Opinion Date: 09/13/2011
Employment & Labor Law
Issues: Age discrimination; Termination of shareholder status in a law firm; The Civil Rights Act (MCL 37.2101 et seq.); Whether the trial court properly granted the defendants summary disposition under MCR 2.116(C)(7) and ordered the case to arbitration; Applicability of the arbitration clause in the shareholder agreement (SA); In re Nestorovski Estate; The Federal Arbitration Act (9 USC § 1 et seq.); First Options of Chicago, Inc. v. Kaplan; Granite Rock Co. v. International Bhd. of Teamsters; Interpreting contracts to ascertain the parties' intent; Goodwin, Inc. v. Orson E. Coe Pontiac, Inc.; Whether the agreement's "Introductory Statements" compelled arbitration of the plaintiffs' CRA claims; The "presumption of arbitrability"; Amtower v. William C. Roney & Co. (On Remand); Seifert v. US Home Corp. (FL); Fazio v. Lehman Bros., Inc. (6th Cir.); Mediterranean Enters., Inc. v. Ssangyong Corp. (9th Cir.); Whether the firm's law office staff manual became part of the SA; Distinguishing Panepucci v. Honigman Miller Schwartz & Cohn, LLP (Unpub. 6th Cir.); Nestle Waters N. Am., Inc. v. Bollman (6th Cir.); Plaintiffs' standing to sue under the CRA; Whether only "employees" may sue under the CRA; McClements v. Ford Motor Co.; Whether the language of the CRA reflects an intent that partners or shareholders in a law firm are entitled to the CRA's protections; Statutory construction; Robertson v. DaimlerChrysler Corp.; MCL 37.2202(1)(a); "Employer" (MCL 37.2201(a)); "Person" (MCL 37.2103(g)); "Individual" defined; People v. Haynes
Court: Michigan Court of Appeals (Published)
Case Name: Hall v. Stark Reagan, P.C.
e-Journal Number: 49676
Judge(s): Gleicher and Stephens; Dissent – K.F. Kelly
Concluding that the unambiguous language of the arbitration clause in the defendant-law firm's SA plainly limited its application to actions related to "the entitlements, privileges, duties and responsibilities attending stock ownership," the court rejected the defendants' claim that the parties intended to arbitrate any age discrimination claims. The court also held that even if the plaintiffs-former shareholders were not "employees" of the firm, the CRA permitted their age discrimination claims against defendants given the evidence that defendants' actions "affected or controlled a term, condition, or privilege" of their employment. Thus, the court reversed the trial court's order granting defendants summary disposition and ordering the case to proceed to arbitration, and remanded. Plaintiffs alleged that age discrimination motivated defendants' decision to terminate their shareholder status in the firm. The court concluded that the arbitration clause in the SA limited its scope to disputes relating to the "interpretation or enforcement" of the "rights or obligations" described in the SA. The SA made "no mention of any relationships between the parties other than those created or impacted by the disposition of stock." The "rights or obligations" addressed in the SA only involved "various forms of entitlement to stock ownership and restrictions attending stock transfer. The parties' chosen arbitration language clearly and unambiguously evinces an intent to commit to an arbitral forum only those claims stemming from the ‘interpretation or enforcement' of matters directly related to the management of corporate stock." Plaintiffs' complaint did not contain any allegation that defendants violated a term of the SA or disregarded the procedures for stock redemptions. They did not assert "any claim or argument germane to the subject matter of the shareholders' agreement, or having its genesis in that agreement." The court concluded that including an age discrimination case "within the scope of an arbitration provision expressly limited to the ‘interpretation or enforcement' of ‘rights or obligations' concerning corporate stock would expand the clause's reach beyond that intended by the parties." Thus, the court held that plaintiffs' age discrimination claims fell outside the scope of the arbitration provision. The court also concluded that in light of the fact the parties contemplated that the SA would serve as "the entire agreement between the parties," no evidence supported the trial court's finding that the SA implicitly incorporated the law office staff manual. Further, the court found Panepucci distinguishable "in several important respects." The court also rejected defendants' argument that plaintiffs lacked standing to sue under the CRA, noting that the Michigan Supreme Court concluded in McClements that the "key to liability under the CRA is not simply the status of an individual as an ‘employee'; rather, liability is contingent upon the employer's affecting or controlling that individual's work status."
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