Employee Resource Group, LLC, David Curry and James Mollette v. Anita Collins

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
EMPLOYEE RESOURCE GROUP, LLC,
DAVID CURRY and JAMES MOLLETTE,
Defendants Below, Petitioners
FILED
June 3, 2019
released at 3:00 p.m.
vs) No. 18-0007 (Mingo County 16-C-214) EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
ANITA COLLINS,
Plaintiff Below, Respondent
MEMORANDUM DECISION
Petitioners Employee Resource Group, LLC (sometimes referred to as “ERG”), David Curry,
and James Mollette (referred to collectively as “petitioners”), by counsel Bradley K. Shafer, appeal
the December 5, 2017, order entered by the Circuit Court of Mingo County, denying their motion
to enforce an arbitration agreement. Respondent Anita Collins, by counsel Nathan D. Brown, filed
a response. On appeal, petitioners contend that the circuit court erred in refusing to enforce the
parties’ arbitration agreement because it found they failed to produced a signed copy of the
agreement.
The Court has considered the parties’ briefs, oral arguments and appendix record on appeal.
This case satisfies the “limited circumstances” requirement of Rule 21(d) of the Rules of Appellate
Procedure and is appropriate for a memorandum decision rather than an opinion. For the reasons
expressed below, the decision of the circuit court is reversed and this case is remanded for further
proceedings consistent with this memorandum decision.
I. Facts
On April 24, 2016, respondent was employed by petitioner ERG to work at a Wendy’s
restaurant located in South Williamson, Kentucky. As part of the hiring process, respondent was
sent an e-mail containing an “Agreement and Receipt for Dispute Resolution Program” (hereinafter
“Arbitration Agreement”), in addition to a document entitled “Dispute Resolution Program, Program
Booklet.” Respondent was asked to review these documents, as well as other employment-related
documents, and to sign the various documents digitally, or electronically, including the Arbitration
Agreement. A copy of the Arbitration Agreement at issue, which was submitted to the circuit court,
reflects respondent’s digital signature on the agreement as follows: “Digitally Signed By: Anita
Collins; Date: Apr-24-2016 1:12:25 PM EDT” on the line above “Associate Signature.”
1
The Arbitration Agreement expressly provides, in relevant part:
MUTUAL PROMISE TO RESOLVE CLAIMS BY BINDING
ARBITRATION. The Company and I agree that all legal claims or
disputes covered by the Agreement must be submitted to binding
arbitration and that this binding arbitration will be the sole and
exclusive final remedy for resolving any such claim or dispute. I also
agree that any arbitration between the Company and me is of an
individual claim and that any claim subject to arbitration will not be
arbitrated on a collective or class-wide basis.
The mutual obligations set forth in this Agreement shall constitute a
contract between the Employee and the Company but shall not
change an Employee’s at-will relationship or any term of any other
contract or agreement between the Company and Employee. This
Policy shall constitute the entire agreement between the Employee
and Company for the resolution of Covered Claims. The submission
of an application, acceptance of employment or the continuation of
employment by an individual shall be deemed to be acceptance of the
dispute resolution program. No signature shall be required for the
policy to be applicable.
Legally protected rights covered by this Arbitration Agreement are
all legal claims, including: . . . tort claims (including, but not limited
to, claims for physical, mental or psychological injury, but excluding
statutory workers compensation claims); claims for wrongful
termination; sexual harassment; [and] discrimination (including, but
not limited to, claims based on race, sex, religion, national origin,
age, medical condition or disability, whether under federal, state or
local law) . . . .
I understand and agree that by entering into this Agreement, I
anticipate gaining the benefits of a speedy, impartial dispute
resolution procedure. This procedure is explained in the Dispute
Resolution Program Booklet, which I acknowledge I have received
and read or have had an opportunity to read.
....
. . . This Agreement and the Dispute Resolution Program Booklet are
the complete agreement of the parties on the subject of arbitration of
disputes. . . .
....
