Craddock v. LeClairRyan, A Professional Corporation

Filing 14

MEMORANDUM OPINION. Signed by District Judge Robert E. Payne on 4/12/2016. (jsmi, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division

MICHELE BURKE CRADDOCK,
Plaintiff

v.

Civil Action No. 3:16-cv-11

LECLAIR RYAN, P.C.
Defendant.

MEMORANDUM OPINION
This
STAY

matter

is

ARBITRATION

DISMISS

AND

reasons

stated

(Docket No.

TO

before

(Docket
COMPEL

below,

the

Court

No.

3)

and

ARBITRATION
Plaintiff's

3) will be denied,

on

Plaintiff's MOTION
Defendant's

(Docket
MOTION

No.

TO

MOTION

7).

STAY

For

TO
TO
the

ARBITRATION

and Defendant's MOTION TO DISMISS

AND TO COMPEL ARBITRATION (Docket No. 7) motion will be granted.

BACKGROUND
Michalle
suit

against

("LeClairRyan"

Burke

Craddock

her
or

"the

("Craddock")

former

employer,

firm"),

for

brought

the

LeClairRyan,

gender

based

current
P.C.

employment

discrimination in violation of Title VII of the Civil Rights Act
of 1964,
Pay

Act,

of the Lilly Ledbetter Fair Pay Act,
alleging

that

LeClairRyan

and of the Equal

systemically

discriminates

against equal compensation and promotion of women generally, and
1

that

LeClairRyan

promoting

her

discriminated

specifically.

in

not

(See

equally

generally

compensating

Compl. ,

Docket

or
No.

1) .

The facts,
Court,

are

ownership

as relevant to the motion currently before the

as

of

the

follows:

Shareholder

in LeClairRyan. 1

shares

Agreement

(Def.' s

Mem.

governs

in

Supp.

of

Mtn. to Dismiss and to Compel Arbitration and Opp. to Pl.'s Mtn.
to Stay Arbitration,
Shareholder
MTD

Mem.

Docket No.

8,

contains

an

Agreement

2).

The

Agreement

2)

arbitration

section

states no restrictions on acceptance.
Mtn.

to

Dismiss

("Def.'s

MTD

and

to

Reply").

("Def.'s MTD Mem.").

dealing

general

with

(Def.'s

arbitration

(Def.' s Reply in Supp.

Compel Arbitration,
A

clause.

The

section

Docket
at

the

No.
end

13,

of

of
5)
the

Agreement states that a signature constitutes acceptance of the
Agreement,

but

does

not

state

that

permissible manner of acceptance.
Mtn.

to

Dismiss

and

("Pl.' s MTD Opp.");
In

October

promotion
application.

to

Compel

signature

(Pl.' s Mem.

Arbitration,

is

the

in Opp.

Docket

only

to Def.' s

No.

12,

4)

(Docket No. 4, Ex. 1).

2012,

Craddock

Shareholder.
(Def.' s

a

MTD Mem.

submitted

LeClairRyan
6;

1

Compl.

an

application

for

approved
<JI<JI

Craddock's

58-59).

On December

Although the Shareholder Agreement has not been reproduced in
its entirety in this litigation, the portions dealing with
arbitration are attached to Craddock's Memorandum in Support of
Motion to Stay (Docket No. 4) at Exhibit 1.
2

12,

2012,

a LeClairRyan administrator sent Craddock:

of the Shareholder Agreement;

( 2)

(1)

a copy

information on a Wells

Fargo

loan program available to finance her required $100,000 capital
contribution;

and

shareholders.

(Def.'s MTD Mem.

to

Shareholder

(3)

as

information on benefits available only to

of

January

Craddock sometime in 2013.
Craddock

never

prompted

her

signed
to

do

7). LeClairRyan promoted Craddock
1,

2013

and

(Def.'s MTD Mem.

the
so

Shareholder

until

long

awarded
6; Compl.

Agreement,

after

shares

58-68).

<JI<JI

and

Craddock

to

no

one

became

a

shareholder.
After
Craddock

a

dispute

and

LeClairRyan

LeClairRyan

would

deduct

extraordinary bonus
(Pl.'s

Stay Mem.

LeClairRyan
2013.

paid

Again,

over

what

the

Shareholder Agreement.

in

of

a

$100, 000

MTD Mero.

and
did

for

ask

(Pl.'s Stay Mero.

of

the

set

7-8;

deducted
not

Craddock' s

series

LeClairRyan was

bonus

LeClairRyan

financing

agreed

Def.'s

5-7;

the

the

the

that

from

an

pay Craddock.

Compl.
buy-in

Craddock
7).

emails

buy-in

to

buy-in,

<JI<JI

58-68).

in August

to

sign

the

Between January 1,

2013 and November 24, 2014, Craddock engaged in behavior typical
of a shareholder:
she

participated

shareholders,

LeCLairRyan compensated her as a shareholder,
in

benefit

plans

only

available

she voted on issues put to shareholders,

referred to herself as a shareholder.

3

(Def.'s MTD Mem. 8).

to

and she

On November 7,

2014,

Craddock complained of discriminatory

treatment related her salary.
point,

~

(Compl.

19). At some unspecified

Craddock acquired her own counsel on the discrimination

matter.

