ORIGINAl, IN THE SUPREME COURT OF OHIO DAVII) BACHRACH, et al. CASE NO. 2011-1064 Plaintiffs - Appellants vs. CORNWELL QUALITY TOOLS CO., Defendant - Appellee. ON APPEAL FROM THE SUMMIT COUNTY COURT OF APPEALS CASE NO. CA 25444 RESPONSE MEMORANDUM IN OPPOSITION TO JURISDICTION, SUBMITTED BY DEFENDANT-APPELLEE, CORNWELL QUALITY TOOLS CO. Timothy A. Shimko 2010 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115 RODERICK LINTON BELFANCE Robert M. Gippin (0023478) One Cascade Plaza, 15`s Floor Akron, Ohio 44308 Phone (330) 315-3400 Fax No. (330) 434-9220 Email: rgippin@rlbll p. com Attorney for Cornwell Quality Tools Company, Appellee Charles E. Dunlap 3855 Starr's Center Drive, Ste. A Canfield, Ohio 44406 s for Appellants, David Bachrach, et o.l. F JUL 2 2 2011 CLERK OF COURT SUPREME COURT OF OHIO
TABLE OF CONTENTS.. TABLE OF AUTHORITIES...:......m 1. This case is not of public or great general interest...1 2. Appellants' Statement of the Case and the Facts is incorrect...2 3. Appellants' Propositions of Law are irrelevant to the present case :...3 4. The Court of Appeals' decision is supported by unanimous precedent...3 PROOF OF SERVICE...6 Paae ii
TABLE OF AUTHORITIES CITED Cases Pa e s 1. Bachrach v. Cornwell Quality Tools Co. (9`h App.Dist.), 2011Ohio 2498...2 2. English v. Cornwell Quality Tools Company, Inc., Summit County Court of Common Pleas, Case No. 2004-07-4058 (March 21, 2008)...3 3. Howard v. Klynveld Peat Marwick Goerdeler (S.D.N.Y., 1997), 977 F. Supp. 654, 665 n. 7, aff'd. without opinion (2d Cir., 1999), 173 F.3d 844, citing Champ v. Siegel Trading Co. (7' Cir., 1995), 55 F.3d 269, 276-77...4 4. Stolt-Nielson S.A. v. Animal Feeds Int'l. Corp. (2010), _, U.S._, 130 S. Ct. 1758; 176 L.Ed.2d 605.......................................................................................4 5. Vanyo v. CitiFinancial, Inc. (8"' App. Dist.), 2009 Ohio 3905...:...4 6. Stachurski v. DirecTV, Inc. (N.D. Ohio, 2009), 642 F.Supp.2d 758...4 7. Howard v. Wells Fargo Minnesota, NA (N.D. Ohio), 2007 U.S. Dist. LEXIS 70099...4 8. Adkins v. Labor Ready, Inc. (S.D.WV, 2001), 185 F. Supp.2d 628...4 9. Goetsch v. Shell Oil Company (W.D.NC, 2000), 197 F.R.D. 574...4 10. Iowa Grain Co. v. Brown (7`h Cir., 1999), 171 F.3d 504...4 11. Biscoff v. DirecTV, Inc. (C.D.CA, 2002), 180 F. Supp.2d 1097...4 12. Johnson v. West Suburban Bank (3 d Cir., 2000), 225 F.3d 366...4 13. Wood v. Cooper Chevrolet, Inc. (N.D.AL, 2000), 102 F. Supp. 2d 1345...4 14. Herrington v. Union Planters Bank (S.D.MS, 2000), 113 F. Supp. 2d 1026...4 15. Alexander v. Wells Fargo Financial Ohio 1, Inc. (S.Ct.), 2009 Ohio 2962...5 16. Rimmer v. CitiFinancial, Inc. (S.Ct.), 2009 Ohio 4902...5 iii
1. This case is not of public or great general interest. The Court of Appeals' decision does not compel class arbitration of this matter. Appellants have entirely misstated what happened below. No issue of compelling class arbitration was ever before the Court of Appeals. Its decision only stays the litigation pending arbitration, without determining whether that would be class or individual arbitration. It is Appellants' choice whether or not to proceed to arbitration of their claims on the merits. They may not proceed with class litigation in court, which is what they sought originally, but that issue is not addressed in their appeal to this Court. Since neither party seeks class arbitration, any arbitration of Appellants' claims will necessarily be on an individual basis. Appellants will not be forced into class arbitration, notwithstanding that is the stated subject of their appeal here. The Memorandum in Support of Jurisdiction thus makes arguments about compelling class arbitration that are completely irrelevant to the case in its present posture. Appellants are doing battle with a straw man entirely of their own construction. Cornwell never disputed that class arbitration can only proceed from an agreement to it between the parties, nor that such an agreement cannot be inferred from silence. But Comwell never contended that there was such an agreement here nor sought class arbitration. The Court of Appeals consequently never ruled on the issue, which was not before it. There will be no class arbitration forced over Appellants' opposition, but neither will there be class litigation in court contrary to the arbitration agreement. The decision below is thus of no public or general interest. The Court of Appeals simply applied well-established state and federal precedent to enforce a typical agreement 1
