Galanova v. Morgan Stanley Services Group Inc.

Background

Morgan Stanley Services Group Inc. and Magaly Denis-Roman moved to compel Irina Galanova to arbitrate claims alleging discrimination, retaliation, and wrongful termination under 42 U.S.C. § 1981 and the Americans with Disabilities Act. Galanova did not file a response by the extended deadline, and the court decided the motion on the existing filings.

Galanova worked for Morgan Stanley from November 1, 1999, through January 12, 2022. Morgan Stanley’s employee dispute-resolution program, called Convenient Access to Resolutions for Employees, or CARE, initially allowed registered employees to pursue statutory employment-discrimination claims in court or through arbitration. In 2015, Morgan Stanley announced that arbitration would become mandatory for covered claims beginning June 19, 2015. The notice stated that continued employment would constitute acceptance unless the employee submitted an effective opt-out form by that date.

The defendants’ evidence showed that Galanova received the notice at her individualized work email address, was not on leave when it was sent, and did not receive an automated out-of-office response. She did not opt out and continued working for Morgan Stanley for more than six years after receiving the notice.

Court’s analysis

The court applied New York contract-formation principles. Under those principles, a valid contract requires an offer, acceptance, consideration, mutual assent, and an intent to be bound. Assent can be shown through conduct, including an employee’s continued work after receiving notice of changed employment terms.

The court concluded that Galanova entered into a valid and enforceable arbitration agreement. It found that the 2015 email adequately explained the essential terms of the expanded CARE program, provided an opportunity to opt out, and gave employees ways to ask questions. Because Galanova did not opt out and continued working, her conduct showed assent to the modified program.

The court next considered whether Galanova’s claims fell within the agreement’s scope. The agreement covered claims arising out of or relating to employment or termination, including statutory-discrimination claims and other federal, state, or local legal claims. The court held that Galanova’s § 1981 and Americans with Disabilities Act claims were covered by that language.

Disposition

Judge John G. Koeltl granted the defendants’ motion to compel arbitration. The court stayed the case pending completion of the arbitration and directed the Clerk to close the motion and the case on the active docket, subject to reopening within 30 days after the arbitration concludes.