Robinson v. Mayfield Auto Group, L.L.C. , 100 N.E.3d 978 ( 2017 )

[Cite as Robinson v. Mayfield Auto Group, L.L.C., 2017-Ohio-8739.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 105844
JOHN P. ROBINSON, ET AL.
PLAINTIFFS-APPELLANTS
vs.
MAYFIELD AUTO GROUP, L.L.C., ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-16-869520
BEFORE: Blackmon, J., McCormack, P.J., and Stewart, J.
RELEASED AND JOURNALIZED: November 30, 2017
ATTORNEYS FOR APPELLANTS
Sheila A. McKeon
Colleen A. Mountcastle
Melanie R. Irvin
Gallagher Sharp L.L.P.
Bulkley Building, Sixth Floor
1501 Euclid Avenue,
Cleveland, Ohio 44115
ATTORNEYS FOR APPELLEES
Ann E. Knuth
Mansour Gavin L.P.A.
North Point Tower
1001 Lakeside Avenue, Suite 1400
Cleveland, Ohio 44114
David M. Neumann
David Neumann L.L.C.
2769 Commercial Road
(East Ninth Extension)
Cleveland, Ohio 44113
PATRICIA ANN BLACKMON, J.:
{¶1} Plaintiff-appellant, John P. Robinson (“Robinson”), appeals from the order
of the trial court granting the motion to stay proceedings pending arbitration filed by
defendant-appellee Mayfield Auto Group, L.L.C., d.b.a. Nick Mayer Ford Lincoln (“Nick
Mayer Ford”). Robinson assigns the following error for our review:
The trial court erred in granting [Nick Mayer Ford’s] motion to stay
proceedings as to the claims of John P. Robinson pending arbitration.
{¶2} Having reviewed the record and pertinent law, we affirm the trial court’s
decision. The apposite facts follow.
{¶3} In September 2016, Robinson, the former controller for Nick Mayer Ford,
and his coworker Eric Walker, filed a complaint against the dealership alleging breach of
contract and unjust enrichment. 1 As is relevant herein, Robinson alleged that he,
Robinson, began his employment with Marshall Ford in 2005. In 2014, Marshall Ford
was purchased by Nick Mayer Ford, and the terms of Robinson’s employment were
adopted by Nick Mayer Ford. Robinson alleged that under the terms of the Controller
pay plan, he was entitled to a monthly base salary plus commissions in the amount of 1%
of the dealership’s net pre-tax profit, and payment for unused vacation. He alleged that
he is entitled to accrued commissions in the amount of $11,459, past vacation payment in
the amount of $5,192, and current vacation payment in the amount of $3,600.
1
Walker is not a party to this appeal.
{¶4} In its answer, Nick Mayer Ford denied liability and asserted that Robinson’s
claims were subject to a mandatory arbitration agreement that was part of his
employment. Nick Mayer Ford also moved to stay the proceedings pending arbitration
and attached a copy of the arbitration agreement, which states:
any and all claims or controversies between me and the COMPANY
relating to my employment with the COMPANY or termination thereof
including claims for breach of contract, tort, employment discrimination
(including unlawful harassment) and any violation of any state or federal
law shall be resolved by arbitration in accordance with the applicable
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association.
***
If any party prevails on a statutory claim, which affords the prevailing party
attorneys fees, then the arbitrator may award reasonable attorneys fees and
costs to the prevailing party.
I understand and agree that this Arbitration Agreement contains a full and
complete statement of any and all agreements and understandings regarding
resolution of disputes between the COMPANY and me * * *.
{¶5} In opposition to the motion to stay, Robinson acknowledged that he signed
the arbitration agreement but argued that the agreement was unsupported by
consideration, and that it is unenforceable because it lacks mutuality and is
unconscionable.
{¶6} On May 2, 2017, the trial court stayed Robinson’s claims pending
arbitration. Robinson now appeals.
Standard of Review
{¶7} Generally, questions concerning whether an arbitration agreement is
enforceable or unconscionable are reviewed under a de novo standard of review.
Hedeen v. Autos Direc t Online, Inc., 2014-Ohio-4200, 19 N.E.3d 957, ¶ 9
(8th Dist.), citing McCaskey v. Sanford-Brown College, 8th Dist. Cuyahoga No. 97261,
2012-Ohio-1543, ¶ 7, and Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St. 3d 352,
353, 2008-Ohio-938, 884 N.E.2d 12. We give no deference to a trial court’s decision
when reviewing an issue de novo. Hedeen at ¶ 9, citing Brownlee v. Cleveland Clinic
Found., 8th Dist. Cuyahoga No. 97707, 2012-Ohio-2212, ¶ 9.
