2015

It Is What We Say It Is: 
How to Authenticate An Electronic Signature

One of the first, and often overlooked, determinations in any contract dispute is who actually made the agreement. The rules of evidence require any signature to be authenticated, and if the identity of a party is in dispute, the best case is that there is a signed agreement where the signatures of either party can easily be tested against an exemplar. But as electronic transactions become more prevalent, so do the issues concerning electronic signatures. The Uniform Electronic Transactions Act has been in place for several years and clearly establishes that electronic signatures can be just as valid as handwritten ones. But the fundamental difference between handwriting and typing – that each person has a unique signature, whereas all Times New Roman looks the same, no matter who typed it – demands that certain measures be in place to help determine the identity of the person making that electronic signature.

In recent years, a potentially $5 billion industry has emerged in this space, where companies such as DocuSign and CoSign provide secure, authenticated platforms for users to legally execute documents. But how can a company ensure that the electronic agreements it has with its employees – employments contracts, workplace policies, arbitration agreements – are actually signed by those people when it hasn’t used an e-signature vendor? The California Court of Appeals addressed this issue recently in Ruiz v. Moss Bros. Auto Group, Inc., a case in which a company tried to enforce an arbitration agreement contained in its employee handbook. Ultimately, the Court decided that the company, Moss Bros. Auto Group (“Moss”), did not sufficiently prove that the electronic signature on the employee arbitration agreement was, in fact, made by the employee, Ruiz. The Court also provided a helpful roadmap for how the company could have otherwise satisfied its burden, and how other companies may ensure its electronic agreements are equally binding.

Background

Ernesto Ruiz filed a class action lawsuit against his employer, Moss, for violating certain employment laws and regulations. In response, Moss petitioned the Court to compel arbitration by enforcing an arbitration agreement that Ruiz allegedly signed electronically. In support of its motion, Moss offered the declaration of its business manager, Mary K. Main, which stated that Ruiz electronically signed the document “on or about September 21, 2011.” A copy of that agreement was attached to the petition, and contained the following on the third page under the signature and date lines: “Ernesto Zamora Ruiz (Electronic Signature)” “9/21/2001 11:47:27 AM.”

In his opposition, Ruiz denied ever making such a signature, and in the alternative, claimed that he did not remember or did not intend to sign such an arbitration provision. Moss’ response included a second declaration from Main, which stated that the Employee Acknowledgement form, which contained the arbitration provision and included the above-referenced electronic signature of Ruiz, was provided to all employees as part of the Employee Handbook, which each employee was required to sign through the company’s digital HR system using a secure, unique password. The trial court found that, despite Main’s declarations, Moss had failed to show that the electronic signature was, in fact, “an act of Ruiz.”

Appeal – Judgment Affirmed

On appeal, the Court made clear what Moss’ burden was to authenticate an electronic signature and prove that there was a valid arbitration agreement. The California Evidence Code § 1401 requires a writing to be authenticated before being entered into evidence – a showing that the document is what the party claims it to be. Where the party seeks to authenticate an electronic signature, California Civil Code § 1633.9(a) allows the party to do so “in any manner.” This means it may offer circumstantial evidence or simply show that the document was signed using one of the e-signature platforms mentioned above. The Court reiterated that “the burden of authenticating an electronic signature is not great.” Still, it agreed with the trial court that Moss had failed to establish such facts. Without direct evidence of Ruiz’s having submitted his signature electronically, Moss failed to show that the electronic signature could only have been placed on the document by Ruiz.

Helpfully, the Court then provided a step-by-step roadmap for authenticating the signature using circumstantial evidence. Moss could have done so by showing:

1. That the signature could only have been placed on the agreement by a person using a unique login;
2. That the date and time indicated on the agreement are the date and time that the signature was made;
3. That all employees are required to use a unique login to get on to the digital HR system to sign documents; and
4. That the signature on the agreement was apparently made by Ruiz on the date and time indicated on the executed agreement.

Takeaway

While the Court’s roadmap for authentication may seem elementary or pedantic, it demonstrates the kind of airtight progression that the rules of evidence require for authentication. Businesspeople should note that with a secure e-signature platform in place, such a progression is simple to replicate, even if Moss failed to do so here. Practitioners may notice that Moss may have been able to satisfy its burden had it been more explicit at trial as to its digital HR system. Ultimately, courts will gladly enforce agreements memorialized by electronic signatures, so long as there are sufficient measures in place for authentication, and a careful showing is made to describe such measures.

For more information contact:

Gibbs Giden Locher Turner Senet & Wittbrodt LLP
1880 Century Park East, 12th Floor
Los Angeles, California 90067
Phone: (310) 552-3400
email: info@gibbsgiden.com

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