Elkjer v. Scheef & Stone, L.L.P.
8 F. Supp. 3d 845
N.D. Tex.2014Background
- Plaintiff Elkjer, an attorney and partner of Defendant Scheef & Stone, filed suit in state court (April 4, 2013) alleging unlawful employment practices under TCHRA and Title VII; the case was removed to federal court (April 30, 2013).
- Defendant moved to stay the case and compel arbitration based on the Amended and Restated Partnership Agreement (effective Jan. 1, 2009) containing an arbitration clause (§ 11.13).
- Plaintiff contends the Partnership Agreement is between the individual partners, not a contract involving Defendant itself, so she is not bound to arbitrate.
- The court must decide (1) whether there is a valid agreement to arbitrate between the parties, and (2) whether the claims fall within the scope of that arbitration clause, applying state contract law and federal policy favoring arbitration.
- The court also addresses alternative non-signatory enforcement and equitable estoppel if no direct agreement exists.
- The court grants the motion to stay and compel arbitration, staying the case and ordering arbitration under FAA § 3.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of agreement to arbitrate | Elkjer argues Partnership Agreement is only between partners, not binding on Defendant | Partnership Agreement governs relations including Defendant; Defendant is a party by operation of Texas law | There is a valid agreement to arbitrate between Plaintiff and Defendant |
| Scope of arbitration clause | Arbitration clause does not cover her Title VII/TCHRA claims | Clause broadly covers disputes arising under or in connection with the Agreement | Claims fall within the scope of the arbitration clause |
| Non-signatory enforcement via equitable estoppel | Equitable estoppel does not apply because Defendant is not a signatory | Equitable estoppel permits a non-signatory to compel arbitration when intertwined with the agreement | Equitable estoppel applies; Defendant may compel arbitration as a non-signatory |
Key Cases Cited
- Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211 (5th Cir. 2003) (two-step arbitrability inquiry; courts decide existence of agreement first)
- Primerica Life Ins. Co. v. Brown, 304 F.3d 469 (5th Cir. 2002) (policy in favor of arbitration; do not assess merits in step one)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (Supreme Court 1985) (arbitration of statutory claims permissible; federal policy tolerated)
- Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061 (5th Cir. 1998) (broad arbitration clauses reach disputes relating to the contract)
- Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524 (5th Cir. 2000) (equitable estoppel bases for non-signatory enforcement)
- Texaco Exploration and Production Co. v. AmClyde Engineered Products Co., Inc., 243 F.3d 906 (5th Cir. 2001) (FAA strong stay/compel authority; arbitration favored)
- Alford v. Dean Witter Reynolds, Inc., 939 F.2d 229 (5th Cir. 1991) (Title VII claims can be subject to compulsory arbitration)
- Rojas v. TK Communications, Inc., 87 F.3d 745 (5th Cir. 1996) (broad reach of arbitration under contracts touching on the relationship)