March 10, 2017

A Time Where Giving Out Your Username and Password Didn't Turn Out Too Poorly

Digital Technology & E-Commerce Blog

In 1999, the Uniform Law Commission promulgated the Uniform Electronic Transactions Act (UETA). The primary purpose of UETA is to equate the enforceability and validity of electronic signatures with handwritten signatures. It has been adopted in 47 states.  The three states that have not, Illinois, New York and Washington, each have laws governing electronic signatures.

The latest electronic signature case, litigated under Illinois's UETA equivalent, delves into whether the plaintiff's provision of username and password to a third party is a sufficient electronic signature so as to convey authorization to a third party to execute on the plaintiff's behalf an agreement requiring mandatory arbitration. See Mohammed v. Uber Technologies, Inc., 2017 WL 590289 (N.D. Ill. Feb. 14, 2017).

The case was decided in the plaintiff's favor, and on grounds not related per se to the Illinois electronic signature statute, but upon first principles of contract law, learned by any first year law student (the court's words).

Facts/Procedural Background

Plaintiff Abdul Mohammed used to drive for Uber Technologies, Inc. (Uber). A few months after starting, Mohammed sought help from one of Uber's Driver Services Representatives (DSR) to install the app on his phone. To log in to the app on his phone, Mohammed provided the DSR with his username and password. Once this information is provided, the app prompts the user to review and accept a service and licensing agreement that includes a dispute resolution clause that required the parties to submit any disputes under such agreement to arbitration. Mohammed claimed that the DSR entered his credentials, read the prompts and accepted the agreement without showing him the agreement. The agreement required arbitration of disputes "arising out of or related to [drivers] relationship[s] with Uber." Uber countered that during his eight month tenure with the company, Mohammed could have used the app to review the agreement at any time.

Mohammed filed a pro se complaint against Uber alleging 21 violations of myriad state and federal laws, including involuntary servitude, peonage and unlawful employment of aliens. Defendants moved to dismiss and compel arbitration pursuant to the agreement. Uber argued that the agreement to arbitrate was valid because Mohammed supplied the DSR with the username and password for the Uber app. Specifically, Uber argued that this username and password sufficed as an electronic signature under Illinois's Electronic Commerce Security Act (ECSA), the state's analog to UETA.

Legal Analysis/Conclusions

Uber first made an unsuccessful procedural argument. It claimed that any questions related to the agreement should be delegated to the arbitrator, thereby divesting the court of the right to consider such questions. This is commonly known as the "delegation clause."  The court rejected this argument. Since Mohammed's arguments pertained to whether the agreement was ever formed, the court had the power to first decide whether an agreement to arbitrate existed in the first place.

The court also rejected Uber's ECSA argument  It noted that: (a) the purpose of the ECSA was to clarify that, when a contract requires a signature to be valid, an electronic signature is satisfactory; (b) and, there was no indication that the ECSA was intended to fundamentally alter substantive contract law such that the provision of an electronic signature alone binds a party, irrespective of a lack of intent. 

Ergo, even assuming arguendo that Mohammed's username and password constituted a valid electronic signature, the provision of this information to the DSR was in and of itself insufficient to transfer authorization to the DSR ("at the DSR's request, by the way") to sign the agreement. Second, Mohammed stated that he did not intend to sign anything simply by providing information to the DSR, and the electronic signature (presupposing entry of a user name and password is such a valid signature under ECSA) can only be valid if not only embodies the act of subscribing to a document, but concomitant intent to do so. Accordingly, Mohammed was not bound to the arbitration provision in the agreement under the ECSA.

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