2018: The Year in Electronic Signature Law

This article was originally published in Legaltech News.

In the waning days of 2018, District Court Judge Sylvia Rambo invoked a literary allusion to provide the year’s most entertaining summary of the legal status of electronic signatures:

“Plaintiff'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.” Keller v. Pfizer, Inc., 2018 WL 5841865 (M.D. Pa. Nov. 8, 2018)

Judicial opinions addressing challenges to the legality of e-signatures are indeed rare—a function of the widespread adoption of e-signature combined with the effectiveness of the ESIGN Act of 2000 in confirming their legal validity.

Nevertheless, 2018 brought some of the most instructive case law yet regarding the evidentiary value of e-signature audit trails and the use of e-signatures around court proceedings, as well as new legislation mandating accelerated adoption of e-signature across the federal government.

With or without a James Joyce reference, 2018 was a year for the books in e-signature law. Here are some of the highlights.

The e-signature audit trail as dispositive evidence of intent

In IO Moonwalkers, Inc. v. Banc of America, 814 S.E.2d 583 (2018), the North Carolina Court of Appeals affirmed summary judgment against a plaintiff seeking relief from its merchant credit card services agreement executed via Docusign. Like the lower court, it found that the plaintiff had ratified the agreement, i.e. bound itself to the agreement via a series of actions showing that it was acquainted with the terms and intended to be bound by them.

In the face of the Docusign audit trail, even the plaintiff’s sworn affidavit that it had never reviewed or signed the agreements was not enough to create a genuine issue of material fact as to the knowledge element of ratification. The court cited Docusign records showing the specific dates and times that someone with access to the plaintiff’s company email had accessed, signed, and reviewed the agreement. It granted summary judgment to defendant on this basis with no need to further analyze the identity of the signer, providing some of the strongest judicial language we’ve seen yet on the evidence associated with electronic agreement.

Later in the year, the Washington Court of Appeals also relied on the Docusign audit trail in affirming summary judgment for a plaintiff seeking to enforce an auto loan agreement in Alliant Credit Union v. Abrego. In this unpublished opinion (filed on New Year’s Eve), the Court ruled that defendant’s allegation of forgery did not raise a genuine issue of material fact in light of the authentication process leveraged in the e-signature workflow.

Use of e-signature for court proceedings

A growing body of case law is recognizing and supporting the trend of leveraging e-signature as an accepted—even preferred—methodology for participation in class actions, settlements, FLSA collective actions, and other court proceedings. As one example from 2018, the court in Weckesser v. Knight Enters. S.E., LLC, 2018 U.S. Dist. LEXIS 144981 (D.S.C. Aug. 27, 2018) approved the use of a “secure E-signature program, such as Docusign” for “receiving responses back from potential opt-in plaintiffs” in a class action.

Similarly, in US v. Real Property Located at 6340 Logan Street, Sacramento, Dist. Court, ED California 2018, the court issued a stipulation and order regarding interlocutory sale of real properties, including: “This Stipulation may also be executed and delivered by ... any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com).”

Statutory requirements still apply with e-signatures

In Thomas v. Credit Mgmt., LP, 2018 U.S. Dist. LEXIS 83685 (N.D. Ind. May 17, 2018) the plaintiff had submitted a DocuSigned affidavit from her sister in support of her motion for summary judgment. The defendant argued that the affidavit was inadmissible, claiming it was undated and unsworn. Although the court recognized that the Docusign records provided proof of the date of signature, it nonetheless ruled the affidavit inadmissible given its “absence of language ensuring that [plaintiff’s sister] was declaring under penalty of perjury that the statements contained therein were true…” as specifically required for unsworn declarations under 28 U.S.C. § 1746.

Though straightforward in legal rationale, Thomas serves as a useful reminder for counsel to be sure to follow all applicable court rules and evidentiary procedures regardless of whether the documents in question are signed electronically or with ink on paper.

New U.S. law promoting e-signatures in the federal government

The 21st Century Integrated Digital Experience Act (“21st Century IDEA”) requires the federal government to modernize its websites, forms, and processes for improved user experience and compliance with legal standards. At a time when many question the ability of legislators and the executive branch to agree, this bipartisan legislation passed both houses of Congress on a unanimous basis and was signed into law on December 20, 2018.

Among other provisions, this new law requires that:

Not later than 180 days after the date of enactment of this Act, the head of each executive agency shall submit to the Director and the appropriate congressional committees a plan to accelerate the use of electronic signatures standards established under the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7001 et seq.).

The 21st Century IDEA is a strong endorsement of the value of modern digital services including electronic signature, and is poised to help the federal government reap a broad range of efficiencies and cost savings, while enhancing how it provides critical services to the public.

What to expect in 2019

2018 saw a handful of additional U.S. states pass laws enabling remote notarization, some of which will take effect at various times this year. On the other side of the Atlantic, the UK Law Commission issued an in-depth consultation paper in 2018 assessing new technological approaches to witnessing and attestation, similarly seeking to shore up the legal framework for a new age of electronic execution of documents.

And, around the world, the rise of so-called “smart contracts” (sets of self-executing computer code that can automate key aspects of transactions) is raising intriguing legal questions about the very nature of digital agreement in the coming age of hyper-automation.

Along with emerging technologies, 2019 will is poised to bring legal issues exploring—and possibly expanding—the bounds of ESIGN, eIDAS, and other electronic signature legal frameworks. If 2018 was a year for the books in e-signature, 2019 is looking to be one for the ages.