Dillard v. Canal Street Brewing Co., L.L.C. et al

Filing 23

OPINION and ORDER Taking 18 Defendants' Renewed MOTION to Compel Arbitration and to Stay Claims Under Advisement and Granting Limited Discovery. Limited Discovery due by 4/2/2024. Any Supplemental Briefs are due by 4/23/2024. Signed by District Judge Shalina D. Kumar. (THal)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
NAEEMAH DILLARD,

Plaintiff,

v.

Case No. 23-cv-11019
Honorable Shalina D. Kumar
Magistrate Judge Anthony P. Patti

CANAL STREET BREWING
CO., L.L.C., et al.,
Defendants.
OPINION AND ORDER TAKING DEFENDANTS’ MOTION TO COMPEL
UNDER ADVISEMENT (ECF NO. 18) AND GRANTING LIMITED
DISCOVERY
I.

INTRODUCTION
Plaintiff Naeemah Dillard brings this action alleging racial

discrimination, harassment, and retaliation by her former employer,
defendant Canal Street Brewing Co. d/b/a Founders Brewing Company
(“Founders”).1 ECF No. 16. Founders filed a motion to compel arbitration
and stay this case. ECF No. 18. The motion has been fully briefed, and the
Court heard oral argument on January 24, 2024. For the following reasons,

“Founders” as used throughout this opinion and order also includes
moving defendant Spain’s Best Beers, Inc.
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the Court takes Founders’ motion under advisement and orders limited
discovery under Federal Rule of Civil Procedure 56(d).
II.

FACTUAL AND PROCEDURAL BACKGROUND
Dillard began working for Founders in June 2021. See ECF No. 16.

According to Founders, Paycor, Founders’ payroll administrator, gave
Dillard access to various documents and agreements, including a
Confidentiality Agreement (the “Agreement”), which included an agreement
to arbitrate “all claims and disputes arising out of or during [her]
employment.” ECF No. 18-2, PageID.401. By way of a sworn declaration,
Founders’ Director of Human Resources Audrey Strieter attests that Dillard
first accessed these documents on June 11, 2021, and electronically
signed them on June 14, 2021, after her virtual orientation. ECF No. 18-3,
PageID.406.
The bottom left-hand corner of each page of the Agreement is
stamped with Dillard’s electronic signature, name, unique username
(Ndillard21), the date and time she electronically signed the Agreement,
and the IP address of the device from which she signed it. ECF No. 18-2.
As Strieter attests: “When an employee electronically signs a document at
Founders, an electronic stamp is generated onto every page of the
document.” ECF No. 18-3, PageID.406, ¶ 4 (emphasis added).
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Strieter’s declaration is silent on whether Paycor’s document signing
program requires a signor to scroll through the entire document before
entering a signature. See id. It also provides no details on how and by
whom the UserID was generated or whether access to documents was
secured by unique password. Id. Aside from the electronic stamp,
Founders makes no reference to any verifying or authenticating
information, such as a receipt-confirming email generated for the
Agreement. See id.
Dillard also attests by sworn declaration that, during the completion of
the online employment forms on her phone, she “absolutely did not see or
sign an arbitration agreement.” ECF No. 19-2, PageID.435, ¶ 5. She also
attests that no one at Founders ever mentioned, referenced, or discussed
the existence of an arbitration agreement. Id. at ¶ 8. Dillard declares that
she reviewed physical copies of the employee handbook, but it did not
contain an arbitration agreement. Id. at ¶ 7.
Founders argues that the valid, binding arbitration agreement for all
claims and disputes arising out of her employment, which Dillard
electronically signed, must be enforced. Dillard argues that genuine issues
of material fact as to the formation of the Agreement preclude the granting
of Founders’ motion and require limited discovery under Rule 56(d)
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followed by a trial under 9 U.S.C. § 4. She also argues that the arbitration
agreement was superseded by language in a later-issued employee
handbook.
III.

