Last week, the Sixth Circuit reversed an order to compel an employee’s FLSA claim to arbitration on the grounds that there was a factual dispute as to whether the plaintiff employee had actually seen and, thus, agreed to the arbitration agreement. Bazemore v. Papa John’s USA, Inc., No. 22-6133 (6th Cir. 7/20/23). The employer utilized eforms and electronic signatures during employee orientation. The Court found that the plaintiff’s sworn denial of having ever seen the agreement was sufficient to require a trial on the issue of whether he had ever agreed to it even if he continued to work after being presented with the agreement. While “[a]n electronic signature can show a party’s assent,” such “signature is legally valid only when “made by the action of the person the signature purports to represent”—which is itself a question of fact.”
According to the Court’s opinion, the plaintiff brought an
FLSA action claiming that the failure to reimburse him for travel expenses
reduced his wages below the minimum wage.
The employer moved to compel arbitration based on an arbitration
agreement which it claimed that he had electronically signed when hired. The process involved him signing in using his
assigned user id and own password, scrolling through the document and then checking
boxes to indicate agreement. Employees
cannot begin work until they complete the forms. The employee responded that he had never seen
such an agreement, thus, impliedly denying that the electronic signature was
his. He indicated that this manager had
been observed logging in and completing training materials for employees and
sought targeted materials about the document in discovery. There is no indication that he denied having
ever seen or signed any other documents during his orientation. The
trial court enforced the arbitration agreement and disregarded the plaintiff’s “convenient
lapse of memory,” but the Sixth Circuit reversed.
The Court found that the employer bore the burden of proving
the existing of a binding agreement. “If
a genuine issue of material fact arises as to whether such an agreement exists,
the court ‘shall proceed summarily to the trial thereof.”’ While “[a]n electronic signature can show a
party’s assent,” such “signature is legally valid only when “made by the action
of the person the signature purports to represent”—which is itself a question
of fact.”
Here, the parties presented conflicting evidence on that point. Papa John’s pointed to an e-Form record of the arbitration agreement. That record has Bazemore’s name typed at the bottom with an electronic signature “By UserID: 467073”—which Greene says is Bazemore’s user ID. Yet Bazemore submitted a sworn declaration in which he repeatedly said that he never saw the arbitration agreement—even though, as Greene said, the e-Form would have required him to scroll through the entire agreement before signing it. We see no reason whatever that would prevent a reasonable factfinder from believing Bazemore’s testimony—which means that his testimony created a genuine issue of material fact.
The Court found that the trial court improperly put the
burden of proof on the plaintiff and failed to credit his denial of ever seeing
the document, finding instead that the lack of a clear denial that he had signed
it was insufficient to disprove the electronic signature.
The Court rejected the employer’s alternative argument that
the plaintiff’s continued employment was sufficient manifestation of assent to
the terms of the arbitration agreement.
Kentucky courts have held that the “conduct of a party is not effective as a manifestation of his assent” unless the party has “reason to know that the other party may infer from his conduct that he assents.” Furtula, 438 S.W.3d at 309. And Bazemore had no reason to think that his continued employment could indicate that he has agreed to arbitrate his claims—given that he was, at the same time, arguing in court that he never agreed to arbitration. Indeed, to hold otherwise would force Bazemore to give up either his job or his day in court.
The Court seemed unaware that courts have found that no signature
is required under the Federal Arbitration Act and employers may require arbitration agreements as a term and condition of continued employment, assuming, of course,
that the employee was given notice of the terms of the agreement, which the
plaintiff here denied.
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
