No. 20-0007 – State of West Virginia ex rel. Troy Group, et al. v. Sims, et al. FILED November 24, 2020 Hutchison, Justice, dissenting: EDYTHE NASH GAISER, CLERK SUPREME COURT OF APPEALS OF WEST VIRGINIA
I dissent because the majority opinion has – unintentionally, I think –
rewritten the West Virginia Rules of Evidence and created a biased, pro-plaintiff process
for the introduction of evidence. The majority opinion essentially says that a person
offering evidence does not have to show the evidence is authentic; the burden is, instead,
on the resisting party to prove the evidence is not authentic.
Rule 104(a) of the Rules of Evidence gives a trial court the discretion to
assess whether evidence is admissible. Rule 104(a) provides:
The court must decide any preliminary question about whether . . . evidence is admissible. In so deciding, the court is not bound by evidence rules, except those on privilege.
That means the trial court can consider all of the surrounding circumstances, unbound by
the Rules of Evidence, to weigh whether a particular piece of evidence is admissible
because it is relevant, competent, and authentic.
This case centers on that last requirement, that evidence be “authentic.” Rule
901(a) provides that, for evidence to be authenticated, “the proponent must produce
evidence sufficient to support a finding that the item is what the proponent claims it is.”
The rule is simple and clear: if someone wants to introduce a piece of evidence for
consideration, they first have to show the judge proof that the evidence is genuine.
1 Let me begin by relating the factual basis for the circuit court’s ruling. The
majority opinion sidesteps many of the facts in the record or, with a wave of judicial
prerogative, declares those facts to be “self-serving” or “unpersuasive.”
A. Factual Background
This case is about a document that the defendant-petitioners purport to be a
written arbitration contract. The plaintiff, Nakita Willis, claims she was discriminated
against by her former employer, defendant TROY Group and various defendant employees
of TROY. Before filing suit, the plaintiff’s lawyers explored a settlement with the
defendants and sent them a copy of their complaint. The defendants never mentioned any
arbitration agreement, and even agreed that their attorney would accept service of a
complaint, if one was filed.
The plaintiff then filed suit, and the defendants answered the complaint and
sought to compel the plaintiff to participate in arbitration. 1 Attached to the motion was a
1 The plaintiff asserts that the defendants answered the complaint and then delayed filing a motion to compel arbitration. West Virginia’s law is not clear on this issue, but there is merit to the argument that the defendants waived their contractual right to arbitration by participating in litigation before asserting their contractual arbitration rights. See Syl. pt. 6, Parsons v. Halliburton Energy Servs., Inc., 237 W. Va. 138, 785 S.E.2d 844, 848 (2016) (“The right to arbitration, like any other contract right, can be waived.”). See also, Thomas J. Lilly, Jr., “Participation in Litigation As A Waiver of the Contractual Right to Arbitrate: Toward A Unified Theory,” 92 Neb. L. Rev. 86, 89-90 (2013) (“[T]he goal of fair and efficient dispute resolution in conformity with the parties’ agreement is better served by a rule that the contractual right to compel arbitration of a dispute is waived if it is not asserted by the time the defendant answers the complaint.”).
2 document that the defendants claim is a copy of a 2004 arbitration contract signed by the
plaintiff. The plaintiff challenged the authenticity of the arbitration contract and produced
an affidavit saying she did not remember ever seeing or signing the document. The
defendants claim she did sign the agreement because all employees signed similar
agreements as a condition of their employment.
The circuit court heard the parties’ arguments and then gave the parties ninety
days to conduct discovery on the authenticity issue. In light of the defendants’ claim,
plaintiffs asked for copies of the arbitration agreements signed by all employees. The
defendants produced these documents. The agreements signed by other employees in 2006
and 2007 appeared to be similar in content and were signed by an actual human resource
employee who worked for TROY Group in 2006 and 2007. In other words, there appears
to have been a consistent signing process in effect in 2006 and 2007. The agreements
before 2006, however, did not appear to follow any process.
