Labor & Employment Law Daily Wrap Up, ARBITRATION—D. Haw.: Xerox employee's continued employment manifested assent to arbitration agreement, (Apr 14, 2025)

By Ronald Miller, J.D.

It did not matter that plaintiff did not sign the arbitration agreement—once he had actual notice and continued employment, that sufficed to establish assent.

Although an employee credibly testified that he had no recollection of emails introducing a new Mutual Arbitration Agreement (MAA), a federal district court in Hawaii found that he had actual notice of the agreement by June 5, 2023, when he received an email that clearly stated that his continued employment after May 15, 2023, constituted acceptance of the terms and conditions of the MAA. Consequently, the court granted Xerox's motion to compel the employee to arbitrate his claim that it owed him unpaid compensation. The employee cannot avoid being bound by the MAA simply by contending he did not subjectively become aware of the terms of Xerox's offer, despite having received unambiguous notice of what would constitute acceptance (Sexton v. Xerox Corp., No. 24-00188 MWJS-RT (D. Haw. Apr. 10, 2025)).

"People manager". The employee began working as a sales representative for Xerox in July 1980. He became president of Xerox's Hawaii business in 1989 and held that position until his separation from the company in March 2024. As President of Xerox in Hawaii, the employee was considered a "people manager." His role as a people manager included the responsibility to monitor the employees that he directly supervised for compliance with Xerox's training and other requirements.

In 2007, Xerox acquired a new company that became a subsidiary of Xerox. By 2019, the employee was working principally under the subsidiary, but he remained on Xerox's payroll and maintained a Xerox email address.

Until the middle of 2023, the employee's direct supervisor was based on the West Coast of the continental United States. The supervisor was in the practice of notifying the employee when his required trainings had not been completed. However, in the middle of 2023, the supervisor was transferred to the East Coast. Thereafter, the employee could not rely on his supervisor to flag uncompleted trainings for him.

Communications. As a global technology company, Xerox used email as its standard channel for communication. Xerox employees are expected to stay on top of their emails. Messages about training and other important information were communicated via email.

On April 14, 2023, Xerox's Chief Human Resources Officer sent an email to all "people managers" of U.S. non-union employees. The message explained that in the following week, Xerox would "introduce a new Mutual Arbitration Agreement (MAA) for all non-union employees based in the U.S.," and that the agreement would "require arbitration rather than litigation when legal disputes arise with current or former employees."

As a "people manager" at the time, the employee's email account received the April 14, 2023, message. However, records show that he did not open the email or click on any hyperlinked text within it. According to the employee, he was on a family trip when the email was sent.

But that was not the last email message the employee's email account received concerning the MAA. His account also received an email on April 19. That message again explained that Xerox was introducing the MAA for all non-union employees based in the U.S. The email advised its recipients that they were required to "read and acknowledge the terms of the MAA by May 15, 2023," and stated that "[t]he agreement requires arbitration of most legal disputes between Xerox and employees after this date." The email did not explicitly state that continuing employment at Xerox past May 15, 2023, would constitute acceptance of the MAA.

Continuing employment. By the time of the April 19, 2023, email, the employee had returned from his family trip. The court found that at that point, he did receive and review the message. However, the court determined that neither the emails nor the hyperlinks on which the employee clicked would have unambiguously explained to him that continuing his employment past May 15, 2023, would constitute acceptance of the MAA. The court additionally found that the employee did not learn that staying as a Xerox employee past May 15, 2023, constituted acceptance before June 5, 2023.

Notice. On May 8 and 12, 2023, the employee's inbox received automated emails notifying him that he had not yet completed the training on the MAA and that this training was "due to be completed" by May 15, 2023. He also received emails notifying him that his MAA training was overdue.

However, on June 5, 2023, the employee received an email that clearly stated that his continued employment after May 15, 2023, constituted acceptance of the terms and conditions of the MAA. Thereafter, he began his training after receiving the email. The court further concluded that he actually saw a training slide informing him that his continuing employment constituted acceptance of the MAA.

After receiving actual notice, the employee chose to continue his employment with Xerox until separating from the company in March 2024. Because there was a genuine dispute of material fact over the "making of the arbitration agreement," the court conducted a bench trial on that factual issue.

Hawaii state law governed the question of whether a valid arbitration agreement existed between the employee and Xerox. Under Hawaii state law, a valid contract generally requires an offer, acceptance, and consideration. Here, there undisputedly was an offer: Xerox offered its at-will employees continued employment past May 15, 2023; this continued employment was offered in exchange for the employees' acceptance of the MAA; and Xerox agreed to be bound by the MAA's terms. The only disputed issue was whether the employee accepted the arbitration agreement.

Mutual assent. Here, the court determined that Xerox met its burden of showing an unambiguous manifestation of assent.

The court noted that an offeree, like the employee, cannot reasonably be objectively viewed as having accepted an offer if they received no notice of it. Thus, the key question is whether the employee received adequate notice of Xerox's offer of continued employment past May 15, 2023, in exchange for acceptance of the MAA.

To determine whether a party has assented to a contract, a factfinder need not determine what a party subjectively knew or understood. The only question is whether that party's words or acts, viewed objectively under a standard of reasonableness, manifests an objective intention to agree.

Because mutual assent hinged on an objective inquiry into the ordinary meaning of a person's behavior, rather than a subjective inquiry into a person's actual knowledge or thoughts, the employee could not avoid being bound by the MAA simply by contending he did not subjectively become aware of the terms of Xerox's offer, despite having received unambiguous notice of what would constitute acceptance.

Inquiry notice. While the parties acknowledge that Hawaii courts have not squarely resolved whether inquiry notice is sufficient under Hawaii state law, given that Hawaii law applies an objective standard to determine whether mutual assent exists, the court predicted that the Hawaii Supreme Court would conclude that if (1) an employer has provided clear and conspicuous notice that continued employment would constitute acceptance of a contract and (2) a reasonably prudent recipient of that notice clearly would have actually learned of it, then an employee's decision to continue their employment is properly viewed, under an objective standard, as manifesting an objective intention to agree.

Thus, the court concluded that Xerox provided sufficient inquiry notice to the employee that his continued employment past May 15, 2023, would constitute acceptance of the MAA.

Actual notice. In any event, the court also found that the employee had actually received and reviewed the June 5, 2023, email and training slide, which explicitly informed him that continuing as an employee at Xerox past May 15, 2023, would constitute acceptance of the MAA. It did not matter that the employee did not sign the MAA—once he had actual notice that continued employment at Xerox was conditioned on acceptance of the MAA, his decision to continue his employment sufficed to establish assent.

The case is No. 24-00188 MWJS-RT.

Judge: Smith, M.

Attorneys: Carl H. Osaki (Carl H. Osaki, Attorney at Law) for Glenn Sexton. Rachel E. Linzy (The Kullman Firm) for Xerox Corp.

Companies: Xerox Corp.

Cases: Arbitration ContractClaims StateLawClaims HawaiiNews