2
VOLUNTARY AGREEMENT. I acknowledge that I have carefully
read this Agreement, I understand its terms, that all understandings
and agreements between the Company and me relating to the subjects
covered in this Agreement are contained in it, and that I have entered
into the Agreement voluntarily and not in reliance on any other
promises or representations by the Company other than those in the
Agreement itself and the Dispute Resolution Program.
I further acknowledge and agree that I have been given the
opportunity to discuss this Agreement with my own private lawyer
and have used that opportunity to the extent that I wish to do so. . . .
On November 3, 2016, respondent was terminated from Wendy’s. Following her
termination, respondent filed a complaint in the circuit court against petitioners alleging that she was
sexually harassed and that she was terminated from her employment, because she reported the
ongoing sexual harassment that she suffered. Respondent’s claims included: 1) violation of the
Kentucky Civil Rights Act, Kentucky Revised Statute § 344.040 (LexisNexis 2011); 2) retaliation
in violation of the Kentucky Civil Rights Act; 3) wrongful termination; 4) extreme and outrageous
conduct; 5) hostile work environment; and 6) negligent supervision/retention.1
In response to the complaint, petitioners filed answers and a motion to enforce the
Arbitration Agreement. Petitioners argued that respondent was presented with and endorsed the
Arbitration Agreement and that the claims raised by respondent’s lawsuit were subject to that
agreement. Respondent opposed petitioners’ motion by arguing, in part, that the Arbitration
Agreement was not enforceable because she “did not in fact sign the document.” Specifically,
respondent contended that “[w]ithin the three (3) page document, there are multiple places in which
the employee is asked to ‘digitally sign.’ Those places have a typed name of Anita Collins;
however, there is no signature on the document. Further, the plaintiff indicates that she has never
seen nor signed the document.” In response, petitioners argued, inter alia, that the Arbitration
Agreement was an enforceable contract and that respondent signed the agreement with her digital
signature.2
1
Despite the agreement between the parties and the circuit court that Kentucky law applies
to this action, we are perplexed by petitioners’ failure to cite to a single Kentucky case in their brief.
See infra section II (discussing the applicability of Kentucky law).
2
The Arbitration Agreement at issue contains a delegation provision that directs the
arbitrator, not the circuit court, “shall have the exclusive authority to resolve any dispute relating
to the interpretation, arbitrability, applicability, enforceability or formation of this Agreement,
including, but not limited to, any claim that all or any part of this Agreement is void or voidable.”
Petitioners raised the delegation provision in their reply brief in support of their motion to enforce
the Arbitration Agreement. But for reasons that are unclear, petitioners failed to raise the delegation
(continued...)
3
In an order entered on May 22, 2017, the circuit court denied petitioners’ motion to enforce
arbitration, finding that “no evidence was tendered regarding when . . . [respondent] was presented
with said agreement and how much time she was afforded to review said document prior to the
alleged electronic signing of the same[;]” that respondent “contends she did not sign” the agreement;
and, that “no enforceable contract exists between” respondent and petitioners. The circuit court,
however, granted petitioners leave to “re-address said motion after” the parties engaged in
discovery.
Thereafter, both respondent and Mr. Ball, the manager of the Wendy’s where respondent
worked and the individual who hired and fired respondent, were deposed. Respondent testified that
she applied for Wendy’s on her iPhone and used her Yahoo email address.3 She testified that she
no longer has the iPhone used in the application process. She further testified that she did not
receive certain employment documents, including the Arbitration Agreement. Respondent, however,
testified that if she had created a passcode or password for the purposes of the security of the
application process,4 she would not have given it to anyone else to use. Regarding her employee
orientation process, she testified that she did not complete any paperwork as part of the hiring
process, including an I-9 “Employment Eligibility Verification,” or provide proof that she was
authorized to work in the United States. Despite this testimony, subsequent to her deposition,
petitioners produced a copy of respondent’s I-9, a copy of her driver’s license, and her W-4, which
indicates her withholdings. Respondent said that the only thing she received from Wendy’s was
“my apron, shirt, and hat[.]”
