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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 12, 1999 Decided July 30, 1999

No. 98-7119

Sharon Ekedahl,

Appellee

v.

COREStaff, Inc.,

Appellant

Appeal from the United States District Court

for the District of Columbia

(No. 96cv01947)

R. Glen Rigby argued the cause for appellant. With him

on the briefs were Thad T. Dameris and Tegan M. Flynn.

Eugene R. Fidell argued the cause for appellee. Deborah

L. Pollock was with him on the brief.

Before: Williams, Sentelle and Garland, Circuit Judges.

Opinion for the Court filed Per Curiam.

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Per Curiam: A jury awarded plaintiff Sharon Ekedahl

$661,875 in a breach of contract action against defendant

COREStaff, Inc. COREStaff challenges the district court's

denial of its motion for judgment as a matter of law, asserting

that there was no stock options contract between the parties,

both because there was no agreement on an essential term

and because the alleged contract did not satisfy the Statute of

Frauds. We conclude that there was no agreement on an

essential term regarding the vesting of the stock options. We

therefore reverse the judgment of the district court and

remand for further proceedings.

I

COREStaff, Inc. is a temporary staffing agency with its

principal place of business in Houston, Texas. Ekedahl is a

resident of the District of Columbia. In January 1995, Michael Willis, the President and Chief Executive Officer of

COREStaff, approached Ekedahl to discuss future employment with the company. At the time Willis approached her,

Ekedahl was employed as a Vice President at Adia Personnel

Services, one of COREStaff's competitors. Ekedahl had

worked at Adia for over ten years, and was receiving an

annual salary and bonuses totaling over $200,000, as well as a

package of stock options. Ekedahl discussed the proposed

employment with Willis and other COREStaff representatives

over the ensuing several months.

On September 12, 1995, COREStaff sent Ekedahl a letter

making a formal offer of employment. The letter stated that

Ekedahl would have the title of Senior Vice President, and

described the position's base salary, bonuses, vacation, and

insurance benefits. In the provision central to this case, it

further stated: "Stock Options--15,000 shares to be granted

immediately." App. 22. The letter contained signature lines

for both Ekedahl and Willis, preceded by the phrase "Accepted by and agreed to." Id. Both Willis and Ekedahl signed

and dated the letter.

On November 1, 1995, Ekedahl began her employment with

COREStaff. On November 9, COREStaff sent Ekedahl a

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letter, stating that she was "being granted an option for

15,000 shares at the IPO price per share of $17.00" and that

she would receive a stock option agreement pursuant to which

her options would "vest equally over a three (3) year vesting

period" and be exercisable over a ten year period. Id. at 26.1

Shortly thereafter, Ekedahl received a draft of COREStaff's

standard employment agreement. Id. at 27-31. Under this

agreement, "[v]esting for such stock options [would] occur

over a three (3) year period, with one-third vesting on the

first anniversary of employment, 1/3 vesting on the second

anniversary of employment, and the final 1/3 vesting on the

third anniversary of employment." Id. at 30. The agreement also indicated that "[t]he exact terms and conditions of

the stock options ... [would] be set forth in the COREStaff,

Inc. 1995 Long-Term Incentive Plan and a Stock Option

Agreement by and between Employee and the Company."

Id.

Ekedahl testified that she was surprised to receive these

documents, particularly because they indicated that her options would vest in the future. She told Willis and

COREStaff's general counsel, Peter Dameris, that the vesting

provisions were not consistent with the September 12 letter.

Willis indicated that Ekedahl should have known there would

be vesting restrictions, but also said he would "work on

accelerating this." 1/27/98 p.m. Tr. at 7. Dameris informed

her that as a matter of policy, COREStaff did not give

immediately-vested options.

On November 20, COREStaff sent Ekedahl a copy of the

stock options agreement for execution. App. 37-41. Like

__________

1 A stock option grants an employee the right to buy a specific

stock at a stated price at any time during a specified (exercise)

period, regardless of the prevailing market price. See American

Bankers Ass'n, Banking Terminology 232 (1981). Once the right

becomes vested, it is no longer contingent upon, for example, the

employee's continued employment with the company. Id. at 254.

Vesting may be total and immediate, graduated over a period of

years, or may occur upon the completion of stated service or

participation requirements. Id.

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the November 9 letter and the proposed employment agreement, this document provided that the options would vest in

the future. Id. at 38. Ekedahl did not sign either the

proposed employment agreement or the stock options agreement, maintaining that they contained vesting provisions that

were inconsistent with the September 12 letter. She continued to work for COREStaff until May 10, 1996, at which point

COREStaff dismissed her for other reasons.