On

November

24,

Craddock's

2014,

counsel

and

LeClairRyan's counsel discussed that Craddock had not signed the
Shareholder Agreement.

(Compl.

On December 18,
LeClairRyan,

2014,

20).

~

Michael Hern

("Hern"),

sent Craddock the Agreement,

President of

stating that Craddock

had "inadvertently failed" to execute the Shareholder Agreement.
Hern

demanded

that

Craddock

business on December 22,

sign

2014,

the

Agreement

by

close

of

and stated that the firm would

"take appropriate steps" if Craddock did not sign and return the
Agreement.
and

( Compl.

learned

$100,000
financial

21) .

~

for

the

first

buy-in,

she

was

records."

agreement

"Craddock reviewed the
time

that,

entitled

(Compl.

~

to

23-27) .

before
inspect
On

she

paid

her

LeClairRyan's

December

21,

2015,

Craddock emailed LeClairRyan stating that she would not sign the
Shareholder

Agreement

information.

(Compl.

that

before
~

inquiry before the

she

28-29).

reviewed

certain

LeClairRyan did not

December 22,

2014

financial
respond to

deadline.

(Compl.

~

30) .
On December 22,

2014,

Craddock returned a signed, modified

version of the Shareholder Agreement,
stating

that

she

had

been

given
4

striking:
the

( 1)

opportunity

provisions
to

view

financial
(Compl.
again

records

11 30).

the

(2)

provisions

Craddock

to

sign

11

(Compl.

the

31).

unmodified Shareholder Agreement.
Craddock

arbitration.

unmodified

filed

a

Charge of

Craddock

Shareholder

MTD Mero.

2) .

right-to-sue notice.
December

On

never

signed

Discrimination with the
("EEOC")

December

4,

on January 20,

2015,

the

EEOC

for Arbitration.

Equal
2015.

issued a

(Def.'s MTD 3).

11,

2015,

LeClairRyan

filed

a

Demand

Arbitration with the American Arbitration Association
On December 12,

the

(Compl. 11 32).

Employment Opportunity Commission

On

to

stating that no Shareholder was permitted to modify

Agreement.

(Def.' s

related

Hern rejected Craddock' s modified agreement and

asked

Agreement,

and

2015,

for

("AAA") .

the AAA accepted and docketed the Demand

(Def.' s MTD Mero.

3). Craddock' s counsel sent a

letter to the AAA on December 14, 2015, arguing that the filing
was inappropriate; the AAA disagreed.
On January
Court.

On

Arbitration

6,

January
(Docket

2016,
7,

(Def.'s MTD Mero. 3).

Craddock filed her Complaint

2016,
No.

filed

in

3)

Craddock

Court,

this

a

Motion
together

Memorandum in Support of Motion to Stay Arbitration
4)
the

("Pl.' s Stay Mem. ") .
filing

of

the

in this
to

Stay

with

a

(Docket No.

Craddock' s counsel notified the AAA of

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
5

in

this

case

service,

on

January

14,

2016.

LeClairRyan promptly

Compel Arbitration

(Def.'s

filed

its

(Docket No.

7),

MTD Mero.

Motion

to

4).

Upon

Dismiss

together with its Memorandum

in Support of Motion to Dismiss and to Compel Arbitration,
Opposition to Plaintiff's motion to Stay Arbitration
8)

( "Def . ' s

Opposition

to

Arbitration
Memorandum

MT D

Defendant's

(Docket
in
11)

in

of

support

No.

Support

(Docket No.

Craddock

Mero. " ) .

Motion

12)

of

own

filed

a

MTD

and

Motion

Opp.")
to

and

Stay

and

(Docket No.

Memorandum

Dismiss

to

("Pl.'s

her

and

in

Compel
a

Reply

Arbitration

("Pl.' s Stay Reply") . LeClairRyan filed a Reply
its

own

motion

(Docket

No.

13)

("Def.'s

MTD

Reply") .

OVERVIEW

The disposi ti ve
entered a binding,

issue on both motions

is whether Craddock

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,
January 1,

2013

and late

the Shareholder Agreement?

6

did Craddock's conduct between
2014

demonstrate acceptance of

3.

Did

Craddock's

documents

failure

before

to

engaging

review
in

LeClairRyan

conduct

financial

characteristic

of

acceptance void her acceptance?
4.

a

Is

written,

unsigned,

but

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 off er?

For

the

reasons

signature

was

Shareholder

set
not

forth
the

Agreement;

below,

exclusive
( 2)

acceptance of the contract;
Craddock the
but did not

option to

the

Court

manner

Craddock's
( 3)

finds
of

that:

( 1)

accepting

conduct

a

the

demonstrates

the Shareholder Agreement gave

examine LeClairRyan

financial

require her to read those documents,

documents

and thus the

fact that she did not examine these documents had no impact on
her acceptance of the Shareholder Agreement;
unsigned contract,

otherwise accepted,

the Federal Arbitration Act; and
arbitration

provisions

in

is

( 4)

a

writ ten but

sufficient

to

invoke

(5) Craddock's crossing out the

December

2014

could

not

be

a

"rejection," because she accepted and formed a contract as early
as January, 2013. 2

2

If Craddock did
arbitrate,
there

not
is

enter a binding, written
a
secondary
question
7

agreement to
of
whether

Accordingly,
No.

