US Court Rejects DocuSign e-Signatures as Method to Provide Digital Authorization

Back in July, the United States bankruptcy court for the Eastern District of California held that under its local rules, an attorney submitting electronically signed documents for filing with the court must maintain an originally signed document in paper form bearing a “wet” signatureIn re Mayfield, No. 16-22134-D-7, 2016 WL 3958982 (U.S. Bankr. Ct. E.D. Cal.).  The United States Trustee (UST) filed a motion for sanctions against a debtor’s attorney who used the an electronic signature platform to have the debtor execute certain documents that were subsequently filed with the court.  The court’s local rules 9004-1(C) and (D) provide that if these documents were executed with a “software-generated electronic signature,” the submitting attorney is required to maintain “an originally signed document in paper form” and produce it upon request by the UST.   When asked by the UST to produce the original signed versions of the documents he filed, the debtor’s attorney was unable to do so.  In response to the motion, the debtor’s attorney argued that the requirements of 9004-1(C) and (D) did not apply because the electronic signatures were manually created by the debtor’s actions taken on the electronic signature platform.  As such, they were not “software-generated electronic signatures” within the meaning of the rule, and under the federal ESIGN Act constituted “original” signatures.

Ultimately, the court held that: (i) the ESIGN Act was not applicable because of the express exemption for court rules at 15 USC § 7003(b)(1), thereby permitting the court to establish and interpret its own rules with respect to electronic signatures, (ii) the electronic signatures created using the platform were within the meaning of the term “software-generated electronic signature” under the local rules, and (iii) the local rule’s reference to “an originally signed document in paper form” required the attorney to also maintain a copy of the document bearing a “wet ink” signature.  Accordingly, the Court granted the UST’s motion and, as the sanction imposed, required the debtor’s attorney to certify completion of the court’s online e-filing training course.

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Implementation of New EU Regulation Establishes Uniform Legal Framework for e-Signatures Across All EU Member States

Recently, the EU adopted a new EU Electronic Signature Regulation 910/2014/EU, which established a new, comprehensive, legal framework for e-signatures, as well as e-identification, e-seals, e-timestamp, e-documents, e-delivery services, and website authentication. The new regulation applies to transactions dating back to July 1, replacing the prior Directive on Electronic Signatures (1999/93/EC). Among other things, the new regulation defines three levels of e-Signatures: (i) e-Signature, (ii) advanced e-Signature, and (iii) qualified e-Signature. “E-Signature” is defined as data in electronic form which are attached to, or logically associated with, other electronic data, which are used by the signatory to sign. “Advanced electronic signature” is defined as uniquely linked to the signatory, capable of identifying the signatory, and created using e-signature creation data that the signatory can, with a high level of confidence, use under his sole control. And finally, a “qualified electronic signature” is defined as an advanced electronic signature created by a qualified electronic signature creation device.

Notably, and in contrast to previous EU directives on e-signatures, the new regulation is directly applicable in all 28 EU Member States without any requirement that it be formally adopted into national law. Specifically, Article 25 of the New Regulation provides that an electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures. Rather, a qualified electronic signature in one EU Member State shall now be recognized as a qualified electronic signature in all other Member States.

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California Court of Appeals Rules on Evidentiary Standard for Attributing an eSignature to the Signer

On April 22, the California Court of Appeals, Second District, reversed a trial court decision denying a defendant employer’s petition to compel arbitration pursuant an electronically signed arbitration agreement with an employee. Espejo v. S. Cal. Permanente Med. Grp., No. BC562377 (Cal. App. Apr. 22, 2016). In the proceedings below, the employer offered declarations describing its electronic contracting procedures with employees. The procedures described in one of those declarations included an email sent to the plaintiff at the email address he provided, which included a hyperlink to a landing page where he could access his employment agreements for review and execution. After clicking on the link, the employee then had to a log in using unique credentials securely provided to the plaintiff by the employer. Once logged in, the plaintiff was presented various employment agreements (including the agreement containing the arbitration clause) and had to manually type in his name to sign the agreements. Upon signing the agreement, the employer’s system finalized the document by imprinting the date, time, and the IP address from which the plaintiff electronically signed the agreements. The employer’s declarant further stated that the plaintiff’s name could have only been typed into the signature pages of the agreements by someone using the plaintiff’s unique user name and password. In opposition to this evidence, the plaintiff only stated that he did not recall executing the agreement containing the arbitration clause and denied that the employer had met its burden to attribute the signature to him under the state UETA.  Read more…

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New York AG Schneiderman Opines on Legality of Electronic Signatures for the Purposes of Online Voter Registration

This week, New York AG Schneiderman issued an opinion regarding the legality of online voter registration, including the use of electronically affixed handwritten signatures. The opinion is in response to a February 8 letter from Suffolk County seeking the AG’s opinion as to “whether State law permits Suffolk County to implement online voter registration through the use of an electronic signature or whether the signature requirements of N.Y. Election Law § 5-210(5)(d)(xi) require signatures to be handwritten or ‘affixed by hand.’” AG Schneiderman opined that because Election Law § 5-210(5)(d)(xi) does not specifically require a signature written with ink on a voter registration application, the law does not preclude an electronically affixed signature. In accordance with the Election Law, AG Schneiderman commented that the electronic signature must be of a “quality and likeness to a signature written with ink,” and that an applicant completing an online registration application must either (i) print and mail the application to the local board of elections, or have a third party print and mail the application; or (ii) personally appear at the local board of elections.

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Florida Fourth District Court of Appeals Rules in Bank’s Favor in Foreclosure Action Based on an eNote

On April 20, a Florida District Court of Appeals issued an opinion affirming a lower court’s final judgment in favor of a bank (Bank) in a foreclosure action against borrowers who signed a mortgage note electronically (eNote). Rivera v. Wells Fargo Bank, N.A., No. 4D14-2273 (Fla. App. April 20, 2016). In the proceedings below, the Bank had presented a sworn certificate of authentication which articulated, among other things, the Bank’s role as servicer of the eNote for Fannie Mae, and describing the Bank’s practices and systems used for the receipt and storage of authoritative copies of electronic records and for protecting electronic records against alteration. The Bank also provided evidence from the same system records and the records of MERSCORP, Inc., as provided for in the terms of the eNote itself, showing that the eNote was last transferred to Fannie Mae and that the authoritative copy of the eNote was maintained in the Bank’s systems as Fannie Mae’s custodian. On appeal, the borrowers challenged the adequacy of the Bank’s demonstration that the eNote had properly transferred to Fannie Mae, thus challenging the Bank’s standing to enforce the eNote and foreclose the mortgage as Fannie Mae’s authorized representative.  Read more…

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