Words Matter! “Acknowledgement” Of Company Policy Is Not “Agreement” To Be Bound By It

“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.”

If you are an employer, and a court begins its decision this way, it is probably not going to be a good day for you. Such was the case for the defendant in Skuse v. Pfizer, Inc.

I know I have been writing a lot lately about arbitration agreements, and Skuse deals with this same topic. But it is different from other recent cases, and in an interesting way. In most of the cases I have written about, the question was whether a plaintiff’s claims fell within the scope of an arbitration agreement and, if so, whether the agreement adequately informed plaintiff that he or she waived the right to have those claims heard in court, by a jury. In Skuse, plaintiff did not argue that the text of defendant’s mandatory arbitration policy insufficiently explained the policy itself or the rights being waived. Instead, plaintiff challenged the the manner in which the policy was delivered to employees.

In Skuse, defendant sought to “extract[ ] its employee’s agreement” to arbitrate (as the Appellate Division characterized it) through what the company called a “training module.” Employees were sent an email with a link to a presentation that described the company’s mandatory arbitration policy. They were “assigned” the task of “reviewing” the presentation, which was comprised of four slides. The first slide explained that agreeing to the policy was a requirement of continued employment with the company, and indicated that employees would be required to “acknowledge” receipt of the policy in a later slide. The second slide contained a link to a “Resources” tab that contained the company’s five-page, single-spaced arbitration policy, which could be reviewed and printed by employees. The third slide contained a paragraph stating that the employee understood that agreeing to the policy was a requirement of employment and requiring the employee to click on a “rectangular box with rounded corners,” next to which was printed: “CLICK HERE to acknowledge.” This slide also indicated that even if employees did not click the acknowledgement, they would be deemed to have acknowledged the policy if they remained with the company for 60 days after receiving the presentation. The fourth and final slide thanked the employees for “reviewing” the arbitration policy.

Plaintiff worked as a flight attendant for defendant . (That is not a typo, apparently Pfizer employs flight attendants on its corporate aviation team.) She was also a practicing Buddhist. Defendant requires its flight attendants to be vaccinated against yellow fever. But the vaccination for yellow fever apparently contains “animal-derived ingredients.” And, as part of her religious beliefs, plaintiff objected to receiving any “injections that contain[ed] any kind of animal protein.” She explained this to defendant, and further explained that she had a valid “yellow card,” which allowed her to travel to any country without the vaccination, but the company continued to insist that she receive the vaccination. Plaintiff requested a religious accommodation from the vaccination requirement, which was denied, and plaintiff was later fired.

Plaintiff sued in state court, alleging that defendant’s failure to provide her with a reasonable accommodation for her religious beliefs violated New Jersey’s Law Against Discrimination. Defendant moved to dismiss and compel arbitration. (Although plaintiff initially claimed that she never received the email or viewed the “training module,” she agreed, for purposes of the motion to dismiss and compel arbitration, that she “got the email and saw the screen that said, I acknowledge receipt of this policy.”) The trial court granted the motion, holding that, although defendant’s policy did not specifically ask plaintiff to confirm that she received the agreement, her continued employment with the company demonstrated her “apparent intent to be bound by [the] agreement.” Plaintiff appealed.

The Appellate Division reversed, primarily based on precedent established by the New Jersey Supreme Court 16 years ago in Leodori v. CIGNA Group. In that case, employees of the defendant company received a handbook that contained the company’s arbitration policy. They also received an “acknowledgement form,” which included “an acknowledgement of the employee’s receipt of the handbook and a recitation that the employee understood the handbook contained information on company policies.” But the “acknowledgement form” did not contain specific language about the arbitration policy. A separate “Employee Handbook Receipt and Agreement” form also accompanied the handbook, and that described the arbitration policy as a term of employment. Plaintiff in Leodori signed the “acknowledgement,” but not the “agreement.” After plaintiff was terminated, he sued the company and the company moved to compel arbitration. The trial court granted the motion, but the Appellate Division reversed, and the Supreme Court then affirmed the Appellate Division’s decision. The Supreme Court held that “an arbitration agreement cannot be enforced against an employee who does not sign or otherwise explicitly indicate his or her agreement to it.” In Leodori, this did not happen because plaintiff did not sign the arbitration agreement itself, and the form he did sign only indicated that he “received” the agreement, not that he “agreed” to it. Therefore, the agreement was unenforceable.

In Skuse, defendant argued that the Appellate Division should “affirm the trial court’s ruling as an appropriate decision for our digital age.” The court declined, confirming that the holding in Leodori applied in the digital age just as it did in the pre-digital days(?) when that case was decided. The Appellate Division noted that it did not “mean to discourage employers from using email to disseminate company policies and announcements,” but when it comes to “the most important employer messages,” like those related to mandatory arbitration policies, employers must be able to show that their employees “actually read and understood” them and, when required, “responded to [them] with . . . knowing and explicit assent.” Because defendant could not show that this was the case in Skuse, it could not compel arbitration.

In arriving at its decision, the Appellate Division focused on the words used in the “training module.” They even took issue with the company calling it a “training module” in the first place: “Obtaining an employee’s binding waiver of his or her legal rights is not a training exercise. It is not on par with routine or mundane training subjects, such as how to obtain an assigned space in an employee parking lot or process a travel voucher.” The court was equally pointed when evaluating the language in the presentation, holding : that “assigning” employees to complete the presentation was a “inapt euphemism[] designed to dilute the legal significance and necessary mutuality of the contractual process;” that asking employees to “acknowledge” receipt of the agreement was not “an explicit, affirmative agreement” reflecting an employee’s agreement to it; and that the final slide, which only thanked employees for “reviewing” the policy, was emblematic of “loose and inconsistent wording that [was] reasonably capable of being misunderstood as something short of an agreement.” Ultimately, the court concluded that, while plaintiff may have acknowledged receipt of the policy, she never explicitly agreed to it, which was fatal to Pfizer’s efforts to enforce it.

In its decision, the court singled out the “click box” at the end of the presentation as a “critical shortcoming” of defendant’s procedure. The box used the word “acknowledge,” not “agree.” The Appellate Division held that “acknowledge” was inadequate to demonstrate agreement. The Appellate Division noted that it was not “prescrib[ing] in rigid fashion the exact language that should be immediately next to [a] click button, but the words used should have close proximity and prominence and contain the critical word ‘agree’ or ‘agreement.’ The weaker terms ‘acknowledge’ does not suffice.” The court also provided an example of wording that would be acceptable: “Click here to convey your agreement to the terms of the binding arbitration policy and your waiver of your right to sue.” Employers who choose to convey their arbitration policy in a manner similar to the way defendant did it in Skuse would be wise to parrot this language.

Finally, the Appellate Division also rejected defendant’s claim that plaintiff should have been deemed to have accepted the company’s arbitration policy because she remained with the company for more than 60 days after reviewing the policy. The court acknowledged that “[t]his [was] certainly what the third slide on the module [said],” but held that “[s]uch a proclamation of ‘consent by default’ [was] legally insufficient . . . to satisfy the requirements of explicit and unmistakable employee assent prescribed by Leodori.”

[NOTE: This decision was interesting for anyone who likes words since it focused so closely on the precise wording of the “training module.” On this note, Judge Sabatino, the author of the opinion, discussed the difference between “agree” and “acknowledge,” a difference that was crucial to the court’s decision: “Although sometimes the word’acknowledge’ might be considered a synonym of the word ‘agree,’ the former term can reasonably be thought to mean simply to ‘recognize’ the existence of something. For [instance], one might ‘acknowledge’ the high price of a new car without ‘agreeing’ to pay it.”]