Plaintiff's MOTION TO STAY ARBITRATION (Docket

3) will be denied, and Defendant's MOTION TO DISMISS AND TO

COMPEL ARBITRATION (Docket No. 7) motion will be granted.

GOVERNING LAW

The
disputes

Federal
to

Arbitration

arbitration

Act

when

requires

a

valid,

that

courts

written

refer

arbitration

agreement exists and the dispute falls within the scope of the
agreement to arbitrate.
Dickey's

Barbecue

2015); Lorenzo v.

9 U.S. C.

Rests.,

Inc.,

§

2; Chorley Enters.,

807

F.3d

553,

Prime Communications, L.P.,

563

Inc.

(4th

806 F.3d 777,

v.

Cir.
781

(4th Cir. 2015).
While the Supreme Court has acknowledged a
"liberal
federal
policy
favoring
arbitration,"
it has also consistently
held that § 2 of the FAA reflects the
"fundamental principle that arbitration is a
matter of contract[]" .... Thus, a court may
order arbitration only when it "is satisfied
that the parties agreed to arbitrate."
And the question of whether the parties
agreed
to
arbitrate
is
resolved
by
application of state contract law.
Lorenzo,

806 F.3d at 781

(internal citations omitted); see also

Chorley,

807 F.3d at 563

("At the same time,

it is well-settled

LeClairRyan's action for
a "declaratory judgment" on the
employment
dispute
before the AAA divests
the Court
of
jurisdiction over the employment dispute. (See generally, Pl.' s
Stay Mem.). Because Craddock did enter a binding, written
arbitration agreement, the Court need not reach the issues of
the propriety of LeClairRyan' s "preemptive strike" in front of
the AAA.
8

that a
dispute

'party cannot be required to submit to arbitration any
which

he

has

not

agreed

to

so

submit.'")

question

of

whether

(internal

citation omitted).
State

law

governs

the

the

parties

formed a contract with a valid arbitration clause. Chorley,
F.3d

at

Kaplan,

563
514

(relying
U.S.

on

938,

First

944,

Options

115

S.Ct.

of

Chicago,

1920,

131

807

Inc.

v.

L.Ed.2d

985

(1995)). The Shareholder Agreement contains a Virginia choice of
law clause

(Docket No.

4,

Ex.

1),

and the parties agree that

Virginia choice of law governs the formation or non-formation of
the contract in question.

(See generally Def.' s MTD Mem.;

MTD Reply). When confronted with uncertain state law,

Pl.' s

a federal

court must predict what course the highest court in the state
would take. Byelick v. Vivadelli, 79 F. Supp. 2d 610,

623

(E.D.

Va.

1999). The federal court may base its prediction on "canons

of

construction,

pronouncements
highest

court,

restatements

of

general

well

of

rules

considered

court decisions." Wells v.

the
or

law,

policies

dicta,

Liddy,

treatises,

and

by

the

186 F.3d 505,

the

recent
state's

state's
528

trial

(4th Cir.

1999) .
Section

Four

of

the

FAA provides

for

a

jury trial

when

there is a question of material fact related to the validity of
a contract containing an arbitration provision.
Chorley,

807

F.3d

at

564.

However,
9

when

the

9.

U.S.C.

parties

do

§

4;
not

dispute any material facts,
jury

trial,

and

the

3

the parties are not entitled to a

court

determines

whether

intended to arbitrate as a matter of law.

the

Chorley,

parties

807 F.3d at

564.
If a valid agreement to arbitrate exists, usections 3 and 4
[of the FAA]

'provide

arbitration agreement:
a

dispute

referable

[]

two parallel devices for enforcing an

a stay of litigation in any case raising
to

arbitration,

9

U.S.C.

affirmative order to engage in arbitration,
F.3d

at

563

(quoting

Moses

H.

Cone

§

Mem'l

§

3,

and

4.'" Chorley,

Hosp.

v.

an
807

Mercury

Constr. Corp., 460 U.S. 1, 22 (1983)).

ANALYSIS

Applying common law principles of contract formation,
clear

that

(1)

Craddock

accepted

the

LeClairRyan

Agreement by her conduct between January 1,
24,

2014,

binding

forming
arbitration

a

contract

which

provision,

such

it is

Shareholder

2013 and November

included

a

that

( 2)

written

and

Craddock's

purported "rejection" of the Shareholder Agreement in December
2014 had no legal effect. Because Craddock agreed to arbitrate,
it is inappropriate for this Court to order a stay in the AAA

3

Although Craddock's papers refer a jury trial (Pl.'s Stay Mem.
14), there do not appear to be any disputes of material fact on
the arbitration issue.
10

proceeding

or

to

otherwise

consider

the

appropriateness

of

LeClairRyan's filing before the AAA.

I.

Craddock

and

LeClairRyan

Formed

A

Contract

As

Early

As

January 1, 2013

Under
parties

Virginia

an

whether

law,

enforceable

[an

"whether

agreement

arbitration

there
to

existed

between

arbitrate

agreement]

depends

contained

the

the
on

essential

elements of a valid contract at common law." Phillips v. Mazyck,
273

Va.

"material

630,

635,

facts

643

S.E.2d

concerning

172,

the

175

(2007).

formation

of

Where

the

the

parties'

proposed arbitration agreement are not in dispute," the issue of
contract formation is a question of law.