The plaintiff discovered that the defendant did not use arbitration agreements
until February 2004; the employee hired immediately before the plaintiff was allegedly the
first to sign such an agreement. The defendants produced only four agreements signed in
2004. Importantly, all four of the 2004 agreements are incomplete, contain irregularities
or “red flags,” and the agreements supposedly signed in 2004 (and 2005) are wildly
different from the agreements executed in 2006 and 2007.
3 To begin, the first arbitration agreement produced by the defendants was
supposedly signed by an employee in February 2004. Oddly, however, the agreement was
signed and dated on a Sunday, when TROY was not expected to be open. Furthermore,
the agreement does not have a countersignature by a TROY employee.
The second arbitration agreement was purportedly signed by the plaintiff in
March 2004. The plaintiff claimed she never signed the document and that the signature
on the document is not hers. The document was, likewise, not signed by a representative
for TROY.
The third arbitration agreement produced was allegedly signed by an
employee in June 2004. Oddly, the agreement was also signed on “6/11/04” by a
representative of TROY, “Aimee R. Orum,” the “Director of HR.” However, in a later
deposition, Ms. Orum confirmed she was not the “Director of HR” in June 2004. In fact,
she admitted she did not start working for TROY until May 2005; her name was Aimee
Olmstead until she married seven years later in 2011; and her title did not become “Director
of HR” until 2015 or 2016.
The fourth arbitration agreement was purportedly signed in December 2004.
However, that employee denies he ever signed an arbitration agreement. Moreover, the
fourth employee asked for a copy of his employment file in 2018 and there was no
arbitration agreement in the file. Remarkably, however, by Summer of 2019, the
defendants were able to produce the purported agreement to the plaintiff.
4 The defendants also produced arbitration agreements from 2005. None of
those agreements are signed by a TROY representative save one, which Ms. Orum signed
and then dated “2005” after she became director of human resources in 2015 or 2016.
Due to the suspect inconsistencies in the arbitration agreements produced by
the defendants, the plaintiff sought to take a deposition of TROY’s Rule 30(b)(7) designee.
Using Rule 30(b)(7), a party may ask a corporation or other entity to designate a person
who can testify on behalf of the entity “to matters known or reasonably available to the
organization.” The plaintiffs’ deposition request asked for a TROY Group witness with
“knowledge of the circumstances around the purported signature of Nakita Willis being
affixed to the Mutual Agreement to Arbitrate” and “knowledge of the policies and
procedures of TROY Group, Inc. with regards to having employees sign a Mutual
Agreement to Arbitrate.”
TROY designated Ms. Orum as its Rule 30(b)(7) designee. As the majority
opinion relates, Ms. Orum testified that, today, it is the company’s policy to present the
arbitration agreement to employees in their new hire paperwork, and employees are
required to sign the agreement as a condition of their employment. However, this policy
is unwritten. When she was asked about TROY’s policy regarding arbitration agreements
in 2004 when the plaintiff allegedly signed the agreement, Ms. Orum said she did not work
for the company until 2005. Ms. Orum further testified that to prepare for her deposition,
she spoke only with the chairman and president of the company and only to “advis[e] them
that I was to be here today.” She never conducted any research regarding the circumstances
5 or policies in effect in 2004. Ms. Orum said she could not say when, where, if or how the
agreement was presented to the plaintiff; what might have been said to the plaintiff; or who,
if anyone, was sure the plaintiff signed the document. She could only say that the signature
seemed to match the plaintiff’s signature on other documents in her digital personnel file.
