As businesses become more reliant upon technology, the prevalence of DocuSign® is no surprise. The DocuSign® program allows parties to electronically sign documents without having to print, manually sign, and scan documents. This program has streamlined many transactions by allowing parties to simply open the DocuSign® request, insert their signatures where requested, and “complete” the document, which returns the “signed” document to the originator. However, in November 2019, a California Court of Appeal found that when disputed, a document signed through the DocuSign® program may not be sufficient to establish a party’s agreement to certain terms contained therein.
Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062, involved a woman named Rosa Fabian who had discussed installing and financing solar panels on her home with Renovate America, Inc. Renovate America had contacted Fabian over the phone in an unsolicited sales call. Fabian had already had the solar panels installed on her home, and Renovate America was offering to finance the solar panel system. Fabian claimed she was never presented with any documents to sign, and never had any conversations with Renovate America other than over the phone.
When Fabian filed a lawsuit against Renovate America relating to improper installation of the solar panels, Renovate America petitioned the court to move the dispute to arbitration. Renovate America presented a contract including an arbitration clause which had purportedly been signed via the DocuSign® program by Fabian. Fabian denied ever signing the document, either physically or electronically. A Renovate America director testified in a deposition that no Renovate America personnel had been present when Fabian allegedly signed the contract via the DocuSign® program, but based on his “extensive experience” Fabian must have been present and signed the document.
To prove Fabian’s signature was indeed authentic, Renovate America needed to present evidence of the content of the contract and the circumstances surrounding the contract’s execution. Renovate America presented two pieces of evidence: Fabian’s printed electronic initials, which the DocuSign® program purportedly authenticates, and a declaration from the employee who had spoken with Fabian.
The Court of Appeal found the electronic initials on the agreement were insufficient to establish the formation of a contract because Renovate America failed to provide additional information as to the authentication process used by the DocuSign® program. Additionally, Renovate America did not provide any information to indicate how it verified Fabian’s electronic signature. This type of information would include: who sent the contract to Fabian, how the contract was sent to Fabian, how Fabian’s signature was placed on the contract, who the finished contract was sent to, and how Fabian’s signature was verified by that recipient. The Court of Appeal therefore rejected this argument.
The Court of Appeal was similarly unpersuaded by the declaration Renovate America submitted. Specifically, the declaration lacked any substantive information regarding the details of Fabian’s purportedly signing the contract. Instead, the declaration summarily stated Fabian had signed the contract without providing any detail as to how that conclusion had been reached.
Renovate America’s bid to arbitrate the dispute brought by Fabian was therefore denied, and Fabian will be allowed to pursue her claim in court. This case should raise eyebrows of those businesses which routinely rely upon the DocuSign® program to complete contracts intended to be binding – especially when those contracts include arbitration clauses. Seemingly, to overcome a claim that a signature gathered via DocuSign® or a similar program was not valid, the party seeking to enforce the contract will need to provide all of the circumstances surrounding the gathering and verification of the signature. This case suggests this information would include the process of presenting the signer with the document, the act of signing, the return of the signed document, and the verification of the signature upon receipt.
While it is unclear whether this case signals that courts are cracking down on arbitration clauses agreed to via the DocuSign® program or whether Renovate America simply took a shortcut in presenting its evidence and took a loss as a result, those businesses relying on DocuSign® or other electronic signature programs should take note that the authenticity of such contracts is not a foregone conclusion and that they may be attacked by persons claiming they did not actually sign. Evidence outside of that gathered by the DocuSign® program to establish the validity of a DocuSign®-gathered signature (e.g., telephone confirmation, email confirmation, etc.) may very well make all the difference.