After Pfizer Ruling, Here Are Keys to Using Electronic Media to Present Binding Arbitration Policies

By Charles Toutant

The "Skuse" appeals court said the manner of presenting the arbitration clause was too "oblique" and failed to provide the requisite assent of employees.

In the wake of an Appellate Division ruling invalidating Pfizer Inc.’s electronic distribution of a mandatory arbitration agreement to its workers, companies using computers and email to obtain employees’ approval of such policies should be candid about the arbitration agreement and its potential waiver of the employee’s statutory rights.

In Skuse v. Pfizer, the appeals court refused to enforce a mandatory arbitration agreement that the drugmaker emailed to employees for viewing during online training. In a Jan. 16 ruling, the appeals court said the manner of presenting the arbitration clause was too “oblique” and failed to provide the requisite assent of employees.

By asking them to “acknowledge” the mandatory arbitration policy by clicking on a box, rather than signing their names, the company failed to obtain “the valid personal agreement of an employee to give up his or her statutorily protected rights to litigate claims against an employer in a public forum and seek a trial by jury,” the appeals court said.

The appeals court in Skuse overturned a ruling that said the arbitration agreement was enforceable. The suit was brought by Amy Skuse, a former flight attendant on Pfizer’s corporate aircraft who said she refused to comply with the company’s vaccination policy for religious reasons. Pfizer has asked the state Supreme Court to hear the case.

But even after the Skuse decision, employers needn’t rule out using computers and email to communicate with employees about an arbitration clause and to obtain their agreement to the policy, said Bruce Greenberg, a commercial litigator at Lite DePalma Greenberg in Newark.

“My impression is, employers who present candidly and directly what it is they’re looking for employees to agree to, won’t necessarily be precluded from doing what they want to do,” Greenberg said. Greenberg noted that Judge Jack Sabatino, who wrote the Skuse decision, “said there was nothing necessarily wrong with using an email to do what Pfizer was looking to do. He emphasized that it was important to do it in a direct and straightforward fashion.”

Pfizer’s manner of presenting the arbitration agreement failed to recognize the serious nature of the issue, according to the panel of judges. The court said that “obtaining an employee’s binding waiver of his or her legal rights is not a training exercise. It is not on a 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.”

A critical flaw in Skuse was Pfizer’s use of a click box on its computer screen asking employees to “acknowledge” the policy. While such click boxes are an acceptable means of obtaining mutual assent, Pfizer should have done more, like including a conspicuous disclosure about the employee’s waiver of rights, and a place for employees to initial key provisions of the agreement, said Benjamin Widener, chairman of the employment law group at Stark & Stark in Lawrenceville.

Another key flaw in Pfizer’s approach was the way the arbitration agreement was presented to employees as a “training policy,” Widener said. In so doing, the court noted that Pfizer diluted the legal significance of the situation.

When implemented and communicated appropriately, arbitration agreements are perfectly enforceable, according to Widener. He cited Singh v. Uber, a 2017 case from the District of New Jersey that found a valid arbitration agreement existed between parties in an employment dispute.

The Singh case “presents a road map, so to speak, of rules and guidelines employers should follow if they intend to seek an employee’s agreement to arbitration by way of a web-based platform or electronic application,” Widener said. “When read along with Skuse, Singh provides that an arbitration agreement and waiver of rights is clear on its face, and not called something else.”

In addition, if there is a hyperlink to a complete written agreement, then the material terms of the agreement should be conspicuously displayed immediately above the electronic signature or box to click manifesting acceptance, Widener said.

“The employee should know this is an arbitration agreement, a very serious document,” Widener said. “The employee should understand that they are being requested to give up these rights and agree to this arbitration agreement.”

But Mitchell Schley, a plaintiff-side employment lawyer in East Brunswick, takes a more cautious approach. He says the message lawyers should take from Skuse is that email is not a valid means to transmit an arbitration clause to employees.