Third Circuit Upholds E-Signed Arbitration Agreement

Third Circuit Upholds E-Signed Arbitration Agreement

Courts continue to enforce electronic signatures, even when applied to arbitration agreements. In Dicent v. Kaplan University, the Third Circuit Court of Appeals ruled that the plaintiff’s allegation that she never consented for her electronic signature to be attached to an arbitration agreement was not supported by the evidence, citing that the plaintiff clicked a button labeled “Electronically Sign.”

E-Signed Contracts

When it comes to executing contracts, including business, employment, consumer agreements, electronic signatures are generally considered valid. Under the Electronic Signatures in Global and National Commerce Act (ESIGN), which went into effect in 2000, digital and electronic signatures are just as legal as their paper and ink counterparts for transactions in or affecting interstate or foreign commerce. It specifically provides that a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”

The federal e-sign law defines an e-signature as “an electronic sound, symbol, process attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record and be legally bound.” Examples include typing your name, uploading a written signature, and clicking a button that says, “I agree.”

Dispute Over Electronically-Signed Arbitration Agreement

Maria Dicent (Dicent) enrolled in online courses offered by Kaplan University (Kaplan). As a part of the enrollment process, Dicent was required to log in to an enrollment portal website, where she was asked to enter various information necessary to become a student. After completing this process, the enrollment portal generated an “Enrollment Packet” in a Portable Document Format (PDF), which included all of the information Dicent had provided, and also included, among other things, an Arbitration Agreement and Waiver of Jury Trial (Arbitration Agreement). Dicent electronically signed (e-signed) the Enrollment Packet PDF.

Dicent subsequently filed suit against Kaplan for various causes of action, including allegations that Kaplan misled her about the availability of career counseling and had prohibited her from keeping materials she had produced in class following her graduation. Kaplan moved to dismiss and compel arbitration, arguing Dicent’s claims fell within the Arbitration Agreement Dicent had e-signed as part of her enrollment documents. Dicent argued that she did not e-sign the Arbitration Agreement; rather, she maintained that Kaplan never informed her of the Arbitration Agreement, and that Kaplan never had her permission to use her e-signature for the Arbitration Agreement.

As detailed by the Third Circuit, Dicent argued she “was tricked and not informed that she would be waiving jury trial or was entering an arbitration agreement” when she was going through the enrollment process. She specifically maintained that she was not aware of the Arbitration Agreement until Kaplan submitted it in Court.  She argued that the “entire enrollment process is deceitful, and the Arbitration Agreement was just simply attached without her knowledge and consent.”

The district court granted Kaplan’s motion to dismiss and compel arbitration. It held that Dicent’s arguments relied on the assertion that her e-signature was used without her consent, which was not supported by any evidence. The district court further noted that Dicent had acknowledged her participation in the enrollment process, in which an e-signature was used in order for her to become a student. Thus, it concluded that Dicent’s arguments were completely contrary to the undisputed facts that the Enrollment Packet PDF contained the Arbitration Agreement, and that she e-signed the document.

Third Circuit Enforces Arbitration Agreement

The Third Circuit affirmed, agreeing that Dicent assented to the Arbitration Agreement. “Dicent presented no evidence to contradict Appellee’s statements, other than to generally argue that she was unaware of the Arbitration Agreement until Appellee presented it to the District Court,” the panel concluded.

In reaching its decision, the Third Circuit rejected Dicent’s argument that she was “tricked” into signing the arbitration agreement. “Appellee’s enrollment process walks prospective students through a series of steps necessary to become a student, which includes the production of an enrollment packet PDF that requires an e-signature to finalize the prospective student’s relationship with appellee. Included within this packet is the clearly labeled arbitration agreement,” the court explained. “Dicent herself conceded that she e-signed the enrollment packet PDF.”

The court added: “The most reasonable inference we can draw from the evidence presented is that Dicent simply did not read or review the enrollment packet PDF closely before she e-signed it, which will not save her from her obligation to arbitrate.”

Key Takeaway

The Third Circuit’s decision in Dicent v. Kaplan University highlights that you can’t simply rely on the fact that a contract was electronically signed in order to avoid its enforcement. Prior to “signing” any contract, it is imperative to read it thoroughly and make sure you understand how it may impact your legal rights, particularly the ability to pursue legal claims in court versus arbitration.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Robert E. Levy, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.