As noted earlier, the plaintiff signed an affidavit in which she maintained that
her signature on the purported arbitration agreement was not authentic and that she did not
sign it. While the circuit court permitted the parties to conduct discovery on the
authentication issue, the defendants did not take the plaintiff’s deposition or offer anything
substantive to challenge the plaintiff’s claim she did not sign the agreement. The plaintiff
followed this with a second affidavit elaborating why she was confident she did not sign
the agreement. The plaintiff stated that, in March 2004 (when she supposedly signed the
agreement), she was represented by a lawyer in an unrelated employment dispute and had,
therefore, a heightened sensitivity to any employment documents that might alter her
rights. She recalled that she would have been highly alarmed at the prospect of not having
access to court, would have raised the issue with her lawyer, and might have even refused
TROY’s job offer.
Based on all of the evidence developed by the parties, the circuit court ruled
that
significant and troubling questions exist with regard to the authenticity of the agreement produced by the Defendants. The circumstances around the signing (or lack thereof) of the document raises a clear factual dispute. Defendants have dismissed Plaintiff’s arguments in this regard and have failed
6 to provide the Court with a clear and cogent explanation for the discrepancies raised. It is clear that Defendants cannot authenticate the agreement, particularly given the confusing testimony of Ms. Orum and questions over her access to the document after it was purportedly signed.
The circuit court therefore concluded the defendants failed to establish the
existence of an actual agreement between the parties. Based on this ruling, the defendants
petitioned this Court for a writ of prohibition, which the majority opinion has granted. I
am flummoxed by the majority opinion.
B. Defendants Cannot Authenticate the Agreement
First, the defendants’ petition to this Court is deceptive, and the majority
opinion plays along with that deception. The defendants claim they – like most modern
companies – scanned all copies of their employment records into a computer and then
shredded the paper originals. Hence, in a gigantic red herring argument, the defendants
complain the circuit judge discriminated against them and every other modern corporation
because, effectively, the judge ruled companies cannot rely on digital copies but must
produce the original “wet ink” version of an agreement. The majority opinion felt
compelled to extemporize on this nonsensical issue, quoting Rules 1002, 1003, and 1004
for the proposition that computerized copies can be just as probative and admissible as
original versions.
Problematically, the circuit court did not base its ruling on a “wet ink” versus
computerized records analysis. The whole “wet ink” argument is a sparkly bauble that
7 drew the majority opinion’s attention away from the real argument, which is that the
defendants failed to produce evidence of authenticity sufficient for the circuit court to find
that the plaintiff-signed arbitration agreement is what the defendants claim it is. The reason
the circuit court considered the computerized documents to be inauthentic is, in part,
because the handwritten signature of the “Director of HR” appeared on at least two
digitized documents executed over a decade before the person became “Director of HR.”
Allow me to explain how the majority opinion should have addressed the
parties’ authenticity arguments, and then I will explain how the majority opinion turned
those rules upside down.
As I said earlier, Rule 104(a) requires a judge to make a preliminary ruling
on the admissibility of evidence. Under Rule 104(a), the judge can weigh any form of
proof, admissible or not, to determine if a piece of evidence is admissible. “Rule 104(a)
requires the proponent of the testimony to show by a preponderance that the evidence is
admissible.” Gentry v. Mangum, 195 W. Va. 512, 522 n.8, 466 S.E.2d 171, 181 n.8 (1995).
Hence, when the defendants stapled a copy of the arbitration agreement onto their motion
to compel, the circuit judge had sole discretion to determine if the document was
admissible; if it was not admissible, then it had no probative effect. The plaintiff, as we
know, said the document was inadmissible because it was not authentic. Rule 901(a)
provides the conceptual framework for authenticating nontestimonial evidence such as
documents and objects; an object or document can be authenticated if the judge finds there
is evidence showing it is what it purports to be.
8 When a defendant offers a contract as evidence, but the plaintiff responds
they did not sign the contract, the burden falls upon the defendant – as the proponent – to
prove by a preponderance of the evidence that the contract, as well as the signature on the
contract, is authentic.
