[Cite as Hyde v. Sherwin-Williams Co., 2011-Ohio-4234.]
Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION No. 95687
GARY L. HYDE PLAINTIFF-APPELLEE
vs.
SHERWIN-WILLIAMS CO., ET AL. DEFENDANTS-APPELLANTS
JUDGMENT: AFFIRMED
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-712677
BEFORE: Keough, J., Kilbane, A.J., and Cooney, J.
RELEASED AND JOURNALIZED: August 25, 2011 ATTORNEYS FOR APPELLANTS
John Gerak Thomas H. Barnard Ellen Toth Ogletree Deakins Nash Smoak & Stew 127 Public Square Suite 4130 Cleveland, OH 44114-1724
ATTORNEYS FOR APPELLEE
Richard C. Haber Bradley J. Barmen Jennifer Rinkes Haber Polk Kabat LLP 737 Bolivar Road Suite 4400 Cleveland, OH 44115
KATHLEEN ANN KEOUGH, J.:
{¶ 1} Defendants-appellants, The Sherwin-Williams Company
(“Sherwin-Williams” or the “Company”), James McIlwee, and Timothy White,
appeal from the trial court’s judgment denying their motion to stay
proceedings pending arbitration of plaintiff-appellee Gary L. Hyde’s age
discrimination claim. Finding no merit to the appeal, we affirm.
I
{¶ 2} At issue in this case are Sherwin-Williams’ Problem Resolution
Procedures (“PRP”) and its Employment Dispute Mediation and Arbitration
Policy (“EDMAP”). The PRP and EDMAP are formalized procedures implemented by Sherwin-Williams for resolving employee disputes with the
Company.
{¶ 3} The PRP provides four steps for review of employee disputes: (1)
discussion with the employee’s direct supervisor; (2) review of the supervisor’s
decision by the next higher level of supervision, the human resources
manager for the employee’s group, and the headquarters human resources
manager; (3) review by a panel consisting of various management personnel;
and (4) for certain claims, mediation and/or arbitration pursuant to the
EDMAP.
{¶ 4} The PRP provides that “[t]hese procedures may be used by
employees to challenge the unresolved differences regarding application of
Company policies, procedures or practices which affect their employment
situation. These procedures are intended to be an exclusive, final and
binding method to resolve all covered claims to the fullest extent permitted by
law. Failure to use these procedures may preclude employees from pursuing
any other legal right they may have in court or in other forums * * *.”
(Emphasis added.)
{¶ 5} The EDMAP provides the additional steps of mediation and
arbitration for certain types of disputes that are not resolved through the
PRP. It states that “[d]isputes covered by this policy * * * shall first be
submitted to the internal steps of the applicable Group/Division [PRP]. If such disputes are not resolved pursuant to those internal steps, they shall be
subject to mediation and/or arbitration under this policy, which shall serve as
the exclusive, final and binding resolution of the dispute to the fullest extent
permitted by law.”
{¶ 6} On a periodic basis, Sherwin-Williams requires its employees to
electronically review, acknowledge, and agree to certain policies and
procedures as a condition of their continued employment with the Company.
On three occasions — August 11, 2005, September 27, 2006, and February 1,
2008 — Hyde reviewed and acknowledged electronic versions of the
Company’s “Explanatory Notice to Employees Regarding the PRP and
EDMAP” with corresponding links to complete versions of the PRP and
{¶ 7} The Explanatory Notice that Hyde reviewed stated in relevant
part:
{¶ 8} “[T]he Company and its employees agree to the fullest extent
permitted by law, to resolve covered disputes through mediation and/or
arbitration pursuant to the EDMAP, and to waive any right they may have to
utilize any other legal procedures for resolving disputes, including but not
limited to the right to file in court or to have a jury trial.”
