U.S. District Judge Madeline Cox Arleo / Photo by Carmen Natale

Ruling that taking no action on an employee arbitration clause is not the same as an affirmative opt-out, a federal judge in Newark has dismissed AT&T's suit seeking to compel arbitration of a discrimination claim lodged by an employee in the company's Union Township store.

AT&T maintained that its arbitration policy, which was emailed to employees, was binding unless the employee opted out of participation in the agreement. The employee in the present case, Francesca Jean-Baptiste, reviewed the arbitration policy but never opted out, according to the documents.

But the absence of action is not sufficient to signify acceptance of the policy, U.S. District Judge Madeline Cox Arleo said in dismissing AT&T's action on Monday.

Jean-Baptiste filed suit in state Superior Court in Essex County against AT&T Mobility in September 2017, claiming violations of the Law Against Discrimination based on her alleged failure to get a promotion after applying numerous times. The plaintiff, who is black and of Haitian descent, also claimed that a supervisor used a racial epithet around the office and made disparaging remarks about another African-American employee's hair.

In November 2017, AT&T filed its own action in U.S. District Court for the District of New Jersey, seeking to compel arbitration and requesting an injunction against litigation of the state court suit. In its motion to compel, the company contended that the arbitration agreement is enforceable under New Jersey law because Jean-Baptiste chose not to opt out of the agreement. Jean-Baptiste argued that she never affirmatively agreed to be bound by the arbitration agreement.

Arleo agreed with Jean-Baptiste, holding that her silence cannot be considered consent.

“AT&T argues 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,” Arleo said. But, according to Arleo, the 2003 New Jersey Supreme Court ruling Leodori v. Cigna ”compels the Court to reject this argument. Jean-Baptiste's silence is not explicit, affirmative agreement that unmistakably reflects her assent to the Arbitration Agreement.”

“Leodori makes clear that the burden of obtaining affirmative acceptance of waiver-of-rights provisions rests with employers. AT&T failed to obtain this explicit, affirmative acceptance, and the Arbitration Agreement is thus unenforceable against Jean-Baptiste,” Arleo said.

In Leodori, the court held that an arbitration provision cannot be enforced against an employee who does not sign or otherwise explicitly indicate his or her agreement to it. The issue before the court was whether an arbitration provision in an employee handbook was enforceable even though the employee failed to sign a form indicating he received the book. The employer argued that the employee's continued employment, and his knowledge of the arbitration policy, indicated assent to the agreement. 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.”

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,” Arleo said.

AT&T's lawyers, Kenneth Gage from Paul Hastings in New York, and Scott Silverman and Keith Rosenblatt at Littler Mendelson in Newark, did not respond to requests for comment.

An AT&T spokesman, Marty Richter, said “we are reviewing the court's decision and considering our options.”

The ruling means that Jean-Baptiste's case can proceed in state court, said her lawyer, Ronald Wronko of Florham Park.

“I think the decision is significant because it helps to ensure that workers will have to affirmatively choose whether to surrender their rights to proceed in court,” Wronko said.