Id. Mutuality of assent

is required for formation of a contract to arbitrate. Id.
The

analysis

in

this

case

focuses

on

two

major

issues:

whether the Shareholder Agreement made a signature the exclusive
means

of

acceptance

and,

if

it

did

not,

whether

Craddock's

silence and conduct reasonably manifested acceptance and intent
to be bound.
A.

The Shareholder Agreement Did Not Make A Signature

The

Exclusive

Manner

Of

Accepting

The

Shareholder

Agreement

Craddock's

position

on

contract

formation

rests

on

the

concluding section of the Shareholder Agreement's statement that
11

"[e] ach Shareholder understands that by signing this agreement
he or she agrees ... to submit any claims arising out of ... his
or

her

relationship

arbitration."
could not
the

with

the

(Pl.' s MTD Opp.

have formed a

Shareholder

to

Corporation

14-15).

Craddock claims that she

contract through her actions,

Agreement

set

binding

forth

only

one

because

manner

acceptance - a signature - which she did not provide.

of

(Pl.'s MTD

Opp. 13-15) .
For

this

proposition,

Craddock

relies

on

Restatement

(Second) of Contracts, which notes that
[a] n offer may invite or require acceptance
to be made by an affirmative answer in
words, or by performing or refraining from
performing a specified act, or may empower
the of feree to make a selection of terms in
his acceptance.
Illustration:
1. A sends a letter to B stating the terms
of a proposed contract. At the end he
writes, "You can accept this offer only by
signing on the dotted line below my own
signature." A replies by telegram, "I accept
your offer. There is no contract."
Restatement

(Second)

accord Sport Sys.,

of Contracts
Inc.

v.

§

Kettler

30
&

(1981)
Scott,

(emphasis added);
Inc.,

No.

127886.,

1994 WL 1031237, at *2 (Va. Cir. Ct. June 27, 1994).
However,

when

a

contract

acceptance,

without

stating

permissible

manner

of

lists

that

acceptance,

12

one

such

a

possible
manner

contract

law

manner

is

the

treats

of
only
the

possible manner as a suggestion, and leaves the offeree free to
accept

the

reasonable

contract
manner.

in
As

(Second)

acceptance

of

suggested manner

the

of Contracts

form

the

second

comment

30 notes,

§

is

or

to

in

the

any

other

Restatement

"[i]nsistence on a particular
Language

unusual

ref erring

to

a

particular mode of acceptance is often intended and understood
as suggestion rather than limitation; the suggested mode is then
authorized,
(Second)

but

of

other modes

Contracts

are

30

§

of

acceptance

Contracts
the

§

Jones,

not

Jones

v.

When "an offer merely suggests

precluded."

Restatement

(Second)

73 Va.

Cir.

of
at

another method
(Second)

Restatement

(Second)

Contracts

46

language in the writing,
acceptance

accord

of

60. That other method must be reasonable in light of

circumstances.

Restatement

(b));

time or manner of acceptance,

is

Restatement

precluded."

(comment

Holloway, 73 Va. Cir. 46 (2007).
a permitted place,

not

("Unless

§

of

30

Contracts

(comments

otherwise

§

65;

(d)-(e));

indicated by the

or the circumstances, an offer invites

in any manner and by any medium reasonable

in the

circumstances"). The "by signing this agreement" language of the
Shareholder

Agreement

acceptance,

and thus

contains

no

limitation

clearly operates

as

a

on

the

mode

of

"suggestion rather

than limitation."
Craddock argues that interpreting the signature language as
a

"suggestion rather than a

limitation"
13

undermines

the

common

law anti-redundancy canon of interpretation.
15)

(relying

on

Restatement

interpretation which gives

(Second)

a

of

(Pl.

MTD Mem.

Contracts

reasonable,

lawful,

§

14-

203

("an

and effective

meaning to all the terms is preferred to an interpretation which
leaves a part unreasonable,
PMA Capital Ins.
S. E. 2d 369,

Co. v.

372-73

unlawful,

US Airways,

(2006)

or of no effect)); accord

Inc.,

271 Va.

("No word or clause

352,

358,

626

in the contract

will be treated as meaningless if a reasonable meaning can
given to it,

and there is a presumption that the parties have

not used words needlessly."). However,
is

not

be

applicable

in this

case,

the anti-redundancy canon

because

reading the

signature

language as a suggestion does not render that language redundant
or meaningless.
that,

As

noted,

the

default

rule

acceptance

in the absence of an exclusive means of acceptance,

reasonable

means

Restatement

(Second)

of

acceptance
of

Contracts

§

65

reasonable

if

it

customary

in

offer

received.") ;

is

(comments

similar

is

the

one

used

transactions
Restatement

(d)-(e)); see also Jones,

at

a

create

will

known to the offeree indicate otherwise,
is

for

("Unless

is
any

contract.

circumstances

a medium of acceptance
by

the

(Second)

the

offeror

time
of

and

or

one

place

the

Contracts

73 Va. Cir. at 46.

§

30

Including

a suggested form of acceptance serves to remove all debate about
whether

that

other words,

form

of

acceptance

qualifies

as

"reasonable."

In

the suggested manner of acceptance states a means
14

by which the parties unquestionably will be bound.

