Was the trial court correct in finding that an arbitration agreement was not formed when an employee was provided with an arbitration agreement electronically at the time of hiring, but there is no proof that the employee signed or otherwise consented to that agreement?
Respondent, Anita Collins, was employed by Petitioner, Employee Resource Group, LLC, at a Wendy’s restaurant in South Williamson, Kentucky. Respondent alleges that she was subjected to sexual harassment on the job and was terminated when she complained. Thereafter, she filed suit in Mingo County. Petitioner then moved to compel arbitration.
The facts developed in the trial court indicate that Respondent applied for employment with Petitioner using her iPhone. Respondent was interviewed and hired. Using an employment software, Petitioner then sent an email to Respondent forwarding forms to be reviewed and signed, including an arbitration agreement. Even though Respondent’s electronic signature appears on the agreement, Petitioner conceded that Respondent’s name would have been automatically stamped onto the forms, including the agreement, when she signed into her email. Petitioner did not produce any email communications or other proof showing that Respondent had, in fact, signed or otherwise agreed to the arbitration agreement. The trial court found that no contract had been formed and denied Petitioner’s motion to compel arbitration on that basis. The issue whether the trial court was correct in finding that Respondent had not entered into an arbitration agreement.
Petitioner points out that it is undisputed that Respondent signed a receipt for the arbitration agreement, and that the receipt contains language “go[ing] well beyond a simple acknowledgement.” The receipt specifically references the arbitration agreement and also provides as follows: “The Company and , agree that all legal claims or disputes covered by the agreement must be submitted to binding arbitration.” Petitioner also argues that Respondent is the party who had control over the emails documenting her receipt of the arbitration agreement and related forms. Petitioner made good faith efforts to obtain these emails, including a subpoena. Accordingly, any failure to preserve and produce this proof “should be weighed against Respondent, not Petitioner.”
Under the applicable law, the party seeking to compel arbitration bears the burden of proving the existence of a valid agreement to arbitrate. Here, the agreement produced by Petitioner does not indicate that it was signed by Petitioner. Instead, it contains nothing more than an automatic digital signature that was activated when Respondent accessed her email. In the absence of any proof that Respondent signed or otherwise consented to the arbitration agreement, it is unenforceable, and the trial court acted appropriately when it refused to enforce the agreement.
Arbitration is a recurring theme in civil litigation today. This is one of two arbitration cases on the March 5th docket, and there will likely be additional ones before the spring term ends in June. Issues involving whether, or not, an agreement to arbitrate was made are front and center in the world of arbitration litigation. With more and more contracts being formed electronically, this case will be very helpful in establishing the rules to be followed in answering this important threshold issue.