Arnold v. Burger King
48 N.E.3d 69
Ohio Ct. App.2015Background
- Arnold signed a mandatory arbitration agreement (MAA) with Carrols that includes claims arising out of or relating to employment and events outside the scope of employment.
- Arnold alleged rape by her supervisor in a Burger King restroom during work hours and asserted six claims against Burger King, Carrols, and Matthews.
- Carrols sought to compel arbitration under the FAA, arguing the MAA covers all employment disputes and that Carrols may enforce the MAA as an owner/agent.
- Arnold argued the MAA is unenforceable against Carrols and that the claims fall outside the MAA’s scope; she contended the MAA is unconscionable.
- The trial court denied arbitration, and on appeal the court affirmed, holding the claims do not fall within the MAA’s scope and that the MAA is unconscionable as applied.
- This case requires determining whether the MAA covers Arnold’s six claims and whether the agreement is procedurally/substantively unconscionable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Arnold's claims within the MAA's scope? | Arnold argues the MAA does not cover Carrols and the claims beyond employment. | Carrols contends the MAA broadly covers all employment disputes and events related to employment, including the present claims. | No; Arnold's claims fall outside the scope of the MAA. |
| Is Carrols a proper enforceable party to the MAA? | Carrols may enforce only a signatory; Arnold did not contract with Carrols directly. | Carrols may enforce the MAA as an owner/agent of the Corporation; DiGenova's affidavit supports this. | Carrols may enforce the MAA as owner/agent, but scope issues remain. |
| Is the MAA unconscionable (procedural or substantive) such that it cannot be enforced? | The MAA’s breadth and procedures are unconscionable, especially given unequal bargaining power and opaque costs/rules. | The MAA is valid and not unconscionable. | Yes; the MAA is both procedurally and substantively unconscionable as applied. |
| Does the FAA preempt Ohio public policy and require arbitration despite unconscionability? | FAA preempts state law to enforce arbitration; public policy favors arbitration. | Even under FAA, the agreement here is unconscionable and unenforceable due to scope and terms. | Not resolved as a standalone issue here; court primarily holds unreasonableness and scope negates arbitration. |
Key Cases Cited
- Academy of Medicine of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185 (2006-Ohio-657) (adopts Fazio protocol; arbitrability depends on contract scope and foreseeability)
- Fazio v. Lehman Bros., Inc., 340 F.3d 386 (6th Cir.2003) (test for scope: could action be maintained without contract; torts may be outside scope)
- Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204 (11th Cir.2011) (arbitration scope requires direct relationship; related to employments' contract limits)
- Taylor Building Corp. of America v. Benfield, 117 Ohio St.3d 352 (2008-Ohio-938) (presumption of arbitrability; factors for unconscionability and contract terms)
- Williams v. Aetna Fin. Co., 83 Ohio St.3d 464 (1998-Ohio-294) (costs of arbitration may render clause unconscionable)
- Coors Brewing Co. v. Molson Breweries, 51 F.3d 1511 (10th Cir.1995) (scope of a broad clause under licensing context; not all disputes are arbitrable)
- Aiken v. World Fin. Corp., 373 S.C. 144 (2007-S.C. 644 S.E.2d 705) (outrageous torts not encompassed by broad arbitration clauses)