This

gives

the signature language value beyond mere surplusage. Thus,
the

anti-redundancy

canon

does

not

require

that

the

that
Court

interpret the signature language of the Shareholder Agreement as
creating an exclusive manner of acceptance.

4

The cases Craddock cites are not to the contrary.
those

cases

merely

stand

for

the

proposition

Rather,

that,

when

a

contract suggests a manner of acceptance, performing that manner
of acceptance does,
Mero.

14)

1359

(11th Cir.

(relying on Caley v.

3805041

(E.D.

Restatement
Jones,

in fact,

2005);
Va.

(Second)

constitute acceptance.
Gulf stream Aero Corp.,

Mitchell v.

July
of

(Pl.' s MTD

Sajed,

2013)

22 I

Contracts

§

3:13-CV-312,

(Spencer,
30

428

J. ) ) ;

(comment

(b));

F. 3d

2013 WL
accord
accord

73 Va. Cir. at 46. The cases Craddock cites do not stand

for the proposition that,
acceptance,

when a contract suggests a manner of

no alternate otherwise-reasonable manner constitutes

acceptance.
In

conclusion,

Agreement

is

most

the

signature

appropriately

4

language
read

of
as

the

Shareholder

suggesting

an

Even if the signature language would be redundant if
interpreted as non-exlusive, the anti-redundancy canon is not
absolute, ~' TMW Enterprises, Inc. v. Fed. Ins. Co., 619 F.3d
574, 578 (6th Cir. 2010); Verizon Virginia, LLC v. XO Commc'ns,
LLC, No. 3:15-CV-171, 2015 WL 6759473, at *9 (E.D. Va. Nov. 5,
2015), and must yield to the common usage of a suggested-butnot-exclusive means of acceptance given by the Restatement and
Jones, 73 Va. Cir. at 43.
15

unquestionably
acceptance

valid

manner

any

other

in

of

acceptance,

manner

without

excluding
under

reasonable

the

circumstances.
B.

Craddock's

Conduct

Between

January

1,

2013

and

November 24, 2014 Reasonably Evinced Acceptance Of The
Shareholder Agreement

Given that the Shareholder Agreement left Craddock free to
accept
next

by

any

manner

question

is

reasonable

under

the

behavior

Craddock's

whether

circumstances,

the

reasonably

demonstrates acceptance and intent to be bound.
The parties concur that a court must determine acceptance
through a party's words or acts.
Wells v. Weston,
493,

503

220 Va.

(1954));

Cardwell,

216 Va.

72,

Def.'s
212,

223

78

{Pl.' s MTD Opp. 12
(1985); Lucy v.

MTD

Reply

(1975));

7

(relying on

Zehmer, 196 Va.

(relying

on

Lacy

see also Marefield Meadows,

Inc. v. Lorenz, 245 Va. 255, 260, 427 S.E.2d 363, 365 (1993)
meeting

of

contract,

the
but

corresponding
acts . ' ") ;

minds
'the

to

is

law

the

Restatement

essential
imputes

(Second)

to

to

reasonable

v.

a

formation

person

meaning
of

the

of

Contracts

an
his
§

of

("A
a

intention
words
19

and
("The

manifestation of assent may be made wholly or partly by written
or

spoken

words

or

by

other

acts

or

by

failure

to

Because Craddock did not sign the Shareholder Agreement

16

act.").
(which

would demonstrate a clear intent to be bound through words), the
Court must examine whether Craddock' s

silence and her behavior

manifest acceptance and intent to be bound.
Silence and inaction 5 typically do not constitute acceptance
of a

contract and its terms.

acceptance
accepts

of

the

an

offer

benefits

and
of

However,
its

the

silence does constitute

terms
offer;

opportunity to reject the offer;

and

where
(2)
{3)

the
has

offeree:
a

of

Contracts

Hanover Ins. Co., No.
Va.

Dec.

8,

2015)

§

69 ( 1) (a); 6

2:15-CV-127,

reasonable

understands that the

offer is made with the expectation of compensation.
(Second)

( 1)

accord

United

Restatement
States

2015 WL 9665679, at *4

v.

(E.D.

(surveying Supreme Court of Virginia cases)

report and recommendation adopted,

No.

2:15CV127,

2016 WL 79931

5

"Inaction" here refers to Craddock not taking action to
affirmatively reject the Shareholder Agreement between January
1, 2013 and November 24, 2014. Although everyday usage of
"action" easily encompasses Craddock buying in to LeClairRyan,
receiving
stock,
voting
as
a
shareholder,
and
receiving
shareholder-only employment benefits, the Restatement instead
characterizes these as "accepting the benefit of the offer"
rather than "actions."
6

Virginia law is that "[s]ilence alone, without some other
objective manifestation of assent, will not serve as acceptance
of a contract." Odyssey Imaging, LLC v. Cardiology Associates of
Johnston, LLC, 752 F. Supp. 2d 721, 724 (W.D. Va. 2010) (relying
on Phillips, 273 Va. at 638, 643 S.E.2d at 176)). Craddock did
not, however, offer "mere silence": she offered silence and
inaction, while at the same time accepting benefits, having an
opportunity to reject,
and knowing that compensation was
expected. This is the "other objective manifestation of assent"
that makes it appropriate to impute acceptance from Craddock' s
behavior.
17

(E.D.

