Hall v. Stark Reagan, PC
818 N.W.2d 367
Mich. Ct. App.2011Background
- Hall and Ortner were associates who became shareholders in Stark Reagan in 2004 under a shareholder agreement containing an arbitration clause.
- In Jan 2009, Stark proposed downsizing to change firm demographics; affidavits allege age-based motives and that younger attorneys had more potential.
- Feb 2009, two individual defendants resigned; remaining shareholders redeemed Hall's and Ortner's stock, ending their employment on March 1, 2009.
- April 2009, Hall and Ortner filed CRA claims in Oakland County Circuit Court alleging age discrimination, retaliation, and conspiracy.
- DefendantsMover for summary disposition argued the shareholder agreement compelled arbitration and that CRA claims were within the agreement; circuit court granted the motion to arbitrate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CRA claims are arbitrable under the shareholders’ agreement. | Hall and Ortner: CRA claims fall outside the arbitration clause which covers stock-related rights. | Stark Reagan: arbitration clause covers disputes arising under the agreement, including employee claims. | CRA claims not within the arbitration clause; reversal and remand for further proceedings. |
| Whether the staff manual was incorporated into the shareholders’ agreement. | Manual forms part of the agreement and thus arbritation may apply. | No incorporation of the manual; merger clause controls. | Staff manual not incorporated; arbitration not triggered by manual. |
| Whether the arbitration clause’s scope includes discrimination claims under the CRA. | Arbitration clause broadly encompasses “any dispute regarding interpretation or enforcement” of rights under the agreement. | Discrimination claims lack nexus to stock-related rights. | Significant relationship test not met; CRA claims not arbitrable. |
| Whether Hall and Ortner have standing to sue under the CRA as shareholders. | CRA protects individuals affected by discrimination, including non-employees with control over terms of employment. | Only employees may sue; plaintiffs are shareholders. | CRA standing satisfied; plaintiffs may pursue claims. |
Key Cases Cited
- Nestorovski Estate, 283 Mich App 177 (2009) (three-part test; arbitrability and scope under contract; de novo review)
- First Options of Chicago v Kaplan, 514 U.S. 938 (1995) (an arbitration agreement requires clear notice of waiving discrimination claims; favorable to arbitration)
- Amtower v William C Roney & Co, 232 Mich App 226 (1998) (presumption of arbitrability; resolve doubts in favor of arbitration)
- Detroit Auto Inter-Ins Exch v Reck, 90 Mich App 286 (1979) (three-part test for arbitrability; doubts resolved in favor of arbitration)
- Mediterranean Enterprises v Ssangyong Corp, 708 F2d 1458 (9th Cir. 1983) (narrow vs broad arbitrability language; significant relationship test)
- Nestle Waters North America Inc v Bollman, 505 F.3d 498 (6th Cir. 2007) (relationship between contracts; later agreements and incorporation; see Nestlé Waters)
- Fazio v Lehman Bros, Inc, 340 F.3d 386 (2003) (test for scope: whether action could be maintained without reference to contract)