Arnold v. Burger King

• Decision Date: 29 October 2015
• Docket Number: No. 101465.,101465.
• Citation: 48 N.E.3d 69
• Parties: Shannon ARNOLD, Plaintiff–Appellee v. BURGER KING, et al., Defendants–Appellants.
• Court: Ohio Court of Appeals

48 N.E.3d 69

Shannon ARNOLD, Plaintiff–Appellee

v.BURGER KING, et al., Defendants–Appellants.

No. 101465.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Oct. 29, 2015.

Carl H. Gluek, Frantz Ward, L.L.P., Cleveland, OH, Jeffrey J. Mayer, Akerman L.L.P., Catherine A. Miller, Freeborn & Peters, L.L.P., Chicago, IL, for Appellants.

William Craig Bashein, Anthony N. Palombo, Bashein & Bashein Co., L.P.A., Paul W. Flowers, Paul W. Flowers Co., L.P.A., Cleveland, OH, for Appellee.

Terry Matthews, South Euclid, OH, pro se.

Before: E.A. GALLAGHER, P.J., LASTER MAYS, J., and E.T. GALLAGHER, J.

ON RECONSIDERATION¹

ANITA LASTER MAYS

, J.

I. FACTS AND PROCEDURE

{¶ 1} Defendant-appellant Carrols L.L.C. (“Carrols”), which owns and operates Burger King restaurant franchises, appeals from the trial court order that denied its motion to either compel arbitration and to dismiss the complaint or to stay the proceedings filed against it by plaintiff-appellee, its former entry-level employee, Shannon Arnold (“Arnold”).

{¶ 2} Upon a review of the record, we disagree with Carrols' assertions. Consequently, the trial court order is affirmed, and this case is remanded for further proceedings consistent with this opinion.

{¶ 3} This employment dispute arises from the alleged rape of Arnold by her supervisor in the men's bathroom at a Burger King restaurant during working hours. She subsequently filed suit alleging the rape and that she was harassed and sexually abused by her supervisor over a period of time.

{¶ 4} As a term of her employment, Arnold executed a mandatory arbitration agreement (“MAA”). The agreement provides that Arnold is to submit to JAMS, Inc. (“JAMS”), a national arbitration association, “any and all disputes, claims or controversies for monetary or equitable relief arising out of or relating to [Arnold's] employment” as well as “claims or controversies relating to events outside the scope of your employment. ” (Emphasis added.)

{¶ 5} Arnold filed her complaint against Burger King, Carrols, and the individual, Terry Matthews (“Matthews”), on March 13, 2014. She alleged that she had been employed by Burger King and Carrols from May 2012 until August 2012 and that Matthews had been her supervisor. She further alleged that on July 21, 2012, as she “was cleaning the restrooms as part of her duties as an employee” of the defendants, Matthews followed her, grabbed her, “pushed her against the door, and forced her to give him oral sex.” Arnold presented six (6) causes of action against the defendants collectively: (1) sexual harassment; (2) respondent superior/negligent retention; (3) emotional distress; (4) assault; (5) intentional tort; and (6) employment discrimination.

{¶ 6} In lieu of an answer, Carrols filed a motion to compel arbitration pursuant to the MAA. It argued that the Federal Arbitration Act (“FAA”) governed the dispute because Carrols is engaged in interstate commerce. It also asserted that the Burger King restaurant where Arnold was raped is one of over 500 franchises owned and operated by Carrols entities, which operates in 13 different states with more than 17,000 employees. Carrols further argued that the plain language of the MAA dictates that Arnold's claims be resolved in arbitration.

{¶ 7} In Arnold's response, she conceded that she signed the MAA but argued she was unaware that she was agreeing to arbitrate with anyone other than Carrols Corporation (“Corporation”). She asserted that because Carrols was not a party to the MAA, Carrols could not enforce it. She further argued that her claims fell outside the scope of the MAA agreement and that the agreement was unenforceable because it is overly broad and unconscionable.

{¶ 8} The trial court denied the motion to compel arbitration without opinion. Carrols now appeals and raises two assignments of error.

II. ASSIGNMENTS OF ERROR

{¶ 9} In the first assignment of error, Carrols argues the trial court erred in denying its motion to stay pending arbitration because the parties had a valid agreement to arbitrate, and Arnold's claims were within the scope of the MAA. In the second assignment of error, Carrols argues that the arbitration clause must be enforced because it is not unconscionable.²

{¶ 10} We find that both asserted errors lack merit. We affirm.

