Source: http://www.fortneylawgroup.com/faqs/Arbitration-agreements:-compelling-and-enforcing-arbitrationArbitration-agreements:-compelling-and-e.html
Timestamp: 2019-04-26 07:42:27+00:00

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Most ADR agreements are entered into before the dispute arises – usually in the contract forming the relationship between the parties. ADR agreements are commonly found in construction contracts, sales agreements, service agreements, employment agreements, brokerage agreements, insurance agreements, etc. Pre-dispute agreements, especially agreements with consumers or employees with unequal bargaining power or sophistication, may be subject to attack in court as unenforceable.
Where there is no ADR agreement before the dispute arises, the parties are free to agree to an ADR procedure to resolve any outstanding dispute. Such post-dispute agreements will be less likely to be subject to attack, given the parties exercising the option of entering into the agreement knowing the nature and extent of the dispute.
Arbitration agreements under the Federal Arbitration Act need to be written, but not necessarily signed. Seawright v. Am. Gen. Fin., Inc., 2007 U.S. App. LEXIS 26328 (6th Cir. 2007). Authority from a number of other circuits supports this view. See, e.g., Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 846 (2nd Cir. 1987) ("[W]hile the [FAA] requires a writing, it does not require that the writing be signed by the parties."); Valero Refining, Inc. v. M/T Lauberhorn, 813 F.2d 60, 64 (5th Cir. 1987) ("We note also that section three of the Act does not require that a charter party be signed in order to enforce an arbitration agreement contained within it."); Tinder v. Pinkerton Sec., 305 F.3d 728, 736 (7th Cir. 2002) ("Although § 3 of the FAA requires arbitration agreements to be written, it does not require them to be signed."); Medical Development Corp. v. Industrial Molding Corp., 479 F.2d 345 at 348 (10th Cir. 1973) ("It [is] not necessary that there be a simple integrated writing or that a party sign the writing containing the arbitration clause."); Caley v. Gulfstream Aero. Corp., 428 F.3d 1359, 1369 (11th Cir. 2005) ("We readily conclude that no signature is needed to satisfy the FAA's written agreement requirement.").
The Sixth Circuit discussed the "knowing and voluntary waiver" requirement in Morrison v. Circuit City Stores, Inc., 317 F.3d 646 (6th Cir. 2003) (en banc). In determining whether an employee "knowingly and voluntarily" waived the right to sue in court, the court considers: "(1) plaintiff's experience, background, and education; (2) the amount of time the plaintiff had to consider whether to sign the waiver, including whether the employee had an opportunity to consult with a lawyer; (3) the clarity of the waiver; (4) consideration for the waiver; as well as (5) the totality of the circumstances." In Morrison, the court found that the plaintiff knowingly and voluntarily waived her right to sue based on the fact that she was "a highly educated managerial employee who was capable of understanding the terms of the agreement" and that the "waiver of the right to file suit in federal court was plain.
In the event that one party wishes to compel another party to arbitrate a dispute, the Ohio Revised Code offers a process to file a petition with the court to compel a party’s participation in an arbitration proceeding. More often, courts are asked to enforce an arbitration agreement with the filing of a motion to stay a lawsuit.
The assertion of the right to arbitrate the dispute is an affirmative defense. It must be stated in the answer. To enforce the right to arbitrate, the party must then file a motion to stay the lawsuit in favor of arbitration. If both parties to the agreement ignore the right to arbitrate, the right is waived.
The determination of whether a controversy is substantively arbitrable under an arbitration provision of a contract is a question of law for the court, not a question for the jury. The court should decide the issue upon an examination of the contract. However, if the parties in the arbitration agreement vests the arbitrator with the authority to decide issues of substantive arbitrablity, court’s will defer to the arbitrator.
Ohio's Arbitration Act provides that a trial court's granting or denial of a party's motion to stay and refer to arbitration is a final order subject to review on appeal. Ohio R.C. §2711.02. If the arbitration agreement is in a commercial construction contract, the denial of a motion to stay is subject to an immediate appeal.
An arbitration clause is not enforceable if it is found to be unconscionable. 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.
Unconscionability involves 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'. A party must establish a 'quantum' of both prongs in order to establish that a particular contract is unconscionable." White & Summers, Uniform Commercial Code (1988) 219, Section 4-7.
