E-SIGNATURE ATTRIBUTION

             Aerotek, Inc. hires hundreds of thousands of employees to work, globally, as contractors. To keep hiring efficient, Aerotek worked with a software developer to build an online-only hiring application. Aerotek uses the computerized hiring app exclusively to guide candidates through the hiring process.

            We recognize this system as “onboarding.”

            The hiring app sends a welcome email to the candidate, which email includes a hyperlink for the candidate’s use to navigate the online account-registration page. At that point a unique user ID and PW is created, and the candidate supplies answers to several personal security questions.

            At each subsequent log-in the candidate must correctly enter the user ID, PW, and answer the security question.

            If successfully navigated, the hiring app presents the candidate with employment information and various contracts to e-sign. First up is the Electronic Disclosure Agreement. By agreeing to the terms of the EDA, the candidate consents to “be bound” by Aerotek’s e-docs “as though . . . signed . . . in writing.” The next set of docs ask for the candidate’s personal info. Each successful completion unlocks the ability to continue deeper into the employment app.

            Included in the docs is a Mutual Arbitration Agreement.

            Trojuan Cornett, Michael Marshall, and Lerone Boyd each remotely completed Aerotek’s computerized hiring app; Jimmy Allen completed his in Aerotek’s office by going through the same computerized online app procedure. Aerotek hired all four to work on a construction project for Aerotek’s client. All four were terminated not long after starting work; all four sued Aerotek and others for racial discrimination and retaliation.

            Aerotek moved to compel arbitration, which dispute resolution mechanism was contained in the MAA. All four employees opposed the motion. Each submitted a sworn declaration acknowledging that he had completed the online hiring application but denying that he had ever seen, signed, or been presented with Mutual Arbitration Agreement.

            Aerotek responded with a time-stamped MAA and EDA, along with database records showing the timestamp for every other action taken by each of the four employees in completing the hiring application.

            At trial, Aerotek’s program manager testified that no employee could have completed the procedure without executing the MAA, and that the records could not have been altered or manipulated after submission. The four employees, unmoved by the program manager’s testimony, countered with their declarations.

            Based on the evidence presented, the trial court denied Aerotek’s motion to compel arbitration. The court of appeals affirmed.

            Aerotek appealed to the Supreme Court.

            To compel arbitration, a party must prove that a valid arbitration agreement exists. For the MAAs to be valid, the employees must have consented to them. The employees argue they did not consent to the MAAs because the e-signatures are not theirs.

            Texas law provides that if parties to a transaction have agreed to conduct it by electronic means, then a standard for attributing e-signatures is applied. That standard requires the showing of a security procedure to determine if the e-record or e-signature is valid. Adequate security procedures include the use of algorithms or other codes, identifying words or numbers, encryption, or callback procedures.

            A record that cannot be created or changed without unique, secret credentials, can be attributed to the one person who holds those credentials.

            The Supremes sifted through the evidence and came to a different conclusion, finding that each of the employees signed and therefore consented to the MAAs and as a consequence, each agreed to arbitration. Aerotek wins. See Aerotek, Inc. v. Lerone Boyd, Michael Marshall, Jimmy Allen, and Trojuan Cornett; Case No. 20-0290; Texas Supreme Court; May 28, 2021: https://law.justia.com/cases/texas/supreme-court/2021/20-0290-0.html.

            Lessons / Questions / Observations:

1. Lesson: My surmise is that the use of e-contracts already exceeds the use of paper contracts. This case is a great tutorial on how to be sure e-contracts are valid, and also how to challenge e-contracts.
   

2. Observation: This case comes to us from the world of employment law. However, it seems to have equal application to all areas of law including mine – real estate.
   

3. Questions: Do you use software to create e-contracts? Do you have a contract with the software supplier certifying that the supplier’s products comport with law, so you have recourse if your e-contracts are successfully challenged?
   

                                                                                    Stuart A. Lautin, Esq.*

* Board Certified, Commercial (1989) and Residential (1988) Real Estate Law, Texas Board of Legal Specialization

Licensed in the States of Texas and New York

  

Reprinted with the permission of North Texas Commercial Association of REALTORS®, Inc.