowing and voluntary consent to an arbitration agreement by electronic means, the employee’s click of a button or electronic signature must be “tethered to and spotlighted with a clear and proximate direction that, by clicking the button, the employee is knowingly agreeing to waive his or her legal rights” to access the courts and have a trial. To this end, although the words “agree” and “agreement” appeared several times on the slides in Pfizer’s module and also within the linked policy, the use of these words outside of the click button was deemed insufficient to satisfy the requirements of Leodori.

  5. To comply with the tenets of Leodori, the Appellate Court suggested that in order to seek an employee’s legally binding response to an arbitration agreement, a “click box” could read as follows: “Click here to convey your agreement to the terms of the binding arbitration policy and your waiver of your right to sue.” Indeed, the panel also noted that Pfizer could use a touch screen or other electronic method for employees to supply their signatures.

Turning to the second issue, the Appellate Division rejected Pfizer’s “consent by default” provision on the third slide of the PowerPoint, as likewise not in compliance with Leodori. The 60-day “deemer” provision was a unilateral attempt to bypass the Leodori requirements, effectively deeming employees who remain employed for 60 days to have agreed to arbitration. The panel could not square its sister-panel’s holding to the contrary in Jaworski with the tenets of Leodori. Indeed, the panel observed that such a “deemer” provision would render the clicking process in the training module meaningless after the passage of 60 days.

The Supreme Court’s decision in this matter promises to deliver to employers the requirements for obtaining employees’ agreement to arbitrate in the digital age, while simultaneously resolving an appellate split concerning “deemer” provisions. We anxiously await our Supreme Court’s comment and decision as to these guideposts.

Attorneys: Brian Block and Melody Lins
Related Practice: Labor and Employment
Category: Arbitration, Employment Litigation