The case law abounds with instances where defendants claimed a plaintiff
signed an arbitration contract but courts refused to enforce the contract because the
defendant could not prove it was authentic. One such example is Ruiz v. Moss Brothers
Auto Group, 181 Cal. Rptr. 3d 781, 787 (Cal.App. 2014), a case where an employer tried
to compel an employee to arbitrate his wage dispute. The appellate court noted that
“general principles of contract law determine whether the parties have entered a binding
agreement to arbitrate, and the party seeking arbitration bears the burden of proving the
existence of an arbitration agreement.” Id. The court also said that “any writing must be
authenticated before the writing, or secondary evidence of its content, may be received in
evidence.” Id.
The trial court in Ruiz refused to enforce the arbitration agreement after
finding the employer failed to show the employee’s digital signature on the agreement was
authentic. The appellate court affirmed that determination:
After Ruiz [the employee] averred he did not recall electronically signing the 2011 agreement, [the employer] explained in her reply declaration that the 2011 agreement was part of an employee acknowledgment form that “is” presented to all [company] employees as part of a series of changes to the company’s employee handbook, and each employee is required to log into the company’s HR system, using his or her
9 “unique login ID and password,” to review and sign the employee acknowledgment form. Again, however, [the employer] did not explain how, or upon what basis, she inferred that the electronic signature on the 2011 agreement was “the act of” Ruiz. This left a critical gap in the evidence supporting the petition. . . .
In the face of Ruiz’s failure to recall electronically signing the 2011 agreement, the fact the 2011 agreement had an electronic signature on it in the name of Ruiz, and a date and time stamp for the signature, was insufficient to support a finding that the electronic signature was, in fact, “the act of” Ruiz. For the same reason, the evidence was insufficient to support a finding that the electronic signature was what Moss Bros. claimed it was: the electronic signature of Ruiz. This was not a difficult evidentiary burden to meet, but it was not met here.
181 Cal. Rptr. 3d at 788.
Likewise, in Fabian v. Renovate America, Inc., 255 Cal. Rptr. 3d 695, 702
(Cal.App. 2019), a company tried to enforce an arbitration clause against a customer in a
solar-panel-installation contract. The court found the agreement unenforceable because
the company failed to show “who presented [the plaintiff] with a physical or electronic
copy of the Contract, the specific location where the Contract was signed, the time when
the Contract was signed, or how [the corporate defendant’s witness] ascertained that [the
plaintiff] was present when the Contract was signed.” Id. The company also could not
articulate the process by which it obtained an electronic signature from the plaintiff.
Because the company could not prove the authenticity of the plaintiff’s signature, it could
not prove it had an enforceable arbitration agreement.
10 Like this Court, the Ohio courts (1) have expressed a “strong presumption . .
. in favor of the validity of a written arbitration clause;” and (2) have said that a party
“cannot be ordered to submit a claim to arbitration if that party has not agreed to arbitrate
the dispute in writing.” ACRS, Inc. v. Blue Cross & Blue Shield of Minnesota, 722 N.E.2d
1040, 1043-44 (Ohio App. 1998). Despite having these rules, Ohio courts have refused to
enforce arbitration agreements that have not been proven to be authentic. One Ohio court
refused to enforce an arbitration contract because the defendants failed to “produce
authenticated copies of the entire contract upon which their motion to compel arbitration
was based in order to provide the trial court with sufficient evidence of the existence of a
written agreement to arbitrate the disputed claims.” Id. at 1045. Another court refused to
enforce a company’s written arbitration agreement because the company failed to show
that the document attached to the motion to compel “was in fact the exact contract agreed
upon by the parties.” McGuinea v. Ganley Nissan, Inc., 2005-Ohio-6239, ¶ 22.
“The Texas Supreme Court, as well as this Court, has repeatedly held that
the party seeking arbitration has the initial burden to establish the existence of a valid
arbitration agreement.” Wright v. Hernandez, 469 S.W.3d 744, 751 (Tex. App. 2015).
Once the validity of an arbitration agreement has been established, there is a presumption in favor of arbitration, and the burden then shifts to the party opposing the agreement to raise an affirmative defense to the enforcement of the agreement. However, while there is a strong presumption in favor of arbitration, it arises only after a valid arbitration agreement is proven to exist.
