Employee who didn’t opt out of post-hire arbitration agreement must arbitrate bias claims

By Marjorie Johnson, J.D.

A former Charter Communications employee failed to convince the Fifth Circuit to overturn a district court ruling compelling him to arbitrate his employment discrimination lawsuit and dismissing his claims, since the employer demonstrated that he both received notice of and accepted the modification to his employment contract requiring him to arbitrate employment-related disputes. The email advising him of the new dispute resolution program “conspicuously warned” that employees would be deemed to have accepted the mandatory arbitration program unless they opted out within 30 days and also provided directions on how to do so, yet he failed to opt out and continued working for the company for over a year until he was terminated (Gezu v. Charter Communications, November 2, 2021, Wilson, C.).

Compelled to arbitrate. The employee worked for Charter from 2007 until his termination in 2019. He claimed that during his employment, he was subjected to race and national origin discrimination, which the company knew about but failed to address. After he was fired for purportedly pretextual reasons, he filed this lawsuit asserting Title VII and Sec. 1981 claims.

Charter moved to compel arbitration and to dismiss his lawsuit, contending that his claim fell under a mandatory arbitration agreement that went into effect more than a year before the employee’s termination. A federal magistrate judge subsequently issued a recommendation in favor of granting the motion, which the district subsequently adopted.

The arbitration agreement. On October 6, 2017, Charter sent an email to all active, non-union employees announcing a new employment-based legal dispute resolution program it called “Solution Channel.” In particular, the email stated: “In the unlikely event of a dispute not resolved through the normal channels, Charter has launched Solution Channel, a program that allows you and the company to efficiently resolve covered employment-related legal disputes through binding arbitration.” The email continued: “By participating in Solution Channel, you and Charter both waive the right to initiate or participate in court litigation (including class, collective and representative actions) involving a covered claim and/or the right to a jury trial involving any such claim.”

The email also advised employees that “[u]nless you opt out of participating in Solution Channel within the next 30 days, you will be enrolled” and hyperlinked the term “Solution Channel” to the company’s intranet, where additional information on the program and optout instructions were available. The full arbitration agreement was also available on the intranet.

Notice and acceptance. On appeal, the employee argued that it was error to compel him to arbitrate his claims since he never read the October 6 email and therefore did not agree to participate in the mandatory arbitration program. Because he was an at-will employee who was not initially subject to the arbitration agreement, the question was whether there was a valid modification of the terms of his employment. To show that there was, Charter needed to demonstrate that he both received notice of the change and accepted it. The Fifth Circuit concluded that the company met this burden.

Despite the employee’s urging that he never agreed to arbitrate his claims against his employer, the record showed a valid modification to his employment contract. In its October 6 email, Charter provided him with notice of its new dispute resolution program aimed at “efficiently resolv[ing] covered employment-related legal disputes through binding arbitration.” The email stated that by participating, the recipient and the employer “both waive[d] the right to initiate or participate in court litigation . . . involving a covered claim” and that recipients “would be automatically enrolled” in the program “[u]nless you opt out … within the next 30 days.” This language, along with the referenced links to additional information about the program provided in the email, was sufficient to notify the employee unequivocally of the arbitration agreement.

Email and the “mailbox rule.” This valid notice was not frustrated by the employee’s assertion that he did not read the October 16 email. As noted by the district court, the mailbox rule comes into play when, like here, “there is a material question as to whether a document was actually received.” Under the rule, a sworn statement constitutes credible evidence of mailing and creates a presumption of receipt.

Here, Charter submitted declarations from two company officials—its VP of HR technology and its senior director of records management and eDiscovery—which averred that the company sent the October 16 email and that the employee both received and opened it. The district court did not err by considering these declarations and finding that they created the presumption of receipt under the mailbox rule, the Fifth Circuit concluded, noting that several other courts had enforced the very same program’s arbitration obligations in similar situations.

Failure to opt out. The employee also failed to refute evidence that he accepted the modification to his employment contract. The October 6 email not only “conspicuously warned” employees that they would be deemed to have accepted the arbitration program unless they opted out within 30 days, but it also provided directions on how to do so. Nonetheless, the employee did not opt out and continued working for the company for over a year until he was terminated.

Accordingly, because Charter demonstrated that the employee both received and accepted the modification to his employment contract, a valid agreement to arbitrate employment-related disputes existed between the parties. And because he did not assert that his claims were not covered by the agreement, the grant of its motion to compel arbitration was affirmed.