Va.

Ballard

Jan.

Const.

6,
Co.,

2016)
250

(relying
Va.

(1995); Hercules Powder Co. v.

on

493,

Galloway

505,

464

Corp.

S.E.2d

Brookfield, 189 Va.

531,

v.

S.B.

349,
541,

356
53

S.E.2d 804, 808 (1949)) . 7 Moreover,
when the recipient knows or has reason to
know that the services are being rendered
with an expectation of compensation, and by
a
word could prevent
the mistake,
his
privilege of inaction gives way
he is
held to an acceptance if he fails to speak.
The resulting duty is not merely a duty to
pay fair value, but a duty to pay or perform
according to the terms of the offer.
Restatement

(Second)

of Contracts

§

69

(comment

(b))

(emphasis

added) .
7

Virginia law is essentially in line with the Restatement on
this point. Magistrate Judge Leonard noted that:
acceptance by silence is an exception and
not the general rule.
Klein v.
Verizon
Commc'ns, Inc., 920 F.Supp.2d 670, 680 (E.D.
Va. 2013)
In cases where courts have
found that silent acceptance occurred, there
was a clear understanding of the terms in
which each party were to be bound and
performance
or
acceptance
of
offered
benefits occured. See, e.g. Galloway Corp.
v. S.B. Ballard Const. Co., 250 Va. 493,
505, 464 S.E.2d 349, 356 (1995)
(finding
that when one party "undertook to perform
the contract according to its terms, an
acceptance by performance resulted" even
though the parties never signed a formal
contract);
Hercules
Powder
Co.
v.
Brookfield, 189 Va. 531, 541, 53 S.E.2d 804,
808 (1949)
("Ample authority sustains the
view that such a promise amounts to an
offer, which, if accepted by performance of
the service, fulfills the legal requirements
of a contract.").
Hanover, 2015 WL 9665679, at *4.
18

In

this

case,

Craddock met

all

the

requirements

for

acceptance-by-silence rule as expressed in the Restatement
and

in Hanover.

offer.
and

First,

Craddock accepted the

benefits

herself

shareholder,
available

out

a

shareholder,

participated

to

in

employment
and

shareholders,

shareholders.

(Def.'s

MTD

was

of

Mem.

benefit

voted

6-8).

compensated

reasonable opportunity to reject the offer.

a

only

had

to
a

Craddock received a

copy of the Shareholder Agreement on December 12, 2012,
promoted to Shareholder as of January 1,

as

put

Craddock

Second,

the
2013

plans

issues

on

69

§

Craddock was promoted to Shareholder on January 1,

held

the

2013.

and was

This is a more

than reasonable period in which Craddock might have communicated
a

rejection

officer.
an

of

Third,

inference

compensation.

the

Shareholder

Agreement

to

any

appropriate

the record before the Court reasonably supports

that
Most

Craddock understood that
obviously,

Craddock

the

knew

offer expected

that

LeClairRyan

expected a $100,000 buy-in, which Craddock agreed in writing to
pay out of her August 2013 bonus.

(Def.'s MTD Mem. 7-8).

In addition to the monetary compensation, excerpts from the
Shareholder

Agreement

show

that

Craddock

duties and accepted binding arbitration
right to recourse in court).
are

less

However,

self-evidently

(Docket No.

types

of

accepted

fiduciary

(giving up her default
4,

Ex.

"compensation"

1,

12).
than

These
money.

common law gives a broad definition to "compensation"
19

as

required for
~'

formation.
(b))

("a

even

though

loss.u);

exchange of value
Restatement

'legal

is

Restatement

performance

of

consideration,

a

no

context of contract

(Second) of Contracts § 79 (comment

detriment'

there

in the

is

sufficient

economic

(Second)

of

pre-existing

[as

detriment
Contracts

legal

duty

consideration]

or
73

§

does

482,

484

actual

noting

not

that

constitute

and thus implicitly recognizing that performance

of a new legal duty constitutes consideration);
Richmond,

other

Inc. v.

Imperial Assocs., 253 Va.
(noting

(1997)

that

98,

consideration

see also GSHH101,

may

480 S.E.2d
come

as

"a

benefit to the party promising or a detriment to the party to
whom the promise is made.u).
Further,

the

Shareholder

Agreement

and

the

business

arrangement it established contemplated that the benefits were
of the type not given without an expectation of an exchange of
value

or,

in

other

words,

of

compensation.

Craddock

was

compensated as a shareholder and accepted the premium benefits
of the Shareholder Agreement.

She also voted as a shareholder,

accepted all benefits of shareholder

status,

and held herself

out as a shareholder. Craddock does not claim to have understood
otherwise.
Because Craddock
Agreement;
Agreement

(2)

had

an

( 1)

accepted benefits of the Shareholder

opportunity

to

in November 2012 but did not
20

reject

the

Shareholder

reject the

Shareholder

Agreement;

(3)

knew that the Shareholder Agreement expected both

monetary compensation ($100,000)
sense

of

legal

arbitration);

an

detriment
(4)

and compensation in the broader

(fiduciary

accepted

commitment

duties,

compensation

of

benefits

to
only

available under the Shareholder Agreement.
Hanover
defendant

provides

argued

Restatement

§

69.

a

that

useful
Hanover

Hanover,

contrary to Restatement

§

2015
69,

In

accepted
WL

by

9665679,

at

that

case,

silence

comparison.

under

*4.

