Adventures in the Law: The Steve Martin Defense

People of a certain age—say, Senior Lawyers Division age—may remember a Steve Martin routine from the 70s. Resplendent in a white suit and using his best TV pitchman voice, Steve promised to tell you, the audience member, how to be a millionaire and never pay taxes!

After a long set-up, he delivered two punch lines. How to be a millionaire? First, get a million dollars.

How to avoid paying any taxes? When the IRS calls, say two simple words: I forgot.

(OK, it was funnier when Steve did it.)

As laughable as the I forgot defense may sound, three California plaintiffs relied on a close variant—the I don’t recall defense--in a lawsuit against their former employer. What’s more, the trial court thought enough of the defense to accept it.

Leroy Iyere, Phillip Derbigny, and Michael Worlow worked at Wise Auto Group’s Infiniti dealership in California. When they were fired, they jointly sued Wise, asserting 25 causes of action, including discrimination, harassment, retaliation, breach of contract, and wrongful termination.

Wise responded with a motion to compel arbitration. In support, Wise submitted a mountain of documents, including (a) three compensation agreements, (b) three employee agreements, and (c) three employment applications.

All the documents called for binding arbitration of all issues and disputes. For example, Leroy’s and Mike’s arbitration agreements stated that

any claim, dispute and/or controversy arising from, or relating in any way to, Employee’s employment relationship … with the Company … which would otherwise be brought in court … shall be submitted to, and resolved through, final and binding arbitration ….

The wording of Phil’s agreement differed slightly but not materially.

All the agreements bore what looked for all the world like the handwritten and hand-dated signatures of Leroy, Phil, and Mike. Included with Wise’s motion was a declaration of the company’s HR director and custodian of personnel records, authenticating the documents.

Leroy, Phil, and Mike fired back, opposing Wise’s motion to compel arbitration, and challenging the signatures on the documents. It’s those challenges that would fit well into the old Steve Martin routine. Each plaintiff declared,

I do not recall ever reading or signing any document entitled Binding Arbitration Agreement or Employment Acknowledgement. I do not know how my signature was placed on [either document] [italics added].

Note that the plaintiffs never claimed that they hadn’t signed the documents or that the signatures had been forged or coerced—only that they didn’t recall signing. In fact, their pleadings tacitly acknowledged that they had, indeed, signed the documents.

For example, each alleged that he had been given a large stack of documents to sign and told to sign quickly and get to work. Each acknowledged that he had “signed the stack of documents immediately.” Similarly, each plaintiff referred to each handwritten signature on his three documents as “my signature.”

How did the trial judge respond to the I don’t recall defense? Precisely the way Steve pretended the IRS would respond to the I forgot defense. The judge bought it. He denied Wise’s motion to compel arbitration.

His reasoning? Because the plaintiffs claimed that they didn’t recall signing, Wise had the burden of proving the authenticity of their signatures. And Wise had not, the court ruled, carried that burden. Never mind that the plaintiffs never disputed that the signatures were theirs, or that they acknowledged signing the entire stack of documents presented to them, or that the head of HR attested to the authenticity of the signatures. If the plaintiffs didn’t recall signing, the agreements were unenforceable.

If the judge ever heard the Steve Martin routine, he apparently didn’t realize Steve was joking. Hopefully, he didn’t rely on Steve’s defense in his own dealings with the IRS.

Wisely, Wise appealed. The appeals court reversed, ruling that the documents Wise submitted were sufficient to shift the burden of proof to opponents of the motion: Leroy, Phil, and Mike. They could carry that burden by

identify[ing] a factual dispute as to the agreement’s existence—in this instance, by disputing the authenticity of their signatures. To bear this burden, the arbitration opponent must offer admissible evidence creating a factual dispute as to the authenticity of their signatures.

But they had offered no evidence disputing the authenticity of their signatures. They hadn’t even alleged that they didn’t sign the documents, only that they didn’t remember doing so—a matter the court said was “of little or no significance.”

The appeals court realized Steve was joking.

The case is Iyere v. Wise Auto, Calif. Ct. of App., 1^st App. Dist., Div. 4, Jan. 2023.