Read or Not, Arbitration Agreement Emailed To Employee Deemed Enforceable

There may come a day when the law regarding the enforceability of arbitration agreements is so well settled that courts no longer have to deal with the issue, but that day has not yet arrived. In Jasicki v. Morgan Stanley Smith Barney, LLC, the Appellate Division was once again asked to determine the enforceability of an arbitration agreement between employer and employee. Unlike many cases, however, the wording of the agreement in Jasicki was not the issue. Instead, the case turned on the manner in which the employer delivered the agreement to the employer.

In Jasicki, plaintiff was employed by defendants. She sued defendants (company and supervisor), claiming that she had been harassed by her supervisor and that the company protected the supervisor and retaliated against her after she complained about the harassment. Defendants moved to compel arbitration. The motion was based on an email that was sent by defendants’ human resources department, which announced the expansion of the company’s arbitration program and included a detailed arbitration provision. The email provided that employees could opt out of the arbitration program within 30 days of receiving the email. If they failed to do so, but continued their employment with the company, then they would be deemed to have consented and agreed to the terms of the arbitration program.

In their motion, defendants introduced evidence from their IT professional demonstrating that plaintiff received the email and that it was marked “read” in her mailbox. Plaintiff never opted out of the arbitration program, so defendants argued she was required to arbitrate.

Plaintiff countered that “the mere receipt of an email was not enough to compel her to arbitrate her claims.” She also argued that certain disclaimers in the company’s email rendered the agreement illusory and that she did not knowingly or voluntarily waive her right to a jury trial.

The trial court granted defendants’ motion and plaintiff appealed. On appeal, plaintiff argued that there was no agreement to arbitrate and that the trial court erred by relying on metadata showing that the company’s email was marked “read” to conclude that plaintiff had read the email and agreed to arbitrate.

The Appellate Division affirmed the trial court’s decision. The court noted that arbitration provisions between employers and employees will generally be enforced as long as they reflect that the employee clearly and unambiguously agreed to arbitrate. The Appellate Division observed that an employee’s signature to an arbitration agreement is the “customary and perhaps surest indication” that an employee knowingly and voluntarily waived its rights and agreed to arbitrate, but an employee’s signature was not required. Instead, the employee’s waiver could be reflected in a “properly couched” email, even one that refers to an arbitration policy contained in a separate writing, provided that the email reflects the employee’s knowing and voluntary waiver of rights in unambiguous terms.

The Appellate Division held that the email in Jasicki met this standard. It held that there was no dispute that plaintiff received the email and that the email’s subject line “unmistakably pertained” to the company’s arbitration program. That plaintiff may not have actually read the email was of no moment because, as the Appellate Division held, “an employee’s failure to review the contents of an email does not invalidate an arbitration agreement.” (In reaching this conclusion, the Appellate Division rejected plaintiff’s reliance on Skuse v. Pfizer, Inc., a case that I discussed here, which involved an employee clicking on a link to “acknowledge” receipt of an arbitration agreement.) In support of its decision, the Appellate Division also noted that arbitration was not unilaterally imposed on plaintiff – she had the ability to opt out, but chose not to. Accordingly, the Appellate Division affirmed the trial court, and rejected plaintiff’s argument that the dispute “center[ed] on metadata or that defendants were required to prove the extent to which she read the [ ] email, beyond presenting objective evidence that she received the email, in order to compel arbitration.”

Court Approves Service Of Complaint Through Facebook

by: Peter J. Gallagher (LinkedIn)

In what has become more and more common in recent years, a New Jersey court recently had to decide whether to allow a plaintiff to serve a defendant over Facebook rather than in person or through other more traditional means. In 252 Main NM, LLC v. John R. Heywang, Lauran Heywang, and American Express Centurion Bank, the trial court’s ruling was a mix of the old and the new. It held that plaintiff could serve defendant via Facebook, but that plaintiff also had to serve defendant via publication in a local newspaper.

In 252 Main, plaintiff sued defendant to foreclose on a tax lien. Plaintiff’s counsel attempted to locate defendant’s address so it could serve him with the complaint. Counsel performed an internet search for defendant’s address; arranged for a skip trace search; submitted an Open Records Act request for defendant’s voter registration records; and submitted an inquiry to the New Jersey Motor Vehicle Commission. All of these efforts yielded the same address in Teaneck, New Jersey. Defendant owned that property at one time, but lost it to foreclosure in June 2018 and was evicted in January 2019.

“Having exhausted traditional modes to locate defendant,” plaintiff’s counsel turned to social media. He located a Facebook account for defendant, which included pictures of defendant. The Facebook page indicated that defendant was from Teaneck and was living in Cancun. But defendant’s only post on the page was from January 2016.