After she left the company, Ekedahl brought a diversity

action in district court, alleging breach of contract by

COREStaff and fraudulent misrepresentation by COREStaff

and Willis. The contract claim principally alleged that

COREStaff breached its agreement to grant Ekedahl immediately-vested stock options. The district court dismissed the

fraudulent misrepresentation claim prior to submitting the

case to the jury. After a three week trial, the jury returned

a verdict for Ekedahl on the contract claim.

After the verdict, COREStaff renewed its earlier motion

for judgment as a matter of law. COREStaff argued that no

reasonable jury could find a meeting of the minds between

the parties with respect to the immediate vesting of Ekedahl's stock options. It also argued that a provision of the

then-effective District of Columbia Statute of Frauds, D.C.

Code Ann. s 28:8-319(1) (1995), would preclude enforcement

of the purported options agreement because there was no

writing that described or indicated the price of the securities

to be given to Ekedahl.

The district court denied COREStaff's motion, concluding

that the jury could have found an agreement for immediate

vesting based on the provision in the September 12 letter

stating that the 15,000 shares were "to be granted immediately," together with Ekedahl's testimony that she would not

have left Adia without an agreement for immediate vesting.

The court also rejected COREStaff's Statute of Frauds argument. This appeal followed.

II

When reviewing a district court's ruling on a motion for

judgment as a matter of law, this court "evaluate[s] de novo

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whether the prevailing party proffered sufficient evidence

upon which a jury could properly base a verdict in its favor."

Bennett Enter., Inc. v. Domino's Pizza, Inc., 45 F.3d 493, 497

(D.C. Cir. 1995). We view the evidence "in the light most

favorable to the prevailing party, and the jury's verdict must

stand unless the evidence, together with all inferences that

can reasonably be drawn therefrom, is so one-sided" that we

cannot conclude a reasonable jury could have reached that

verdict. Id.

Under District of Columbia law, the party asserting the

existence of an enforceable contract has the burden of proving that there has been agreement--a "meeting of the

minds"--as to all material terms. See Jack Baker, Inc. v.

Office Space Dev. Corp., 664 A.2d 1236, 1238 (D.C. 1995);

Davis v. Infield, 664 A.2d 836, 838 (D.C. 1995). "Where the

parties fail to agree to all material terms, no contract is

formed...." Jack Baker, 664 A.2d at 1239; see Edmund J.

Flynn Co. v. LaVay, 431 A.2d 543, 547 (D.C. 1981). Proof of

a meeting of the minds may be found either in the written

agreement or, if the agreement is ambiguous, in the parties'

actions at the time of contract formation. See Davis, 664

A.2d at 838; Nofziger Communications, Inc. v. Birks, 989

F.2d 1227, 1230 (D.C. Cir. 1993).

In the instant case, it is clear that the vesting of the stock

options was a term material to the alleged options agreement

between Ekedahl and COREStaff. Ekedahl testified that her

belief that the options would vest immediately was critical to

her decision to leave her job at Adia and begin working at

COREStaff. See 1/27/98 a.m. Tr. at 12-13 (stating that she

"absolutely [would] not" have accepted the September 12

offer if it indicated the options would vest in future); 1/28/98

p.m. Tr. at 75 (describing absence of vesting restrictions as

"the turning point" in her acceptance of offer). COREStaff

witnesses, on the other hand, testified that a delayed vesting

structure was an integral part of the company's Long-Term

Incentive Plan, and that the company did not generally offer

immediately-vested options. See 2/4/98 p.m. Tr. (pt. 1) at 47-

49; 2/5/98 Tr. at 56. Given the significance that both parties

placed on the presence, or absence, of immediate vesting, it

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follows that vesting was a material term as to which

COREStaff and Ekedahl had to be in agreement in order to

reach a binding contract.

The record, however, is devoid of any evidence that the

parties reached an agreement on vesting. The only reference

to stock options in the September 12 letter states: "Stock

Options--15,000 shares to be granted immediately." App. 22.

Ekedahl made clear at oral argument that she does not

contend that the term "granted" meant "vested," and that she

understood that an option could be granted immediately

without vesting immediately. See supra note 1; see also

Ekedahl Br. at 29-30; 1/27/98 a.m. Tr. at 12. Indeed, she

had received several documents in connection with her Adia

stock options that distinguished between the two terms. See,

e.g., Joint Exs. 45, 48. The parties' written agreement,

therefore, is silent as to vesting.

