Tuesday, June 28, 2022

Federal appeals court rejects reliability of electronic signatures on employment agreements

During a webinar I recently conducted on employee handbooks, someone asked me a question about the best practice between wet signatures vs. e-signatures on handbook receipts. I answered that either was fine, but at least with the digital footprint of an e-signature you avoid the disingenuous "that's not my signature," or the "I don't ever remember signing that" we sometimes hear from plaintiffs in deposition. 

Then I read Barrows v. Brinker Restaurant Corp.

Savannah Barrows worked at a Chili's restaurant owned by Brinker, which she sued after her employment ended. Brinker moved to dismiss Barrows' lawsuit and to compel her to submit her claims to arbitration based on an arbitration agreement it claimed she electronically signed. In support of its motion Brinker relied on the following evidence:

  • Records showing that Brinker was the registered owner of IP address from the computer on which the agreement was signed.
  • Time records showing that Barrows was working at the restaurant on the same day as the electronic signature.
  • Affidavit testimony about Brinker's onboarding process, including the employee's creation of a login and password to e-sign documents.
  • Affidavit testimony about how employees e-sign documents, including the need to enter their unique password.

Barrows, on the other hand, submitted her own affidavit, claiming that she never saw or signed the arbitration agreement, never recalled e-signing any documents, and never recalled using the restaurant's computer system for any purpose.

Astoundingly, the 2nd Circuit held that the employee's statements were enough to defeat the employer's motion to compel arbitration.

In reviewing motions to compel arbitration … a court must consider all relevant, admissible evidence submitted by the parties.… And in reviewing this broad set of materials, there is nothing to suggest that nonmovants' affidavits alone cannot—as a matter of law—suffice to defend against such a motion.

Of course, the fact that a party's declaration can defeat a motion to compel arbitration does not mean it always will. Where a party merely states that she cannot recall signing an agreement (as opposed to denying she has done so), such a declaration ordinarily fails to create a triable issue of fact. Likewise, where the facts alleged in a nonmovant's declaration are so contradictory that doubt is cast upon their plausibility, then absent other evidence, granting the motion to compel may be appropriate. Further, a party "normally does not show the existence of a genuine issue of fact merely by making assertions that are based on speculation or are conclusory. And of course, a party's declaration will not create a material issue of fact in those rare cases where it is blatantly contradicted by the record, so that no reasonable jury could believe it (as when a plaintiff's declaration statements are directly refuted by undisputed video evidence).

Barrows's declaration had none of these flaws.… Accordingly, and drawing all inferences in Barrows's favor (as, at this stage, we must), there is a triable issue of fact as to whether she ever received, or became aware of, Brinker's arbitration agreements, regardless of whether she ultimately signed them. 

This is a devastating opinion for employers that hope to enforce any agreements against employees, including arbitration agreements. If all it takes is for an employee to say, "I deny ever signing that agreement," I don't know what hope employers have other than a jury trial. Are they supposed to video record every instance of an employee signing an agreement to eliminate any doubt? The Barrows court sure seem to think so.