Bachrach v. Cornwell Quality Tool Co.
2011 Ohio 2498
Ohio Ct. App.2011Background
- Eight former Cornwell tool dealers sued Cornwell Quality Tools Company for multiple claims including deceptive trade practices, fraud, consumer fraud, negligent misrepresentation, breach of fiduciary duty, and sought class action treatment against nearly 500 members.
- All franchising agreements contain identical arbitration provisions requiring binding AAA commercial arbitration in Ohio; awards may be entered in court with Ohio law governing the arbitration.
- Cornwell moved to stay proceedings pending arbitration; the trial court denied the stay and proceeded toward pretrial.
- The court of appeals analyzed arbitrability and whether class arbitration issues should be decided by arbitrators or courts, considering Stolt-Nielsen and related Ohio authority.
- The central question was whether the plaintiffs’ claims fall within the scope of the arbitration agreement, independent of any class action posture.
- The appellate court ultimately held that the dispute falls within the arbitration clause’s broad scope, and the stay should have been granted; the matter was reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court should have stayed the action pending arbitration | Plaintiffs fall within the arbitration clause; stay appropriate | Disputes may require arbitrator initial determination on arbitrability | Stay required; arbitrability determined by court first |
| Who decides arbitrability and whether class arbitration issues are for court or arbitrator | Arbitrator should decide class-arbitration questions per precedent | Court should decide arbitrability first; class-arbitration issues unsettled | Arbitrability is for the court to decide first |
| Whether the arbitration clause covers the plaintiffs’ claims as arising out of the contract | All claims arise from the franchise contract and its formation | Clause may be silent on class arbitration and scope must be determined | Claims fall within the broad scope of the arbitration agreement |
Key Cases Cited
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758 (2010) (contract language controls class arbitration absent contractual basis)
- Greentree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003) (plaintiff/arbitrability question remanded to arbitrator in silent contracts)
- City of Fostoria v. Ohio Patrolmen’s Benevolent Ass’n, 106 Ohio St.3d 194 (2005) (invoked to analyze whether arbitrability is a question for court)
- Acad. Med. of Cincinnati v. Aetna Health Inc., 108 Ohio St.3d 185 (2006) (broad arbitration clause scope; action could be outside arbitration if not tied to contract)
- AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643 (1986) (arbitrability is a judicial question in the absence of explicit agreement otherwise)
- Alexander v. Wells Fargo Fin. Ohio 1 Inc., 122 Ohio St.3d 341 (2009) (broad clause ‘any claim or controversy arising out of the agreement’ enforceable)