Gembarski v. PartsSource, Inc. (Slip Opinion)

2019 Ohio 3231
CourtOhio Supreme Court
DecidedAugust 14, 2019
Docket2018-0125
StatusPublished
Cited by24 cases

This text of 2019 Ohio 3231 (Gembarski v. PartsSource, Inc. (Slip Opinion)) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gembarski v. PartsSource, Inc. (Slip Opinion), 2019 Ohio 3231 (Ohio 2019).

Opinion

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as Gembarski v. PartsSource, Inc., Slip Opinion No. 2019-Ohio-3231.]

NOTICE This slip opinion is subject to formal revision before it is published in an advance sheet of the Ohio Official Reports. Readers are requested to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65 South Front Street, Columbus, Ohio 43215, of any typographical or other formal errors in the opinion, in order that corrections may be made before the opinion is published.

SLIP OPINION NO. 2019-OHIO-3231 GEMBARSKI, APPELLEE, v. PARTSSOURCE, INC., APPELLANT. [Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as Gembarski v. PartsSource, Inc., Slip Opinion No. 2019-Ohio-3231.] Civil law—Civ.R. 23(A)—In a class-certification case, when the case originates with a single named plaintiff and that plaintiff is not subject to an arbitration agreement that was entered into by unnamed putative class members, the defendant need not raise a specific argument referring or relating to arbitration in the answer—Defendant may raise an argument that relates to arbitration against putative class members at the class- certification stage of proceedings—Court of appeals’ judgment reversed and cause remanded. (No. 2018-0125—Submitted February 20, 2019—Decided August 14, 2019.) APPEAL from the Court of Appeals for Portage County, No. 2016-P-0077, 2017-Ohio-8940. __________________ SUPREME COURT OF OHIO

FISCHER, J. {¶ 1} Appellant, PartsSource, Inc., appeals the judgment of the Eleventh District Court of Appeals affirming the trial court’s judgment granting appellee Edward F. Gembarski’s motion to certify a class action. We accepted jurisdiction over PartsSource’s three propositions of law related to the trial court’s decision to grant class certification. We will address only the second and third propositions of law, however, as they are dispositive in this case. {¶ 2} We hold that in a class-certification case, when the case originates with a single named plaintiff and that plaintiff is not subject to an arbitration agreement that was entered into by unnamed putative class members, the defendant need not raise a specific argument referring or relating to arbitration in the defendant’s answer. In such circumstances, the defendant may raise an argument that relates to arbitration against putative class members at the class-certification stage of the proceedings. {¶ 3} As relevant to this case, PartsSource had no duty to assert arbitration as a defense in its answer because Gembarski, the only named class representative, was not subject to an arbitration agreement that had been entered into by unnamed putative class members. A defendant need not raise defenses that are related only to unnamed putative class members because those unnamed putative class members are not parties to the action prior to class certification. Thus, because arbitration was not available as a defense at the time PartsSource submitted its answer, PartsSource could not waive a right to assert arbitration at that time, as PartsSource had no such right to waive. {¶ 4} Prior to Gembarski’s motion to certify a class, PartsSource had no duty to raise an argument that, because unnamed putative class members were parties to arbitration agreements, Gembarski—as the representative of that class— failed to satisfy Civ.R. 23(A)’s typicality and adequacy requirements. Nor does any of Ohio’s Rules of Civil Procedure require PartsSource to file a motion to strike

2 January Term, 2019

the class action. The burden to certify the class action or to maintain the class action is never on the defendant. {¶ 5} Thus, because PartsSource denied Gembarski’s averment that he met the requirements of Civ.R. 23(A) when it filed its answer, PartsSource properly preserved its arguments alleging that because unnamed putative class members were parties to arbitration agreements and Gembarski was not, Gembarski failed to satisfy Civ.R. 23(A)’s typicality and adequacy requirements. Accordingly, we reverse the judgment of the court of appeals and remand the cause to that court for consideration of PartsSource’s assignments of error in light of this opinion. I. BACKGROUND {¶ 6} In October 2012, Gembarski filed a class-action complaint against his former employer, PartsSource, in the Summit County Court of Common Pleas. Gembarski asserted claims of breach of contract, unjust enrichment, conversion, equitable restitution, constructive trust, and “money had and received.” Each claim was asserted on behalf of the putative class. Gembarski claimed that while he worked for PartsSource, PartsSource improperly withheld and deducted commissions earned by Gembarski and other account managers. Gembarski argued that his claims were typical of the putative class, which included current and former PartsSource account managers and employees, and that he would fairly and adequately protect the class as the named representative. {¶ 7} PartsSource filed an answer to the complaint, denying the allegations as to each class-action requirement (including typicality and adequacy) and denying that the lawsuit could be maintained as a class action. Shortly thereafter, the parties agreed to transfer the case to the Portage County Court of Common Pleas. {¶ 8} The parties agreed to participate in private mediation but came to no resolution. The case was removed to federal court but was then remanded to the Portage County Court of Common Pleas. In September 2015, Gembarski, for the first time, filed a motion asking that the trial court certify the case as a class action.

3 SUPREME COURT OF OHIO

{¶ 9} PartsSource opposed Gembarski’s motion to certify the class action. PartsSource argued that it had instituted an alternative-dispute-resolution program in January 2011 and that, under that program, employees who entered into an arbitration agreement waived their right to file a lawsuit in favor of a “three-step process culminating in mandatory and binding arbitration.” Claims covered under the arbitration agreement included claims arising from or relating to the employees’ employment. Gembarski, however, had refused to sign the arbitration agreement. So PartsSource alleged that Gembarski could not meet the typicality requirement necessary for his motion to certify the class to be granted because his claims or defenses were not typical of the claims or defenses of the putative class “where employees who signed arbitration agreements * * * would be precluded from participating in [the] case as absent class members.” PartsSource also claimed that Gembarski failed to establish adequacy, as his interests diverged from those putative class members who were subject to the arbitration agreement with PartsSource. {¶ 10} Gembarski argued that PartsSource had waived “the defense of arbitration.” Gembarski claimed that PartsSource knew of “its alleged right to arbitrate” at the onset of the litigation. Gembarski maintained that because PartsSource participated in the litigation and had not asserted an “arbitration defense,” PartsSource acted inconsistently with “its alleged right of arbitration.” Gembarski concluded that because PartsSource waived an “arbitration defense,” there was “nothing stopping, barring or otherwise prohibiting the absent class members from participation in the class action as a participating class member.” (Emphasis sic.) {¶ 11} PartsSource countered that it did not waive “the issue of arbitration.” PartsSource argued that it never had a right to demand arbitration from Gembarski. PartsSource contended that it would have been premature to raise any argument related to arbitration prior to the class-certification phase of the litigation.

4 January Term, 2019

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Bluebook (online)
2019 Ohio 3231, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gembarski-v-partssource-inc-slip-opinion-ohio-2019.