Mr. Ball’s deposition revealed that he had worked for Wendy’s since 2005. He testified that
once an individual completes the on-line application for a job with Wendy’s he manages, the
application is sent to him. He then reviews the application and determines whether he wants to
proceed to hire the individual. If the individual is hired, a program called TalentReef generates an
email that is sent to the employee at the email address the applicant provides. The email includes
the Arbitration Agreement and the “Employee Resource Group LLC Dispute Resolution Program
2
(...continued)
provision before this Court on appeal. As we found in Employee Resource Group, LLC v. Harless,
No. 16-0493, 2017 WL 1371287 (April 13, 2017) (memorandum decision), failure to assert any
issue regarding the delegation provision before this Court serves as a waiver on appeal. Id. at *2 n.4.
3
Respondent testified that she no longer has access to this email account because she had
forgotten her password and “for some reason it locked.” She testified that had occurred some eight
months prior and she did not know any way to get back into that account. Because of this,
petitioners were unable to obtain email records regarding the communications that respondent
received as part of the hiring process. Similarly, petitioners were unable to obtain emails sent from
the TalentReef program to respondent as part of the hiring process. Nevertheless, petitioners did
produce a copy of the digitally signed Arbitration Agreement, as well as other signed employment-
related forms that also had been digitally signed by respondent.
4
The terms “passcode” or “password” are used interchangeably by the parties.
4
Booklet.” The email is sent to the employee, and the employee confirms receipt of those documents
by electronically signing them. The recipient can print the documents if desired. Mr. Ball stated
that when an employee completes an on-line application, the person sets up a profile and creates a
password. The employee then enters that password to electronically sign the documents—there is
no “physical signature.” If the employee does not complete the forms emailed to him or her by
digitally signing the documents, Mr. Ball testified that he does not schedule the orientation and the
individual is not hired. If the forms are completed, Mr. Ball schedules an orientation. As part of
the orientation, Mr. Ball stated that he looks at the new employee’s social security card and photo
identification card, makes a copy of those documents, and places them in the restaurant’s file. Mr.
Ball then logs onto the TalentReef program and digitally signs all the paperwork that the new
employee has reviewed by entering his password. Mr. Ball stated that it is his customary and routine
practice to review with any new employee the policies that were previously emailed to the employee
“to make sure they understand it[,]” and to try and answer any questions the employee may have.
After discovery, petitioners renewed their motion to enforce the Arbitration Agreement,
arguing that a valid arbitration agreement had been entered into between the parties. Respondent
filed a response, contending that she “did not in fact sign the document.” Respondent maintained
that the “‘digital signatures’ were merely pre-stamped to the documents.” She contended that she
never saw the documents.
The circuit court denied petitioners’ motion to enforce arbitration in an order entered on
December 5, 2017. The circuit court found that respondent’s name “was prestamped into the
signature block[;]” that “ERG did produce an Arbitration Agreement which had . . . [respondent’s]
typed name in a digital signature box in seven (7) distinct locations all dated for April 24, 2016, and
that [sic] the time of 1:12:25 PM EDT[;]” that under Kentucky law, “as a matter of general contract
law, an individual cannot be legally bound by an agreement to which she did not consent[;]” that “at
best, . . . [petitioner ERG] has . . . [respondent’s] pre-stamped name on its Agreement[;]” and that
no enforceable contract exists between petitioners and respondent. It is from this order that
petitioners appeal.
II. Standard of Review/Applicable Law
Whether the arbitration agreement is enforceable is a question of law. In syllabus point one
of West Virginia CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W. Va. 465, 796 S.E.2d
574 (2017), this Court held: “When an appeal from an order denying a motion to dismiss and to
compel arbitration is properly before this Court, our review is de novo.” Further, “[w]here the issue
on an appeal from the circuit court is clearly a question of law or involving an interpretation of a
statute, we apply a de novo standard of review.” Syl. Pt. 1, Chrystal R.M. v. Charlie A.L., 194 W.
Va. 138, 459 S.E.2d 415 (1995).