11 Id. (Cleaned up). The Texas court went on to note that “[a]uthenticity is a prerequisite to
admissibility.” Id. Finally, that court made this point:
Simply attaching a document to a pleading neither makes the document admissible as evidence, dispenses with proper foundational evidentiary requirements, or relieves a litigant of complying with other admissibility requirements. A document may only be considered authentic if a sponsoring witness vouches for its authenticity or if the document meets the requirements of self-authentication[.]
Id. (Cleaned up). The Texas court found that the defendant “failed to properly authenticate
the arbitration agreement when it first filed its motion to compel.” Id. However, because
the plaintiff never “challenged or contested the genuineness of her signature on the
document,” and the defendant offered affidavits that “verified that the agreement was an
exact duplicate of the original document,” the court reversed course and concluded the
arbitration agreement was authentic and enforceable. Compare United Rentals, Inc. v.
Smith, 445 S.W.3d 808, 814 (Tex. App. 2014) (because “no witness could conclusively
establish that the Employment Agreement in Exhibit A was a true and correct authentic
copy,” arbitration clause in agreement was not enforceable).
The guidelines I take away from these cases are simple. General principles
of contract law determine whether the parties have entered into a binding agreement to
arbitrate, and the party seeking arbitration has the initial burden of establishing the
existence of a valid arbitration agreement. Only after a valid arbitration agreement is
established does a presumption in favor of arbitration arise, and only then does the burden
shift to the opposing party opposing to raise an affirmative defense to the agreement. A
12 defendant seeking to enforce an arbitration agreement may attach a copy to the motion to
dismiss or to compel, but a trial court may consider the agreement only if “no party
questions the authenticity of the document.” Syl. pt. 6, Mountaineer Fire & Rescue Equip.
v. City National Bank, ___ W.Va. ___, ___ S.E.2d ___ (No. 18-0984, November 20, 2020).
Authenticity is a prerequisite to admissibility and consideration. If the plaintiff challenges
the authenticity of the document, then the defendant has the burden of proving by a
preponderance of the evidence that the document is what the defendant claims it is: a
written arbitration contract to which both parties have clearly expressed their assent. See
generally Menaka N. Fernando, Jennifer S. Schwartz, “Tackling Forced Arbitration,”
Trial, 31-34 (September 2018).
In this case, the plaintiff disputed the authenticity of the defendants’
arbitration agreement. The defendant offered proof of its procedures today and how
recently-hired employees are required to sign the agreement as a condition of employment.
However, the Rule 30(b)(7) witness offered by the defendants had no idea of the
circumstances surrounding the execution of the agreement with the plaintiff, who was
(according to the defendants’ evidence) the second person to sign such an agreement.
While the defendants offered no evidence as to what the process was in 2004, the plaintiffs
discovered that the process was quite irregular, with questionable “Director of HR”
signatures appearing on documents over a decade later, or documents appearing in files in
2019 that were not produced in 2018. Further, the plaintiff definitely said it was not her
13 signature on the document and that the signature might have been digitally forged. The
defendants’ only answer is that it looked like plaintiff’s signature.
On this record, the circuit court was clearly within its discretion to find that
the defendants had failed to produce a preponderance of evidence showing that the
document was, in fact, what they claimed it was: a written arbitration agreement signed by
the plaintiff.
C. Problems with the Majority Opinion
The majority opinion holds that because the defendants attached a copy of a
digital document to their motion, they made “a prima facie showing of the existence of an
agreement to arbitrate and that Ms. Willis then failed to overcome the presumption of its
validity.” The majority opinion says that merely producing a document is prima facie
evidence there is a contract, and that the “burden of establishing prima facie evidence of
an agreement . . . is a light one.” Thereafter, according to the majority opinion, the burden
shifts to the party seeking to avoid the contract.
