Federal Judge Refuses to Enforce AT&T’s Arbitration Policy Against Former Employee

A federal judge has denied an employer’s motion to compel arbitration in a gender and race discrimination case.  In AT&T Mobility Services, LLC v. Francesca Jean-Baptiste, No. 17-11962 (July 13, 2018), a woman, Jean-Baptiste, worked as an Assistant Store Manager at an AT&T store in New Jersey.  In March 2016, AT&T sent Jean-Baptiste an email notice regarding the company’s binding arbitration policy.  The email advised Jean-Baptiste that the arbitration policy was optional and provided the worker with an opt-out procedure.  The employer’s email also instructed Jean-Baptiste to review the arbitration policy online and click on a “Review Completed” button whether or not she chose to opt-out. After AT&T sent Jean-Baptiste two additional emails regarding the arbitration policy, she accessed the document and clicked on the “Review Completed” button without affirmatively opting out.

After the arbitration policy purportedly took effect, Jean-Baptiste filed a gender and race discrimination lawsuit against AT&T in a New Jersey State court.  About three months later, AT&T filed suit in the United States District Court for the District of New Jersey seeking to compel arbitration and to stay the State Court case.  In response, Jean-Baptiste filed a cross-motion to dismiss.  According to Jean-Baptiste, “she never affirmatively agreed to be bound by the Arbitration Agreement,” and her “mere silence cannot be considered consent.”

In its written opinion, the New Jersey federal court first stated, “AT&T’s motion to compel arbitration and Jean-Baptiste’s motion to dismiss both turn on whether the Arbitration Agreement is enforceable against Jean-Baptiste.”  Next, the federal court looked to New Jersey contract law in an effort to determine whether the arbitration policy was enforceable:

The Supreme Court of New Jersey’s analysis in Leodori v. CIGNA Corp. is instructive. 175 N.J. 293 (2003). There, the Supreme Court considered whether an arbitration provision contained in an employee handbook was enforceable, even though the employee had failed to sign the “Employee Handbook Receipt and Agreement” form. Id. at 297-98. The defendants argued that the plaintiff’s receipt of the handbook, together with the plaintiff’s continued employment and knowledge of the arbitration policy “based on . . . numerous documents” received by the plaintiff, was sufficient to demonstrate the plaintiff’s assent to the waiver of rights. Id. at 303, 306. The Supreme Court disagreed, holding that such a waiver was unenforceable “unless we find some other unmistakable indication that the employee affirmatively had agreed to arbitrate his claims.” Id. at 307. Thus, Leodori established that “an arbitration provision cannot be enforced against an employee who does not sign or otherwise explicitly indicate his or her agreement to it.” Id. at 306.

After that, the court rejected AT&T’s claim “that Jean-Baptiste’s failure to follow AT&T’s opt out procedure – her lack of action – signifies she intended to waive her rights and be bound by the Arbitration Agreement” based on Leodori.

The federal court also dismissed AT&T’s argument that Jean-Baptiste’s “continued employment was deemed an affirmative indication of an employee’s assent to an arbitration program.”  According to the court:

Here, AT&T did not condition Jean-Baptiste’s employment on her participation in its arbitration program, nor did it say that by continuing her employment she would be signifying her acceptance of the Arbitration Agreement. To the contrary, AT&T specifically told Jean-Baptiste that the decision was “entirely up to [her]” and that there would be “no adverse consequences” if she did not wish to participate in the program. Compl. ¶ 10. Accordingly, Jean-Baptiste’s decision to continue her employment with AT&T simply had nothing to do with her assent to the optional program.

If AT&T wished to make the Arbitration Agreement a condition of Jean-Baptiste’s continued employment, or if it wished to obtain a signature or a simple click that stated “I agree” or “I accept,” it was free to do so. Instead, AT&T chose to rely on an absence of action from its employees to signify acceptance of the Arbitration Agreement. Leodori makes clear that the burden of obtaining affirmative acceptance of waiver-of-rights provisions rests with employers. See Leodori, 175 N.J. at 307 (“[W]ith minimal effort, employers can revise the language to include an indication that the recipient has received and agreed to an arbitration policy.”). AT&T failed to obtain this explicit, affirmative acceptance, and the Arbitration Agreement is thus unenforceable against Jean-Baptiste.

Finally, the United States District Court for the District of New Jersey denied AT&T’s motion to compel the dispute to arbitration and granted Jean-Baptiste’s motion to dismiss the case.

Photo credit: ECohen on Foter.com / CC BY-SA