[Cite as Philpott v. Pride Technologies of Ohio, L.L.C. , 2015-Ohio-4341.]



### IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

CHRISTOPHER PHILPOTT, Plaintiff-Appellee,

vs. PRIDE TECHNOLOGIES OF OHIO, LLC, Defendant-Appellant. :

:

:

:

: APPEAL NO. C-140730 TRIAL NO. A-1403566

O P I N I O N.

Civil Appeal From: Hamilton County Court of Common Pleas Judgment Appealed From Is: Reversed and Cause Remanded Date of Judgment Entry on Appeal: October 21, 2015

Katz, Greenberger & Norton LLP and Stephen E. Imm , for Plaintiff-Appellee, Wood & Lamping LLP and Dale A. Stalf , for Defendant-Appellant.

Please note: this case has been removed from the accelerated calendar.OHIO FIRST DISTRICT COURT OF APPEALS



### 2 F ISCHER , Judge.



### {¶1} Defendant-appellant Pride Technologies of Ohio, LLC, (“Pride Technologies”) appeals the decision of the tr ial court overruling its motion to stay or dismiss the proceedings filed against it by plaintiff-appellee Christopher Philpott, and compel Philpott to arbitrate his claims . Because Philpott failed to demonstrate that the costs of arbitration would be prohib itively high as to render the arbitration provision in his contract with Pride Tech nologies substantively unconscionable, and Pride Technologies had not waived its right to arbitrate the dispute, we reverse the judgment of the trial court. The Parties’ Attempted Arbitration 

### {¶2} Philpott had been employed by Pride Technologies for eight years, ending in 2012. That same year, Pride Te chnologies filed a demand for arbitration with the American Arbitration Association (“AAA”) in New York against Philpott in accordance with Pride Technologies’ “Executive Employment Agreement,” demanding over $190,000 from Philpott. Philpott filed a co unterclaim in the arbitration, arguing that Pride Technologies had failed to credit his profit-sharing account approximately $48,000, as required by the parties’ “Profit Sharing Unit Agreement.” 

### {¶3} In May 2014, a month before the scheduled arbitration, AAA suspended the arbitration in accordance with its rules, because Philpott had not paid his portion of costs and fees, totaling $11,950. Philpott informed Pride Technologies

and the arbitrator that he could not affo rd to pay the nearly $12,000 bill. The arbitrator made clear that Pride Technologies, as the claimant, could pay Philpott’s share of the fees to avoid suspension. Pride Technologies refused to pay Philpott’sOHIO FIRST DISTRICT COURT OF APPEALS



### 3 share and expressed doubt as to Philpott’s representation th at he could not afford to pay the fees. Pride Technologies also stated its intention to file suit in New York state court should Philpott refuse to pay. 

### {¶4} A week before the scheduled arbitration hearing, the parties received an email from an AAA representative, stating that Philpott’s share of the fees remained unpaid, and that AAA would cancel the hearings unless Philpott or Pride Technologies paid the remaining balance. The email also indicated that the arbitrator would work with the parties to reduce fees. Apparently, neither side responded to the arbitrator’s offer, becaus e Philpott filed the in stant action in the Hamilton County Court of Common Pleas on June 17, 2014. Motion to Stay Proceedings and Compel Arbitration 

### {¶5} Philpott’s complaint mirro red his counterclaim in the arbitration, and Philpott attached a copy of the Profit Shar ing Unit Agreement to the complaint. In response to Philpott’s complain t, Pride Technologies filed a motion to stay or dismiss the proceedings and compel arbitration, arguing that Philpott’s claims must be

arbitrated in accordance with the arbitr ation clause in the Profit Sharing Unit agreement, which provided: “Any dispute arising between the parties concerning the interpretation, alleged breach or enforcement of this Agreement shall be submitted to final and binding arbitration pursuant to the employment rules of the [AAA] before a single arbitrator in New York City.” 

### {¶6} Philpott responded to Pride Tech nologies’ motion to compel arbitration with his affidavit opposing the motion. Philpott argued that Pride Technologies had waived the arbitration clause in the Profit Sharing Unit Agreement by failing to pay Philpott’s unpaid share of the arbitration fees when it had the abilityOHIO FIRST DISTRICT COURT OF APPEALS



### 4 to do so. Philpott stated that he had sustained a significant period of unemployment after leaving Pride Technologies, and that he supported his wife and three children,

two of whom had severe disabilities. In Pride Technologies’ repl y brief, it denied that it had waived the arbitration provisio n by refusing to pay Ph ilpott’s share of the arbitration fees because the AAA rules permi tted, but did not require, a party to pay the opposing party’s fees. Pride Technologies argued that Philpott had failed to demonstrate an inability to pay, and that Philpott ha d been a well-paid executive employee, receiving an annual salary of $175,000 at Pride Technologies. Pride Technologies also argued that Philpott could have sought a reduction in fees as offered by AAA, but did not. Finally, Prid e noted that Philpott had failed to show

that the arbitration clause was otherwise unenforceable for reasons of fraud or unconscionability. 