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Before Applying A 30-Year-Old Decision To Modern Technology, A New Jersey Court References A Musical From The 1890’s

by: Peter J. Gallagher (LinkedIn)

In Pathri v. Kakarlamath, the issue before the court was whether a witness could testify via contemporaneous video transmission in a divorce trial. The trial court denied the witness’s request to do so and the issue went up on appeal, where the Appellate Division began its decision, naturally, by referencing Gilbert & Sullivan’s “The Major General’s Song” from The Pirates of Penzance:

In most respects, the bench and the bar might – with apologies to Gilbert and Sullivan – proclaim the court rules to be “the very model of a modern” set of civil guidelines. But, in one respect, the rules haven’t quite caught up to the technological revolution. So, feeling “plucky and adventury,” we granted leave to appeal to consider how a judge should assess a party’s request to appear at trial and present testimony by way of contemporaneous video transmission.

Pathri was a matrimonial action. Plaintiff and defendant, both of whom were originally from India, came to the United States in 2007. Plaintiff sued defendant in 2018 and moved back to India shortly thereafter. Defendant countersued for divorce. One week before the scheduled trial, plaintiff requested that he be allowed to appear and testify at trial via “contemporaneous video transmission” from India. He claimed he could not obtain a visa to enter the United States. Plaintiff opposed the request and the trial judge denied it, because it would “inhibit her ability to assess plaintiff’s testimony and credibility.” Plaintiff appealed.

The Appellate Division stayed the divorce trial and heard the appeal on an emergent basis. It vacated the trial court’s decision and remanded the matter back to the trial court with instructions on how to address the issue.

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New Jersey Court: Length of Opinion Not Indicative of Time or Effort Put Into Decision

by: Peter J. Gallagher (LinkedIn)

Procedural issues are usually pretty boring, but the issue in N.J. Div. of Child Prot. & Permanency v. A.L. is different. OK. It might still be boring to most, but it is interesting (or at least informative) if you have ever spent weeks researching and drafting an appeal only to have an appellate court reject your position with a short opinion.

The underlying case in A.L. is sad, but also irrelevant for our purposes. Defendant was found to have abused or neglected her child. She appealed that ruling to the Appellate Division, which, in a three-paragraph decision, recounted the underlying facts, concluded that defendant’s arguments lacked sufficient merit to warrant further explanation, and affirmed substantially for the reasons set forth in the trial judge’s “comprehensive and well-reasoned written opinion.”

Defendant moved for reconsideration, arguing that the court “eschewed the basic appellate obligation to review the record.” The only evidence defendant offered to support this argument was that the Appellate Division’s decision was only three paragraphs long. Needless to say, this argument did not prevail.

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Arbitration Award Vacated Because Arbitrator Hid Ownership Interest In Arbitration Service

by: Peter J. Gallagher (LinkedIn)

Arbitration awards are rarely overturned. The standard to vacate an award is high, and judicial review of awards is often unexacting. So when a court overturns an award, it is usually worth a closer look. And one recent decision from the U.S. Court of Appeals for the Ninth Circuit, Monster Energy Company v. City Beverages , LLC, is definitely worth a closer look. In Monster, the court vacated an arbitration award based on the “evident partiality” of the arbitrator. The main evidence of the arbitrator’s “evident partiality” was his ownership interest in JAMS, a fact he did not disclose before the arbitration. At the risk of revealing my own ignorance, I did not know that JAMS is owned, at least in part, by some of the neutrals who mediate/arbitrate cases through JAMS. But it is, and after Monster, those owners should disclose that relationship to the parties before beginning an arbitration.

The defendant in Monster was a beer distributor. In 2006, it signed an agreement with plaintiff to be the exclusive distributor of plaintiff’s energy drinks for 20 years in a specific geographical territory. But the agreement contained an out for plaintiff – it could terminate the agreement without cause if it paid a severance fee to defendant in an amount agreed upon by the parties in the agreement. Eight years after signing the agreement, plaintiff exercised this clause, paid the severance fee, and terminated the agreement. Defendant objected, arguing that the termination violated Washington’s Franchise Investment Protection Act.

The agreement between the parties contained an arbitration provision, requiring that any dispute be resolved by JAMS Orange County. After plaintiff served its arbitration demand, JAMS provided the parties with a list of seven neutrals. The parties chose their arbitrator from this list. The chosen arbitrator then provided a disclosure statement, which included the following: “I practice with JAMS. Each JAMS neutral, including me, has an economic interest in the overall financial success of JAMS.” The arbitrator also disclosed that he had arbitrated one matter for plaintiff in the past five years, and that he had ruled against plaintiff in that case, which involved a dispute between plaintiff and another distributor.

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