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.
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, Mi-
chael Willis, the President and Chief Executive Officer of
COREStaff, approached Ekedahl to discuss future employ-
ment 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 "Accept-
ed 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
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 agree-
ment 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 op-
tions 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.
the November 9 letter and the proposed employment agree-
ment, 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 agree-
ment, maintaining that they contained vesting provisions that
were inconsistent with the September 12 letter. She contin-
ued 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 imme-
diately-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 Eke-
dahl'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 immediate-
ly," 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 argu-
ment. 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
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 prov-
ing 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
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 Sep-
tember 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 essen-
tial 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 conten-
tion that COREStaff knew it was only the prospect of
immediately-vested options that made its offer better than
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 com-
parison. 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 compen-
sation 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 sched-
ules. 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 evi-
dence that this is the industry standard. Indeed,
COREStaff has itself entered into immediate-vesting agree-
ments 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 Eke-
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 exclusive-
ly on the parties' failure to reach an enforceable agreement
with respect to the stock options. Ekedahl, however, con-
tends 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 is-
sues: 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 Eke-
dahl 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 re-
verse the judgment of the district court. We remand the
issue of severance pay for further proceedings.
Reversed and remanded.