Gupta v. Morgan Stanley Smith Barney, L.L.C.

Rajesh Gupta (plaintiff) worked as a financial advisor for Morgan Stanley Smith Barney, L.L.C. (Morgan Stanley) (defendant). Gupta sued Morgan Stanley for discrimination, retaliation, and defamation, alleging that Morgan Stanley had forced Gupta to resign when he was facing imminent military leave. Morgan Stanley moved to compel arbitration, contending that Gupta had agreed to arbitrate all employment-related claims after failing to opt out of Morgan Stanley’s amended dispute-resolution policies, which included a mandatory-arbitration agreement that was not in effect when Gupta was initially hired. Morgan Stanley’s dispute-resolution policies explicitly stated that the terms were subject to change after advance notice. Gupta worked for Morgan Stanley for four years, and his employment included regular email communications. Morgan Stanley emailed the arbitration policy changes to Gupta personally, gave him 30 days to review the new arbitration agreement, and circulated an opt-out form that conspicuously displayed the deadline to opt out. Morgan Stanley posted a continual company intranet reminder and repeatedly pointed out that silence would be construed as acceptance. The new arbitration agreement was mentioned eight times in the email notice, and the notice clearly explained that arbitration would become the exclusive forum for covered claims, that Gupta was free to opt out without adverse consequence, and that failure to opt out coupled with continued employment would be construed as acceptance. The district court found that Gupta’s receipt of Morgan Stanley’s email notification of the mandatory-arbitration requirement, coupled with Gupta’s continued employment and failure to submit the provided opt-out form, gave rise to an agreement to arbitrate. Accordingly, the court granted Morgan Stanley’s motion to compel arbitration and stay the litigation. Gupta appealed and did not dispute that he received the email notification or that it constituted an offer to arbitrate; rather, he argued that his silence and inaction could not constitute acceptance of the offer.