Is your arbitration program as bulletproof as you think? Macy's wasn't
A federal appeals court just handed employers a win: Macy's opt-out arbitration program is enforceable, even without an employee's signature.
On March 4, 2026, the United States Court of Appeals for the Third Circuit overturned a lower court ruling and ordered that a Macy's employee must take his workplace dispute to arbitration rather than to court – a decision that should put HR departments across the country on notice about the power, and the fragility, of how arbitration programs are designed and communicated.
The case began when Curtis Stabile, a Macy's employee, filed a lawsuit against the company and Felecia Green-Hall in federal court in New Jersey. Macy's moved to compel arbitration, arguing that Stabile had already agreed, years earlier, to resolve any work-related disputes through the company's internal arbitration program. The motion came after both parties had completed a period of discovery into whether a valid arbitration agreement existed. Stabile disagreed with Macy's position. The trial court sided with Stabile. Then the appeals court stepped in and changed everything.
The dispute came down to a single document – what Macy's called its Plan Document – and whether it was enough to bind an employee to arbitration. The Plan Document laid out the rules clearly: all employment-related disputes would be settled through binding arbitration. Employees who did not want to participate had to say so in writing, within a set deadline, by returning an opt-out form. Macy's mailed the Plan Document, along with that opt-out form and a pre-addressed, postage-paid return envelope, directly to Stabile's home.
Stabile said he did not remember receiving any of it. The court was not persuaded. Under a well-established legal principle, mail that is properly addressed, stamped, and posted is presumed to have been received. Stabile offered no evidence that something went wrong in the mailing process, and saying "I don't recall" was not enough to overcome that presumption. In fact, Macy's gave him a second chance to opt out roughly a year after the program launched. He did not take it then, either.
The trial court had earlier found the whole arrangement confusing, saying Macy's communications around the arbitration program were contradictory and unclear on whether arbitration was actually required. The appeals court disagreed, and firmly. The problem, it found, was that the trial court had mixed the Plan Document together with a collection of other company communications and then judged the whole package as one muddled offer. Read on its own, the Plan Document was plain, clear, and legally sound.
That distinction matters enormously for HR professionals. The appeals court's reasoning makes clear that the way a company packages and delivers its arbitration materials can be just as legally significant as what those materials actually say. Surrounding a clean, well-drafted arbitration agreement with supplementary communications that create confusion is not a neutral act – it can create the very ambiguity that unravels the whole program in court.
There is also a broader takeaway on acceptance. Stabile never returned either of the opt-out forms he was given the opportunity to submit. Under the structure Macy's had in place, that silence was enough. Employees who did not return the opt-out form within the deadline were considered to have accepted the program. The court found that arrangement perfectly valid, provided the employee was given adequate notice and a genuine opportunity to opt out – both of which Macy's had provided, twice.
For HR teams managing large workforces, the case reinforces something that employment lawyers have long advised: an arbitration program is only as strong as the process behind it. Clear language, proper delivery, documented opt-out windows, and a standalone agreement that can hold up on its own – without needing surrounding materials to explain it – are not administrative details. They are the difference between a program that holds and one that falls apart at the first legal challenge.
