July 14th, 2021

What is a Signature? (Does your unsigned email count?)

We lawyers love, love, love our formality, oft times filling pages with pretentious legalese. I’m sure that wax seals and red ribbons were invented by lawyers, to make doubly, triply sure that everything was authentic. And redundant.

And when seals and ribbons went by the wayside, wet ink signatures became the standard-bearer of authenticity.

Last week the Appellate Division (First Department) confronted the formality of signatures regarding a settlement. The court sought to answer a question: If lawyers agree to a settlement via our now ubiquitous email, but use a standard signature block instead of retyping their names, is a settlement valid?

In other words, what kind of seals and red ribbons do we now need?

While at first blush this looks like a small esoteric question of law regarding the informality of email and the courts’ respect for stipulations, it has the potential to carry over to a thousand different aspects of law as now practiced.

The fact pattern of The Matter of Philidelphia Insurance v. Kendall is not too complicated (if you practice personal injury law here in New York), but for the others a short background: The liability insurance you buy for your car is not for your injuries, but for the injuries of others in a collision. Thus, if the other person has only a $25,000 policy, you might be shit out of luck — a technical legal term — if you lost your leg. That’s why you buy Supplementary Uninsured/Underinsured Motorist (SUM) insurance. That part is for you. If the other driver has only $25K in insurance, and you have $1M, you can turn to your own insurer for the $975K difference.

And that’s what happened here. Kendall was clobbered in a collision. The motorcycle that hit her had only the 25K minimum but she had $1M in SUM. She collected the $25K from the other driver and proceeded to arbitration against her own insurer.

According to the decision, this funky fact-pattern popped up regarding the arbitrator’s decision and settlement with the arbitrator awarding the maximum 975K. But Kendall’s lawyer settled for only 400K because he hadn’t see the decision yet:

The arbitrator rendered her decision on September 16, 2019, awarding Kendall $975,000. The same day, the decision was emailed to Kendall’s counsel and faxed to Philadelphia’s counsel. However, neither counsel received the decision and they continued to negotiate. On September 19, 2019, the parties reached an agreement to settle the dispute for $400,000.

How did they shake hands on this deal? Via email:

On that day [Kendall’s] counsel emailed [Philadelphia’s] counsel: “Confirmed -we are settled for 400K.” Below this appeared “Sincerely,” followed by counsel’s name and contact information. Shortly thereafter, [Philadelphia’s] counsel emailed in reply, attaching a general release, styled a “Release and Trust Agreement,” and saying, “Get it signed quickly before any decision comes in, wouldn’t want your client reneging.” [Kendall’s] counsel answered, “Thank you. Will try to get her in asap.” This email concluded with the same valediction, name, and contact information as had [Kendall’s] counsel’s earlier email.

The lawyer for the injured Kendall then learned of the $975K decision and wanted to go back on the $400K agreement, arguing that it was’t “subscribed” as per CPLR 2104 by retyping his name in the email in addition to his prepopulated contact information block.

So, is the email agreement “in writing” as required by statute? If it sounds like a boring one-off kinda issue, you are not thinking of all those emails you send on a daily basis and how those might be viewed by a court.

Now previously, our Court of Appeals had held that a preprogrammed name on a fax transmission did not fulfill the subscription requirement. So email should be the same, right? (Parma Tile Mosaic & Marble Co. v Estate of Short)

The times, they are a changin’. A mid-level appeals court has now held that the old fax decision from New York’s top court is not controlling as the practice of law has changed:

The Parma court wrote in a different era, when paper records were still an important modality, maybe the most important modality, of recording information in law and business. Since that time, the electronic storage of records has become the norm, email has become ubiquitous, and statutes allowing for electronic signatures have become widespread. For these reasons, and those that follow, we find that Parma is not controlling.

While this very same court held in 2013 that “an email in which a party’s or its attorney’s name is prepopulated in the email is not sufficiently subscribed for purposes of CPLR 2104” it has now reversed itself and said “wet ink” signatures are not needed, nor is any retyped signature:

We now hold that this distinction between prepopulated and retyped signatures in emails reflects a needless formality that does not reflect how law is commonly practiced today. It is not the signoff that indicates whether the parties intended to reach a settlement via email, but rather the fact that the email was sent.

