For more than a decade, California courts have wrestled with the challenge of how to resolve disputes over the authenticity of electronically signed arbitration agreements.
While the State Supreme Court has not yet offered conclusive guidance, decisions by the State’s various appellate courts offer insight into what factors a court is likely to consider.
As we have noted before, the holding in Epic Systems v. Lewis contributed to a proliferation of arbitration agreements with class and collective action waivers. Our prior analysis predicted certain datapoints one should consider capturing to support a petition to compel arbitration when disputing the authenticity of an electronically signed agreement. The holdings in four cases over the last 11 years confirm that success will require surviving a demanding and fact intensive inquiry, one that asks much of parties seeking to compel arbitration.
Ruiz v. Moss Bros. Auto Group, Inc., 232 Cal. App. 4th 836 (2014)
Well before remote work and remotely onboarding employees were common practice, California courts faced the question of how to determine the authenticity of electronically signed arbitration agreements. In Ruiz v. Moss Bros. Auto Group, Inc., the Court of Appeal addressed this issue in resolving a wage and hour class action dispute. Citing an electronically signed arbitration agreement from 2011, the defendant petitioned the trial court for an order compelling arbitration of the named plaintiff’s individual claims. In support of its petition, the defendant provided declarations by an employee that summarily described the company’s onboarding process and—based on that summary description—asserted that the named plaintiff electronically signed the agreement by virtue of his employment with the company. The evidence also included a copy of the executed agreement, which bore the named plaintiff’s alleged electronic signature and the date and time the document was signed. In response, the named plaintiff stated he did not recall signing an arbitration agreement, insisted that he would not have signed such an agreement, and argued that the defendant had not proven the authenticity of his electronic signature by a preponderance of the evidence. The trial court denied the petition, finding that the defendant failed to establish the existence of an enforceable agreement to arbitrate.
The Court of Appeal for the Fourth District affirmed the trial court’s decision, holding that the defendant-appellant failed to carry its burden of proving the authenticity of the electronic signature because the summary language and assertions in the employee’s declarations did not explain how the employee reached her conclusions or how she was able to infer that the named plaintiff was in fact the person who signed the agreement. While the declarations explained the steps the company took for employee onboarding—including the use of a unique login ID and password to complete the onboarding paperwork, which included the arbitration agreement—the Court held that this evidence was lacking because it did not explain with sufficient specificity how the employee could conclude the named plaintiff actually executed the agreement. The Court also rejected the defendant-appellant’s argument that it was not required to authenticate the named plaintiff’s signature, holding that precedent and statute both shifted the burden of authentication back onto the defendant when the named plaintiff claimed he did not recall signing the agreement and that he would not have signed it if presented to him.
In short, Ruiz introduced the concept that a summary statement of how an arbitration agreement might have been electronically signed in the normal course of an employee’s onboarding is insufficient. Instead, it called for a specific, detailed explanation of how one could conclude no one else but the signatory could have placed his or her electronic signature on the document.
Espejo v. Southern California Permanente Medical Group, 246 Cal. App. 4th 1047 (2016)
Two years after Ruiz, another appellate court weighed in. This time, however, the court reached the opposite conclusion and held in favor of the party moving to compel arbitration. In Espejo, the plaintiff sued his former employer for wrongful termination. As in Ruiz, the defendant petitioned for an order to compel arbitration on the basis of an electronically signed agreement. The defendant also submitted declarations that described in detail the company’s employee onboarding program, its process for reviewing electronically signed documents, and security features meant to ensure the authenticity of the electronic signature. Specifically, the declarations referenced the use of private and unique login credentials provided directly to the employee, system safeguards that required the employee to reset credentials with their own self-selected password before being able to complete the onboarding paperwork, and explained how only the employee could have inserted their name into the electronic signature fields. The plaintiff denied signing the arbitration agreement, and, despite the detailed declaration, the trial court denied the petition to compel arbitration in part because it declined to consider a supplemental declaration submitted by the defendant that contained the detailed information that explained how no one other than the employee could have caused the electronic signature.
On review, the appellate court outlined the same process and approach as used in Ruiz, but found its way to a different outcome by holding that the declarations in Espejo went further than the summary and conclusory statements offered by the declarant in Ruiz. The appellate court concluded that the defendant-appellant did meet its burden here and that it did not repeat the error the defendant in Ruiz committed. The appellate court further held that the trial court committed error by refusing to consider the defendant-appellant’s supplemental declaration, concluding that it was timely submitted and that the trial court’s refusal to consider the document was an abuse of discretion.
Post-Espejo Cases
Bannister v. Marinidence Opco, LLC, 64 Cal. App. 5th 541 (2021)
Whether it realized this or not, the court’s holding in Espejo signaled to future courts when an electronically signed arbitration agreement is sufficiently authenticated. This is demonstrated in Bannister, which came five years after Espejo and concerned an action for discrimination, retaliation, and other claims. Like in Espejo, the plaintiff in Bannister denied signing the arbitration agreement. In response, the defendant did not present evidence of any kind of unique or user-specific credentials or log in data. Instead, the record was mixed and suggested that a single employee input personnel data for as many as 20 employees, including data for the plaintiff, who may or may not have used the computer terminal to complete her onboarding paperwork. In the absence of a secure, user-specific login method, as well as the suggestion that another person input key data, the Bannister court concluded the defendant did not satisfy its burden of proving the authenticity of the electronic signature.
