If The Signing’s Not Real, Don’t Count On Appeal

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Seyfarth Synopsis: The Court of Appeal affirmed an order denying an employer’s motion to compel arbitration because the employer failed to authenticate the employee’s electronic signature on the arbitration agreement. Bannister v. Marinidence Opco, LLC.

Facts

Maureen Bannister was an office worker at a skilled nursing facility for three decades before the facility was purchased by Marinidence. When she lost her job a year later, she sued Marinidence for discrimination, retaliation, and defamation. Marinidence moved to compel enforcement of the arbitration agreement that Bannister apparently had signed electronically while completing her new employee paperwork for Marinidence.

Marinidence showed that Bannister, to access the online onboarding portal, would have had to enter her name, social security number, and Marinidence’s “Client ID” and pin code (which was the same for all employees). Marinidence also showed that a W-4 tax withholding form and an emergency-contact form would have been required before accessing the arbitration agreement, thereby supporting an inference that it was Bannister herself who completed all of the information and electronically signed the arbitration agreement.

Bannister submitted contradictory evidence: she said she never reviewed or signed any arbitration agreement and showed that the “secure information” required to access the online portal was available in each employee’s personnel file. Additionally, she presented evidence that the human resources manager completed the onboarding process for other employees without their participation.

In light of this conflicting evidence, the trial court concluded that Marinidence failed to meet its burden to prove the existence of an arbitration agreement, and therefore denied the motion to compel arbitration.

The Court of Appeal’s Decision

The Court of Appeal affirmed the trial court because substantial evidence supported the conclusion that Marinidence failed to prove that Bannister electronically signed the arbitration agreement.

The trial court had found that Marinidence did not meet its burden in establishing the authentication of an electronic signature under Civil Code section 1633.9, which is part of the California Uniform Electronic Transactions Act, and which requires “a showing of the efficacy of any security procedure applied to determine the person to which the … electronic signature was attributable.” In assessing the trial court’s decision, the Court of Appeal focused on Marinidence’s inability to rebut Bannister’s evidence that she was not the only one who could have executed the arbitration agreement.

 Because Marinidence failed to rebut evidence that the human resources manager completed the onboarding process for other employees, as well as evidence that persons other than the employee herself could complete the W-4 and emergency-contact forms, the Court of Appeal affirmed the trial court’s conclusion that Bannister showed she was not the only person who could have executed the arbitration agreement. The Court of Appeal stressed that it would not “second guess the trial court’s factual determinations.”

What Bannister Means for Employers

Employers should review the processes by which their employees acknowledge and sign documents to determine if the requirements of the California Uniform Electronic Transactions Act  and its federal analog have been met. When requiring employees to electronically sign arbitration agreements, employers should ensure that execution of the agreement is possible only by the employee in question. This result can be accomplished by various methods, including the use of unique usernames and passwords that are created by the employees themselves.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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