In fact, even the signature block doesn’t appear to be needed — it must only be sent from the lawyer’s account, forming a rebuttable presumption that the lawyer sent it:

We find that if an attorney hits “send” with the intent of relaying a settlement offer or acceptance, and their email account is identified in some way as their own, then it is unnecessary for them to type their own signature.

But wait, there’s more: It has been customary over the years for defendants and insurance companies to create ever more complex general releases and settlement agreements. Back in the day, the simple Blumberg form was the gold standard, until those that bill by the hour figured out there may be a bit more gold to be mined by creating ever more complex forms.

The First Department, however, found that the simple email was binding when the sole issue was the amount of the settlement. The digital handshake was good enough, and the formal release wasn’t particularly relevant as it is merely a ministerial condition:

The Release and Trust Agreement was to be further documentation of the binding agreement constituted by the parties’ counsel’s emails agreeing to settle respondent’s claim for $400,000, rather than something on which that binding agreement was contingent. The material term of the parties’ agreement to settle respondent’s claim being the sum of money that petitioner would pay respondent, respondent’s execution of a general release was essentially a ministerial condition precedent to payment (see CPLR 5003-a[a].

So, your emailed agreements will be held up the same as if they had a fancy wax seal and a red ribbon. And probably so too with any other assertion that you make. And those complex general releases that defendants like to waste time with may well be meaningless to a court.

Don’t think twice before hitting send. Think it though three times. Because “send” is your signature.

December 6th, 2016

Opting Out of Uber’s Forced Arbitration (The Clock is Ticking)

Uber logo. Used without its permission.

You have until December 21st. That’s it. But you can opt out.

Here’s the deal: Uber changed its terms of service to force people into arbitrations, taking away consumers’ rights to sue the ride sharing company if something goes wrong. Like plow into another car because the driver was looking at his phone to see where his next right might come from.

That kind of thing.

And compulsory arbitration is very bad for the little guy, as I’ve discussed earlier, as arbitrators would love to have the repeat business of the companies that are always involved in disputes. There is a hidden financial motivation to arbitrators to be gentle to Uber and other large businesses so that they continue to hire said arbitrators.

That is why, for example, Wells Fargo is trying hard to force claims against it for creating sham accounts into arbitration, instead of facing the wrath of juries.

So while Big Business of all stripes can pull it’s business from arbitrators who might not be as nice as they’d like, the one-and-done consumer has no leverage. None. Nada. Zip.

Advantage: Big Biz.

So, courtesy of Marea L. Wachsman, comes this easy-peasy method of preserving your rights against Uber.

Take it away Marea:
————————-

Marea Wachsman, of Schreier & Wachsman, LLP

If a passenger is injured in an Uber vehicle due to its negligence, passengers were required to arbitrate their claims for personal injuries before the American Arbitration Association. They were required to arbitrate pursuant to the terms and conditions of the Uber contract the passenger “accepts” when using Uber.

On July 29, 2016, however, Judge Rakoff from the Southern District ruled that the Uber arbitration terms were not conspicuous enough or did not evince the users “unambiguous manifestation of ascent” to the arbitration provision and therefore the court ruled that the arbitration provision was not enforceable.

With its forced arbitration clause tossed into the dumper, Uber tried again.

On November 14, 2016 Uber sent an email to its users to undermine Judge Rakoff’s decision, announcing it was updating its Terms effective November 21, 2016 — while everyone was scampering somewhere, or doing something, in anticipation of Thanksgiving.

In that same email, Uber instructed its users to read the new Terms and expressly stated it had “revised our arbitration agreement.” The revision is with an eye to ensuring that negligence claims by passengers must have their claims for personal injuries arbitrated, and not litigated, thereby waiving the passengers’ rights to a jury trial.

Fortunately, you can reject the November 21, 2016 Uber Terms, by providing Uber with written notice by mail, by hand delivery or by email within 30 days of November 21, 2016.

If the rejection is by email, the email must come from the email associated with the individuals account and addressed to [email protected]. The notice to reject the Terms must include the individuals full name and state your explicit intent to reject the changes to the Terms.

By rejecting the November 21, 2016 Terms, the individual continues to be bound by the Terms the individual first agreed to when the individual signed up with Uber. Thus, presumably, the individual would still have the protection Judge Rakoff provided in having the claims for personal injury for an Uber passenger against Uber heard in a courtroom and not in an arbitration hall.