{¶ 9} Beginning in March 2007, shortly after defendant White became
Hyde’s supervisor, Hyde began receiving negative performance evaluations, despite years of outstanding evaluations. Hyde subsequently initiated the
PRP process, challenging his performance reviews and alleging that
defendants McIlwee (who later became Hyde’s supervisor) and White were
engaged in age-related bias toward him. Ultimately dissatisfied with the
resolution of his complaint, Hyde appealed the PRP Management
Committee’s decision to mediation. Subsequently, in June 2009,
Sherwin-Williams terminated Hyde’s employment. In December 2009, Hyde
filed this lawsuit against defendants-appellants, asserting that their actions
constituted age discrimination in violation of R.C. 4112 et seq.
{¶ 10} Before answering the complaint, defendants-appellants filed a
motion to stay proceedings pending arbitration. Appellants argued that
Hyde’s age discrimination claim was subject to the arbitration agreement, as
set forth in the PRP and EDMAP. The trial court subsequently denied the
motion without opinion; this appeal followed.
II
{¶ 11} Appellants assert three assignments of error on appeal. They
contend that the trial court erred by: (1) not recognizing the written
agreement between Hyde and Sherwin-Williams as the exclusive, final, and
binding procedure to resolve all disputes regarding employment
discrimination or the termination of Hyde’s employment with
Sherwin-Williams; (2) not staying the proceedings pending arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §1 et seq., and R.C. 2711.01
et seq.; and (3) denying their motion to stay proceedings pending arbitration.
{¶ 12} Initially, we note that appellants’ brief does not comply with
App.R. 16 because appellants do not argue each assignment of error
separately. App.R. 16(A)(7) requires “[a]n argument containing the
contention of the appellant with respect to each assignment of error.”
Although an appellate court may jointly consider assignments of error that
are related, the parties do not have the same option and are required to
separately argue each assignment of error. Fiorilli Constr., Inc. v. A.
Bonamase Contracting, Inc., Cuyahoga App. No. 94719, 2011-Ohio-107, ¶30.
{¶ 13} Under App.R. 12(A)(2), an appellate court “may disregard an
assignment of error presented for review if the party raising it fails to * * *
argue the assignment separately in the brief, as required under App.R.
16(A).” Thus, it would be within our discretion to simply disregard all of
appellants’ assignments of error and summarily affirm the trial court.
Cleveland v. Posner, Cuyahoga App. No. 93893, 2010-Ohio-3091, ¶6.
Nevertheless, in the interest of justice, we will address appellants’
assignments of error. Further, we will consider them together, as they all
relate to the trial court’s denial of appellants’ motion to stay the proceedings
pending arbitration.
III {¶ 14} In his brief in opposition to appellants’ motion to stay proceedings
and compel arbitration, Hyde argued that arbitration was not mandatory
because the language of the PRP is ambiguous as to whether arbitration is
voluntary or mandatory and, further, that the PRP is procedurally and
substantively unconscionable and therefore, unenforceable as a matter of law.
On appeal, appellants contend that under the PRP and EDMAP, Hyde’s
claim is subject to mandatory arbitration and the agreement is not
unconscionable.
{¶ 15} The determination of whether an arbitration clause is
unconscionable is a question of law; therefore, we apply a de novo standard of
review. Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352,
2008-Ohio-938, 884 N.E.2d 12. A de novo standard of review is likewise
appropriate in this case because the issue of whether the parties are bound by
the arbitration provisions in the PRP and EDMAP requires interpretation of
the contract, which is an issue of law. Berry v. Lupica, Cuyahoga App. No.
90657, 2008-Ohio-5102, ¶7; Ghanem v. Am. Greetings Corp., Cuyahoga App.
No. 82316, 2003-Ohio-5935, ¶11.
IV
{¶ 16} Resolving disputes through the extra-judicial process of
arbitration is generally favored in the law. Williams v. Aetna Fin. Co., 83
Ohio St.3d 464, 471, 1998-Ohio-294, 700 N.E.2d 859. An arbitration clause in a contract is generally viewed as an expression that the parties agree to
arbitrate disagreements within the scope of the clause, and, with limited
exceptions, an arbitration clause is to be upheld just as any other provision in
a contract. Id.; Vanyo v. Clear Channel Worldwide, 156 Ohio App.3d 706,
2004-Ohio-1793, 808 N.E.2d 482, ¶8. There is a strong presumption in favor
of arbitration, and any doubt should be resolved in favor of arbitrability.