This holding ignores the Rules of Evidence and turns the burden of proof in
this case upside down. By the majority opinion’s reasoning, a party can attach any
document to a pleading or motion and, if it looks like a contract, then the trial court must
declare that the document is prima facie evidence of a contract. The majority opinion
further places the burden of proof on the opposing party to introduce evidence showing the
14 document is not a binding contract. As I said, I anticipate plaintiffs will have a field day
with this holding because, effectively, it unmoors plaintiffs from any real burden of proof.
The majority opinion also violates a basic tenet of appellate review: that this
Court does not make findings of fact. That burden lies with the trial courts, and this Court
has often said that it will set those findings aside only if they are clearly erroneous:
A finding is clearly erroneous when, although there is evidence to support the finding, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. However, a reviewing court may not overturn a finding simply because it would have decided the case differently, and it must affirm a finding if the circuit court’s account of the evidence is plausible in light of the record viewed in its entirety.
Syl. pt. 1, in part, In Interest of Tiffany Marie S., 196 W. Va. 223, 470 S.E.2d 177 (1996).
Furthermore, “[t]he action of a trial court in admitting or excluding evidence in the exercise
of its discretion will not be disturbed by the appellate court unless it appears that such
action amounts to an abuse of discretion.” Syl. pt. 10, State v. Huffman, 141 W. Va. 55,
87 S.E.2d 541 (1955).
The majority opinion concludes that the evidence of “irregularities”
surrounding the process of forming the plaintiff’s so-called contract is irrelevant. Despite
the fact that these hinky deviations “appear on documents formed proximate in time to hers
and show suspicious conduct,” the majority opinion fails to see their relevance because
they did not occur in the plaintiff’s document. The majority opinion says this despite the
obvious admissibility of circumstantial evidence, and the overarching authority of a trial
15 judge to consider any evidence, admissible or not, when ruling on admissibility under Rule
104(a).
Furthermore, the majority opinion rejects the plaintiff’s claims that she did
not sign the arbitration agreement as “self-serving,” without recognizing the defendants’
evidence is just as “self-serving.” When the plaintiff suggests that the defendants may have
copied her digital signature from elsewhere and pasted it into the agreement, the majority
opinion sees “no evidence in the record to support this allegation.” This conclusion seems
to run contrary to the evidence showing that despite TROY Group having digitized all of
its employment records, Ms. Orum’s physical signature as “Director of HR” appears on a
2004 agreement executed a year before Ms. Orum was hired, seven years before she
changed her last name to Orum, and over a decade before she was “Director of HR.”
Additionally, the majority opinion finds that the defendants provided
“compelling information” that the signature on the agreement is the plaintiff’s (despite the
two affidavits where the plaintiff says it is not her signature), then declares “there is simply
no evidence in the record to suggest that it is not Ms. Willis’ signature on the parties’
arbitration agreement[.]” And then, with no analysis whatsoever, the majority opinion
announces that the circuit court erred in its assessment of the evidence, and that the plaintiff
“failed to meet her burden of demonstrating that the arbitration agreement was not
authentic and that it was not her signature on that agreement.”
16 Stated simply, the majority opinion chose one set of facts over the other to
overturn the circuit court’s findings apparently to justify reversing the circuit court.
Despite our long-standing law from Tiffany Marie S. that “a reviewing court may not
overturn a finding simply because it would have decided the case differently,” the majority
opinion has done just that.
D. Conclusion
It is difficult how to measure just how much the majority opinion’s holding
deviates from the norm established by the Rules of Evidence. The majority opinion ignores
the discretion of trial courts to determine the admissibility of evidence, and it ignores the
duty of the party offering evidence to establish it as authentic. The majority opinion
eviscerates a proponent’s duty to show evidence is admissible, and it puts the burden on
the defending party to show evidence is not admissible. It then rejects any facts in the
record favorable to the defending party to reach the conclusion that, despite one party
saying they never agreed to the terms, a contract exists. The opinion is, as we say back
home, “a hot mess.”
I therefore respectfully dissent.