However,

defendant failed to "establish []

that Hanover took any offered benefits pursuant to the purported
settlement agreement." Id.

Additionally,

"Hanover's silence and

inaction gives the Court no guidance as to what terms Hanover
might have assented to." Id.
benefits,

By contrast, Craddock took offered

and the emailed Settlement Agreement clearly lays out

the terms to which Craddock assented.
At

the

partnership

margins,
also

Craddock's

supports

finding

request
that

for

Craddock

promotion

to

accepted

the

offer embodied in the Shareholder Agreement. As the Restatement
notes, either "[e]xplicit statement by the offeree [or] usage of
trade ... may give the offerer reason to understand that silence
will constitute acceptance." Restatement
69

(comment

(Second) of Contracts

§

(d)) . 8 Craddock's October 2012 request for promotion

8

Even further at the margins, "usage of trade" also supports
finding acceptance, in that it is extreme 1 y unlike 1 y that any
21

to

shareholder

suggesting

is

that

an

"explicit

Craddock

statement

intended

to

by

accept

the

the

offeree"

Shareholder

Agreement governing promotion to shareholder. Craddock's request
tends to make it even more reasonable to infer acceptance from
Craddock's conduct.
Craddock argues, contrary to Restatement
cited

in

cannot be

Hanover,

636-37,

Contractors,
240,

513

acceptance

of

an

69 and the cases

arbitration

clause

implied through silence or conduct at Virginia law.

(Pl.' s MTD Opp.
630,

that

§

18-20)

(relying on Phillips v.

643 S.E.2d 172,
Inc.

S.E.2d

v.
858

176

(2007);

Mazyck,

Brooks

Randy Robinson Contracting,
(1999)).

The

cases

which

273 Va.

Co.

General

Inc.,

257 Va.

&

Craddock cites,

however, do not actually support her position. In Brooks,
a general contractor sent to a subcontractor
an unsigned form contract containing an
arbitration provision that the parties had
not previously discussed and that was not
included
in
the
subcontractor's
bid
documents
The subcontractor testified
that he did not agree with the terms of the
form
contract
and that
he
purposefully
refused to
sign it,
although he
never
communicated
his
disagreement
to
the
contractor .... The subcontractor began work
on the project
but the subcontractor
left the work unfinished
The general
law firm would read Craddock calling herself a shareholder and
accepting shareholder benefits as anything but acceptance, even
in the face of silence and a failure to explicitly reject the
promotion. Because evidence of this does not appear in the
record, however, the Court does not place weight on "usage of
trade" in assessing whether Craddock's behavior reasonably
demonstrated acceptance.
22

contractor completed the unfinished work and
demanded arbitration . . . . We . . . upheld the
trial court's finding that the parties did
not mutually assent to a modification of
their original oral contract
In doing
so, we noted the lack of any evidence that
the general contractor,
i.e.,
the party
seeking
enforcement
of
the
purported
contract,
objectively
manifested
its
intention to be bound by the form contract
In fact, the evidence showed that the
general contractor did not sign the form
contract
before
sending
it
to
the
subcontractor precisely because it expected
that the subcontractor would make changes to
the document.
Phillips,

273 Va.

(including

the

636-37.

The

reason that

arbitration provision)

was

the Brooks
not

binding

contract
is

that

the party seeking to enforce the contract did not manifest an
intent to be bound by the contract as drafted at the time of
alleged contract formation.
which

to

enforce

the

Phillips likewise involved a case in

arbitration

provision

never

objectively

manifested its assent to the terms of the contract containing an
arbitration provision.
case,

however,

the

Phillips,

actions

demonstrate

intent

to

LeClairRyan

assigned

be

of

bound

shares

to

273
the
by

Va.

173-74,

party
the

176.

seeking

Shareholder

Craddock;

granted

In

this

enforcement
Agreement:
shareholder

voting rights to Craddock;

and granted shareholder benefits to

Craddock.

6-8).

(Def.' s

MTD Mem.

the record shows that,
LeClairRyan

did not

Additionally,

the evidence in

unlike the general contractor in Brooks,

expect

Craddock to modify the

23

Shareholder

Agreement.
were

(Pl.' s

expected

drafted) .
were

To

Stay Mem.

to

adhere

reiterate:

unenforceable

10)
to

the

because

(noting that
the

Shareholder

contracts
the

all

party

in

Agreement

Brooks

seeking

shareholders

to

and

as

Phillips

enforce

the

contract did not demonstrate an intent to be bound; however,
this

case,

LeClairRyan' s

demonstrates

a

clear

conduct beginning on January 1,

intent

to be bound by the

terms

in

2013

of

the

Shareholder Agreement. 9 To the extent that Brooks and Phillips
are

relevant

to

this

case,

it

is

merely

to

underscore

that

parties must objectively manifest their acceptance and intent to
be bound by a contract objectively manifest

and both parties to this dispute did

their

acceptance

and

intent

to

be

bound

from January 1, 2013 onward.
C.