Melia v. Officemax N. Am. Inc., Cuyahoga App. No. 87249, 2006-Ohio-4765,
¶15, citing Neubrander v. Dean Witter Reynolds, Inc. (1992), 81 Ohio App.3d
308, 610 N.E.2d 1089.
{¶ 17} Under both the Federal Arbitration Act, 9 U.S.C. §1 et seq.
(applicable in both federal and state courts),1 and Ohio’s Arbitration Act, R.C.
2711.01 et seq., a trial court is required to stay proceedings when a party
demonstrates that an agreement exists between the parties to submit the
issue to arbitration. In order for an arbitration agreement to be enforceable,
however, the agreement must apply to the disputed issue and the parties
must have agreed to submit that particular issue or dispute to arbitration.
Ghanem, supra at ¶12.
{¶ 18} Hyde does not dispute that he agreed to the PRP as a term and
condition of employment. He contends that “[t]his case does not question if
Weiss v. Voice/Fax Corp. (1994), 94 Ohio App.3d 309, 312, 640 N.E.2d 875, citing 1
Southland Corp. v. Keating (1983), 465 U.S. 1, 14-16, 104 S.Ct. 852, 79 L.Ed.2d 1. Mr. Hyde agreed to the PRP; it questions to what Mr. Hyde agreed.”
(Emphasis in original.) While appellants assert that Hyde’s
acknowledgment means he agreed that the PRP is mandatory and is
therefore precluded from pursuing his claim in court, Hyde contends that the
language of the PRP indicates that Sherwin-Williams’ employees are not
required to participate in the PRP/EDMAP procedures.
{¶ 19} Hyde contends that this court’s decision in Hardwick v.
Sherwin-Williams Co., Cuyahoga App. No. 81575, 2003-Ohio-657, supports
his conclusion. In Hardwick, two former employees of Sherwin-Williams
filed suit for sexual discrimination. The trial court denied Sherwin-Williams’
motion to stay proceedings pending arbitration under the PRP. On appeal,
this court found that neither plaintiff had signed or acknowledged receipt of
the PRP at the time of its distribution nor agreed to use the PRP as the sole
means of redress. Accordingly, this court held there was no mutual assent to
the PRP policy. Id., ¶13.
{¶ 20} Further, this court found that the language Sherwin-Williams
used to describe the PRP to its employees made the PRP seem optional.
Specifically, this court found language that “‘[t]hese procedures may be used
by employees * * *’”, “‘[a]ll regular full and part-time employees * * * are
eligible to use the Problem Resolution procedures * * *’”, and failure to use
the procedures “‘may preclude employees from pursuing any legal rights they may have in court or in other forums’” implied that employees had a choice as
to whether to use the PRP. Id. at ¶14. This court noted further that the
PRP applied unilaterally to the employees, but did not apply to any legal
claims that Sherwin-Williams might have against its employees. Id. at ¶3.
Further, this court found that the PRP did not condition continued
employment upon an employee’s agreement to use the PRP procedures. Id.
at ¶6. Accordingly, this court held that “[b]ased on the language defendant
chose to employ in describing the PRP to its employees, we reject
[Sherwin-Williams’] contention that such procedures were clear and
unambiguous, mandatory conditions of employment.” Id. at ¶16.
{¶ 21} Hyde contends that the language in the version of the PRP that
he acknowledged and agreed to is identical to that considered in Hardwick
and, accordingly, in light of this court’s holding in Hardwick, his use of the
PRP is permissive, instead of mandatory.
{¶ 22} Hardwick, which was decided in 2003, described the PRP as a
“one-paged leaflet.” Sherwin-Williams obviously made some changes to the
PRP after the Hardwick decision. The PRP acknowledged and agreed to by
Hyde is a four-page document and states that the PRP procedures “are
intended to be an exclusive, final and binding method to resolve all covered
claims to the fullest extent permitted by law.” Further, it conditions
employment and continued employment upon an employee’s agreement to resolve covered disputes through the PRP procedures.