DISCUSSION
The Federal Arbitration Act requires district courts to compel

arbitration of claims covered by a valid arbitration agreement. Bazemore v.
Papa John's U.S.A., Inc., 74 F.4th 795, 797–98 (6th Cir. 2023) (citing 9
U.S.C. § 4). The party seeking arbitration must prove that such an
agreement exists. Id. at 798 (citing Boykin v. Family Dollar Stores of Mich.,
LLC, 3 F.4th 832, 839 (6th Cir. 2021)). Courts look to general principles of
state contract law to determine whether a valid arbitration agreement
exists. Id.
The Court first addresses Dillard’s argument that, to the extent the
arbitration agreement within the Agreement was ever valid, it was nullified
by the terms of a superseding employee handbook issued after Founders
merged to form a new entity. Dillard cites the superseding handbook’s
language: “any previous policies or representations relating to my
employment are no longer in effect, having been replaced by [this]
Handbook.” ECF No. 19-5, PageID.602, ¶ 2. Contrary to Dillard’s
argument, the new handbook explicitly preserves the terms of the
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Agreement. Indeed, the very next paragraph to the one Dillard quotes
plainly affirms that the “Agreement that I executed as a condition of my
employment and all the terms in the . . . Agreement[] will remain in full force
and effect. If there is any conflict between this Handbook and . . . the
Agreement, the terms of [the Agreement] will control.” Id. at ¶ 3 (emphasis
added). By its own clear terms, the new employee handbook did not
invalidate the Agreement or the arbitration provision subsumed within it.
The Court thus must determine whether the parties formed a valid
arbitration agreement at the outset. A motion to compel arbitration under §
4 of the Federal Arbitration Act is treated like a Rule 56 motion for summary
judgment, so, as the moving party, Founders has “the initial duty to present
evidence that would allow a trier of fact to find all required elements of a
contract . . . because it bore the burden of proof on its contract claim under
§ 4.” See Boykin, 3 F.4th at 839. Under Michigan law, valid contracts
require an offer and an unambiguous acceptance in strict conformance with
that offer. See Kloian v. Dominos Pizza LLC, 733 N.W.2d 766, 770 (Mich.
Ct .App. 2006). “Whether the parties have mutually agreed to be bound [by
contract] ‘is judged by an objective standard, looking to the express words
of the parties and their visible acts.’” Hergenreder v. Bickford Senior Living

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Group, LLC, 656 F.3d 411, 417 (6th Cir. 2011) (quoting Kloian, 733 N.W.2d
at 771).
Dillard attests in her sworn declaration that she did not agree to the
arbitration provision within the Agreement because she did not see it or
sign it. ECF No. 19-2, PageID.435, ¶ 5. Founders argues the electronic
signature recorded on the Agreement objectively manifests her agreement
to be bound to its terms, including the arbitration provision. “But an
electronic signature is legally valid only when made by the action of the
person the signature purports to represent—which is itself a question of
fact.” Bazemore, 74 F.4th at 798 (internal quotations omitted) (applying the
Uniform Electronic Transactions Act [UETA], as adopted by Kentucky);
accord Bronson Health Care Group, Inc. v. Esurance Property and
Casualty Ins. Co., 2023 WL 6320144, at *7, ___N.W.2d ___ (Mich. Ct. App.
Sept. 28, 2023) (applying UETA, as adopted by Michigan).
In Bazemore, as here, the defendant seeking to enforce the
arbitration agreement pointed to the electronic signature of the plaintiff,
Bazemore, who argued that he did not agree to the arbitration provision. 74
F.4th at 798. Bazemore submitted a sworn declaration in which he said he
never saw the arbitration agreement and “had never heard about it.” Id. at
797-98. Notwithstanding testimony from the defendant that the electronic
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document containing the arbitration agreement required Bazemore to scroll
through the entire agreement before signing it, “Bazemore’s testimony that
he never saw the agreement was . . . enough to create a genuine issue as
to whether he signed it.” Id. at 798.
Dillard, like the plaintiff in Bazemore, testified under penalty of
perjury, that she never saw or signed the arbitration agreement. ECF No.
19-2, PageID.435, ¶ 5. The record here even lacks evidence that the
Agreement required Dillard to scroll through the entire document before
she was permitted to sign, evidence that in Bazemore still fell short in
proving the existence of a valid signature. Under Bazemore, Dillard’s sworn
declaration creates a genuine issue of fact as to whether she agreed to the
arbitration agreement.
At oral argument, Founders urged the Court to follow the ruling in
Anderson v. Crothall Healthcare Inc.—that a party’s own assertion, without
evidentiary support, is not sufficient to create a genuine issue of material
fact as to the legitimacy of an electronic signature. 2022 WL 3719834 (E.D.
Mich. Aug. 29, 2022) (collecting cases). The Court first notes that
Anderson, an unpublished district court case, was decided before the Sixth
Circuit issued and published its Bazemore decision. And, even if Anderson

