Court Compels Arbitration of Lawsuit Filed by Employees Discharged After Discovery of Personal Text Messages About a Coworker on a Company-Issued iPad

A recent decision from the District of New Jersey granting a motion to compel arbitration not only reinforces the strong federal policy in favor of arbitration, but also highlights issues pertaining to company-issued devices and employees’ personal use of these devices.

While employed by Anheuser-Busch, Victor Nascimento received a company-issued iPad. Nascimento and other employees exchanged text messages about a coworker over their personal cell phones outside of the work day, but the messages were received on Nascimento’s company-issued iPad because the iTunes account on his iPad was linked to his personal cell phone. The company-issued iPad was later reassigned to the coworker who was the subject of the text messages, and that person discovered the text messages on the device and inferred that they were about him. Following an investigation by Anheuser-Busch, Nascimento and several other employees were fired. The terminated employees later sued Anheuser-Busch, alleging violations of the Law Against Discrimination.

Anheuser-Busch filed a motion to compel arbitration. The relevant documents constituting the arbitration agreement were: (1) the employment application, which stated, “If hired … I agree that work-related disputes between the Company and me will be subject to final and binding arbitration under the Company’s Dispute Resolution Program [(“DRP”)]; (2) the offer letter, which provided, “Anheuser-Busch uses a … DRP for all employment related disputes, the last step of which is final and binding arbitration. The DRP will be a term and condition of your employment and your exclusive remedy for any employment claims you have. By accepting employment with Anheuser-Busch Sales of New Jersey, you agree to submit all claims to the DRP”; and (3) the DRP, which explained, “By continuing your employment with Anheuser-Busch Companies, Inc. or any of its subsidiary companies (“Company”), you and the Company are agreeing as a condition of your employment to submit all covered claims to the [DRP], to waive all rights to a trial before a jury on such claims, and to accept an arbitrator’s decision as the final, binding and exclusive determination of all claims.”

Notwithstanding recent decisions from New Jersey state courts nullifying arbitration agreements in the consumer and employment contexts for failure to adequately explain that the consumer or employee was giving up their right to a jury trial, the District Court granted Anheuser-Busch’s motion, emphasizing the strong federal policy in favor of arbitration. The Court rejected Plaintiffs’ assertions that there was not a valid arbitration agreement between the parties:

First, the Court disregarded Plaintiffs’ claim that the employment agreement and offer letter did not state that the employee would give up the right to a jury trial, therefore, there was no arbitration agreement. The Court reasoned that the DRP clearly stated that the waived their right to a jury trial by continuing their employment with Anheuser-Busch. The DRP also explained the procedural differences between arbitrations and judicial proceedings.

Second, the Court rejected Plaintiffs’ assertion that the arbitration agreement was “illusory” because the DRP gave Anheuser-Busch the exclusive right to modify or continue the DRP. The Court explained that this exclusive right applied only to future disputes, not existing disputes subject to the DRP.

Third, the Court disregarded Plaintiffs’ contention that the arbitration agreement was unconscionable because it limited the number of depositions and interrogatories. The Court stated that the discovery limitations were reasonable because they did not deprive Plaintiffs of a fair opportunity to present their claims, and the arbitrator was permitted to allow additional discovery upon a showing of good cause.

Fourth, the Court rejected Plaintiffs’ other assertion of unconscionability due to the DRP’s requirement that the award be kept confidential. The Court clarified that the DRP only required that the arbitration award not be “published,” which is not synonymous with “confidential.”

Overall, the Court’s opinion is a clear-cut example of a federal district court enforcing a valid arbitration agreement. The underlying facts, however, draw attention to privacy issues for employers providing company-issued devices, and employees who use such devices. As previously addressed in another Gibbons blog, employers must remember to caution employees that there is no expectation of privacy on company-issued devices, and that any information on a company-issued device is considered company property. Companies should take care to provide adequate training and issue appropriate written policies, including those that include a valid arbitration agreement!