Court Clarifies Burden Of Proving Validity Of Electronically Signed Arbitration Agreement

The increased popularity of electronic signing of contracts has generated litigation regarding disputes over whether a party agreed to arbitrate disputes. In Valdez v. Tesla, Inc., a California court has reinforced that, once a purported electronically signed arbitration agreement is presented to the court, the party challenging the enforceability of the agreement bears the burden of introducing evidence that he did not sign. When such evidence is introduced, through a declaration or otherwise, the burden transfers to the party invoking the agreement to provide that the electronic signature is authentic.

In Valdez the lower court ignored this burden-switching sequence. Instead of requiring the party challenging the agreement to offer evidence, the court determined the arguments of counsel were sufficient to impose upon the proponent of the agreement the burden of proof.

Reversing, the appellate court noted as follows:

“The weakness in Valdez’s position is that he submitted no evidence he did not electronically sign the offer letter that contained the arbitration clause. He points to no authority, and our own research has disclosed none, in which a party opposing arbitration on this ground has been held to meet his burden without providing, at a minimum, a declaration under penalty of perjury stating he or she did not sign or does not recall signing the agreement. Rather, courts have consistently relied on a declaration contesting signature in some form as an evidentiary basis for a finding that the signature is not valid.”

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