California Mediation and Arbitration

Authentication: Failure To Authenticate Electronic Signing Means Arbitration Agreement Is Unenforceable

Shifting Burdens Of Proof.

        Isabel Garcia sued her employer and its sales manager, alleging sexual harassment. Defendants petitioned to compel arbitration, and carried their initial burden by producing an arbitration agreement. But Garcia pushed back, claiming she had not signed, putting the employer to the test of authenticating her electronic signature. The employer was not able to authenticate to the satisfaction of the trial judge or the Court of Appeal. Garcia v. Stoneledge Furniture LLC et al., A166785 (1/3  5/17/24) (Petrou, Fujisaki, Rodriguez).

        The employer relied on a declaration of a person who did not have personal knowledge that Garcia signed. Furthermore, the employer did not explain its security system to establish that only Garcia could have signed the document. Also, the employer used Taleo, described as a third-party electronic workforce management platform. However, "the arbitration agreement lacked the appearance of an electronically signed document as it contained no date, time, or IP address, nor any indication it was created within the Taleo system."

        The order denying defendants' petition to compel arbitration was affirmed.

        COMMENT: In the age of the internet, there are still some advantages to ink signatures on paper with a witness signature. Authenticating electronic signatures can be tricky. Here, it might have helped to have a date, time, or IP address. One wants a verification system that identifies the signer and the authenticity of the signature, and there are electronic tools such as DocuSign that can be effective. Indeed, perhaps Taleo would have provided the necessary authentication, but the opinion states that there was "no indication [the document] was created within the Taleo system."

Arbitration, Existence Of Agreement: CCA 2/7 Holds Employer Failed To Carry Burden Of Proof Agreement To Arbitrate Existed

After Employee Questioned The Agreement To Arbitrate, Burden Of Proof Shifted To Employer.

        Hope Gamboa sued Northeast Community Clinic for employment-related claims. The employer moved to arbitrate. The trial court denied the motion. Affirmed. No agreement to arbitrate existed. Gamboa v. Northeast Community Clinic, No. 394833 (2/7  11/30/21) (Ibarra, Perluss, Feuer).

        Why couldn't the employer prove an agreement to arbitrate existed? The employer provided a signed contract and a statement by the HR manager that the employee had signed the agreement. This shifted the burden of proof to the employee, who testified she didn't remember the agreement, and wouldn't have signed it if she had known what it was. This amounted to a denial of the existence of the agreement. Unfortunately for the employer, the declaration it provided did not provide foundation that the declarant had personal knowledge that the employee signed. 

Arbitration, Authentication, Standard Of Review, Employment: First District Div. 5 Agrees That Employer Failed To Authenticate Electronic Signature On Arbitration Agreement

Authentication Of Electronic Signatures Continues To Trip Up Employers.

        The trial court denied the employer's motion to compel arbitration, because the employee Bannister "presented evidence that she never saw the [arbitration] agreement during the  onboarding process and did not affix her  electronic signature to it," and the  Court of Appeal affirmed. Maureen Bannister v. Marinidence Opco, LLC, et al., A159815 (1/5  5/21/21) (Burns, Simons, Rodriguez).

        When an appeal from a denial of a  motion to arbitrate turns on undisputed facts, the Court of Appeal reviews the trial court's ruling for  substantial evidence. If the facts are undisputed, then the  review  of the  trial court's finding can be a  question of  law. Here, the court  agreed that  the outcome is  the same regardless of  the  standard applied. The trial court concluded that, given conflicting evidence, the employer failed to  prove by "a preponderance of the evidence" the existence of an arbitration agreement. And the Court of  Appeal defers to the trial court's determination of the credibility of witnesses and weight of the evidence.

        COMMENT: Civil Code section 1633.9, subdivision (a), governs the authentication of electronic signatures. It provides: "(a) An electronic record or electronic signature is attributable to a person if it was the act of the person.  The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable."

Arbitration, Authentication, Burden Of Proof: Defendants/Appellants Sufficiently Established Existence Of Agreement To Arbitrate By Authenticating Electronic Signature

Because Defendant Introduced Key Evidence In Supplemental Declaration, Rather Than In Moving Papers, Court Had To Address The Burden Of Proof.

     Yes, it happens.  Sometimes, a published case deserving a post escapes my net.  However, Espejo v. Southern California Permanente Medical Group, (2nd Dist. Div. 4 2016) (Collins, Epstein, Willhite), though filed back on April 22, is worth a post, because it systematically addresses how to authenticate an arbitration agreement with an electronic signature, and who has the burden of proof.  I have addressed authentication issues in posts on January 4, 2015 (Ruiz v. Moss Bros. Auto Group) and on December 31, 2014 (JBB Investment Partners). 

     In Espejo, the defendants moving to compel arbitration submitted key evidence in a supplemental declaration, rather than in their initial moving papers.  This put at issue whether the burden to authenticate fell upon them in their moving papers, or whether they could timely present evidence of authentication later after the plaintiff opposing arbitration questioned the authenticity of his electronic signature.  The Court of Appeal concluded that while the moving parties had the initial burden of establishing the existence of an arbitration agreement, that burden did not include authentication.  Therefore, their introduction of evidence to establish authenticity after plaintiff questioned authenticity was still timely.  The Court distinguished Toal v. Tardif, 178 Cal.App.4th 1208 (2009), in which the party seeking arbitration submitted a copy of the contract signed by the party’s attorney – those facts did not satisfy the initial burden of showing that an agreement existed between the parties to arbitrate.

     Espejo lays out a roadmap for authenticating an electronically signed document.  The employee applicant used a private and unique username and password provided to him orally and by phone.  After logging in, he had to re-set his password and choose his own password.  Without resetting his password, he could not proceed.  He then had to agree to complete employment documents using an electronic signature.  Then he was directed to hyperlinks to key documents, including the Dispute Resolution Procedure containing the arbitration provisions.  He was prompted on the signature page of the employment agreement to accept or decline it.  If he accepted, he was prompted to complete his name, which then populated the signature line.  The final employment agreement included the name, date, time, and the IP address where the applicant electronically signed the agreement.  The same procedure applied to the Dispute Resolution Procedure. 

     COMMENT:  The procedure for authentication here seems pretty solid, and therefore useful as a yardstick for evaluating whether an electronic authentication procedure measures up to authentication requirements – at least until the next case comes along.