When an E-Mail Signature is an Electronic Signature is a Settlement Signature

An e-mail signature can be a thoughtful closing to a mundane correspondence, or a mindless addendum to an otherwise critical message. Some are automatically placed at the foot of every message we send, while others are customized for a particular recipient. Does an e-mail signature constitute a legally binding signature? And if so, is this e-mail signature sufficient to bind parties to a settlement agreement?
The California State Court of Appeal addressed the issue of when an e-mail signature amounts to an electronic signature, and when an electronic signature is sufficient to enforce a settlement agreement in J.B.B. Investment Partners, Ltd., et al., v. R. Thomas Fair, et al. No. A140232, 2014 WL 6852097 (Cal. Ct. App. Dec. 5, 2014). The case concerned a series of e-mails and text messages, a voicemail, a round of golf, and a week-long communication delay – a perfect recipe for a dispute concerning when, how and where a contract was made. Ultimately, the Court found that merely signing one’s name at the bottom of an e-mail is far from sufficient to bind that person in contract, let alone to a settlement agreement. Under California’s Uniform Electronic Transactions Act (“UETA”), the party looking to enforce the e-mail as an electronic signature must show that 1) the parties agreed to conduct an electronic transaction and 2) the signing party wrote his or her name on the email with the intent to formalize an electronic transaction.

Background

This case involved a dispute between two real estate investors on the one hand, and the owner of two apartment units on the other. After Plaintiffs had invested $250,000 in Defendant Hand’s apartments, they allegedly discovered several fraudulent misstatements and omissions made by the Defendant. Before commencing the litigation, the parties engaged in settlement discussions, and on July 4, 2013, Plaintiffs’ counsel sent Hand an e-mail (“July 4 Offer”) laying out the terms of the proposed $350,000 settlement, included in which were the following statements:

• “All litigation would be stayed pending full payments”
• “The Settlement paperwork would be drafted in parallel with your full disclosure of all documents and all information…”
• We require a YES or NO on this proposal; you need to say I ACCEPT … Anything less shifts all focus to the litigation and to the Court Orders we will seek…”
• “Let me know your decision.”

The July 4 Offer did not contain a signature line or signature block, nor was the e-mail signed by any of the Plaintiffs.

The following day, Fair responded to the offer with a seemingly ambiguous e-mail from his cell phone (“July 5 Response”) at 10:17 a.m., which read:
“[Plaintiffs’ counsel], the facts will not in any way support the theory in your e-mail. I believe in [the apartment complex]. So I agree. Tom fair[.]”

Counsel for the Plaintiffs responded soon thereafter, asking Hand to clarify his response. Before receiving such response, Plaintiffs filed the instant lawsuit, which complaint was then sent to Defendant at 12:25 p.m. During the next two hours, Fair sent three text messages and left one voicemail, in which he apologized for being on a golf course that prohibited cell phone use, reiterating his acceptance of the terms presented in the July 4 Offer. At 1:53, Plaintiffs’ counsel sent a confirmatory e-mail acknowledging receipt of Fair’s acceptance, and noting that “I will work on the formal settlement paperwork” and “will seek to get that settlement paperwork to you for review by Monday.”

On July 11, 2013, the written settlement agreement, complete with signature blocks for all parties and a clause explicitly permitting the document to be electronically signed, was sent to Defendant. Defendant did not sign that written settlement offer, and the parties proceeded to trial. Upon a motion to enforce the settlement agreement pursuant to California Code of Civil Procedure § 664.6, the trial court ruled that the central issue was whether the two parties had a meeting of the minds as to the terms of the settlement, and that the July 4 Offer was accepted by Fair’s July 5 Response. This conclusion was supported by the court’s interpretation of the surrounding circumstances and communications. The trial court entered judgment for the Plaintiffs and Defendants timely appealed.

Discussion

On appeal, the Court found that, as a preliminary matter, in order to determine whether the settlement agreement could be enforced under CCP § 664.6, there must first be a determination of whether the settlement was signed as required by the statute. Where the alleged signature is electronic in form, party seeking enforcement of the signature must show that A) the parties agree to conduct a transaction by electronic means pursuant to UETA § 1633.5(b), and that B)it amounts to an electronic signature under UETA §1633.2(h). Neither of these conditions was address by the trial court, yet they were determinative on appeal.

A) Parties agree to conduct electronic transaction

The question of whether the parties agreed to conduct a transaction by electronic means is determined by examining the context and surrounding circumstances of the transaction. While an explicit agreement to allow electronic signatures is not required, it is a relevant factor. Furthermore, evidence that a signature was requested or permitted in electronic form in past or future agreements will be relevant.

