In Stabile v. Macy’s, Case No. 24-2979 (3rd Cir. March 4, 2026), a white gay Macy’s store manager was allegedly fired for trying to apprehend a shoplifter and subsequently filed a discrimination lawsuit. Plaintiff Stabile alleged that throughout his employment Macy’s maintained a corporate culture that was hostile to employees due to their race, sexual orientation or perceived sexual orientation. Macy’s moved to dismiss and compel arbitration based on certain plan documents.
Whether a valid arbitration agreement existed was unclear at the District Court level as Stabile did not remember ever receiving the mailings Macy’s sent to its nonunionized employees giving them the chance to opt out of mandatory arbitration of job disputes. After limited discovery, the US District Court for the District of New Jersey denied Macy’s motion.
On appeal, the Third Circuit reversed, and remanded with instructions to grant the motion. When analyzing a motion to compel arbitration, courts engage in “a two-step inquiry into (1) whether a valid agreement to arbitrate exists and (2) whether the particular dispute falls within the scope of that agreement.” The Federal Arbitration Act, which governs the parties’ agreement, instructs courts to refer to principles of applicable state law when determining the existence and scope of an agreement to arbitrate.
Here, the court found, that Macy’s Plan Document standing alone as its offer to Stabile to arbitrate all employment-related claims. The Plan Document constitutes a valid and enforceable agreement to arbitrate Stabile’s claims under New Jersey law because it meets the required contractual elements of mutual assent, offer, acceptance, and consideration. The plan document further provides that it applies to employees “who have voluntarily elected the benefits of arbitration by not returning an ‘Arbitration Election Form’ within the prescribed time limits.” Because Stabile failed to return either of the opt-out election forms within the time prescribed he was found to have accepted the agreement to arbitrate.