In a recent decision, Ruiz v. Moss Brothers Auto Group, Inc., 2014 Cal. App. LEXIS 1176 (Cal. App. Ct. 4th Dist. Dec. 23, 2014), the California Court of Appeals affirmed an order denying an employer’s petition to compel an employee to arbitrate his wage and hour claims because the employer could not present evidence that established the employee, in fact, electronically signed the arbitration agreement.
Plaintiff Ernesto Ruiz filed a putative class action complaint against his employer, Moss Brothers Auto Group, alleging Moss failed to pay Ruiz and other employees overtime wages, provide required meal and rest periods, provide accurate and complete wage statements, reimburse business expenses, and pay final wages in a timely manner. Shortly after Ruiz filed his complaint, Moss Brothers petitioned for an order compelling arbitration of Ruiz’s individual claims, alleging that Ruiz had previously electronically signed an arbitration agreement.
Ruiz opposed Moss Brothers’ petition to compel arbitration. Ruiz argued that he had no recollection of electronically signing the arbitration agreement, and further alleged that Moss Brothers could not prove that the electronic signature was an “act attributable” to Ruiz, as required by California Code of Civil Procedure section 1633.9(a).
Moss Brothers provided the court with a declaration from its Business Manager, Mary Main, who stated that all employees were presented with the arbitration agreement as part of a series of changes to the Employee Handbook. The declaration further stated: “Each employee is required to log into the Company’s HR system – each with his or her unique login ID and password – to review and electronically execute the Employee Acknowledgement form, which includes the arbitration agreement.” The declaration did not, however, explain how Moss Brothers determined that Ruiz, and not someone else, electronically signed the agreement.
The trial court denied Moss Brother’s petition to compel arbitration on the ground that Moss Brothers “failed to establish that an Arbitration Agreement in fact exists between Moss Bros. and Ruiz.”
Court of Appeals Ruling
On appeal, the court first noted that the petitioner bears the burden of establishing, by a preponderance of the evidence, that a valid agreement to arbitrate exists. After a review of the evidence presented by both parties, the court concluded that Moss Brothers did not present sufficient evidence to support a finding that the electronic signature on the 2011 agreement in question was the act of Ruiz. Although the court acknowledged that Civil Code section 1633.7 grants electronic signatures the same legal effect as handwritten signatures, the court went on to explain that all writings must be authenticated before the writing can be received into evidence. The court held that Main’s declaration “summarily” asserting that Ruiz was the person who electronically signed the agreement was not sufficient to authenticate Ruiz’s signature. The court’s opinion then suggests that Moss Brothers could have satisfied its evidentiary burden (which the court stated was not a difficult burden to meet) had Main stated 1) that an electronic signature in the name of “Ernesto Zamora Ruiz” could only have been placed on the agreement by a person using Ruiz’s “unique login ID and password”; 2) that the date and time printed next to the electronic signature indicated the date and time the electronic signature was made; 3) that all Moss Brothers employees were required to use their unique login ID and password when they logged into the HR system and signed electronic forms and agreements; and 4) the electronic signature on the 2011 agreement was, therefore, apparently made by Ruiz on September 21, 2011, at 11:47 a.m.
Takeaway for Employers
The Ruiz decision should not serve to deter employers from using electronic employee signatures. Rather, employers should ensure they have a means of authenticating an employee’s electronic signature. The Ruiz holding suggests that providing employees with a unique login and password to use when electronically signing documents, is likely sufficient to authenticate the employee’s signature so long as the employer can explain in detail how the signature system operates and that the system is secure such that no one but the employee could have signed the document in question. Once the employer is in receipt of an employee’s electronic signature, we also recommend that the employer send the employee an email acknowledging its receipt of the signed document. By taking these steps, an employer likely will be able to make a satisfactory evidentiary showing in the event a dispute arises as to the authenticity of an employee’s electronic signature.