Here, there was no signature requested in the July 4 Offer, nor did the offer invite a signature with a signature block. Instead, the offer merely requested a “YES,” “NO,” or “I ACCEPT” in return. Furthermore, the July 11 written proposal included signature blocks, as well as explicit language permitting electronic signatures. And Plaintiffs’ counsel wrote a follow-up e-mail on July 19 to Fair stating, “It’s a good thing we have a settlement, then; let’s put pen to paper and close it…We are not going to stay anything until we have a signed deal.” All these communications would indicate that both parties agreed that any settlement would only be enforceable as a written, signed document.

B) Electronic Signature

In order to fulfill the requirement of § 1633.2(h), a party must show more than merely proof that the signature in question was made by the person against whom enforcement of the contract is sought, and that the signature was electronic. The party must also show that the signature was “executed or adopted by a person with the intent to sign the electronic record.” Id. Furthermore, the court may value evidence of whether both sides intended for a document or signature to be binding as an electronic signature.

Here, the Court found that there was substantial evidence to support Defendant’s argument that Fair did not intend for his signature to formalize an electronic transaction. First, Defendant’s July 5 voicemail and text messages did not indicate that he intended his prior e-mail signature to act as a binding legal signature, but merely that he agreed with the negotiated terms. Second, the July 4 Offer indicated that further paperwork would be prepared, which paperwork would serve as the final settlement agreement. Third, Plaintiffs’ July 5 filing of this instant complaint – which by the terms of the July 4 Offer would seem to terminate the offer prior to acceptance – and subsequent drafting a written settlement agreement negate any argument that the Plaintiff believed the July 5 Response to be a binding signature.

Conclusion

The rules governing electronic transactions and signatures under the UETA are well established and informative: it must be clear that both parties agreed to conduct an electronic transaction, and that the signing party intends for that electronic signature to act as a binding signature. However, the J.B.B. Court seemed to add even heightened scrutiny to this analysis when a part seeks to enforce a settlement agreement with an electronic signature. Agreements of such legal import and consequence should be unequivocal in their terms, and the parties forthright in their intent.

For more information contact:
Sumner D. Widdoes, Esq.
Gibbs Giden Locher Turner Senet & Wittbrodt LLP
1880 Century Park East, 12th Floor
Los Angeles, California 90067
Phone: (310) 552-3400
email: swiddoes@gibbsgiden.com

The content contained herein is for informational purposes only, may not reflect the most current legal developments and does not constitute legal advice. The transmission of information in this post (or any transmission or exchange of information over the Internet), or by any of the included links, is not intended to create and does not constitute an attorney-client relationship. The opinions expressed in this post are the opinions of the author only and may not reflect the opinions of the author’s law firm. No representations are made as to the completeness, accuracy or validity of any information contained in this post.

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Copyright 2014 Gibbs Giden ©

Do Your Website and Mobile App Comply with the ADA?

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“Does my company really have to worry about the ADA?” Whether you are a brick-and-mortar store, exclusively online retailer or any other business with a website or mobile app, the answer appears to be “yes.”

Many businesses are surprised to learn that they may be in violation of federal and state anti-discrimination laws by using a website or mobile application that are not accessible to those with disabilities. As a recent series of threatened lawsuits and Department of Justice press release indicate, all companies that have a web and mobile presence may be targets for claims that they fail to comply with Title III of the Americans with Disabilities Act (ADA) and analogous state statutes (such as California’s Unruh Civil Rights Act). Although trial and district courts in the Ninth Circuit have so far rejected some claims, potential consequences for violations of such laws may be time-consuming and expensive. Moreover, the Department of Justice is actively enforcing website accessibility as demonstrated by last month’s settlement with the owners and operators of the nation’s leading online grocery store, peapod.com

Companies around the country are often first learning about these compliance issues when they receive a letter from a plaintiffs’ ADA advocacy law firm demanding compliance and, in many cases, statutory damages. Many of these claims assert that a company’s website or mobile application lacks certain functionalities that are necessary for disabled persons to access and use such website or mobile application. These functionalities include, for example, the ability of a user to access all website features using a keyboard rather than a mouse, and including alternative text captions for website and mobile application audio and features that work with “text-to-speech” screen reader technology.

It is important for companies to be proactive and at the very least, evaluate their website and mobile applications to exhaustively determine and remedy any accessibility issues. Companies should maintain a constant dialogue with their in-house and third-party web and mobile application designers and programmers to remedy any current and future accessibility issues.

Being proactive will help a company avoid potential consequences for statutory violations. In addition to time and goodwill factors, California’s Unruh Civil Rights Act imposes a $4,000.00 statutory penalty for every violation, whereas the ADA presently permits injunctive relief and the recovery of attorneys’ fees.

