Electronic-signature system allowed others to edit doc – employee’s signature held invalid

If your company uses electronic signatures, you might want to review just exactly how those signatures are collected and recorded. A Cal­iforn­ia company may be headed for court, and not for the arbitration it thought it would get, because the mechanism it used to record an employee’s signature on an arbitration agreement was held to be insufficient:

• The arbitration agreement was contained in an on-line form to authorize a background check on the employee. The company claimed that she ‘signed’ the arbitration agreement electronically when she filled out the form at the time she was recruited to work for the company.
• The on-line form’s electronic-signature mechanism merely called for the employee to type in her name into a signature-line browser field. When the employee was finished filling out the form, she had to click a button that said “save” — but not “I agree” or anything like it — to save the form for processing.
• Crucially, the on-line system that provided and managed the form allowed others to edit the form — and there was no way to tell for sure who had typed in the employee’s name.
• The employee testified that she was sure she didn’t type her name into the form — she said that her full name, including her middle name, had already been filled in when she accessed the form, and that she never used her middle name when signing documents, ever. (She also testified that she did not see and did not read the arbitration provisions in the on-line form.)

After hearing witness testimony, a trial court ordered the case to go to arbitration, on grounds that the evidence was sufficient to show that the employee had indeed agreed to arbitration.

An appeals court, however, reversed, saying:

We find the evidence is not sufficient to tip the scales in favor of [the employer] Quiksilver.

It presented no affirmative evidence that [the former employee] Adams filled in her full legal name on the form.

While the trial court apparently disbelieved her denial, the only evidence offered to contradict her denial was … testimony that she had to scroll all the way to the bottom of the form and click on “save” to exit the form and send her data to [the online system provider] Kenexa.

Evidence that Adams scrolled to the bottom of the form and clicked on “save” is not evidence that she typed in her full legal name.

Furthermore, Kenexa’s security procedure did not operate here to make it more likely than not it was Adams who typed in the electronic signature. …

Adams v Superior Court [Adams v. Quicksilver, Inc.], no. G042012 (Cal. App. 4th Div. Feb. 22, 2010) (unpublished) (vacating and remanding trial court’s order compelling arbitration).

Lesson learned: Review your electronic-signature systems — what you think is a valid signature, a court might see differently.

(Hat tip: Jeffrey Neuburger at Proskauer Rose.)