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Craddock v. LeClair Ryan, P.C.

United States District Court, E.D. Virginia, Richmond Division

April 12, 2016

MICHELE BURKE CRADDOCK, Plaintiff
v.
LECLAIR RYAN, P.C. Defendant.

MEMORANDUM OPINION

ROBERT E. PAYNE SENIOR UNITED STATES DISTRICT JUDGE

This matter is before the Court on Plaintiff s MOTION TO STAY ARBITRATION (Docket No. 3) and Defendant's MOTION TO DISMISS AND TO COMPEL ARBITRATION (Docket No. 7) . For the reasons stated below, Plaintiff's MOTION TO STAY ARBITRATION (Docket No. 3) will be denied, and Defendant's MOTION TO DISMISS AND TO COMPEL ARBITRATION (Docket No. 7) motion will be granted.

BACKGROUND

Michalle Burke Craddock ("Craddock") brought the current suit against her former employer, LeClairRyan, P.C. ("LeClairRyan" or "the firm"), for gender based employment discrimination in violation of Title VII of the Civil Rights Act of 1964, of the Lilly Ledbetter Fair Pay Act, and of the Equal Pay Act, alleging that LeClairRyan systemically discriminates against equal compensation and promotion of women generally, and that LeClairRyan discriminated in not equally compensating or promoting her specifically. (See generally Compl., Docket No. 1) .

The facts, as relevant to the motion currently before the Court, are as follows: the Shareholder Agreement governs ownership of shares in LeClairRyan.[1] (Def.'s Mem. in Supp. of Mtn. to Dismiss and to Compel Arbitration and Opp. to Pl's Mtn. to Stay Arbitration, Docket No. 8, 2) ("Def.'s MTD Mem."). The Shareholder Agreement contains an arbitration clause. (Def.'s MTD Mem. 2) . The Agreement section dealing with arbitration states no restrictions on acceptance. (Def.'s Reply in Supp. of Mtn. to Dismiss and to Compel Arbitration, Docket No. 13, 5) ("Def.'s MTD Reply"). A general section at the end of the Agreement states that a signature constitutes acceptance of the Agreement, but does not state that a signature is the only permissible manner of acceptance. (Pl's Mem. in Opp. to Def.'s Mtn. to Dismiss and Compel Arbitration, Docket No. 12, 4) ("Pl's MTD Opp."); (Docket No. 4, Ex. 1).

In October 2012, Craddock submitted an application for promotion to Shareholder. LeClairRyan approved Craddock's application. (Def.'s MTD Mem. 6; Compl. 15 58-59). On December 12, 2012, a LeClairRyan administrator sent Craddock: (1) a copy of the Shareholder Agreement; (2) information on a Wells Fargo loan program available to finance her required $100, 000 capital contribution; and (3) information on benefits available only to shareholders. (Def.'s MTD Mem. 7). LeClairRyan promoted Craddock to Shareholder as of January 1, 2013 and awarded shares to Craddock sometime in 2013. (Def.'s MTD Mem. 6; Compl. ¶¶ 58-68). Craddock never signed the Shareholder Agreement, and no one prompted her to do so until long after Craddock became a shareholder.

After a dispute over the financing of Craddock's buy-in, Craddock and LeClairRyan agreed in a series of emails that LeClairRyan would deduct the $100, 000 for the buy-in from an extraordinary bonus what LeClairRyan was set to pay Craddock. (Pl's Stay Mem. 5-7; Def.'s MTD Mem. 7-8; Compl. ¶¶ 58-68). LeClairRyan paid the bonus and deducted the buy-in in August 2013. Again, LeClairRyan did not ask Craddock to sign the Shareholder Agreement. (Pl's Stay Mem. 7). Between January 1, 2013 and November 24, 2014, Craddock engaged in behavior typical of a shareholder: LeCLairRyan compensated her as a shareholder, she participated in benefit plans only available to shareholders, she voted on issues put to shareholders, and she referred to herself as a shareholder. (Def.'s MTD Mem. 8).

On November 7, 2014, Craddock complained of discriminatory treatment related her salary. (Compl. ¶ 19). At some unspecified point, Craddock acquired her own counsel on the discrimination matter. On November 24, 2014, Craddock's counsel and LeClairRyan's counsel discussed that Craddock had not signed the Shareholder Agreement. (Compl. ¶ 20) .