Garcia v. Stoneledge Furniture, LLC, 102 Cal. App. 5th 41 (2024)
More recently, the Court of Appeal for the First District seemingly endorsed the approach in Espejo and went further by outright suggesting that the proponent of an arbitration agreement must offer substantive assurances that no one other than the plaintiff could have signed the arbitration agreement in question. In Garcia, the plaintiff sued her former employer and other entities for sexual harassment. Citing an electronically signed arbitration agreement completed during Ms. Garcia’s onboarding, the defendants petitioned to compel arbitration. In support of their petition, the defendants relied on a declaration by a human resources information systems analyst, which stated that Ms. Garcia would have created a unique user ID and confidential password for her onboarding paperwork. The analyst’s declaration further averred that Ms. Garcia’s unique credentials would have served as her electronic signature on her new hire documentation, that she accessed the arbitration agreement through a dedicated link, and that her electronic signature on that document signaled her assent to the arbitration agreement. In other words, the evidence presented echoed that offered by the defendants in Espejo.
Ms. Garcia, however, disputed the authenticity of her signature on the arbitration agreement by pointing to discrepancies between the electronic signature there and other signature fields in her onboarding paperwork. She further noted that the arbitration agreement did not contain an indication that her unique credentials had been entered or used to complete that form, unlike the other documents she completed for her onboarding. Ms. Garcia also noted the absence of an IP address on the arbitration agreement, which stood in contrast to the other documents, all of which did have an IP address listed. Ms. Garcia also alleged the analyst’s declaration was insufficient because the analyst did not have personal knowledge of her completing the onboarding paperwork.
At the hearing on the petition to compel arbitration, the defendants argued that an evidentiary hearing was necessary to resolve the factual dispute, but the trial court denied this request and found in favor of Ms. Garcia, citing the absence of a date, time, or IP address on the executed arbitration agreement, as well as the fact that the analyst was not a percipient witness to Ms. Garcia’s alleged completion of the paperwork.
On review, the Court of Appeal affirmed the trial court’s decision. In reaching that conclusion, the Court deferred to the trial court’s findings of fact and noted that the analyst’s declaration merely explained how the signature could have gotten there rather than show that only Ms. Garcia could have placed the electronic signature on the arbitration agreement. In short, the Garcia court took a concept first articulated in Ruiz—the idea of confirming the electronic signature was the act of the plaintiff—and extended it further in two ways. It did so first by not rejecting the trial court’s suggestion that the analyst, who did not personally witness the act of Garcia signing the document, could not unilaterally prove the authenticity of the electronic signature. By not engaging with this idea, the appellate court may have inadvertently endorsed a standard where a percipient witness is always necessary to determine authenticity. The appellate court also went further than Ruiz by requiring that the defendant offer evidence that excluded the possibility that anyone other than the plaintiff could have been the source of the signature. In essence, the Court held that proving authenticity necessarily includes eliminating all possible or even imaginary doubt over the authenticity of the electronic signature. This is a staggering requirement given California law has long recognized that the concept of eliminating even imaginary or all possible doubts exceeds proof beyond a reasonable doubt—the highest burden in the American legal system,[1] suggesting that the proponent of an arbitration agreement must meet a burden even higher than the one that safeguards our most fundamental Constitutional rights.
The evolution from Ruiz to Garcia suggests an embrace of exacting requirements on parties seeking to enforce arbitration agreements. This new standard, however, raises two untested questions: 1.) Does the requirement of excluding all possible alternatives prejudice proponents of arbitration agreements by impermissibly subjecting them to a heightened evidentiary standard (i.e., one beyond a preponderance of the evidence), and 2.) Do these demanding standards work against the long held and recognized public policy that favors use of arbitration as a means of dispute resolution? Both are questions that could be raised and explored as the law further develops.
Takeaways
For the time being, parties seeking to ensure the enforceability of arbitration agreements should take the lessons from these four cases to heart and design their processes in a way that arms them with the facts necessary to convince a trial court that an electronic signature is authentic. Such strategies include:
- Developing or using secure platforms that can trace back directly to the intended recipient/signatory to an arbitration agreement;
- Requiring the electronic signatory to the arbitration agreement to create a unique username and password;
- Ensuring that no one else accessed the electronic signatory’s account;
- Recording the date, time, and IP address at the time the agreement is electronically signed;
- Requiring written consent from the electronic signatory that they consent to using an electronic signature;
- Using consistent formatting and eliminating any differences or inconsistencies in how an electronic signature appears across different forms or fields when presented together;
- Having another person present to witness the electronic signature; and
- Sending a confirmation email to the signatory and the originating party listing and providing copies of all electronically signed documents.
While these steps might be burdensome or challenging, the holdings in these cases demonstrate their significance should litigation arise.
ENDNOTES
[1] See CALCRIM No. 220, Judicial Council of California Criminal Jury Instructions (2024 edition).
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