United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, UNITED STATES DISTRICT JUDGE.
Gupta is a former employee of Morgan Stanley Smith Barney,
LLC. He contends in this lawsuit that Morgan Stanley
unlawfully terminated and defamed him. Morgan Stanley has
moved to compel arbitration and stay the lawsuit, arguing
that Gupta agreed to arbitrate any disputes concerning his
is a reserve member of the United States Navy Judge Advocate
General Corps (JAG). Gupta contends that, in early 2017, the
Navy called him for at least six months of JAG duty, but his
supervisors at Morgan Stanley disliked this. He contends that
they "effectively terminated" him and tried to
recoup his unvested bonuses, which are held as promissory
notes by the second defendant named in the complaint. (The
Court will refer to the defendants collectively as Morgan
Stanley.) Under the Uniformed Services Employment and
Reemployment Rights Act (USERRA), 38 U.S.C. § 4311(a),
an employer may not terminate an employee for serving in one
of the uniformed services.
has sued Morgan Stanley for defamation (in relation to
comments made about his departure) and for violations of the
USERRA. Morgan Stanley argues Gupta is bound to arbitrate
these claims by an agreement that it contends was formed via
email. On September 2, 2015, a person using the address
Human-260.Resources@morganstanley.com sent an e-mail to the
address email@example.com, stating:
By continuing your employment with Morgan Stanley, you accept
. . . the terms of the Arbitration Agreement and the
arbitration provisions of the CARE Guidebook, unless you
elect to opt out of the CARE Arbitration Program by
completing, signing and submitting an effective CARE
Arbitration Program Opt-Out Form by October 2, 2015.
D.E. 7, Defs.' Ex. 2 at 1. Gupta never completed an
opt-out form, but he contends he never saw this e-mail and
would have opted out of arbitration if he had. Morgan Stanley
introduced by affidavit evidence that Gupta, using the same
e-mail address, received, and responded to, numerous e-mails
on the same day this e-mail was sent.
the Federal Arbitration Act, a court must compel arbitration
of a dispute that the parties agreed to arbitrate. 9 U.S.C.
§ 4. To prevail on a motion to compel arbitration, a
party must demonstrate that (1) the parties agreed to
arbitrate and (2) the dispute falls within the agreement.
Granite Rock Co. v. Int'l Bhd. of Teamsters, 561
U.S. 287, 297 (2010). Whether an enforceable arbitration
agreement was formed is determined by applying state contract
law. First Options of Chicago, Inc. v. Kaplan, 514
U.S. 938, 944 (1995).
argues that no arbitration agreement was formed, for two
reasons. First, he describes his failure to respond to the
September 2 e-mail as silence and argues that silence
constitutes assent only if "the offeror has stated or
given the offeree reason to understand that assent may be
manifested by silence or inaction." Restatement (Second)
of Contracts ¶ 69. Gupta contends that Morgan Stanley
never gave him such a reason. Gupta also contends that a
party must assent to the existence of a contract, not just
its terms, and he did not do so by his silence. Morgan
Stanley argues that Illinois law permits an employer to
reasonably conclude that an employee who does not opt out of
an agreement of the type at issue has assented to it.
Court agrees with Morgan Stanley. Illinois law permits an
offeror to construe silence as acceptance if circumstances
make it reasonable to do so. First Nat'l Bank of
Chicago v. Atl. Tele-Network Co., 946 F.2d 516, 519 (7th
Cir. 1991). In Winters v. AT&T Mobility Services,
LLC, No. 17 C 4053, 2017 WL 2936800 (C.D. Ill. July 10,
2017), the court found that an employer could reasonably
construe an employee's silence as consent when the
employer had clearly communicated the offer to the employee
and provided a means to opt out. Id. at *4-5.
See also Pohlman v. NCR Corp., No. 12 C 6731, 2013
WL 3776965, at *5 (N.D. Ill. July 17, 2013); Mecherle v.
Trugreen, Inc., No. 12 C 1617, 2012 WL 4097221, at *3-5
(N.D. Ill. Sept. 14, 2012); Ragan v. AT&T Corp.,
355 Ill.App.3d 1143, 1150, 824 N.E.2d 1183, 1188-89 (2005).
In the September 2 e-mail, Morgan Stanley described an
arbitration program, stated in plain terms that recipients
had a month to opt out, and provided a way to do so. D.E. 7,
Defs.' Ex. 2 at 1. Under these circumstances, Morgan
Stanley could reasonably construe an employee's silence
Gupta also presents a second argument against finding an
agreement was formed. He contends that he never got the
September 2 e-mail and offers a sworn declaration in support
of his contention. See D.E. 17, Pl.'s Ex. 1
¶ 6 (Gupta Decl.). Gupta concludes that this is
sufficient to require denial of Morgan Stanley's motion
to compel. The Court disagrees; Gupta's declaration does
not warrant denying arbitration outright. But, under the FAA,
Gupta may be entitled to a trial on whether the parties
formed an agreement requiring arbitration. 9 U.S.C. § 4.
The standard for whether a trial is required on the question
of the existence of an arbitration agreement is similar to
the standard on a motion for summary judgment; "the
party must identify specific evidence in the record
demonstrating a material factual dispute for trial."
Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th
motion for summary judgment, a genuine dispute requiring a
trial typically exists when a party directly denies receiving
a letter or e-mail. See In re Longardner & Assocs.,
Inc., 855 F.2d 455, 459 (7th Cir. 1988); Jones v.
Citibank, F.S.B., 844 F.Supp. 437, 442 (N.D. Ill. 1994);
Hall v. Kmart Corp., No. 04 C 6240, 2005 WL 6349832,
at *2 (N.D. Ill. Aug. 25, 2005). In Vaden v. IndyMac
Bank, F.S.B., No. 02 C 1150, 2003 WL 22136306 (N.D. Ill.
Sept. 16, 2003), the plaintiff sued a financial institution
in part for failing to comply with notice requirements
imposed by the Truth in Lending Act. Id. at *1. The
defendant moved for summary judgment, arguing that it sent a
letter to his residence that properly provided notice.
Id. But the plaintiff, in a deposition, denied ever
receiving the letter. Id. at *4. The Court concluded
that the denial created a factual dispute requiring a trial.
Id. at *5.
Stanley contends that courts "routinely" conclude
that the denial of receipt cannot defeat a motion for summary
judgment without further evidence. The only controlling case
on which Morgan Stanley relies, however, creates no such
general rule. In Tinder, the Seventh Circuit held
that the district court correctly compelled arbitration,
despite the fact that the plaintiff presented an affidavit
purportedly contesting receipt of a mailing. Tinder,
305 F.3d at 730. In the affidavit, however, the plaintiff
stated that she did not recall seeing the relevant
arbitration document-not that she never saw it. Id.
at 735-36. The Seventh Circuit found this was insufficient to
create an issue for trial. Id. at 736.
Tinder can be read alongside Longardner to
impose a straightforward rule: when the plaintiff submits an
affidavit stating that he does not recall receiving a ...