Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca6-14-03403/USCOURTS-ca6-14-03403-0/pdf.json

Parties Involved:
Allied Industrial Scrap, Inc.
Appellant
OmniSource Corporation
Appellee

Document Text:

1 

RECOMMENDED FOR FULL-TEXT PUBLICATION 

Pursuant to Sixth Circuit I.O.P. 32.1(b) 

File Name: 15a0011p.06 

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT 

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ALLIED INDUSTRIAL SCRAP, INC., 

Plaintiff-Appellant, 

v. 

OMNISOURCE CORPORATION, 

Defendant-Appellee. 

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No. 14-3403 

Appeal from the United States District Court 

for the Northern District of Ohio at Youngstown. 

No. 4:10-cv-02092—John R. Adams, District Judge. 

Decided and Filed: January 21, 2015 

Before: MERRITT, STRANCH, and DONALD, Circuit Judges. 

_________________ 

COUNSEL 

ON BRIEF: F. Timothy Grieco, ECKERT SEAMANS CHERIN & MELLOTT, LLC, 

Pittsburgh, Pennsylvania, for Appellant. Cathleen M. Shrader, BARRETT & MCNAGNY LLP, 

Fort Wayne, Indiana, for Appellee. 

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OPINION

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 MERRITT, Circuit Judge. The otherwise victorious plaintiff-appellant in this diversity 

case appeals the district court’s ruling that a unilateral fee-shifting clause for attorney’s fees was 

unenforceable under Ohio law as a matter of public policy. The district court relied on a 

previous published opinion from this Court in Scotts Co. v. Central Garden & Pet Co., 403 F.3d 

781 (6th Cir. 2005), that held that the Ohio Supreme Court would not enforce similar fee-shifting 

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No. 14-3403 Allied Indus. Scrap v. OmniSource Corp. Page 2 

clauses. Three years after the Scotts case, the Ohio Supreme Court in Wilborn v. Bank One 

Corp., 906 N.E.2d 396 (Ohio 2009), made it clear that it would enforce such unilateral or onesided fee-shifting contract provisions. Therefore, we must reverse. 

 In this case, the plaintiff offered to sell approximately 3 million pounds of scrap copper to 

the defendant. The defendant negotiated the core terms of the sale but did not object to the 

following fee-shifting provision: “In the event purchaser shall default in his obligations 

hereunder, purchaser shall be liable for [the plaintiff]’s costs of collection, including attorney’s 

fees.” The contract that includes this clause was negotiated between two experienced and 

sophisticated commercial entities. There was no duress. The parties were on an equal footing. 

There was no statute or other specific public policy that would invalidate a fee-shifting provision 

in a multi-million-dollar contract for the sale of copper scrap. A jury trial determined that the 

defendant defaulted on its obligation under the contract. 

It is elementary that in diversity we must apply the law of the state’s highest court. In 

Wilborn, the Ohio Supreme Court upheld a one-sided, fee-shifting contract for attorney’s fees in 

favor of a bank in connection with a home-equity loan agreement. As Wilborn explains, Ohio 

generally applies the “American rule” in which each party bears its own litigation costs, but 

under Ohio law contracts may shift the costs of litigation, including attorney’s fees. 906 N.E.2d 

at 400–01. There are exceptions that prevent parties from contracting around statutory public 

policy determinations. See, e.g., id. at 402 (prohibiting fee shifting that conflicted with 

foreclosure laws); State v. Taylor, 10 Ohio 378, 380–81 (1841) (denying attorney’s fees that 

operated to evade usury statutes). Wilborn makes it clear that when not confronted with a direct 

statutory conflict, Ohio law will generally give effect to such fee-shifting provisions when there 

is no duress. 

We therefore reverse the district court’s summary judgment order invalidating the feeshifting clause and remand with instructions to determine the fair, just, and reasonable value of 

the attorney’s fees specifically provided for in the contract. 

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