5
The parties all agree, and the circuit court correctly found, that the arbitration agreement at
issue is subject to the Federal Arbitration Act (“FAA”)5 and that “‘under the FAA, whether a valid
arbitration agreement exists between the parties is determined by the applicable contract law which,
in this case, is Kentucky.’” “In general, this State adheres to the conflicts of law doctrine of lex loci
delicti.” Syl. Pt. 1, Paul v. Nat’l Life, 177 W. Va. 427, 352 S.E.2d 550 (1986). Thus,
West Virginia courts apply the lex loci delicti choice-of-law rule; that
is, the substantive rights between the parties are determined by the
law of the place of injury. Blais v. Allied Exterminating Co., 198
W.Va. 674, 482 S.E.2d 659 (1996); Paul v. National Life, 177 W.Va.
427, 352 S.E.2d 550 (1986); Vest v. St. Albans Psychiatric Hospital,
Inc., 182 W.Va. 228, 229, 387 S.E.2d 282, 283 (1989). However,
under the lex loci delicti choice-of-law rule, West Virginia procedure
applies to all cases before West Virginia courts. “It is traditional that
a forum court always applies its own procedural rules and practices,
regardless of the procedure that might be employed if the case were
tried at the place where the cause of action arose. (footnote omitted).”
McKinney v. Fairchild Int’l, Inc., 199 W. Va. 718, 727, 487 S.E.2d 913, 922 (1997). In this case,
the Arbitration Agreement arose out of respondent’s application for employment at a Wendy’s
restaurant in South Williamson, Kentucky, and all the allegations forming the basis for respondent’s
claims against petitioners took place in Kentucky. Thus, the resolution of the issue now before the
Court necessarily requires the application of Kentucky law.
III. Discussion of Issue
The determinative issue before the Court is whether the circuit court erred in refusing to
enforce the Arbitration Agreement based upon its determination that the agreement was not signed
by respondent. Petitioners argue that by digitally signing the document, respondent agreed to enter
the Arbitration Agreement voluntarily and acknowledged that she had received the agreement and
read, or had the opportunity to read, the agreement. Petitioners claim that the circuit court erred in
finding that respondent’s name was “prestamped” rather than digitally signed on the Arbitration
Agreement and that petitioners “cannot conclusively produce a signed agreement.”6
5
See 9 U.S.C.§§ 1 to -16 (2012).
6
Petitioners brought to the Court’s attention during oral argument a recent case from the
Supreme Court of Kentucky, Northern Kentucky Area Development District v. Snyder, 570 S.W.3d
531 (Ky. 2018). In Snyder, the Kentucky court found that an arbitration agreement between a state
agency and its employee was unenforceable because Kentucky Revised Statute 336.700(2)
(LexisNexis 2011) “is a direct limitation on the power of state agencies to condition employment
of their state employees on agreement to an arbitration clause; in fact, this statute outright prohibits
(continued...)
6
Respondent argues that the parties did not enter into a contract and, therefore, she is not
required to submit her claims to arbitration. She maintains that the evidence does not show that she
received or signed the Arbitration Agreement. She further argues that under Kentucky law, “mere
receipt of a document, if it exist[sic], is not enough to bound [sic] a party to the arbitration
agreement.”7
We begin our examination of the issue raised by setting forth the following general burden
of proof that must be met by a party seeking to enforce an arbitration agreement in Kentucky:
While there is no question “that the party seeking to enforce
an agreement has the burden of establishing its existence, . . . once
prima facie evidence of the agreement has been presented, the burden
shifts to the party seeking to avoid the agreement.” Louisville
Peterbilt, Inc. v. Cox, 132 S.W.3d 850, 857 (Ky.2004). A party
“me[ets] the prima facie burden by providing copies of [a] written
and signed agreement[ ]to arbitrate.” Id.
MHC Kenworth Knoxville/Nashville v. M & H Trucking, LLC, 392 S.W.3d 903, 906 (Ky. 2013)
(emphasis added).
