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NJ Raises the Bar For Enforcement of Arbitration Provisions

Arbitration provisions are routinely enforced by courts, however, a recent ruling by the US District Court of New Jersey just made enforcement a little harder.

In Schmell v. Morgan Stanley & Co. Inc., No. CV 17-13080, 2018 WL 1128502 (D.N.J. Mar. 1, 2018) a former employee alleged he was not bound by Morgan Stanley’s mandatory arbitration agreement because he had never actually agreed to it. Morgan Stanley had sent an email to its employees alerting them to the fact they would be required to arbitrate all claims and indicated in the email that the employee’s continued employment at Morgan Stanley would be considered consent to mandatory arbitration.  Mr. Schmell argued he’d never received the email and as such, he had never agreed to mandatory arbitration.  The District Court agreed finding that because Morgan Stanley could not show Mr. Schmell had received, reviewed or agreed to the provision, the mandatory arbitration agreement was not enforceable.

While these sorts of electronic notice have become common place, moving forward, any employer who wishes to have their employees be bound by an arbitration agreement sent electronically must take additional steps to confirm that its employees viewed the notice, reviewed it and agreed to be bound by it either by executing the agreement or failing to opt out in the time provided. 

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About this Author

Jay S. Becker, Giordano Law Firm, Labor Employment Attorney
Shareholder

Mr. Becker, Chair of the Labor and Employment Practice Area, devotes his practice to labor relations and employment law and litigation on behalf of management. His experience includes conducting trials, hearings, arbitration and mediation sessions; responding to state and federal administrative agency charges; collective bargaining; drafting employment-related corporate documents such as restrictive covenants, employee handbooks, employment agreements, various stock and compensation plans, and separation/severance agreements. He counsels employers on all employee relations issues including...

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Jeri L. Abrams, Giordano Halleran,  Employment Documentation Lawyer, Workplace Litigation Attorney
Shareholder

Jeri focuses primarily on employment law, with an emphasis on drafting and negotiating complex employment-related documentation, such as executive employment, consulting, restrictive covenant, commission, bonus, retention, change-in-control and severance agreements. Jeri counsels employers on a broad range of employment matters, including hiring, disciplining and terminating employees, family and medical leaves, disability leaves and accommodations, anti-discrimination and anti-retaliation laws, wage and hour compliance, and reductions in workforce. She works closely with management, in-house counsel, and human resources personnel in the development and implementation of employment policies and handbooks that comply with applicable law and are consistent with the employer's unique practices and organizational culture. Jeri also advises clients on the employment aspects of M&A deals and other corporate transactions.

Representative Matters 

  • Fortune 300 Company: Represented client in 4 separate recent acquisitions; drafted and negotiated complex executive employment agreements between the client and the founder of the acquired businesses, each of whom were integral to the value of the business being purchased.
  • Publicly-held Pharmaceutical Company: Represented client during a major workforce reorganization, which included 2 plant closures, staff relocations and a series of 9 reductions in workforce; worked closely with the client's legal and human resources departments to ensure the orderly separation of more than 600 employees and to minimize associated legal risks and business disruption; provided advice related to federal and state WARN act issues, wage and hour laws, OWBPA requirements and severance arrangements; prepared and negotiated severance agreements.
  • Publicly-held REIT: Advised client on a wide-array of unique employment matters in the context of the "spin-off" of one of its divisions.
  • Private Equity Firm: Represented large private equity client in connection with a high risk and sensitive termination of the CEO of one of its portfolio companies.
  • Private Equity Firm: Represented private equity firm in the drafting and negotiation of employment agreements for the senior executives of a large portfolio company.
732-741-3900
Ari G. Burd, Giordano Law Firm, Labor Employment Attorney
Associate

Mr. Burd practices in both the Labor and Employment Law Practice Area and the Health Care Practice Area. In the Labor and Employment Practice Area, Mr. Burd devotes his time to litigation and counseling employers with regard to traditional employment and labor related issues. Mr. Burd has extensive experience in both the state and federal courts in areas including retaliation, wrongful termination, wage and hour, sexual harassment and race, age, gender and disability discrimination. Mr. Burd also has considerable experience in assisting negotiating and drafting employment related...

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