Fetzer v. Miley
2019 Ohio 4578
Ohio Ct. App.2019Background
- Three former Kirby employees (Miley, Hannon, Sayler) signed identical Loyalty, Confidentiality, and Inventions (LCI) agreements that granted access to Kirby’s nonpublic distributor/confidential information and contained a broad arbitration clause covering “any and all disputes or controversies concerning this Agreement.”
- After Miley left Kirby for American Shaman, Miley allegedly solicited Hannon and Sayler; Hannon and Sayler later resigned and joined American Shaman. Scott Fetzer alleges misuse of Kirby’s confidential information to recruit at least 20 distributors, tortious-interference, unfair competition, UTSA violations, civil conspiracy, breach of loyalty, and (originally) contract claims; Sayler was also alleged to have not repaid relocation reimbursement.
- Scott Fetzer sued and attached the LCI agreements. Defendants (including nonsignatories Sanders and American Shaman) moved to compel arbitration and stay proceedings under R.C. 2711. Scott Fetzer amended its complaint to drop express contract claims and argued remaining tort/statutory claims were not arbitrable.
- The trial court granted the motion to compel arbitration and stayed the case. Scott Fetzer appealed, arguing (1) its tort and statutory claims are not arbitrable and (2) the LCI’s arbitration clause expressly permits judicial injunctive relief so the court should not have stayed proceedings.
- The court of appeals affirmed (with a modification): Scott Fetzer’s claims against the three signatory former employees must be arbitrated; the claims against nonsignatories Sanders and American Shaman are not subject to arbitration. The stay was modified to direct only Scott Fetzer, Miley, Hannon, and Sayler to complete arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Scott Fetzer’s tort and statutory claims (tortious interference, civil conspiracy, unfair competition, UTSA, breach of loyalty) against former employees are subject to arbitration | Claims can be maintained independently of the LCI and do not require reference to the agreement | Claims arise from misuse of confidential information that signatories accessed only because they signed the LCI; arbitration clause is broad and covers disputes "concerning" the agreement | Held: Claims against signatory employees are arbitrable because the factual allegations "touch matters" protected by the LCI; nonsignatories (Sanders, American Shaman) are not bound by the clause, but the presence of nonarbitrable claims/parties does not preclude staying the entire action pending arbitration. |
| Whether the arbitration clause’s reservation allowing judicial temporary/preliminary injunctive relief prevents compelling arbitration or staying the case | Clause preserves right to seek court injunctive relief; Scott Fetzer had requested preliminary injunctive relief | Defendants proceeded to compel arbitration; plaintiffs failed to pursue emergency relief or press the injunctive-reservation below | Held: Issue waived—Scott Fetzer failed to raise/pursue injunction below (no TRO sought and no record of arguing the reservation in filings), so appellate court did not reach the substantive merits; stay/arbitration order affirmed as modified. |
Key Cases Cited
- Hayes v. Oakridge Home, 122 Ohio St.3d 63 (2009) (recognizing Ohio’s strong public policy favoring arbitration)
- Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352 (2008) (arbitration-enforcement principles and policy)
- Taylor v. Ernst & Young, L.L.P., 130 Ohio St.3d 411 (2011) (focus on whether parties actually agreed to arbitrate the dispute)
- Williams v. Aetna Fin. Co., 83 Ohio St.3d 464 (1998) (presumption favoring arbitration when a claim falls within arbitration clause scope)
- Alexander v. Wells Fargo Fin. Ohio 1, Inc., 122 Ohio St.3d 341 (2009) (test whether an action could be maintained without reference to the contract or relationship)
- Academy of Med. of Cincinnati v. Aetna Health, Inc., 108 Ohio St.3d 185 (2006) (doubts regarding arbitrability resolved in favor of arbitration)
- AT&T Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643 (1986) (arbitration clause interpretation should not be denied unless clearly inapplicable)
- Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960) (standard for arbitrability and reference to arbitration where clause is susceptible of covering dispute)
- Natale v. Frantz Ward, L.L.P., 110 N.E.3d 829 (Ohio 2018) (claims that "touch matters" covered by an agreement are arbitrable)