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had precedential value, its facts are distinguishable from the ones before
this Court.
In Anderson, the record indicated that the plaintiff, who denied the
existence of an agreement to arbitrate, “received a confirmation email
listing all of the documents she signed during her onboarding process,
including the [arbitration agreement].” Anderson, 2022 WL 3719834, at *5.
Founders has not provided any such confirming email, or any other
corroborating records verifying and authenticating Dillard’s signature or the
viewing of the entire Agreement.
Founders points to the stamp at the bottom of each page of the
Agreement as proof that Dillard saw, agreed to, and signed the Agreement
in its entirety. See ECF No. 18-2. The stamp reflects Dillard’s electronic
signature, along with a UserID, the date, and exact time of the signature
and the IP Address associated with the signature. Id. But, as noted in
Strieter’s sworn declaration, “[w]hen an employee electronically signs a
document at Founders, an electronic stamp is generated onto every page
of the document.” Id. at PageID.406, ¶ 4 (emphasis added). This testimony
suggests that a single signature placed at the end of the document, which
may or may not have been viewed before accepting a signature, was
populated throughout the document as a stamp appearing on the bottom of
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each page. The generated stamp alone does not disprove Dillard’s
testimony that she never saw or signed the arbitration agreement.
Dillard has sufficiently placed the formation and her alleged signing of
the arbitration agreement in issue. See Bazemore, 74 F.4th at 798.
Because summary judgment (and, by extrapolation, a motion to compel
arbitration under 9 U.S.C. § 4) can be supported or defeated by citing a
developed record, the Court must allow adequate discovery on formation
issues before resolving Founders’ motion to compel arbitration. See Fania
v. KIN Insurance, Inc., 2023 WL 3587753, at *4 (E.D. Mich. May 22, 2023)
(citing Boykin, 3 F.4th at 842).
IV.

CONCLUSION
The Court will permit the parties to conduct limited discovery on

formation issues related to the arbitration agreement and Dillard’s alleged
electronic signature. The parties may supplement their briefing on
Founders’ motion to compel arbitration upon completion of the limited
discovery. Based upon the supplemental briefing, the Court will determine if
it must compel arbitration or “proceed summarily” to a trial on remaining
disputed factual issues regarding formation. See 9 U.S.C. § 4.
IT IS ORDERED that Founder’s motion to compel arbitration (ECF
No. 18) is TAKEN UNDER ADVISEMENT.
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Discovery for the limited purpose of addressing the arbitration
agreement formation and electronic signature issues will be permitted until
April 2, 2024. The parties must submit any supplemental briefs by April
23, 2024. Any issue decided by the Court in this order will not be
reconsidered.
IT IS SO ORDERED.

Dated: February 6, 2024

s/Shalina D. Kumar
SHALINA D. KUMAR
United States District Judge

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