to arbitrate business disputes. That the claims were brought in the form of a class action that might not be arbitrable that way was correctly and unremarkably disregarded. There is nothing about the decision below that merits this Court's review. 2. Appellants' Statement of the Case and the Facts is incorrect. Appellants have not separately included a statement of the case, but they have described events in the courts below in their statement of facts. The description is entirely inaccurate as to the Court of Appeals' decision. The Court of Appeals did not hold that "the arbitration agreement... should be construed broadly to mean that the parties had impliedly agreed to class arbitration, and ordered the litigation stayed pending class arbitration." (Memorandum in Support of Jurisdiction, p. 5.) To the contrary, the Court of Appeals expressly stated, "The question of whether an unwilling party may be forced into class arbitration under this agreement is not before this Court. The question presented by the procedural posture of this case is whether the plaintiffs' claims fall within the scope of the parties' arbitration agreement. Regardless of whether multiple plaintiffs present their claims in the aggregate with class action allegations, when faced with a motion to stay pending arbitration, the first question a trial court must consider, in the absence of an enforceability challenge, is whether the disputed actions of the defendant fall within the scope of the arbitration provision." Bachrach v. Cornwell Quality Tools Co. (9th App. Dist.), 2011 Ohio 2498, (1221. (Emphasis added.) Comwell simply moved for a stay pending arbitration, it did not move for a stay pending class arbitration. At no time has Cornwell contended there should be class arbitration of this matter, indeed Comwell has always said it would oppose that. The effect of the Court of Appeals decision is only to reverse and remand for the entry of the 2
stay Cornwell sought, no more than that. If Appellants change their minds and decide to seek class arbitration, that issue will then come initially before the trial court. The Statement of Facts of course contains nothing concerning the merits that has been established by evidence, given the early procedural posture of the case. They are mere allegations. Comwell strongly disagrees with Appellants' contentions, but will not discuss them here other than to note that the same contentions by another plaintiff similarly situated, with the same counsel, were previously rejected. English v. Cornwell Quality Tools Company, Inc., Summit County Common Pleas Case No. 2004-07-4058 (March 21, 2008), confirming the arbitration award of former U.S. District Court Judge Richard B. McQuade, Jr. 3. Appellants' Propositions of Law are irrelevant to the present case. For the reasons stated above, Cornwell will make no substantive response to Appellants' Propositions of Law, with which it does not largely disagree. But they are beside the point, since neither party here is seeking class arbitration and the Court of Appeals did not order it. While it may be more correct only to say that an agreement for class arbitration cannot be inferred from silence, the issue was not before the Court of Appeals and is not presented to this Court for review by the decision below. 4. The Court of Appeals' decision is supported by unanimous precedent. Appellants were implicitly attempting to override the arbitration agreement by bringing a class action in court. But literally all the state and federal precedent is to the contrary. If there is no agreement for class arbitration, there can only be individual arbitration. Perhaps now recognizing that they cannot prevail on any argument to the 3