{¶8} There is a presumption in favor of arbitration where the disputed issue falls
within the scope of the arbitration agreement, “except upon grounds that exist at law or in
equity for the revocation of any contract.” DeVito v. Autos Direct Online, Inc.,
2015-Ohio-3336, 37 N.E.3d 194, ¶ 42 (8th Dist.)(en banc); Conte v. Blossom Homes
L.L.C., 8th Dist. Cuyahoga No. 103751, 2016-Ohio-7480, ¶ 13.
{¶9} In DeVito, this court explained that presumption as follows:
It is well settled that the arbitration process is a favored method to
settle disputes. Both the Ohio General Assembly and the courts have
expressed a strong public policy favoring arbitration. Hayes v. Oakridge
Home, 122 Ohio St. 3d 63, 2009-Ohio-2054, 908 N.E.2d 408, ¶ 15.
Arbitration is favored because it provides the parties “‘with a relatively
expeditious and economical means of resolving a dispute.’” Id., quoting
Schaefer v. Allstate Ins. Co., 63 Ohio St. 3d 708, 712, 590 N.E.2d 1242
(1992).
Id. at ¶ 12. Accord R.C. 2711.01(A) (an arbitration agreement in a written contract
“shall be valid, irrevocable, and enforceable, except upon grounds that exist in law or
equity for the revocation of any contract.”).
{¶10} Under R.C. 2711.02(B), when a trial court determines that an arbitration
provision is enforceable, the trial court shall on application of a party, stay the trial
pending arbitration, unless arbitration has been waived.
{¶11} In the instant matter, Robinson argues that the arbitration provision is
unenforceable for lack of mutuality of assent and consideration, and because it is
unconscionable.
I. Enforceability
{¶12} Arbitration is a matter of contract. DeVito at ¶ 13, citing United
Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S. Ct. 1347,
4 L. Ed. 2d 1409 (1960). Thus, prior to making any determination regarding the
arbitrability of any issue, a court must first determine whether the arbitration agreement is
enforceable under basic contract precepts. Skerlec v. Ganley Chevrolet, Inc., 8th Dist.
Cuyahoga No. 98247, 2012-Ohio-5748, ¶ 8, citing Council of Smaller Ents. v. Gates,
McDonald & Co., 80 Ohio St. 3d 661, 665, 1998-Ohio-172, 687 N.E.2d 1352.
{¶13} The elements of a contract are a voluntary offer, acceptance of the offer, and
consideration. Butcher v. Bally Total Fitness Corp., 8th Dist. Cuyahoga No. 81593,
2003-Ohio-1734, ¶ 28, citing Nilavar v. Osborn, 127 Ohio App. 3d 1, 711 N.E.2d 726
(2d Dist.1998); Noroski v. Fallet, 2 Ohio St. 3d 77, 79, 442 N.E.2d 1302 (1982). The
“mutuality of obligation” doctrine requires only a quid pro quo or consideration. Frick
v. Univ. Hosps. of Cleveland, 133 Ohio App. 3d 224, 228, 727 N.E.2d 600 (8th
Dist.1999). The Ohio Supreme Court has held that giving up a right to trial, in addition
to the corresponding rights of that judicial process, is consideration. Hayes v. Oakridge
Home, 122 Ohio St. 3d 63, 2009-Ohio-2054, 908 N.E.2d 408, ¶ 42-43.
{¶14} In support of his contention that the arbitration agreement is
unenforceable, Robinson relies on Harmon v. Philip Morris, 120 Ohio App. 3d 187, 697
N.E.2d 270 (8th Dist.1997). In Harmon, the employer’s alternative dispute resolution and
arbitration programs required the employee, but not the employer, to submit claims to
arbitration. The employer gave the employee the option of accepting the program or
working elsewhere, and the employer also reserved the right to terminate the program at
any time. The employee “acknowledged receipt of” pamphlets explaining the
agreement. In concluding that the employee was not required to arbitrate his claim for
wrongful termination, this court found no “acceptance” of the agreement, no mutuality,
and no consideration.
A. Acceptance
{¶15} In undertaking its analysis, the Harmon court explained:
[T]he Restatement of the Law 2d, Contracts (1981), Section 17, which
provides as follows:
“(1) * * * the formation of a contract requires a bargain in which there is a
manifestation of mutual assent to the exchange and a consideration.”
