Court opinions in Florida, or even in the United States, addressing the legality of electronic signatures are uncommon. This is likely due to the creation of the Uniform Electronic Transactions Act (UETA)[1] and the Electronic Signatures in Global and National Commerce Act (ESIGN) combined with the widespread adoption and use of electronic signature applications. In nearly all cases (and jurisdictions) to date, courts have held that a duly executed electronic signature carries the same legal effect as a paper and ink signature. Despite this consensus, litigants continue to challenge the legality of its use. To counter, opposing parties need to understand the importance of an application’s audit trail and be prepared to make the same enforceability arguments as in any other typical contract dispute.
In surveying the latest cases involving electronic signature challenges, the types of arguments being made can be placed into one of two categories: (1) the signer argues that he/she did not sign the agreement or in other words, the signature was forged; or (2) the e-signature process does not form an enforceable, binding contract. Here are examples of each scenario making its way through the court systems:
IO Moonwalkers, Inc. v. Banc of Am. Merch. Serv., LLC, 814 S.E. 2d 583 (N.C. Ct. App. 2018): In a business loan dispute, the CEO of IO Moonwalkers argued that he had not signed the agreement. In the end, the North Carolina Court of Appeals affirmed the lower court’s grant of summary judgment against IO Moonwalkers on the basis that he had ratified the agreement. In reaching this decision, the court relied on the electronic signature audit trial showing the CEO had access to the corporate email account and had reviewed and signed the agreement at specific times. Moreover, the court noted that since IO Moonwalkers had ratified the agreement, there was no need to further rule on the question of the signer’s identity.
Obi v. Exeter Health Resources, Inc., No. 18-cv-550 (D.N.H. Ct. 2019): In a breach of contract claim, the plaintiff alleged her signature was forged on a document. The U.S. District Court for the District of New Hampshire disagreed finding that the plaintiff’s claim was unsupported by the record as she had signed in, reviewed, and signed the document via her electronic signature application account.
Alliant Credit Union v. Abrego, No. 76669-4-1 (Wash. Ct. App. Dec. 31, 2018): The Washington Court of Appeals affirmed summary judgment on a breach of contract claim regarding a default on an auto loan. The defendant challenged the existence of the loan by alleging his signature was forged. The courts disagreed finding that there was no genuine issue of material fact as to the existence of an enforceable agreement based on the extensive authentication process employed by the electronic signature application.
Pavlov v. Debt Resolvers USA, Inc., 907 N.Y.S. 2d 798 (N.Y. Civ. Ct. 2010): The defendant argued that the plaintiff was not entitled to a refund because their agreement did not provide for one. In response, the plaintiff argued their agreement was unenforceable. The New York City Civil Court held that the parties, who used an electronic signature application, had formed a binding contract.
Overall, the courts’ reactions to these arguments are summed up best in Keller v. Pfizer, Inc., No. 17-cv-1883 at *8 (M.D. Pa. Nov. 8, 2018): "[p]laintiff’s argument that she should not be bound by the arbitration agreement simply because she did not sign a physical paper contract is as archaic today as the notion that James Joyce is unlawfully obscene."
Given the foregoing, there are two major takeaways. First, e-signature audit trails are relied upon as key evidence and secondly, electronic signatures are widely acknowledged as legally binding. It is also important to note that electronic signature applications have also been utilized as an approved means of participating in certain legal proceedings. For example, federal courts have used e-signature applications to opt in for class action matters. See, e.g., Joseph v. Velocity, the Greatest Phone Company Ever, Inc., No. 18-cv-01174 (S.D. Ohio Jan. 14, 2019); In re Anthem, Inc. Data Breach Litig., No. 15-md-02617 (N.D. Cal. Aug 25, 2017). Therefore, if litigants continue to raise electronic signature challenges in Florida and other jurisdictions, these arguments are likely to fail.
[1] Florida has adopted and codified UETA in Section 668.50 of the Florida Statutes.