Sixth Circuit Holds Validity of Employee’s Electronic Signature Creates Issue of Fact, Reverses Order Compelling Arbitration

In Bazemore v. Papa John’s U.S.A. Inc., the Sixth Circuit Court of Appeals considered the plaintiff’s appeal of an order granting the defendant’s motion to compel arbitration and to dismiss the plaintiff’s complaint brought under the Fair Labor Standards Act.

The case, a putative class action brought by Papa Johns delivery driver Andrew Bazemore, alleged that Papa Johns had under-reimbursed Bazemore’s vehicle expenses, which resulted in him being paid less than the minimum state and federal wage requirements. Papa Johns moved to compel arbitration based on an arbitration agreement allegedly signed by Bazemore through an electronic signature program called e-Forms. Papa Johns submitted an affidavit in support of the motion explaining the process employees must follow to electronically sign the arbitration agreement as a condition of employment, and indicating the company’s records showed that Bazemore had “followed this process to sign its arbitration agreement.” Bazemore opposed the motion, contending that he had never seen or heard about the arbitration agreement and that his alleged login credentials “were clearly made up.” Bazemore requested limited discovery related to the validity of his alleged electronic signature. The district court denied Bazemore’s request for discovery, finding his position that he had never seen the agreement was a “convenient lapse in memory,” and granted Papa Johns’ motion to compel arbitration and to dismiss the complaint.

The Sixth Circuit first recognized the Federal Arbitration Act requires that a party seeking to compel arbitration must prove a valid arbitration agreement exists, and “[i]f a genuine issue of material fact arises as to whether such an agreement exists, the court shall proceed summarily to the trial thereof.” The court then found that while an electronic signature can be legally valid and show a party’s assent to an agreement, the parties presented conflicting evidence as to whether Bazemore’s electronic signature was valid, including Bazemore’s sworn statement that he had never seen the arbitration agreement before. The court found this disagreement presented a genuine issue of material fact for the fact finder to determine, and even though Bazemore did not expressly state he had not signed the agreement, “a reasonable factfinder could plainly infer that, if Bazemore had not seen the agreement, he had not signed it either.” The court reversed the district court’s order compelling arbitration and remanded the case for further proceedings.

Bazemore v. Papa John’s U.S.A., Inc., No. 22-6133 (6th Cir. July 20, 2023).