Section 22 provides:
“(1) The manifestation of mutual assent to an exchange ordinarily takes the
form of an offer or proposal by one party followed by an acceptance by the
other party or parties.”
(Emphasis deleted.) Id. at 190.
 {¶16} Therefore, as to the acceptance issue, this court noted that Harmon merely
signed a document verifying that he had “received the information,” but did not agree to
the terms set forth in the program. Harmon, 120 Ohio App. 3d at 191.
{¶17} Here, however, Robinson did not merely acknowledge receipt of the
arbitration agreement. Rather, he specifically agreed that he “understand[s] and agree[s]
that this Arbitration Agreement contains a full and complete statement of any and all
agreements and understandings regarding resolution of disputes between the COMPANY
and me[.]” Therefore, we find sufficient acceptance.
B. Mutuality of Assent
{¶18} Robinson argues that the arbitration agreement is unilateral, and the trial
court erred in “summarily determining that there was mutual assent[.]”
{¶19} With regard to the mutuality of the assent and consideration, the Harmon
court also noted that “the terms of this program require employees to arbitrate their claims
against Philip Morris but do not similarly require Philip Morris to arbitrate its claims
against them. 120 Ohio App. 3d at 191.
{¶20} However, in Bell v. Hollywood Ent., 8th Dist. Cuyahoga No. 87210,
2006-Ohio-3974, this court distinguished Harmon and found sufficient mutuality of
obligation where the employer was required to submit all claims to arbitration and could
not alter or terminate the arbitration program. Accord Skerlec, 2012-Ohio-5748. In
Skerlec, both the employee and the dealership agreed to submit any unresolved complaint
of “workplace wrongdoing” to arbitration and both parties agreed to give up their right to
a jury trial in exchange for the other’s similar promise. Id. at ¶ 12. This court agreed
with the trial court’s determination that the arbitration provision was enforceable in light
of the mutual promises and consideration, and “[u]nlike Harmon and Post [v. ProCare
Auto. Serv. Solutions, 8th Dist. Cuyahoga No. 87646, 2007-Ohio-2106], there is nothing
in the arbitration agreement that permits the employer to bypass arbitration.” Id. at ¶ 13.
{¶21} In this matter, the arbitration agreement states:
any and all claims or controversies between me and the COMPANY
relating to my employment with the COMPANY or termination thereof
including claims for breach of contract, tort, employment discrimination
(including unlawful harassment) and any violation of any state or federal
law * * * shall be resolved by arbitration.
Therefore, because the agreement pertains to “all” claims and controversies, it governs
both the employee’s and employer’s claims. Unlike Harmon and Post, there is no
provision that allows the employer to use the judicial process. Therefore, the agreement
is not void for lack of mutuality.
C. Consideration
{¶22} Robinson argues that there is insufficient consideration for the agreement
because his employment was not contingent upon signing the arbitration agreement. He
notes that Nick Mayer Ford took no action against his coworker Walker for failing to sign
the agreement.
{¶23} With regard to consideration, the Harmon court noted:
[Restatement (Second) of Contracts,] Section 17 provides:
“(1) To constitute consideration, a performance or a return promise must be
bargained for.
“(2) A performance or return promise is bargained for if it is sought by the
promisor in exchange for his promise and is given by the promisee in
exchange for that promise.
“(3) The performance may consist of
“(a) an act other than a promise, or
“(b) a forbearance, or
“(c) the creation, modification, or destruction of a legal relation.”
Harmon, 120 Ohio App. 3d at 190.
{¶24} In finding insufficient consideration, the Harmon court explained:
[S]ince Philip Morris reserves the right to amend or terminate the program
at any time, it has neither offered a benefit to employees nor incurred a
detriment by modifying the terms of the employment relationship. Thus,
no consideration flowed from the employer to the employees to compensate
them for relinquishing their individual and collective rights to present their
claims to a jury in a court of law because they remained at-will employees
following implementation of the program, subject to termination but
without the right to seek redress from a jury.
Id. at 191.