### {¶7} The trial court held a hearing on Pride Technologies’ motion. At the hearing, Philpott told the cour t that Pride Technologies had filed suit against him in New York state court in July 2014, which, Philpott argued, further reinforced that Pride Technologies had waived the arbitration clause. After listening to argument by counsel, the trial court and th e parties agreed that Philpott’ s asserted inability to pay the arbitration fees would require discovery and further evidence; therefore, the trial court agreed to continue th e matter for a decision on the waiver issue, and, if necessary, reach the “unconscionability” issue. 

### {¶8} The trial court issued a decision de nying Pride Technologies’ motion to compel arbitration. In its decision, the trial court stated, “[t]he troublesome part of all of this are the fees required by the AAA. Simply put they seem extraordinary. * * * If an alternative dispute re solution is of such a nature and/or expense that anOHIO FIRST DISTRICT COURT OF APPEALS



### 5 aggrieved party cannot participate, then it is invalid.” It is from this decision that Pride Technologies now appeals. Pride Technologies’ Appeal 

### {¶9} In a single assignment of error, Pride Technologies argues that the trial court erred in overruling its mo tion to compel arbitration. 

### {¶10} As an initial matter, we addres s whether Ohio or New York law governs the parties’ dispute. The Profit Sharing Unit Agreement contained the following governing law clause: “The validity, interpretation, performance and enforcement of this Agreement and the Profit Sharing Member’s rights in, to and under the Profit Sharing Units shall for all purposes be governed by the laws of the State of New York without giving effect to the principles of conflicts of laws thereof.” 

### {¶11} The law of the forum state controls procedural remedies, such as

motions to enforc e arbitration. See Guider v. Lci Communications Holdings Co. , 87 Ohio App.3d 412, 417, 622 N.E.2d 415 (10th Dist.1993), citing Shafer v. MetroGoldwin-Mayer Distrib. Corp. , 36 Ohio App. 31, 172 N.E. 689 (10th Dist.1929). By contrast, the law of the state chosen by agreement of the parties typically governs substantive issues regarding contract enforcement. See Wise v. Zwicker & Assocs.,

P.C. , 780 F.3d 710, 715 (6th Cir.2015). A choice-of-law determination becomes unnecessary, however, if the laws of each forum would reach the same result. Holliday v. Ford Motor Co. , 8th Dist. Cuyahoga No. 86069, 2006-Ohio-284, ¶ 19. Here, the parties contend that New York and Ohio law treat enforcement of an arbitration clause over objections of waiver or unconscionability similarly. Thus, we will apply Ohio law in resolvin g Pride Technologies’ appeal.OHIO FIRST DISTRICT COURT OF APPEALS



### 6 Review of Agreements to Arbitrate 

### {¶12} Ohio’s Arbitration Act, R.C. Chap ter 2711, provides two methods for enforcing arbitration agreements: 1) R.C. 2711.02, which allows for an order staying proceedings pending arbitrat ion, and 2) R.C. 2711.03, which allows for an order compelling arbitration. Jarvis v. Lehr , 1st Dist. Hamilton No. C-130832, 2014-Ohio3567, ¶ 8. Ohio law favors arbitration such that if a claim falls within an agreement to arbitrate, a presumption in favor of arbitration arises. Taylor Bldg. Corp. of Am.

v. Benfield , 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 27. Ohio’s Arbitration Act also embodies this presum ption in favor of arbitration in R.C. 2711.01(A), which provides that “[a] provisio n in any written contract * * * to settle by arbitration a controversy that subsequently arises out of the contract * * * shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.” 

### {¶13} An order granting or denying a stay of proceedings pending arbitration is a final order as provid ed in R.C. 2711.02(C). Rippe & Kingston Co. PSC v. Kruse , 1st Dist. Hamilton No. C-130587, 2014-Ohio-2428, ¶ 14. As a general matter, we review the denial of a motion to stay under R.C. 2711.02(B) for an abuse of

discretion. Id . However, where the enforceability of an arbitration agreement raises questions as to whether a party’s actions cons titute a waiver of the right to arbitrate as a matter of law, or as to whether an agreement to arbitrate is unconscionable, we

review the trial court’s order de novo. See Taylor Bldg. at ¶ 31-36; Snider v. S. Forty Homes, Inc. , 5th Dist. Muskingum No. CT2007-0027, 2008-Ohio-385, ¶ 8. 

### {¶14} In its appeal, Pride Technologies argues that the trial court erred in denying its motion to stay the proceedings and compel arbitration on the ground ofOHIO FIRST DISTRICT COURT OF APPEALS



### 7 excessive costs because Philpott failed to set forth any evidence demonstrating that enforcement of the arbitration provision would be unconscionable. We agree. The Ohio Supreme Court has noted that “an arbitration clause will not be held unenforceable based on unsupported allegations of prohibitive costs.” Taylor Bldg. at ¶ 57-59, citing Green Tree Fin. Corp.-Alabama v. Randolph , 531 U.S. 79, 90-91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000). Therefore, a party seeking to avoid enforcement of an arbitration provision because of prohibitive costs must either come forth with evidence rega rding inability to pay the ar bitration costs and fees, or demonstrate that arbitration costs and fees are substantially higher than the costs of litigating in court. See Norman v. Schumacher Homes of Circleville, Inc. , 2013- Ohio-2687, 994 N.E.2d 865, ¶ 26 (4th Dist.). 

