Macy’s ‘offer’ to decline ‘benefits of arbitration’ was no offer; employee’s silence was no acceptance
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Wednesday, July 19, 2017

Macy’s ‘offer’ to decline ‘benefits of arbitration’ was no offer; employee’s silence was no acceptance

By Lisa Milam-Perez, J.D.

A Macy’s employee who claimed he was harassed and ultimately discharged due to his learning disability can’t be forced to arbitrate his ADA suit against the retailer, a federal district court in New York held. Macy’s contended that the employee had agreed to arbitrate employment-related disputes because he did not affirmatively decline participation in its dispute resolution program. But silence was not acceptance, the court held, particularly given the muddied language of the election form by which employees could choose to opt out. Macy’s had muddied the waters by suggesting that if the employee chose to opt out, he would be giving up the “benefit” of arbitration—rather than preserving the right to his day in court. The court denied Macy’s motion to compel arbitration, declining to follow an unpublished Second Circuit decision addressing an employee’s silence upon receipt of the identical form at issue here (Weiss v. Macy’s Retail Holdings Inc, aka Macy’s Inc., July 14, 2017, Hellerstein, A.).

“The Decision is Yours.” The long-term Macy’s employee had worked at its Yonkers, New York, store since 1997. In 2003, the company implemented a dispute resolution program mandating binding arbitration as the final step in a four-stage process. As part of the program rollout, the company held information meetings at all of its stores, showed an informational video, explained the “benefits of arbitration,” and distributed a letter from the CEO and a brochure explaining the details of the program, including its binding arbitration provision.

But you must decline. Macy’s officials “expressly conveyed” that employees would need to affirmatively opt out of the program if they did not wish to arbitrate. A section in the brochure, entitled “The Decision is Yours,” stated that if “you decide you would like to be excluded from participating in and receiving the benefits of Step 4 [arbitration], we will ask you to tell us in writing by completing a form that will be mailed to all employees’ homes this Fall.” Arbitration was not mandatory—and nothing in the brochure or statements made by Macy’s implied that agreeing to arbitrate work-related disputes was a condition of employment. The employee never returned the election form to decline participation in the program. Because he did not affirmatively “decline the benefits of arbitration,” he agreed to arbitrate, Macy’s argued.

Rebuttable presumption, but … The parties disputed whether the employee even received the mailing. (For that matter, the employee insisted he never attended an informational meeting, watched a video, or received any materials explaining the arbitration component of the program. Had he received it, he would have opted out, he claimed.) Macy’s enjoyed a rebuttable presumption that the employee received the documents sent to his home address, the court said. Whether the employee rebutted that presumption was irrelevant, though. Even if he received the form, the parties did not contractually agree to arbitrate as a matter of law, as the essential contract elements of offer and acceptance simply were not established here.

Obfuscation muddies “offer.” The election form was “a remarkably counterintuitive, ambiguous, and misleading document,” the court observed, and thus could not serve as the basis for a binding contract to arbitrate. To opt out of arbitration, the recipient is asked to “agree that I am waiving the ability to participate in Step 4″ of the dispute resolution program, “which Macy’s benignly describes throughout the document as the ‘benefits of arbitration.’” This language irked the court.

“Generally speaking, one does not typically seek to waive a benefit, and the concept of waiving a benefit is certainly not synonymous with the concept of declining an offer to enter into a contract in order to maintain the status quo,” the court wrote. The form “creates the false impression that by signing the document, the recipient employee would be giving up a pre-existing right to be ‘covered by the benefits of arbitration,’” when in fact, by not signing the election form, he would instead be ceding his preexisting right to litigate. As such, the form “obfuscates the fact that by doing nothing, the employee is giving up that right.” Therefore, the form was not an offer.

No acceptance. Moreover, silence upon receiving the form did not operate as acceptance. Under New York contract law, “an offeror has no power to transform an offeree’s silence into acceptance when the offeree does not intend to accept the offer,” the court noted, citing precedent. None of the exceptions to this general principle applied here. For example, the “course of conduct” exception was inapplicable because there were no previous dealings between the parties in which the employee had “tacitly and repeatedly” accepted an offer to arbitrate.

A better argument might be made that the third exception applied: Silence might equal acceptance if the offeror has, through an explicit statement, given the offeree reason to understand that silence or inaction would manifest assent. Still, without any showing of deception or dishonesty on the employee’s part, this exception also did not apply. Here, the court cited the Restatement (Second) of Contracts: the “mere fact that an offeror states that silence will constitute acceptance does not deprive the offeree of his privilege to remain silent without accepting.” There was nothing in this case to suggest that, through his silence and inaction, the employee intended to give a false impression that he had accepted the offer to opt out of arbitration.

Macy’s pointed to Manigault v. Macy’s E., LLC, a 2009 Second Circuit decision that involved the same election form at issue here. The appeals court held a silent employee did in fact agree to arbitrate employment-related disputes. But that unpublished summary order was not binding, and it was distinguishable, at any rate, because the employee in that case was required to arbitrate as a condition of employment—so continuing to work constituted acceptance. That was not the case here, as Macy’s had expressly told employees: “The Decision is Yours.” Macy’s motion to compel arbitration was denied.

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