Craddock' s
Failure
To
Review
LeClairRyan
Financial Documents Before Engaging in Conduct
Characteristic Of Acceptance Did Not Void Her
Acceptance

Craddock's memorandum notes that the subscription agreement
required Craddock to warrant that she had been
given access
to and an opportunity to
examine
such
documents,
materials,
and
information concerning the Corporation as I
deem necessary or advisable in order to
reach an informed decision as to making an
investment in the corporation, and I have
carefully
reviewed
and
understand
these
9

If LeClairRyan did not adhere to all the terms of the contract,
as Craddock claims, that proves that LeClairRyan breached the
contract, not that LeClairRyan never intended to be bound by the
contract.
24

materials and I have received answers to my
full satisfaction
I have made such in
dependent investigation
as
I deem
necessary.
(Pl.' s Stay Mem.
failure

to

form

8) . Craddock never explicitly argues that her

contract.

a

review

reasonable
afforded

financial
It

is

reading

of

Craddock

worth

an

information she

documents

the

means

noting,

however,

Shareholder

opportunity

deemed advisable.

that

she did not

that

Agreement
read

to

the

is

most

that

it

financial

any

Craddock received a

copy of

the Shareholder Agreement by email on December 12, 2012. She was
advised of her right, but did not exercise it before manifesting
acceptance by conduct

(receiving and paying for shares, voting,

accepting shareholder benefits)

in 2013.

On LeClairRyan' s

side

of this contract,

when Craddock began manifesting acceptance by

conduct,

reasonable

it

was

for

LeClairRyan

to

presume

that

Craddock had decided she did not need to review the financial
information that she was given the opportunity to review.
D.

The FAA Requires A Written Arbitration Agreement,
But Not A Signed Arbitration Agreement

The FAA only requires arbitration where the parties entered
a written arbitration agreement. 9 U.S.C.
two

circuit

does

not

courts

require

have,

however,

§

2. This district and

determined

an arbitration agreement be

that

*3

(emphasis added)

(relying on Seawright v.
25

FAA

signed by the

parties entering into the agreement." Mitchell,
at

"[t] he

a

2013 WL 3805041
Am.

Gen.

Fin.

Servs.,

Inc.,

Gulfstream
2005)).

507

F.3d

Areospace

Craddock's

arbitrate

signed

967,

Corp.,

978
428

argument

by

the

(6th
F.3d

that

Cir.
1359,

there

parties"

2007);
1369

is

(Pl.'s

no

MTD

Caley
(11th

Cir.

"written
Opp.

v.

11)

to
is,

accordingly, unavailing.
In sum:
offer:

on December 12,

the

Shareholder

2012,

LeClairRyan made a written

Agreement.

(Def.'s

MTD

Mem.

7).

The

Shareholder Agreement contained a written arbitration provision.
(Docket No.

4, Ex.

1, 11). The Shareholder Agreement suggested,
(Docket No. 4, Ex.

but did not require, acceptance by signature.
1,

11-12) .

By

Shareholder

suggesting,

Agreement

Shareholder

Agreement

Restatement

(Second)

given

a

not

any

reasonable

of Contracts
(1)

requiring,

Craddock

left
in

offer and its terms by
between January 1,

but

§

65.

free
or

to

the
the

accept

customary

manner.

Craddock accepted the

accepting the benefits of the offer

2013 and November 24,

reasonable

acceptance,

opportunity

to

reject

2014 after
the

offer

(2)

being

and

(3)

understanding that the offer was made with the expectation of
compensation.

(Def.'s

MTD

Contracts § 69; Restatement
(b)). Thus,
written,

6-8);
(Second)

Restatement

(Second)

of Contracts § 69

of

(comment

Craddock accepted the Shareholder Agreement and its

binding,

FAA-enforceable arbitration provision by her

conduct between January 1, 2013 and November 24, 2014.

26

II. Craddock's "Rejection" In December, 2014 Had No Legal Effect·
Craddock

argues

that,

when

Shareholder Agreement,

she

(Def.'s

15-17,

MTD

common

Mem.

law,

a

12,

~,

Chittum v .

(1975).
questions

of

contract

(such

216 Va .

issues

formed

been

19-20).

to

sign

the

arbitration provision.

It

as

asked

is

correct

Craddock

that,

striking

at
the

constitutes a rejection and a new offer.

Potter,

However,

was

rejected the

counteroffer

arbitration provisions)

she

(offered

of

4 63 ,

rejection

formation.
and

4 67 ,

If

and

the

accepted),

219 S . E . 2 d 8 5 9 ,
counteroffer

contract
a

has

party's

8 63
are

already

subsequent

decision to cross out portions of the contract is an offer to
modify a

contract

at most

did

accept)

and

not

Craddock's

alleged

(an

a

offer which LeClairRyan clearly

nullity

"rejection"

at

worst.

almost

two

In

other

years

words,

after

the

contract was formed is legally irrelevant.
CONCLUSION

For

the

ARBITRATION
MOTION

TO

reasons
(Docket

DISMISS

stated above,
No.

AND

3)
TO

will
COMPEL

Plaintiff's
be

denied,

ARBITRATION

MOTION
and

TO

Defendant's

(Docket

No.

motion will be granted.
It is so ORDERED.

Isl
Robert E. Payne
Senior United States District Judge
Richmond, Virginia
Date: April 12, 2016
27

STAY

7)