It is rare when a court overturns a motion to compel arbitration. In Brown v. Child Advocates, Inc., No. 14-24-00012-CV (Tex.App. Hou. April 15, 2025), the court did just that. Ms. Chiffon Brown filed suit claiming CAI fired her when she refused to perform illegal acts. The employer produced an arbitration agreement. But, Ms. Brown said she had no recollection of signing the arbitration agreement. It was signed via electronic signature. The agreement had a unique provision, that the parties would attempt mediation before seeking arbitration.
Brown’s attorney suggested to CAI that they attempt mediation, before invoking arbitration. But, CAI proceeded to file a motion to compel arbitration. Without a hearing, the court granted CAI’s motion to compel arbitration. Once the parties were in arbitration, Brown pointed out that they still had not done any mediation. The Arbitrator replied that they are now in arbitration and they could now do mediation. But, Ms. Brown insisted under the terms of the arbitration agreement, they must do mediation before starting arbitration. The parties did mediate. No settlement occurred. Then Brown lost in front of the arbitrator. The employer filed a motion seeking to conform the arbitration award. At that point, the claimant objected that the pre-condition of mediation did not occur as required by the arbitration agreement. The trial court sided with the employer.
Security Procedures
On appeal the Fourteenth Court of Appeals agreed with the plaintiff. The court pointed to the requirements of Texas’ Uniform Electronic Transactions Act. Under that statute, to show a valid electronic signature, the employer must show various security procedures were in place when the employee signed the arbitration agreement. The burden is on the employer to show the electronic signature procedures were secure enough that only the employee in question could have signed the agreement.
The court of appeals reviewed an affidavit signed by CAI’s CEO and found it wanting. The affidavit did not show: 1) that creating the online account required personal information unique to Ms. Brown, 2) that security procedures are in place which would have prevented any unauthorized person from accessing the web page in place of Brown, 3) the affidavit did not present evidence corroborating Brown’s unique password and login, and 4) no evidence was shown that users must complete all steps before moving forward in the online process.
But, noted the court of appeals, CAI did present a copy of the arbitration agreement with Brown’s signature and a date and time stamp. That was sufficient evidence to put the burden back on Brown to show she did not sign the agreement.
Brown then testified via declaration that :
- She never intended to enter a binding arbitration agreement.
- She could not confirm that the electronic signature was hers.
- She had no recollection of signing an arbitration agreement.
- She never received a copy of the arbitration agreement while she was employed, and does not remember accessing an electronic version of the agreement.
- If she had known about the possibility of opting-out of the agreement at the time that she allegedly signed the document, she would have “certainly” completed the proper form in order not to be bound by arbitration.
The court found Brown’s testimony sufficient to show she did not sign the agreement. It is not stated, but the court also seemed concerned by the lack of security procedures. The employer did present a “scintilla” of evidence that Brown likely signed the agreement. But, the court seemed less than impressed.
The court appeared to be impressed by Brown’s declaration that she would have opted out of arbitration if she had been aware of it. Having reviewed many of these appeals, I think it was the weakness of the employer’s evidence more than the strength of the employee’s evidence. In many cases concerning electronic signatures, the employee claims to have no recollection of having signed the arbitration agreement. Indeed, that is really the norm in electronic signature cases. The employees always claim to have no memory of the signing or of the agreement. The Fourteenth Court seemed impressed by Brown’s assertion that she would have opted out of any arbitration and by CAI’s lack of security procedures.
In Any Manner
The dissent was troubled by the decision. The dissent pointed to the Uniform Electronic Transactions Act’s catch-all phrase that an electronic signature can always be proven “in any manner.” The dissent believes the emphasis on security procedures was over-blown. The dissent believed presenting the arbitration agreement with a date and time stamp and Brown’s user name should suffice. But, if we were to accept the dissent’s view, then the requirement for security procedures would effectively be written out of the statute. See the opinion here.