contrary, Appellants have not contested that principle in their Propositions of Law to this Court.l Arbitration agreements are enforced (absent other grounds), notwithstanding class action allegations in a complaint brought in court, whether or not they also contain a provision for class arbitration. Howard v. Klynveld Peat Marwick Goerdeler (S.D.NY, 1997), 977 F. Supp. 654, 665 n. 7, aff'd. without opinion (2d Cir., 1999), 173 F.3d 844, citing Champ v. Siegel Trading Co. (7`s Cir., 1995), 55 F.3d 269, 276-77. Champ was cited with approval by the Supreme Court in Stolt-Nielsen S.A. v. AnimalFeeds Int'l. Corp. (2010), -, U.S. _, 130 S. Ct. 1758, 1769, n. 5; 176 L. Ed. 2d 605, as persuasive authority on class arbitrability that had been disregarded by the arbitrators below. See also, Vanyo v. Citifinancial, Inc. (8h App. Dist.), 2009 Ohio 3905; Stachurski v. DirecTV, Inc. (N.D. Ohio, 2009), 642 F. Supp. 2d 758; Howard v. Wells Fargo Minnesota, NA (N.D. Ohio), 2007 U.S. Dist. LEXIS 70099; Adkins v. Labor Ready, Inc. (S.D.WV, 2001), 185 F. Supp. 2d 628; Goetsch v. Shell Oil Company (W.D.NC, 2000), 197 F.R.D. 574; Iowa Grain Co. v. Brown (7`h Cir., 1999), 171 F.3d 504; Bischoff v DirecTV, Inc. (C.D.CA, 2002), 180 F. Supp. 2d 1097; Johnson v. West Suburban Bank (3Td Cir., 2000), 225 F. 3d. 366; Wood v. Cooper Chevrolet, Inc. (N.D.AL, 2000), 102 F. Supp. 2d 1345; Herrington v. Union Planters Bank (S.D.MS, 2000), 113 F. Supp. 2d 1026. I If Appellants are attempting to lure this Court into addressing the issue of class litigation versus individual arbitration by indirection, framing their appeal as if the Court of Appeals ignored indisputable rules of law when it did not, in order to try to get before this Court and then to shift their argument to their real issue, that is all the more reason to reject the appeal. The parties have an obligation to frame their Propositions of Law to state their real contentions clearly and honestly. In any event, as shown in this section, it is extremely well-established that a class action demand does not override an arbitration agreement. There is nothing for this Court to decide afresh conceming that rule of law. 4
Two decisions of this Court suggest strongly that it would reject any effort to avoid arbitration by trying to use a class action mechanism. In Alexander v. Wells Fargo Financial Ohio 1, Inc. (S.Ct.), 2009 Ohio 2962, this Court reversed separate determinations by a Court of Appeals that arbitration agreements were not enforceable, in two cases brought as class actions. The cases were remanded for further findings concerning other potential grounds for non-enforcement. There was no suggestion in Alexander that the unavailability of class arbitration would preclude individual arbitration. This Court also subsequently remanded Rimmer v. Citifinancial, Inc. (S.Ct.), 2009 Ohio 4902, in view of Alexander, for reconsideration of a class action certification, without connnent. The Eighth District Court of Appeals decision in Rimmer noted that some of the contracts at issue contained arbitration clauses, although their effect was not discussed. 2008 Ohio 1814, at 127. Presumably the clauses were among the grounds on which review was sought in this Court, leading to the remand on the basis of Alexander. The clear inference is that this Court expected that the arbitration clauses would be enforced notwithstanding the class action demands. The decision of the Court of Appeals in the present case was thus only one of many that have uniformly come to the same conclusion. A class action complaint in court does not override an otherwise enforceable arbitration agreement. The present appeal raises no issue about that principle of law. The Court of Appeals reached the correct conclusion, following precedent that is very well established in Ohio and elsewhere. This Court has no reason to review the decision. The appeal should be declined. 5
RODERICK LINTON/BELFANCE Robert M. Gippin (0023478) One Cascade Plaza, 15a' Floor Akron, Ohio 44308 Phone (330) 315-3400 Fax No. (330) 315-3360 Email: reipnin@rlbll p. com Attorney for Cornwell Quality Tools Company, Appellee CERTIFICATE OF SERVICE I certify that a copy of the foregoing Response was served by U.S. Mail, postage pre-paid, this 21s` day of July, 2011 upon: Timothy A. Shimko 2010 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115 Charles E. Dunlap 3855 Starr's Center Drive, Ste. A. Canfield, Ohio 44406