### {¶15} With regard to his financial situation, Philpott stated that he had sustained a significant period of unemployment after leaving Pride Technologies, and that he supported his wife and three children, two of whom had severe disabilities. However, Phil pott’s financial circumstances were not otherwise made part of the record. As to the costs of ar bitration, Philpott provided the court with evidence of arbitration costs, but did not provide any comparison of those costs to the costs of litigating in court. Moreover , the record indicates that the arbitrator offered to work with the parties to reduce fees, but that offer apparently had been rejected by Philpott, who filed the instant su it instead. Therefor e, Philpott failed to

demonstrate that the costs of arbitration woul d be prohibitively high as to render the arbitration provision substa ntively unconscionable. See Taylor Bldg. Corp. , 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, at ¶ 59.OHIO FIRST DISTRICT COURT OF APPEALS



### 8 {¶16} Philpott urges this court to affirm the trial court because, Philpott argues, Pride Technologies waived its right to arbitrate the dispute. A party seeking to demonstrate that an opposing party waived an arbitration clause must show that the opposing party knew abou t the right to arbitrate, an d acted inconsistently with that right as shown by the tota lity of the circumstances. Hilton v. Mill Rd. Constr. II,

Ltd. , 1st Dist. Hamilton No. C-030200, 2003-Ohio-7107, ¶ 7. In considering whether the totality of the circumstances warrant a finding of waiver, cour ts have considered 1) any delay in the requesting party’s demand to arbitrate * * *; 2) the extent of the requesting party’s part icipation in the litigation prior to its filing a motion to stay th e judicial proceeding, including a

determination of the status of disc overy, dispositive motions, and the trial date; 3) whether the requesting party invoked the jurisdiction of the court by filing a counterclaim or third-party complaint withoutasking for a stay of the proceedings; and 4) whether the nonrequesting party has been prejudiced by the requesting party’s

inconsistent acts. (Internal citations omitted.) Harsco Corp. v. Crane Carrier Co. , 122 Ohio App.3d 406, 414, 701 N.E.2d 1040 (3d Dist.1997). 

### {¶17} In this case, Pride Technologies unquestionably knew about its right to arbitrate, as it sought to arbitrate the dis pute even prior to Ph ilpott’s filing of the instant complaint. The question then becomes whether Pride Technologies has acted inconsistently with its right to arbitration. Prior to the filing of Philpott’s complaint in the trial court, Pride Technologies initiated arbi tration proceedings against Philpott in New York. After Philpott failed to pay his share of the arbitration feesOHIO FIRST DISTRICT COURT OF APPEALS



### 9 and costs, Philpott filed the instant suit . Pride Technologies responded to the complaint with its motion to enforce arbitration, prior to answering or conducting any discovery. Thus, the totality of the circumstances indicates that Pride Technologies has not acted inconsistent ly with its right to arbitration. 

### {¶18} Philpott contends that Pride Techno logies had the opportunity to pay Philpott’s share of the arbitration fees and costs to avoid suspension under the AAA rules, and because it did not, Pride Techno logies’ actions demonstrate a waiver of its right to arbitrate. We disagree. First, no thing in the parties’ contract required Pride Technologies to pay Philpott’s portion of the arbitration costs. Second, although the AAA rules permitted Pride Technologies to pay Philpott’s share of the arbitration fees and costs to avoid suspension, nothing required Pride Technologies to front the entirety of the arbitration fees or costs for Philpott. Philpott may not like the AAA rules and fee structure, however, he agreed to be bound by them to the exclusion of

other arbitration entities. Moreover, we are not persuaded that Pride Technologies’

suit in New York state court indicates a wa iver of the right to arbitrate. Pride Technologies’ suit in New York state co urt followed Philpott’s initiation of the current suit, and Pride Technologies has steadfastly maintained its desire to

arbitrate. 

### {¶19} In conclusion, the record fails to support Philpott’s argument that Pride Technologies has waived its right to arbitrate the in stant dispute, and Philpott

has failed to demonstrate that arbitration wo uld be so cost prohibitive as to become unconscionable. Therefore, in accordance with the strong presumption in Ohio law favoring arbitration, we sustain Pride Technologies’ assignment of error. TheOHIO FIRST DISTRICT COURT OF APPEALS



### 10 judgment of the trial court is reversed. We remand the matter to the trial court to enter an order staying the proceedings and compelling arbitration. Judgment reversed and cause remanded.

H ENDON , P.J., and M OCK , J., concur.

Please note: The court has recorded its own entry on the date of the release of this opinion.