{¶25} However, in Skerlec, 2012-Ohio-5748, this court found sufficient
consideration. The Skerlec court noted that “[n]o consideration is required above and
beyond the mutual agreement to arbitrate.” Id. at ¶ 13, citing Corl v. Thomas & King,
10th Dist. Franklin No. 05AP-1128, 2006-Ohio-2956, ¶ 20, citing Dantz v. Apple Ohio
LLC, 277 F. Supp. 2d 794 (N.D.Ohio 2003). The Skerlec court also noted that giving up
a right to trial, in addition to the corresponding rights of that judicial process, is
consideration. Id. at ¶ 9, citing Hayes, 122 Ohio St. 3d 63 at ¶ 42-43.
{¶26} From the foregoing, the parties’ agreement to arbitrate all disputes serves as
consideration; consideration is not dependent upon the promise of continued employment.
Further, in this matter, unlike Harmon, 120 Ohio App. 3d at 187, and Post,
2007-Ohio-2106, Nick Mayer Ford did not reserve the right to alter or terminate the plan.
Rather, the parties mutually agreed to arbitrate “any and all claims or controversies.”
Therefore, we find sufficient consideration to support the mandatory arbitration
agreement.
{¶27} In accordance with the foregoing, we conclude that the arbitration
agreement contains the requisite elements of a valid, enforceable contract.
II. Unconscionability
{¶28} Unconscionability is a ground for revocation of a contract. Taylor Bldg.
Corp. of Am., 117 Ohio St. 3d 352 at ¶ 32; R.C. 2711.01(A). Whether a particular
contract or contract provision is unconscionable is a question of law subject to de novo
review. Taylor Bldg. Corp. of Am. at ¶ 36; Devito, 2015-Ohio-3336 at ¶ 16; Martin v.
Byke, 8th Dist. Cuyahoga No. 88878, 2007-Ohio-6816, ¶ 25. The party claiming
unconscionability bears the burden of proving that the contract or provision at issue is
unconscionable. Taylor Bldg. Corp. of Am. at ¶ 33.
{¶29} In Martin, this court explained the concept of unconscionability as
follows:
“Unconscionability is generally recognized to include an absence of
meaningful choice on the part of one of the parties to a contract, combined
with contract terms that are unreasonably favorable to the other party.”
Collins v. Click Camera & Video, Inc. (1993), 86 Ohio App. 3d 826, 834,
621 N.E.2d 1294. “Unconscionability thus embodies two separate
concepts: 1) unfair and unreasonable contract terms, i.e., ‘substantive
unconscionability,’ and 2) individualized circumstances surrounding each
of the parties to a contract such that no voluntary meeting of the minds was
possible, i.e., ‘procedural unconscionability * * *. These two concepts
create what is, in essence, a two-prong test of unconscionability. One
must allege and prove a ‘quantum’ of both prongs in order to establish that
a particular contract is unconscionable.” Id., quoting White & Summers,
Uniform Commercial Code (1988) 219, Section 4-7.
Substantive unconscionability concerns the actual terms of the agreement
and whether the terms are unfair and unreasonable. Collins, supra, at 834.
Contract clauses are unconscionable where the “clauses involved are so
one-sided as to oppress or unfairly surprise [a] party.” Neubrander v.
Dean Witter Reynolds, Inc. (1992), 81 Ohio App. 3d 308, 311-312, 610
N.E.2d 1089.
Procedural unconscionability involves the circumstances surrounding the
execution of the contract between the two parties and occurs where no
voluntary meeting of the minds was possible. Collins, supra at 834. In
determining procedural unconscionability, a court should consider factors
bearing on the relative bargaining position of the contracting parties —
including age, education, intelligence, business acumen, and experience in
similar transactions — whether the terms were explained to the weaker
party, and who drafted the contract. Id., citing Johnson v. Mobil Oil
Corp., 415 F.Supp 264, 268 (E.D.Mich. 1976).
Id. at ¶ 28-30; see also Devito at ¶ 14-20.
A. Substantive Unconscionability
{¶30} Robinson argues that the arbitration agreement is substantively
unconscionable in accordance with this court’s decision in Post v. ProCare Auto. Serv.
Solutions, 8th Dist. Cuyahoga No. 87646, 2007-Ohio-2106. He asserts that it required
the employee, but not the employer, to submit his or her disputes to arbitration, did not
disclose the costs, and that he “may end up spending a considerably higher amount of
costs and fees in arbitration.”
1. Lack of Mutuality as Basis of Unconscionability
{¶31} As noted in Post, 2007-Ohio-2106, lack of mutuality can be a basis of
unconscionability. Id. at ¶ 17.
