A couple of cases from last month indicate that electronic communications – i.e. emails – are increasingly being given the same amount of legal significance as traditional, hard-copy letters. Firstly, there’s Forcelli v. Geico Corp. from the New York Appellate Courts. This one involved a car accident, a multiparty lawsuit, and an over-the-phone settlement agreement, which was followed by the following email:

“Per our phone conversation today, May 3, 2011, you accepted my offer of $230,000 to settle this case. Please have your client executed [sic] the attached Medicare form as no settlement check can be issued without this form.
“You also agreed to prepare the release, please included [sic] the following names: Xerox Corporation, Gelco Corporation, Mitchell G. Maller and Sedgwick CMS. Please forward the release and dismissal for my review. Thanks Brenda Greene [claims adjuster acting for defendants].”

The plaintiffs prepared and sent out the release, which was to serve as a stipulation of settlement, but then Geico’s lawyers challenged its validity, claiming that “the email message did not constitute a binding written settlement agreement”, required under New York CPLR 2104. That rule provides in part that:

An agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered.

So, the validity of Greene’s email under CPLR 2104 was the issue before the court in late July. Justice Sgroi observes that, contrary to Geico’s argument, “as a representative of the Gelco defendants’ insurer” Greene did indeed have apparently authority to speak for them in the settlement negotiations. The real analysis focused on the word “subscribed” in CPLR 2104. Even though emails don’t have a handwritten signature as a written letter might, the court cites other New York cases where emails have been enforced under this particular Rule. This is perhaps the most significant excerpt from the Order, though:

Morever, given the now widespread use of email as a form of written communication in both personal and business affairs, it would be unreasonable to conclude that email messages are incapable of conforming to the criteria of CPLR 2104 simply because they cannot be physically signed in a traditional fashion[.]

Based on the prevailing use of email, particularly in the business context, the settlement is upheld, and the following rule is issued:

[W]here, as here, an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement.

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Literally the same day, July 24th, a state appeals court in Texas issued its opinion in PanAmerican Operating, Inc. v. Maud Smith Estate, another case where emails played a key role. An independent contractor [Wormser] working for a petroleum producer [PanAmerican] negotiated an oil lease, and when the price oil dropped, the producer refused to pay on the lease. The case centered around the standard contract law trope of apparent authority. In finding that “a reasonably prudent person would have believed Wormser possessed the authority to contract on PanAmerican’s behalf because PanAmerican acted with such a lack of ordinary care as to clothe Wormser with indicia of authority”, the court listed many reasons to uphold the trial court’s holding. The matter of Wormser’s email account was one that influenced the court to a large degree. PanAmerican “provided Wormser with a “@panamop.com” email address,” and “failed to require [Wormser] in his use of the provided email address… to inform Plaintiff that he lacked authority”. The language used throughout the email negotiation process was also cited:

In his emails to Elder, Wormser repeatedly used the words “we,” “us,” “our,” “they,” and “our attorney.”

The court distinguishes this case with CSX Transportation, Inc., which held that “Granting an e-mail domain name, by itself, does not cloak the recipient with carte blanche authority to act on behalf [of] the [grantor]. Were this so, every subordinate employee with a company e-mail address – down to the night watchman – could bind a company to the same contracts as the president.” The instant case is characterized as one where “a principal who employs an agent to carry out its business but, regretting the outcome of the agent’s actions, opportunistically denies the agent acted with authority.” Wormser is deemed to have authority, and the trial court’s verdict that the lease should be honored, is upheld.