In the instant case, the record unequivocally contains a digitally signed copy of the
Arbitration Agreement produced by petitioners during discovery before the circuit court. Thus, the
burden shifted to respondent. Respondent argued that although the agreement was digitally signed
it was not her signature, rather it was a “pre-stamped” signature. But the unrefuted evidence before
the circuit court was that the only way the digital signature appears on the document was for
respondent to have entered her password that she created into the portal that was emailed to her—
6
(...continued)
such act.” 570 S.W.3d at 535. The issue of whether an arbitration agreement can be a condition of
employment, however, was never raised by the parties in this appeal. Further, following the
Kentucky Supreme Court’s decision in Snyder, the Kentucky Legislature passed “Kentucky State
Senate Bill 7, which amends KRS 336.700 and will apply both prospectively and retroactively, . .
. [having been] signed into law on March 25, 2019. It effectively nullifies the Supreme Court’s
holding in Northern Kentucky Area Dev. Dist. v. Snyder.” Tassy v. Lindsay Entm’t Enters., Inc.,
Civil Action No. 3:16-CV-00077-TBR, 2019 WL 1455797, at *6 (W.D. Ky. April 4, 2019).
7
Respondent relies upon Ally Cat, LLC v. Chauvin, 274 S.W.3d 451 (Ky. 2009), to support
her position that her assent to the arbitration agreement must be express and that mere
acknowledgment of receipt of the document is insufficient. The Supreme Court of Kentucky in
Ernst & Young, LLP v. Clark, 323 S.W.3d 682 (Ky. 2010), however, stated that “Ally Cat has no
applicability to an arbitration agreement governed exclusively by the Federal Arbitration Act.” Id.
at 687 n.8. The case before us is similarly governed by the FAA and, thus, Ally Cat is not
applicable.
7
a password that she testified she would not have shared with anyone else. Significantly, the digital
signature found on the Arbitration Agreement complies with Kentucky’s Uniform Electronic
Transaction Act, Kentucky Revised Statute §§ 369.101 to -.120 (LexisNexis 2008 & Supp. 2018).8
Contained within that act is Kentucky Revised Statute § 369.107, which provides:
1) A record or signature may not be denied legal effect or
enforceability solely because it is in electronic form.
(2) A contract may not be denied legal effect or enforceability solely
because an electronic record was used in its formation.
(3) If a law requires a record to be in writing, an electronic record
satisfies the law.
(4) If a law requires a signature, an electronic signature satisfies the
law.
Id. (emphasis added). Consequently, contrary to the circuit court’s finding that petitioners “cannot
conclusively produce a signed agreement between parties,” petitioners did produce a signed
Arbitration Agreement and met their prima facie burden. It was respondent who failed to produce
sufficient evidence to overcome it. The circuit court should have referred the case to arbitration and
erred when it failed to so.9
IV. Conclusion
For the foregoing reasons, the December 5, 2017, order entered by the Circuit Court of
8
Similarly, this Court has recognized the validity of a digital or electronic signature in State
ex rel. U-Haul Co. of West Virginia v. Zakaib, 232 W. Va. 432, 752 S.E.2d 586 (2013), wherein we
stated that
from a legal standpoint, electronic contracting is no different from
contracting using tangible paper writings. “[A] contract cannot be
denied enforcement solely because it is in electronic form or signed
electronically.” Juliet M. Moringiello and William L. Reynolds,
From Lord Coke to Internet Privacy: The Past, Present, and Future
of the Law of Electronic Contracting, 72 Md. L.Rev. 452, 460 (2013).
232 W. Va. at 440 and n.8, 752 S.E.2d at 594 and n.8 (providing in a footnote that West Virginia
has also adopted the Uniform Electronic Transactions Act, W. Va. Code §§ 39A-1-1 to -17 (2014)).
9
Because the case should have been referred to an arbitrator, it is for that arbitrator to resolve
any remaining issues including whether the Arbitration Agreement is ambiguous and whether
respondent’s claims fall within the parameters of the parties’ Arbitration Agreement.
8
Mingo County, denying petitioners’ motion to enforce arbitration is reversed and the case is
remanded for entry of an order referring the matter to arbitration.
Reversed and remanded.
ISSUED: June 3, 2019
CONCURRED IN BY:
Chief Justice Elizabeth D. Walker
Justice Margaret L. Workman
Justice Tim Armstead
Justice Evan H. Jenkins
Justice John A. Hutchison
9