Drafter and editor beware – and be clear!

Of the 37 Ohio appellate cases involving arbitration issues in 2016, the one that caught my attention actually never got to arbitration.  Nonetheless, it reminds us of the importance of formal processes and the sometimes costly results of informality. 

In Kaminsky v. New Horizons Computer Learning Center of Cleveland, 2016-Ohio-1468, Kaminsky was hired by New Horizons as an at-will computer instructor in 1998.  He signed an “Arbitration as Exclusive Remedy” agreement (AER), agreeing to forego the right to bring employment-related claims in a court, other than claims arising under a separate confidentiality, non-competition and non-solicitation agreement.  The AER also stated that “Any claim or theory that the Company breached a contract also comes within the scope of this procedure.  However, to the extent that any such claim is inconsistent with ad precluded by New Horizons’ at-will employment policy, such a claim will be subject to summary disposition (if raised in court) or prehearing disposition (if raised in the request for arbitration).”

In 2013, Kaminsky accepted a job with another company and gave New Horizons notice.  New Horizons enticed him to stay, offering Kaminsky an enhanced package that changed Kaminsky from an at-will employee to one with a three-year agreement, and providing a raise and bonuses, and extending the non-compete agreement.  The new terms were set forth in an email that Kaminsky acknowledged and accepted by return email.  The parties did not discuss the AER as part of these negotiations.

In March 2015, Kaminsky was terminated.  New Horizons claimed it was due to a reduction in force, but Kaminsky contested this and sued New Horizons for breach of contract and other claims.  Appellant filed a motion for judgment on the pleadings, or, in the alternative, to stay the proceedings and compel arbitration.  Kaminsky opposed the motion on the grounds that the AER was not a part of the 2013 contract, and that in any case the AER was unenforceable as it lacked consideration.  The trial court denied defendant’s motion.

The 8th District Court of Appeals first noted that questions involving whether a party has agreed to waive its right to arbitrate a dispute are reviewed under a de novo, not abuse of discretion, standard.  “Under a de novo standard, we give no deference to a trial court’s decision.” [Citations omitted.]

The court then considered the facts and circumstances surrounding the AER, reiterating the long line of cases favoring arbitration when it is apparent the parties consented to use it as a means of resolving disputes.  Appellant New Horizons noted that the AER contained no expiration date, and also noted that Kaminsky’s employment with it never ended, since he accepted the revised offer before quitting and starting the new job.

Kaminsky noted that he was no longer bound by the AER when he negotiated the new agreement.  The court sided with Kaminsky, finding that by renewing the non-compete agreement but not having any discussion about the AER, there was no mutual assent to the AER. 

Although Kaminsky argued that the AER was only intended to apply to employees at will and that his new contract removed him from at-will status, the court rejected this argument, finding the AER applies, by its terms, to all employees. 

The court’s cautionary note: “With the issue of contract interpretation, the intent of the parties is paramount.”  The email exchange summarizing the enhanced package to retain Kaminsky was the only document evidencing the terms of the new agreement and assent thereto, and since it specified certain terms or agreements but never referenced others, the court could not infer intent on the part of all parties to assent to absent terms.