III. STANDARD OF REVIEW

{¶ 11} The question of whether a party has agreed to submit an issue to arbitration is reviewed under a de novo standard. Hedeen v. Autos Direct Online, Inc., 8th Dist., 2014-Ohio-4200, 19 N.E.3d 957, ¶ 9

, citing McCaskey v. Sanford–Brown College, 8th Dist. Cuyahoga No. 97261, 2012-Ohio-1543, 2012 WL 1142880, ¶ 7 ; and Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12. Under a de novo standard of review, we give no deference to a trial court's decision. Hedeen at ¶ 9, citing Brownlee v. Cleveland Clinic Found., 8th Dist. Cuyahoga No. 97707, 2012-Ohio-2212, 2012 WL 1795273, ¶ 9 ; Akron v. Frazier, 142 Ohio App.3d 718, 721, 756 N.E.2d 1258 (9th Dist.2001).

IV. ANALYSIS

{¶ 12} Carrols argues that Arnold's claims are subject to arbitration under the MAA because they arise out of Arnold's employment. Arnold responds that Carrols cannot enforce the MAA against her because the corporate employer named party in the MAA is not Carrols but Burger King and that her claims did not fall under the scope of the MAA.

{¶ 13} We find that Carrols is a proper party to the MAA; however, we also find merit in Arnold's assertion that her claims do not fall under the scope of the MAA. Therefore, we affirm the trial court's denial of Carrols' motion to compel arbitration.

A. Enforceability by Carrols as a Party to the Agreement

{¶ 14} Arnold's arbitration agreement provides, in plain language:

My agreement to arbitrate Claims extends to Claims against Carrols' officers, directors, managers, employees, owners, attorneys and agents, as well as to any dispute you have with any entity owned, controlled or operated by Carrols Corporation.

(Emphasis added.)

{¶ 15} Attached to Carrols' motion to compel arbitration was the affidavit of Gerald DiGenova (“DiGenova”), Vice President of the Human Resources Department of Carrols Restaurant Group, Inc., and copies of several documents. DiGenova explained the corporate relationship between Carrols Restaurant Group, Inc., Carrols L.L.C., and Burger King restaurants. He averred that Carrols adopted the MAA for all employees as of August 1, 2006, and that Arnold executed the MAA at the time she was hired as an employee.

{¶ 16} DiGenova verified the motion's attached documents that included (1) a copy of the MAA signed by Arnold on May 10, 2012; (2) information about JAMS, the alternative dispute resolution provider named in the MAA; and (3) a “complete copy” of the JAMS employment arbitration rules and procedures.³

{¶ 17} DiGenova's affidavit states that the Corporation is the sole member of Carrols. Therefore, although Carrols is not “a signatory” to the agreement, we agree that it may enforce the agreement as an owner or agent of the Corporation, unless there exists some common law justification to void the contract. Javitch v. First Union Secs., 315 F.3d 619, 629 (6th Cir.2003)

.

B. Enforceability of the MAA

1. Scope of the Agreement (Assignment of Error I)

{¶ 18} Carrols relies on the United States Supreme Court's decision in Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. ––––, 132 S.Ct. 1201, 1203, 182 L.Ed.2d 42 (2012)

, in support of its argument that the MAA should be enforced whenever Ohio law conflicts with the FAA.⁴

{¶ 19} In Marmet, family members brought personal injury and wrongful death claims against a Marmet nursing home in West Virginia. The West Virginia Supreme Court, faced with the question of enforceability based on a public policy violation, held that arbitration agreements that apply to personal injury and wrongful death claims against nursing homes are unenforceable under state law. The West Virginia court also concluded that the FAA did not pre-empt this state public policy.

{¶ 20} In reversing the West Virginia Supreme Court's decision, the U.S. Supreme Court, quoting the FAA, explained:

The FAA provides that a “written provision in * * * a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction * * * shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

Marmet at 1203, quoting 9 U.S.C. 2

. Based on this provision, the Marmet court held that “ ‘[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.’ ” Id., quoting AT & T Mobility v. Concepcion, 563 U.S. 333, 131 S.Ct. 1740, 1747, 179 L.Ed.2d 742 (2011).

{¶ 21} Accordingly, the Marmet court concluded that “West Virginia's prohibition against predispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes is a categorical rule prohibiting arbitration of a particular type of claim, and that rule is contrary to the terms and coverage of the FAA.” Marmet, 565 U.S. ––––, 132 S.Ct. at 1204, 182 L.Ed.2d 42

. However, Marmet is not determinative here.

{¶ 22} The Marmet court made the threshold finding that the plaintiffs' claims fell within the scope of the arbitration agreement, in contrast to the instant case. In addition, the court acknowledged that the West Virginia court also had to “consider whether, absent th[e] general policy, the arbitration clauses in [plaintiff's cases] are unenforceable under state common law principles that are not specific to arbitration and pre-empted by the FAA.” Id. In other words, the West Virginia court was free to find the arbitration agreement unenforceable for common law reasons, such as invalid formation of the contract or unconscionability.

{¶ 23} Generally speaking, Ohio's public policy encourages arbitration as a method to settle...