You can find the information buried on Uber’s legal page, in paragraph 5, reprinted in full below:

Uber may amend the Terms from time to time. Amendments will be effective upon Uber’s posting of such updated Terms at this location or in the amended policies or supplemental terms on the applicable Service(s). Your continued access or use of the Services after such posting confirms your consent to be bound by the Terms, as amended. If Uber changes these Terms after the date you first agreed to the Terms (or to any subsequent changes to these Terms), you may reject any such change by providing Uber written notice of such rejection within 30 days of the date such change became effective, as indicated in the “Effective” date above. This written notice must be provided either (a) by mail or hand delivery to our registered agent for service of process, c/o Uber USA, LLC (the name and current contact information for the registered agent in each state are available online here), or (b) by email from the email address associated with your Account to: [email protected]. In order to be effective, the notice must include your full name and clearly indicate your intent to reject changes to these Terms. By rejecting changes, you are agreeing that you will continue to be bound by the provisions of these Terms as of the date you first agreed to the Terms (or to any subsequent changes to these Terms).

June 21st, 2013

Why Arbitration is Rigged Against Consumers

The United States Supreme Court put arbitration back in the news yesterday, by deciding a case in favor of American Express and against a restaurant (American Express v. Italian Colors Restaurant). The restaurant had a $40,000 claim, but to prove it would cost about $1M. They wanted, therefore, to proceed as a class action with others similarly aggrieved by American Express policies, as that is what class actions are made for: allowing small claimants to aggregate to make justice economically viable.

Justice Scalia, writing for the majority, says boo hoo and too damn bad if the courthouse doors were slammed in their face due to a contract:

“Respondents argue that requiring them to litigate their claims individually—as they contracted to do—would contravene the policies of the antitrust laws. But the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.”

Justice Kagan, writing in dissent, calls Scalia on what he did:

Here is the nutshell version of this case, unfortunately obscured in the Court’s decision. The owner of a small restaurant (Italian Colors) thinks that American Express (Amex) has used its monopoly power to force merchants to accept a form contract violating the antitrust laws. The restaurateur wants to challenge the allegedly unlawful provision (imposing a tying arrangement), but the same contract’s arbitration clause prevents him from doing so. That term imposes a variety of procedural bars that would make pursuit of the antitrust claim a fool’s errand. So if the arbitration clause is enforceable, Amex has insulated itself from antitrust liability—even if it has in fact violated the law. The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse.

And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad.

I won’t get into further details, as it is covered elsewhere, such as here:

The Supreme Court Just Made It Easier for Big Business to Screw the Little Guy (Mother Jones)

Details: American Express v. Italian Colors Restaurant (SCOTUSBlog)

SCOTUS Decision in American Express v. Italian Colors (CivPro and Fed Courts Blog)

I write instead to briefly explain why pro-consumer groups hate arbitration agreements that are forced onto consumers in the fine print of countless agreements.

Corporations appear regularly in front of arbitrators, but unlike judges, litigants get to actually pick who they appear before. True, the choice of arbitrator must be done with the consent of the consumer, but the consumer is likely to appear only once and not be the frequent flyers that corporations are.

Arbitrators have, therefore, two customers in front of them; one that regularly hires them to arbitrate and the other appearing as a one-off. Who does the arbitrator want to make happy?

You might think that the arbitrator would just do what is fair, but fair is a flexible term. Arbitrators know that if a defendant-corporation deserves to be hammered in the verdict, and they do exactly that in their decisions, then the company is likely to blacklist the arbitrator from their “approved” list.

If you were corporate counsel, wouldn’t you be tracking which arbitrators have given favorable verdicts and which ones not? Wouldn’t you be selecting only the favorable ones? Wouldn’t you have an “approved” list?

And if you are an arbitrator, wouldn’t you want to be on that list with a constant flow of business?

The consumer, of course, doesn’t have the advantage of appearing often, and even with counsel, the counsel is unlikely to be have as much business in front of the arbitration company as the corporation.

There are times, of course, when a plaintiff may want to arbitrate, such as circumstances where speed is of the essence due to age, or the cost of experts exceeding the value of the case. That’s fine, so long as it’s elective.

But that isn’t what’s happening lately as corporations rush to put compulsory arbitration agreements in every consumer contract they can find.

Congress should act to reverse this decision. Given the staggering sums of money that corporations give to candidates, of course (courtesy once again of the Supreme Court in Citizens United v. Federal Election Commission), that is unlikely.