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The Digital Age Is Continuing To Create Challenges For Courts

Question:  Can an electronic signature be verified as authentic when the signer denies having signed the record?

Answer:     Yes. Courts evaluate the security procedures surrounding the electronic signature to prove authenticity.

Courts are increasingly encountering new dilemmas that earlier courts could not even imagine. One of these dilemmas is requiring the courts to rethink traditional ways of authenticating signatures. Notaries public, handwriting experts, witnesses, and the like are all key legal components for authenticating traditional signatures. But what about electronic signatures? Electronic signatures are useless if businesses have no way to authenticate them. Since an electronic signature itself is usually nothing more than a fungible click of a button, proving authenticity through traditional methods does not work. In response to this challenge, the Texas Supreme Court in Aerotek, Inc. v. Lerone Boyd, et al., has provided guidance on how to prove up electronic signatures.

Aerotek hires workers around the world to work as contractors for their client companies. Because of the logistical problems this creates with documentation, Aerotek worked with a software engineer to build an electronic employment application. The application presents the applicant with various contracts to sign. One of the documents that the applicant is asked to sign is an arbitration agreement. The four defendants in this case each completed Aerotek’s computerized hiring process. Their applications included electronic signatures and timestamps on the arbitration clause. Aerotek hired all four to work as contractors on a construction project for one of Aerotek’s clients. All four defendants were eventually terminated and, thereafter, filed a lawsuit against Aerotek for racial discrimination and retaliation.

Aerotek moved to compel the lawsuit to arbitration based on the signed arbitration agreement in the applications. Each defendant opposed the application and admitted completing the application process but denied signing the arbitration agreement. The trial court conducted a hearing on Aerotek’s motion to compel arbitration. After considering the evidence, the trial court held that the defendants win. The defendants’ denials coupled with Aerotek’s lack of proof authenticating the signatures convinced the court to deny Aerotek’s motion to compel arbitration. Aerotek appealed. The appellate court considered the case and agreed with the trial court. The defendants won again. The appellate court denied Aerotek’s motion to compel arbitration. Aerotek then appealed to the Texas Supreme Court.

The Texas Supreme Court reversed the trial court and held that Aerotek wins. The Court ruled that Aerotek had proven the authenticity of the electronic signatures. The Court made special note of specific security procedures in the application process as evidence of authenticity of the signatures.

  • To enter an application, a candidate was required to create a unique identifier, user ID, password, and security questions all of which were unknown to Aerotek
  • A candidate was required to enter personal information and sign documents by clicking on the document.
  • An application recorded and timestamped a candidate’s every action.
  • An application could not be submitted until all steps were completed and all required signatures were provided including signatures on the arbitration agreement.
  • Once a candidate submitted an application, Aerotek could not modify its contents.

The defendants did not present evidence to rebut any of this. They simply denied signing the agreement and claimed that Aerotek had not proven that the signatures were authentic. The Texas Supreme Court reversed the trial court and sent the case to arbitration.

The lesson is that electronic security procedures matter. If you are relying on electronic signatures, you need to spend the time and money to invest in quality software with good security measures then follow the procedures. Signers who deny that their electronic signatures are authentic need to provide the court evidence attacking the security measures. Otherwise, agreements with electronic signatures entered through proper security measures that are consistently followed should be enforced.

Scot Pierce, Esq. is a trial lawyer and transactional attorney.  Click on his picture for his profile page.

Disclaimer: This post contains general opinions and analysis and should not be treated as advice for any specific case.

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