In Hall v. Reagan Stark, -Mich App-, Case No. 294647,
(9/1/3/11), a court of appeals panel held in a 2-1 opinion that
a law firm's shareholder agreement did not preclude litigation over
claims of age discrimination. Two shareholders had filed suit in circuit
court alleging that they had been dismissed because of their age. The
circuit court judge granted summary disposition to the law firm. The
court found that the dispute was covered under the miscellaneous provision
of the shareholder agreement providing for arbitration.
The provision stated: Any dispute regarding interpretation or
enforcement of any of the parties' rights or obligations hereunder shall be
resolved by binding arbitration according to the rules of the American
The majority stated that the provision by its terms, limited its scope to
disputes relating to the interpretation or enforcement of rights and
obligations described within the agreement. The agreement made no mention
of any other relationships between the parties other than those created or
impacted by the disposition of stock. As a result, the rights or
obligation referenced only involve various forms of entitlement to stock
ownership and restrictions attending stock transfer.
In reviewing the complaint, the panel found no allegations of violations of the
shareholder agreement nor any assertions concerning the price of plaintiffs'
stock; the manner of stock disposition; or any other right in the agreement.
The panel concluded that to expand the clause's reach to cover a
discrimination claim would be to expand the scope beyond what the parties
intended. The panel stated that its conclusion was buttressed by the fact
that the parties were employment lawyers and as a result, would be aware of the
court's prior decisions concerning notice to employees when attempting to waive
In addressing the presumption of arbitrability, the panel rejected
the attempt to "stretch" language to encompass
statutory claims. The panel stated that the unambiguous language
"plainly limits" its application to to actions arising out of the
duties and privileges attending stock ownership. There was no factual
support for any intention to arbitrate age discrimination claims. The
panel also rejected the argument that the law firm's employee handbook should
be read into the agreement.
The panel also addressed the issue of the plaintiffs' standing to sue. It
stated that even if plaintiffs were not considered to be "employees,"
the defendants' actions affected or controlled a term or condition of their
employment, citing McClements v. Ford Motor Company, 473 Mich 373 (2005) [an enhanced version of this opinion is available to lexis.com
subscribers / unenhanced version available from lexisONE Free Case Law].
The decision is a reminder to employers to state clearly that discrimination
claims are covered when that is the desire and the intent. While broad
language will provide for expansive interpretation by the courts, the decision
shows that it is no guarantee that that statutory claims will also be presumed
to be covered. The best practice is to say what you mean to say--claims
of statutory discrimination are covered.
An application for leave to appeal has been filed with the Michigan Supreme
For additional Labor and Employment law
insights from John
Holmquist , visit the Michigan Employment Law
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