Nor is there any evidence that the parties orally agreed on

a vesting provision. To the contrary, Ekedahl's testimony

makes clear that she never discussed vesting with COREStaff

at all:

Q: So the record and I are very clear on this, at the

time that you signed the agreement, ... dated September 12, 1995, you had absolutely no discussion

whatsoever with Mike Willis, or anyone else at

COREStaff, about vesting, isn't that correct?

A: That's correct.

Tr. 1/28/98 p.m. at 16-17; see also Tr. 1/27/98 a.m. at 8.

COREStaff's testimony was in accord. See 2/2/98 p.m. Tr.

(pt. 2) at 33, 35. As the District of Columbia Court of

Appeals has said, "[t]he failure to ... even discuss an essential term of a contract may indicate that the mutual assent

required to make or modify a contract is lacking." Owen v.

Owen, 427 A.2d 933, 937 (D.C. 1981). In this case it surely

does.

There is also no evidence to support Ekedahl's contention that COREStaff knew it was only the prospect of

immediately-vested options that made its offer better than

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her current compensation package at Adia, and hence knew

that such a provision was the critical inducement in luring her

away. As already noted, the parties agree that vesting was

never discussed. Ekedahl further testified that she had no

conversations with COREStaff regarding the value of her

Adia stock options. 1/28/98 a.m. Tr. at 52-53. Indeed, not

only is there no evidence that COREStaff had compared or

could compare the value of the two packages, there was no

evidence from which the jury itself could make such a comparison. As Ekedahl conceded at oral argument, she never

introduced any evidence as to the total value of her Adia

compensation package, particularly its stock options. Hence,

there was no evidence from which the jury could conclude

that only with an immediate-vesting provision would the

COREStaff package have been worth more than the compensation Ekedahl was receiving from Adia.

Both Ekedahl and COREStaff make arguments that could

be read as urging us to adopt default rules to apply whenever

a contract is silent as to vesting. Ekedahl characterizes

delayed vesting as a "restriction," and argues that the failure

expressly to include such a restriction denotes its absence.

But to support such a default rule, Ekedahl would have to

offer evidence that immediate vesting is the background norm

for personnel agreements, which she wholly failed to do.

Even her own Adia options contained delayed vesting schedules. COREStaff, on the other hand, suggests the opposite

default rule--that in the absence of a provision providing for

immediate vesting we should presume that vesting is to be

delayed. Like Ekedahl, however, COREStaff offers no evidence that this is the industry standard. Indeed,

COREStaff has itself entered into immediate-vesting agreements upon occasion. App. 16. Accordingly, we decline each

party's invitation to fashion a default rule and restrict our

decision to the documents and testimony before us in this

case.

III

We conclude that the vesting of the stock options was a

material term of the putative options contract between EkeUSCA Case #98-7119 Document #452982 Filed: 07/30/1999 Page 7 of 8
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dahl and COREStaff, and that there is no evidence the

parties reached a meeting of the minds as to that term. This

in turn compels the conclusion that, as a matter of law, there

was no contract between the parties with respect to the

vesting of the options. There being no contract, we need not

consider whether the parties' various writings were sufficient

to satisfy the Statute of Frauds.

One final issue requires attention before we can specify a

disposition for this appeal. COREStaff's briefs here and its

motion for judgment as a matter of law below focus exclusively on the parties' failure to reach an enforceable agreement

with respect to the stock options. Ekedahl, however, contends that her breach of contract claim had two components,

stock options and severance pay. Ekedahl Br. at 3, 5. The

district court's jury instructions made reference to both issues: if the jury found a breach of an enforceable options

agreement, it was directed to award Ekedahl an amount that

would make her whole; if it found a breach of an enforceable

agreement for severance pay, it was directed to award her

the sum of $67,500. App. 168, 169. Although the verdict

form only referred specifically to stock options, the final

interrogatory simply asked the jury to state a sum of money

that "would fairly and reasonably compensate Sharon Ekedahl for her damages ... that resulted from [COREStaff's]

failure to comply with the agreement." Id. at 154. Hence,

we cannot determine whether the jury's answer of $661,875

included an award of severance pay.

Since we have heard no argument regarding severance pay

on this appeal, we limit our ruling to Ekedahl's claim to

immediately-vesting stock options. In that respect, we reverse the judgment of the district court. We remand the

issue of severance pay for further proceedings.

Reversed and remanded.

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