Another Less-Than-Direct Way of Trying to Impose an Arbitration Scheme Fails

Skuse v. Pfizer, Inc., 457 N.J. Super. 539 (App. Div. 2019).  Sometimes, the first sentence of a judicial opinion tells you all you need to know about the result, even if the full opinion is 35 pages long.  That was so of Judge Sabatino’s opinion today in this case.  The first sentence read “This case exemplifies an inadequate way for an employer to go about extracting its employees’ agreement to submit to binding arbitration for future claims and thereby waive their rights to sue the employer and seek a jury trial.”

Pfizer emailed its employees a “training module” (also labeled a “training activity”) that consisted of slides regarding Pfizer’s mandatory arbitration policy.  There was a link to the full policy, and a separate email that contained a link to frequently asked questions.  At the end of the module, employees were asked to “acknowledge” the module presentation by clicking an electronic button.  The module also said that if an employee did not so “acknowledge,” but continued to work for Pfizer for 60 days, the employee would be “deemed” to be bound by the arbitration policy.  Additionally, the final slide thanked employees for “reviewing” the presentation.  Though the word “agreement” appeared in the module and in the policy, employees were not asked to “agree,” by clicking or otherwise, but only to “acknowledge.”

Plaintiff, a former Pfizer employee, sued Pfizer, alleging a violation of the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq.  She asserted claims of religious discrimination and failure to provide a reasonable accommodation to her religious beliefs.  The case involved the refusal of plaintiff, a practicing Buddhist, to undergo a vaccination for yellow fever.  She alleged that her religious beliefs forbade her from receiving any injection that contained any animal protein.

Pfizer moved to compel arbitration, citing the training module.  Plaintiff contended that she had never received an email about arbitration and had never agreed  to arbitration.  For purposes of the motion, however, she asked the Law Division to assume that she had gotten the email and and saw the screen that asked her to “CLICK HERE to acknowledge.”  Notably, she had continued to work for Pfizer for thirteen months after the date of that email, which implicated the “deemed” provision of the module.

The Law Division granted Pfizer’s motion, relying on her seeming intent to accept arbitration based on her remaining employed by Pfizer for over sixty days after the email.  Plaintiff appealed, and today the Appellate Division, applying de novo review, reversed, as Judge Sabatino’s first sentence indicated would be the result.

Judge Sabatino’s legal analysis rested on two Supreme Court opinions, Leodori v. CIGNA Corp., 175 N.J. 293 (2003), and Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430 (2014), a case that is by now very familiar to readers of this blog, since it has been the basis of many rulings since Atalese was issued, including (among others) this one and this oneLeodori held that an employee’s waiver of statutory rights, in the context of an employer’s binding arbitration policy, was ineffective absent “an explicit, affirmative agreement that unmistakably reflects the employee’s assent.”  Atalese mandated that, to be effective, an arbitration clause “must be clear and unambiguous that [a person] choosing to arbitrate disputes rather than have them resolved in a court of law.”

Judge Sabatino held that the facts here did not satisfy Leodori and Atalese.  To begin with, the terms “training module,” “training activity,” and others were “inapt euphemisms” that diluted or obscured the fact that an “agreement” was being imposed.  The final slide’s thanks for “reviewing” the module only accentuated the misimpression that this was something other than a binding agreement.  “An 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 to the arbitration policy, in order to secure their voluntary waiver of their rights under the law.”

The “CLICK HERE to acknowledge” box was a “critical shortcoming.”  Leodori had held that it was not enough that an employee receive an arbitration policy; there must be an agreement.  Though “agreement” was used elsewhere, Pfizer’s failure to use a form of that word in the click box, the key part of the module and the only part that some employees would even read, was fatal.  The click box should have been “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.”

Indeed, Judge Sabatino observed, Leodori had said that it would have sufficed for the employer there to change its “acknowledgment” form to use “agreed,” and that it would have been easy for Pfizer to do that here.  He noted that Pfizer “may have strategically decided to omit the word ‘agree’ from the click box because using that term might cause some employees to balk and to question the arbitration policy….  The more straightforward method the law requires may well generate discussions by employers with some workers who may hesitate to provide their electronic agreement.  But the temporary inconvenience to companies in having such discussions would be offset by the benefit of achieving legally enforceable mutuality and clarity.”

Judge Sabatino then turned to the provision that “deemed” the arbitration policy to be binding if the employee stayed on the job for sixty days or more.  But that “consent by default” provision in no way satisfied the Leodori requirement of “explicit and unmistakable employee assent,” Judge Sabatino concluded.  The panel distinguished on its facts, and declined in any event to follow, Jaworski v. Ernst & Young U.S. LLP, 441 N.J. Super. 464 (App. Div. 2015), on the “deemer” issue.

“The sixty-day provision here is the company’s unilateral declaration.  In essence, it is an attempt to bypass the evidential requirements of Leodori, so that employees who do not communicate their voluntary agreement to the arbitration policy will be imagined to have provided such agreement if they keep reporting to work for longer than two months.  The provision, which is set forth on the very same acknowledgment slide we have found to be inadequate, unacceptably circumvents the Supreme Court’s tenets.”

Given Leodori, Atalese, and the many cases that have followed them and, over a period of many years, invalidated unclear, vague, confusing, euphemistic, or otherwise deficient attempts to impose arbitration, it is baffling that sophisticated employers have not learned the lesson that it is necessary to be clear and direct in an arbitration provision.  That is all the more so since most if not all of the decisions, including that of Judge Sabatino today, emphasized the ease of creating a clear, direct, and therefore valid arbitration clause, and even offered specific examples of how to do that.  And Leodori was decided in 2003, nine years before plaintiff in this case started work at Pfizer.  The invalidity of the “deemer” here thus should not have come as a surprise.