On December 18, 2014, Michael Hern ("Hern"), President of LeClairRyan, sent Craddock the Agreement, stating that Craddock had "inadvertently failed" to execute the Shareholder Agreement. Hern demanded that Craddock sign the Agreement by close of business on December 22, 2014, and stated that the firm would "take appropriate steps" if Craddock did not sign and return the Agreement. (Compl. ¶ 21). "Craddock reviewed the ... agreement and learned for the first time that, before she paid her $100, 000 buy-in, she was entitled to inspect LeClairRyan's financial records." (Compl. ¶ 23-27). On December 21, 2015, Craddock emailed LeClairRyan stating that she would not sign the Shareholder Agreement before she reviewed certain financial information. (Compl. 28-29). LeClairRyan did not respond to that inquiry before the December 22, 2014 deadline. (Compl. ¶ 30) .

On December 22, 2014, Craddock returned a signed, modified version of the Shareholder Agreement, striking: (1) provisions stating that she had been given the opportunity to view financial records and (2) provisions related to arbitration. (Compl. ¶ 30). Hern rejected Craddock's modified agreement and again asked Craddock to sign the unmodified Shareholder Agreement, stating that no Shareholder was permitted to modify the Agreement. (Compl. ¶ 31). Craddock never signed the unmodified Shareholder Agreement. (Compl. ¶ 32) .

Craddock filed a Charge of Discrimination with the Equal Employment Opportunity Commission ("EEOC") on January 20, 2015. (Def.'s MTD Mem. 2). On December 4, 2015, the EEOC issued a right-to-sue notice. (Def.'s MTD 3).

On December 11, 2015, LeClairRyan filed a Demand for Arbitration with the American Arbitration Association ("AAA"). On December 12, 2015, the AAA accepted and docketed the Demand for Arbitration. (Def.'s MTD Mem. 3). Craddock's counsel sent a letter to the AAA on December 14, 2015, arguing that the filing was inappropriate; the AAA disagreed. (Def.'s MTD Mem. 3).

On January 6, 2016, Craddock filed her Complaint in this Court. On January 7, 2016, Craddock filed a Motion to Stay Arbitration (Docket No. 3) in this Court, together with a Memorandum in Support of Motion to Stay Arbitration (Docket No. 4) ("PL's Stay Mem."). Craddock's counsel notified the AAA of the filing of the Motion to Stay, and the AAA notified the parties that arbitration proceedings would be stayed for up to 60 days, beginning January 8, 2016. LeClairRyan accepted service in this case on January 14, 2016. (Def.'s MTD Mem. 4). Upon service, LeClairRyan promptly filed its Motion to Dismiss and Compel Arbitration (Docket No. 7), together with its Memorandum in Support of Motion to Dismiss and to Compel Arbitration, and Opposition to Plaintiff's motion to Stay Arbitration (Docket No. 8) ("Def.'s MTD Mem."). Craddock filed a Memorandum in Opposition to Defendant's Motion to Dismiss and Compel Arbitration (Docket No. 12) ("Pl's MTD Opp.") and a Reply Memorandum in Support of her own Motion to Stay Arbitration (Docket No. 11) ("Pl's Stay Reply"). LeClairRyan filed a Reply in support of its own motion (Docket No. 13) ("Def.'s MTD Reply").

OVERVIEW

The dispositive issue on both motions is whether Craddock entered a binding, written agreement to arbitrate disputes with LeClairRyan. This question encompasses several sub-issues:

1. Was a signature the exclusive manner of accepting the Shareholder Agreement?
2. If a signature was not the exclusive means of accepting the Shareholder Agreement, did Craddock's conduct between January 1, 2013 and late 2014 demonstrate acceptance of the Shareholder Agreement?
3. Did Craddock's failure to review LeClairRyan financial documents before engaging in conduct characteristic of acceptance void her acceptance?
4. Is a written, but unsigned, arbitration provision sufficient to establish "written provision ... to settle by arbitration" under the Federal Arbitration Act?
5. Was Craddock's crossing out the arbitration provisions in the Shareholder Agreement in December 2014 a rejection of an offer?

For the reasons set forth below, the Court finds that: (1) a signature was not the exclusive manner of accepting the Shareholder Agreement; (2) Craddock's conduct demonstrates acceptance of the contract; (3) the Shareholder Agreement gave Craddock the option to examine LeClairRyan financial documents but did not require her to read those documents, and thus the fact that she did not examine these documents had no impact on her acceptance of the Shareholder Agreement; (4) a written but unsigned contract, otherwise accepted, is sufficient to invoke the Federal Arbitration Act; and (5) Craddock's ...


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