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. (E.D.Mich. 1976), 415 F.Supp 264, 268. Additionally, the court should consider whether the party who claims that the terms of a contract are unconscionable was represented by counsel at the time the contract was executed. Eagle v. Fred Martin Motor Co., 157 Ohio App.3d 150, 163, 2004-Ohio-829, at ¶31, citing Bushman v. MFC Drilling, Inc. (July 19, 1995), 9th Dist. No. 2403-M. "The crucial question is whether 'each party to the contract, considering his obvious education or lack of it, [had] a reasonable opportunity to understand the terms of the contract, or were the important terms hidden in a maze of fine print ***?'" Lake Ridge Academy v. Carney (1993), 66 Ohio St.3d 376, 383, quoting Williams v. Walker-Thomas Furniture Co. (C.A.D.C. 1965), 350 F.2d 445, 449.
a.	Assent. Did both parties assent to the arbitration agreement?
In Seawright v. American General Financial Services, a case decided by the Sixth Circuit on November 13, 2007, the court determined that continued employment after the announcement of an arbitration agreement was considered “assent” to the agreement under Tennessee law.
b.	Mutuality. Are both parties obligated to arbitrate the dispute?
Some courts have held that the agreement must be mutual – both parties may only bring claims in an arbitration. In Harmon v. Philip Morris, Inc., 120 Ohio App. 3d 187 (1997), the court ruled that an arbitration agreement requiring employees to submit their claims to arbitration without a similar obligation on the employer, and giving the employer the right to amend or terminate the arbitration program "at any time," lacked consideration because it "neither offered a benefit to its employees nor incurred any detriment by modifying the terms of the employment relationship."
c.	Excessive filing fees. The Tenth, Eleventh, and D.C. Circuits have suggested that such cost-splitting provisions per se deny litigants an effective forum for the vindication of their statutory rights.
“It may well be that the existence of large arbitration costs could preclude a litigant . . . from effectively vindicating her federal statutory rights in the arbitral forum. . . .
Green Tree, 531 U.S. at 91-92 (footnotes omitted).
“We hold that potential litigants must be given an opportunity, prior to arbitration on the merits, to demonstrate that the potential costs of arbitration are great enough to deter them and similarly situated individuals from seeking to vindicate their federal statutory rights in the arbitral forum.” Therefore, the court invalidated a provision requiring the plaintiff to pay an amount equal to $500 or 3% of the plaintiff’s annual salary as the arbitration costs.
d.	Limitations of remedies: Does the arbitration agreement limit remedies that the parties would otherwise be entitled under statute so as to undermine the rights afforded by the statute?
In Yost v. Procare Automotive Services, the Cuyahoga County Court of Appeals determined in 2007 that an arbitration agreement was substantively unconscionable where it limited an employee’s right to obtain attorneys fees in connection with a potential punitive damage award under section 4112.99.
Courts have invalidated arbitration agreements that impose a statute of limitations on the employee that is more restrictive than the statute.
(1) Any provision of a construction contract, agreement, understanding, or specification or other document or documentation that is made a part of a construction contract, subcontract, agreement, or understanding for an improvement, or portion thereof, to real estate in this state that makes the construction contract or subcontract, agreement, or other understanding subject to the laws of another state is void and unenforceable as against public policy.
Several other states have similar statutory provisions.
The parties may mutually agree on the locale where the arbitration is to be held. If any party requests that the hearing be held in a specific locale and the other party files no objection thereto within fifteen calendar days after notice of the request has been sent to it by the AAA, the locale shall be the one requested. If a party objects to the locale requested by the other party, the AAA shall have the power to determine the locale, and its decision shall be final and binding.
If the parties disagree as to the locale, the AAA may initially determine the place of arbitration, subject to the power of the arbitrator(s), after their appointment to make a final determination on the locale. All such determinations shall be made having regard for the contentions of the parties and the circumstances of the arbitration.
Parties to an arbitration agreement can waive the arbitration requirements, but only if both parties waive arbitration. Waiver most often occurs where one party files an action in court, and the other party actively participates in the litigation, through the filing of a counterclaim, the filing of discovery requests, etc., without first asserting that the claim is subject to mandatory and binding arbitration.

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