2019: The Year in Electronic Signature Law
By Hal Marcus, Director, Product Marketing
In a year consumed by emerging data privacy laws like CCPA and growing legal use cases for AI and analytics, electronic signatures may not have dominated the legal technology headlines. (And there wasn’t even a fun judicial quote referencing James Joyce to rally around!) Yet 2019 saw no shortage of US legal engagement with e-signature. Indeed, if there’s a metaphor to be found in 2019’s stance on electronic signature, it would have to be the continued opening of doors—to broader use cases, recognition, and flexibility.
Here are some highlights from the year in e-signature law.
Washington decides it no longer needs its original e-signature law
One of only three US states that never adopted the 1999 Uniform Electronic Transactions Act (UETA), Washington had already pioneered electronic signature legislation with the 1997 Washington Electronic Authentication Act (WEAA). However, WEAA was narrower in focus than UETA and its federal counterpart, the ESIGN Act of 2000 (ESIGN), in that it recognized only “digital signatures,” a subset of e-signatures requiring digital certificates to prove the signers’ identity.
Over the years, WEAA was gradually amended and augmented by other laws that broadened the state’s e-signature legal framework to be more aligned with UETA and ESIGN—and particularly their core principle of technology neutrality (meaning no particular e-signature methodology has greater legal status than any other). Unfortunately, however, that piecemeal evolution led to inconsistencies across Washington law.
To resolve those inconsistencies, as of July 28, 2019, WEAA has been repealed in its entirety. According to state congressional reports, the repeal not only “cleans up confusion in existing law”, but also acknowledges that the “private sector” has effectively put WEAA “out of business.” The latter point recognizes that e-signatures have become widely adopted in the US without typically requiring the use of state-regulated digital certificates for signer identity.
Though the repeal of WEAA now makes Washington the only state in the union without a singular overlay statute for e-signature, the clear intent of the repeal is to defer to ESIGN by removing lingering incompatibilities. Indeed, the bill that repealed WEAA expressly inserted ESIGN’s broad “electronic signature” definition into various other Washington state laws.
In short, a pioneering 1997 state law originally intended to promote e-signature was, in 2019, deemed no longer necessary in light of wide market adoption and a more inclusive federal law.
California enables more e-signature use cases
When California enacted UETA in 1999, it excluded certain record types from the act’s coverage. Ostensibly aimed at protecting consumers (back at a time when access to electronic communication was not yet the norm), these exemptions meant businesses could not necessarily use electronic records and signatures for certain documents—from landlord-tenant notices, to health provider benefit notices, to even notices of cancellation for some types of telephone solicitations. Legal support for such use cases would have to derive from other legal sources over time.
And that’s just what’s happening. Gradually, California’s UETA exemptions are disappearing—and 2019 saw continued progress on that road in at least two industries:
On September 5, 2019, California Governor Gavin Newsom signed into law AB-1065, which amends both California’s UETA and Insurance Code. The new law follows some ten years of exploratory easing of the restrictions on electronic records and signatures for a range of insurance use cases, beginning with certain property and casualty insurance documents (such as homeowners and auto insurance) and eventually including more sensitive documents (like notices of cancellations and life insurance notices). Citing a list of benefits achieved, AB 1065 removes the sunset provisions that had made these latter use cases only temporary. Electronic records and signatures can now be used for such notices indefinitely.
Similarly, on October 3, 2019, Newsom approved AB-596, which chips away at California UETA’s exemption for transactions involving motor vehicle recalls. The new law expressly permits new motor vehicle dealers to receive electronic authorization from consumers for any repair of a manufacturer recall (so long as such interactions are consistent with regulations adopted by the Bureau of Automotive Repair). This change eliminates the occasionally burdensome requirement for a consumer to appear repeatedly in person at a service center to approve a repair related to a safety recall.
New case law underscores the value of an e-signature audit trail
The new year had barely begun when a state appellate court, relying on evidence of an electronic agreement, overturned a lower court ruling based on jurisdictional grounds.
Designs for Health, Inc. v. Miller was a breach of contract matter over an agreement to sell health care products. The trial court dismissed the case, finding that the plaintiff had not established the court’s personal jurisdiction over defendant Miller, a California resident. The Appellate Court of Connecticut reversed the dismissal, basing jurisdiction on the “forum selection clause” in the agreement. The DocuSign audit trail and other evidence provided by plaintiff met its prima facie burden to establish personal jurisdiction over defendant (who, the court noted, had used DocuSign previously to sign agreements).
Later, in Loretta-Azuka v. Exeter Health Resources, Inc., the U.S. District Court for the District of New Hampshire granted summary judgment to the defendants in a breach of contract claim in the context of employment at a hospital. The court found the plaintiff’s “somewhat vague claim” of “forgery” performed by one or more of the defendants to be “wholly unsupported by the record,” as the plaintiff had reviewed and signed the relevant documents via her DocuSign account.
And, in Joseph v. Velocity, the Greatest Phone Company Ever, Inc., the U.S. District Court for the Northern District of Ohio approved the use of DocuSign for parties to opt into a class action. (Admittedly, class actions are a common use case for e-signature and this case is relatively unremarkable, but that title is just too wonderfully hyperbolic not to get honorable mention!)
So there are key highlights of the year in US e-signature law. May the doors continue to open in 2020, and may you all enjoy a healthy and happy New Year — and new decade!
Learn more about e-signature legality—across the US and across the globe.