2021 Ohio 942
Ohio Ct. App.2021Background
- Little Aquanauts purchased an Endless Pools unit online and clicked to accept Endless Pools’ Terms and Conditions of Sale, which included an arbitration clause limited to disputes “arising under these Terms and Conditions of Sale.”
- Terms addressed acceptance, governing law (Pennsylvania), limitation of liability (including that Endless Pools is not responsible for permits/authorizations), and that disputes must be submitted to JAMS in Philadelphia.
- After installation, the Cuyahoga County Board of Health rejected the pool as noncompliant; Aquanauts could not open its business and vacated the leased space.
- Aquanauts sued Endless Pools for negligent misrepresentation and violating Ohio’s Deceptive Trade Practices Act, alleging pre-sale representations about the pool’s suitability and code compliance.
- Endless Pools moved to compel arbitration (or dismiss), arguing the arbitration clause covers these claims and that arbitrability should be decided by the arbitrator; the trial court denied the motion.
- On appeal, the Eighth District affirmed, holding the arbitration clause was narrow and Aquanauts’ tort claims could be maintained without reference to the Terms and Conditions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Aquanauts’ negligent misrepresentation and DTPA claims are subject to the arbitration clause | Claims arise from pre-contractual representations independent of the Terms; therefore not ‘‘arising under’’ the Terms | The clause is broad enough to cover disputes arising from the sale; claims implicate the Terms’ limitation of liability (permits) and thus must be arbitrated | Court: Clause is narrow; alleged misrepresentations do not require reference to the Terms and can be litigated; arbitration denied |
| Whether arbitrability was delegated to the arbitrator | Court should decide arbitrability because the arbitration clause is silent on delegation | JAMS rules allow the arbitrator to decide arbitrability; therefore arbitrability should be for the arbitrator | Court: No clear and unmistakable delegation in the clause; court decides arbitrability |
Key Cases Cited
- Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (federal policy favors arbitration; doubts resolved in favor of arbitration)
- AT&T Techs., Inc. v. Communs. Workers of Am., 475 U.S. 643 (arbitration should not be denied unless clause clearly does not cover dispute)
- Academy of Medicine of Cincinnati v. Aetna Health, Inc., 842 N.E.2d 488 (Ohio: four-rule framework for arbitrability; ask whether claim can be maintained without reference to contract)
- Council of Smaller Ents. v. Gates, McDonald & Co., 687 N.E.2d 1352 (Ohio: party cannot be compelled to arbitrate disputes it has not agreed to submit)
- Fazio v. Lehman Bros., Inc., 340 F.3d 386 (6th Cir.: an action is likely outside arbitration if it can be maintained without reference to the contract)
- Williams v. Aetna Fin. Co., 700 N.E.2d 859 (Ohio: presumption favoring arbitration arises only when claim falls within arbitration provision)