Example of Poor Implementation

A snippet from a message to the Electronic Contracting Practices Working Group of the Cyberspace Law Committee of the Business Law Section of the American Bar Association. This case is a good example of how electronic signatures/records/transactions/notices will fail to be effective due to implementation problems.


To Electronic Contracting Practices Working Group:

From Co-Chair Kathy Porter

I wanted to update you on a case that the Working Group has followed in the First Circuit involving the use of email to distribute changes in the employment policies of a company. In this case, the employer sent a mass e-mail to employers changing the dispute resolution provisions to mandate arbitration. The email contained two attachments, one with the new policy and one with FAQs. The text of the email was found by the district court judge to be confusing and vague. The employee claimed he never agreed to the new policy.

Campbell v. General Dynamics (1st Cir 05/23/2005)http://caselaw.lp.findlaw.com/data2/circs/1st/041828p.pdf

Campbell brought an ADA claim in federal court against his former employer General Dynamics. General Dynamics moved to dismiss case on grounds that company policy mandated arbitration. The company distributed a revised employee handbook to employees via e-mail. Campbell claimed he had not agreed to the revised policy. The district court denied General's Dynamics motion to compel arbitration , and the company appealed . The First Circuit affirmed.

However, the First Circuit recognized that the electronic distribution of the employee handbook was not per se invalid.

The court observed that "the Electronic Signatures in Global and National Commerce Act (E-Sign Act), Pub.L. No. 106-229, 114 Stat. 464 (2000) (codified at 15 USC Sections 7001-7031), likely precludes any flat rule that a contract to arbitrate is unenforceable under the ADA solely because its promulgator chose to use e-mail as the medium to effectuate the agreement."

..... "[b]y its plain terms, the E-Sign Act prohibits any interpretation of the FAA's 'written provision' requirement that would preclude giving legal effect to an agreement solely on the basis that it was in electronic form."

The court reviewed all of the circumstances surrounding the distribution of the email to General Dynamics' employees The court determined that "[w]eighing all the attendant circumstances ... the notice was wanting and ... therefore, enforcement of the waiver would be inappropriate."

The court noted that "the district court's opinion does exhibit a high degree of skepticism about the use of e-mail in this context," but opined "[w]e do not share that skepticism: we easily can envision circumstances in which a straightforward e-mail, explicitly delineating an arbitration agreement, would be appropriate."