934 F.3d 705
7th Cir.2019Background
- Gupta was hired by Morgan Stanley in 2013 and signed an employment agreement that included an arbitration clause and a merger clause.
- Morgan Stanley maintained a CARE employee dispute-resolution program on its intranet; CARE stated its terms could change after advance announcement.
- In September 2015 Morgan Stanley emailed all U.S. employees, including Gupta, a revised CARE arbitration agreement making arbitration mandatory for employment disputes unless an employee opted out by October 2, 2015. The email: linked the agreement and opt-out form, repeatedly warned that continued employment would be treated as consent, and promised no adverse consequences for opting out.
- Gupta did not opt out, continued working for two more years, then sued Morgan Stanley for USERRA discrimination, retaliation, and related defamation. Morgan Stanley moved to compel arbitration.
- The district court concluded Gupta received the September 2 email and that his silence plus continued employment amounted to acceptance of the arbitration agreement; it compelled arbitration. The Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an employee's silence (failure to opt out after notice) can form acceptance of an arbitration agreement | Gupta: silence/email delivery alone cannot create assent; he never saw or agreed to the offer | Morgan Stanley: clear emailed offer, 30‑day opt‑out, intranet reminders, and statement that continued employment = consent; silence is reasonable acceptance | Held: Silence plus receipt, repeated notice, opt‑out procedure, and continued employment reasonably constituted acceptance under Illinois objective‑theory contract law |
| Whether Gupta received sufficiently clear notice of the arbitration terms and consequences | Gupta: employer must give more than an email delivery to form contract (relies on Campbell) | Morgan Stanley: email explicitly referenced arbitration many times, provided links, opt‑out form, deadline, and warned continued employment would be acceptance | Held: Notice was sufficient—email repeatedly referenced arbitration, opt‑out process, and consequences, distinguishing Campbell |
| Whether the arbitration agreement covers Gupta’s claims (scope) | Gupta: (implicit) even if agreement existed, it may not cover these claims | Morgan Stanley: CARE expressly covers discrimination, retaliation, and related claims | Held: Agreement expressly covered those claims; they fall within arbitration scope |
| Whether the employment agreement barred unilateral modification absent a signed amendment or incorporated CARE so that CARE changes required Gupta’s signature | Gupta: employment agreement required written/signed consent for mandatory arbitration; course of dealing required initialing | Morgan Stanley: CARE and employment agreement are separate; merger clause does not incorporate CARE; CARE allowed unilateral changes after notice | Held: Employment agreement did not incorporate CARE; merger clause does not show incorporation; CARE’s modification provision governed and did not require signature |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA favors enforcement of written arbitration agreements)
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (FAA applies to employment contracts)
- Melena v. Anheuser-Busch, Inc., 847 N.E.2d 99 (Ill. 2006) (use objective contract doctrines to assess arbitration agreement formation)
- Tinder v. Pinkerton Sec., 305 F.3d 728 (7th Cir. 2002) (FAA does not require signed agreement for arbitration enforcement)
- Bauer v. Qwest Commc’ns Co., LLC, 743 F.3d 221 (7th Cir. 2014) (silence/conduct can manifest assent under Illinois law)