Although the Department of Justice is not expected to release compliance standards until 2015, settlement agreements and consent decrees hint that the Department of Justice may require websites and mobile applications to comply with the Web Content Accessibility Guidelines 2.0, Level AA (WCAG 2.0 AA), developed by a private industry group. The Department of Justice has required compliance with the WCAG 2.0 AA in the past, including in the DOJ’s consent decree with H&R Block in 2013 and, more recently, in the Department of Justice’s November 2014 settlement with owners and operators of peapod.com. Under the settlement agreement with peapod.com, America’s leading online grocer is required to adopt measures to ensure that users with disabilities are able to fully and equally enjoy the various goods, services, facilities and accommodations provided through http://www.peapod.com including: (1) designating an employee as web accessibility coordinator for http://www.peapod.com, who will report directly to a Peapod, LLC executive; (2) retaining an independent website accessibility consultant, who will annually evaluate the accessibility of the website and its mobile applications; (3) adopting a formal web accessibility policy; (4) providing a notice on http://www.peapod.com soliciting feedback from visitors on how website accessibility can be improved; (5) providing automated accessibility testing and accessibility testing by individuals with a variety of disabilities of http://www.peapod.com and its mobile applications; and (6) providing mandatory annual training on website accessibility for Peapod’s website content personnel.

Don’t wait until you get a complaint from the Department of Justice (the entity tasked with enforcing the ADA) or a demand letter from a plaintiffs’ ADA advocacy law firm. If you own or operate a website or mobile application, be proactive.

For more information contact:
Christopher E. Ng, Esq.
Gibbs Giden Locher Turner Senet & Wittbrodt LLP
1880 Century Park East, 12th Floor
Los Angeles, California 90067
Phone: (310) 552-3400
email: cng@gibbsgiden.com

The content contained herein is for informational purposes only, may not reflect the most current legal developments and does not constitute legal advice. The transmission of information in this post (or any transmission or exchange of information over the Internet), or by any of the included links, is not intended to create and does not constitute an attorney-client relationship. The opinions expressed in this post are the opinions of the author only and may not reflect the opinions of the author’s law firm. No representations are made as to the completeness, accuracy or validity of any information contained in this post.

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Protect Your Employees from Creepy Customers

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In a recent federal court lawsuit against Costco, the warehouse retail giant is being charged by the U.S. Equal Employment Opportunity Commission for creating a sexually hostile workplace for failing to protect a female worker from “unwelcome advances” from a customer.

John Rowe, EEOC’s district director in Chicago, said the agency’s investigation found the employee had repeatedly complained to managers at one of its stores. She was “pursued, approached, and confronted in the Costco by the man,” stated an EEOC release. “One of her managers apparently told the young woman that he agreed the man was ‘not right’ and that Costco would monitor the situation,” Rowe said. “But what actually happened was that when the situation persisted and the employee complained to the police, Costco management allegedly yelled at her and told her to be friendly to the customer.”

Eventually, the employee resigned because of the harassment and filed a claim with the EEOC.

John Hendrickson, EEOC regional attorney in Chicago said, “All employers have a duty to protect employees from sexual harassment whatever form that harassment may take – whether it’s lewd remarks, groping, propositioning or stalking. No employer gets a pass because it is a customer targeting its employee, rather than a manager or fellow employee. That’s particularly true when the harassment is especially egregious. If the employer permits the harassment to continue, it’s compounding its liability and troubles.”

Although most sexual harassment claims arise from harassment in the workplace by a supervisor or co-worker, this complaint against Costco serves to remind employers that they may be liable for sex discrimination if the harasser is a client or customer and the employer fails to take proper steps to protect an employee. It is imperative to training employee to promptly report incidents of alleged sexual harassment, including those perpetrated by customers, and make sure employees know whom to contact to report an incident. In addition, prompt and proper follow-up is essential, as well as avoidance of any actions against the employee who filed the complaint that could be construed as retaliation.

For more information contact:
Christopher E. Ng, Esq.
Gibbs Giden Locher Turner Senet & Wittbrodt LLP
1880 Century Park East, 12th Floor
Los Angeles, California 90067
Phone: (310) 552-3400
email: cng@gibbsgiden.com

The content contained herein is for informational purposes only, may not reflect the most current legal developments and does not constitute legal advice. The transmission of information in this post (or any transmission or exchange of information over the Internet), or by any of the included links, is not intended to create and does not constitute an attorney-client relationship.  No representations are made as to the completeness, accuracy or validity of any information contained in this post.

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