{¶32} Here, however, as this court noted in the discussion of enforceability of the
agreement, the arbitration agreement required arbitration of “any and all claims or
controversies between me and the COMPANY relating to my employment with the
COMPANY or termination thereof[.]” Therefore, we reject Robinson’s claim of lack of
mutuality.
2. Failure to Disclose Costs
{¶33} The arbitration agreement that the Post court found to be substantively
unconscionable did not disclose the costs of arbitration or the fact that they may be
substantially higher than costs associated with a regular court proceeding. Id. at ¶ 18.
However, the plaintiff presented no evidence that the costs of arbitration would deter him
from vindicating his rights in arbitration. Id. at ¶ 20. Similarly, in McCaskey, this
court stated:
[A] failure to disclose the costs of arbitration did not make a provision per
se unconscionable. [Taylor, 117 Ohio St. 3d 352] at ¶ 56-58,
citing Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 90-91,
121 S. Ct. 513, 148 L. Ed. 2d 373 (2000). The Taylor court required specific
and individualized evidence that arbitration costs were unduly burdensome
to the party opposing it.
Here, just as in Taylor, there is no evidence that McCaskey would be
prevented from prosecuting his claim in arbitration even though he did
submit various fee schedules for the American Arbitration Association
(“AAA”) and the National Arbitration Forum (“NAF”).
Id., 2012-Ohio-1543, at ¶ 32-33.
{¶34} Similarly, in this matter, there is no evidence that Robinson would be
prevented from prosecuting his claim in arbitration.
{¶35} In accordance with the foregoing, we likewise reject the claim that the
arbitration agreement is unconscionable for failing to disclose costs.
3. Costs of Arbitration Higher Than Litigation
{¶36} Robinson maintains that the costs of arbitration are higher than in the
judicial forum and he “may end up spending a considerably higher amount of costs and
fees in arbitration.”
{¶37} The party complaining of the costs of arbitration bears the burden of
showing the likelihood of incurring such costs. Felix v. Ganley Chevrolet Inc., 8th
Dist. Cuyahoga Nos. 86990 and 86991, 2006-Ohio-4500, ¶ 21. The mere “risk” that a
party will be saddled with prohibitive cost is too speculative to justify the invalidation of
an arbitration agreement. Taylor Bldg. Corp. of Am., 117 Ohio St. 3d 352, at ¶ 57.
{¶38} Here, Robinson’s assertion that he “may end up spending a considerably
higher amount of costs and fees in arbitration” is too speculative to support the claim of
unconscionability. Id. Further, Robinson’s claim that the costs of arbitration are
higher than in the judicial forum was insufficient to demonstrate that the cost of
arbitration would operate to deter him or other similarly situated individuals from seeking
to vindicate his statutory rights through arbitration.
{¶39} Further, the evidence presented herein concerning arbitration filing
appears to place a greater cost burden upon the employer, and there is no basis upon
which we can conclude that the arbitration costs and fees are prohibitive, unreasonable, or
unfair as applied to Robinson, or that Robinson has been denied the opportunity for a
hearing of his claims due to the costs. Accord Felix, 2006-Ohio-4500, at ¶ 21.
B. Procedural Unconscionability
{¶40} Robinson next asserts that the arbitration agreement is procedurally
unconscionable because it was drafted by Nick Mayer Ford and was not explained to
Robinson. This court rejected similar claims in Pruitt v. Strong Style Fitness, 8th Dist.
Cuyahoga No. 96332, 2011-Ohio-5272, and stated:
immediately preceding Pruitt’s signature is a paragraph in bold type stating
that Pruitt read and understood the terms of the rules and regulations prior
to signing. At that point, Pruitt was free to walk away from the contract if
he did not like the terms proposed by Strong Style. See Wallace v. Ganley
Auto Group, 8th Dist. Cuyahoga No. 95081, 2011-Ohio-2909[.]
Id. at ¶ 18. Accord Taylor Bldg. Corps. of Am. at ¶ 47. Accord Butcher, 8th Dist.
Cuyahoga No. 81593, 2003-Ohio-1734, at ¶ 35.
{¶41} In accordance with all of the foregoing, the assigned error is without
merit.
{¶42} Judgment is affirmed.
It is ordered that appellee recover of appellant costs herein taxed. The court
finds there were reasonable grounds for this appeal. It is ordered that a special mandate
issue out of this court directing the common pleas court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure
PATRICIA ANN BLACKMON, JUDGE
TIM McCORMACK, P.J., and
MELODY J. STEWART, J., CONCUR