{¶ 23} Nevertheless, the PRP still contains language implying that the
PRP is optional. The PRP acknowledged by Hyde provides that “[t]hese
procedures may be used by employees to challenge the unresolved differences
* * * which affect their employment situation.” (Emphasis added.) Further,
despite an unequivocal assertion in the PRP that the PRP methods are
“intended to be an exclusive, final and binding method to resolve all covered
claims,” the PRP states that “if you fail to appeal a decision with which you
disagree, you may be precluded from taking your complaint to an outside
forum for resolution” and “[f]ailure to use the procedures may preclude
employees from pursuing any other legal rights the employees may have in
court or in other forums.” (Emphasis added.) These sentences clearly
suggest that there may be situations where an employee is not precluded
from pursuing his claim in court and, hence, that the procedures are not the
final, mandatory means of resolving all employee disputes.
{¶ 24} Similarly, although appellants contend that Hyde signed two
documents during the PRP process in which he acknowledged and agreed
that the PRP and EDMAP processes were the exclusive, final, and binding
means by which to resolve his claims, additional langugage, capitalized, in
bold print and immediately following the provision that identified the
procedures as “binding” stated: {¶ 25} “I FURTHER UNDERSTAND THAT IF I DO NOT USE THESE
PROCEDURES, I MAY BE PRECLUDED FROM PURSUING ANY OTHER
LEGAL RIGHTS I MAY HAVE IN COURT OR IN OTHER FORUMS.”
{¶ 26} We find that Sherwin-Williams’ repeated representations that an
employee’s failure to follow the PRP “may” preclude that employee from
seeking redress in outside forums expressly contradicts appellants’ position
that the procedures outlined in the PRP are the exclusive method for
resolving employee disputes. By virtue of the language used — the same
language the Hardwick court found indicated that use of the PRP was
optional — appellants implied that there would be circumstances where an
employee would not be prevented from pursuing resolution of their legal
claims in outside forums, i.e., that the PRP procedures are not mandatory,
final, or binding.
{¶ 27} Another phrase in the PRP — that “[d]isputes covered by the
EDMAP that are not satisfactorily resolved through the initial steps of the
Procedures are subject to mediation and/or arbitration” — likewise suggests
that arbitration is not mandatory. The “and/or” language suggests that an
employee is allowed to choose one or the other and that arbitration was not
required in this case because Hyde engaged in mediation.
{¶ 28} Although appellants contend that the EDMAP makes clear that
mediation and/or arbitration is final and binding, the EDMAP is merely a subpart of the PRP, which indicates that the procedures are optional and that
employees might be able to pursue their claims in outside forums. In short,
one part of the document indicates that the procedures are optional while the
other suggests the procedures are mandatory.
{¶ 29} Further, we are not persuaded by appellants’ assertion that the
“may” language in the PRP simply means that an employee has the option of
going to arbitration or doing nothing. Appellants contend that a “long line”
of federal and appellate courts have analyzed the use of the word “may” in
mandatory arbitration agreements and concluded that it means that an
employee who does not want arbitration has the option of abandoning his
claim; appellants argue that the same interpretation should apply to the
PRP. Specifically, appellants direct us to Rutter v. Darden Restaurants, Inc.
(C.D.Cal.2008), No. CV 08-6106 AHM (Ssx), which they contend is “strikingly
similar” to this case. In Rutter, the plaintiff, like Hyde, did not dispute that
he had agreed to a four-step mediation and arbitration procedure, but argued
that the process was not mandatory because one sentence in the agreement
provided that upon the conclusion of mediation, “if the dispute involves a
legal claim, either the Employee or the Company can submit the matter to
binding arbitration.” The Rutter court rejected the plaintiff’s assertion that
this language meant that arbitration was permissive, rather than mandatory,
because it found that other language in the agreement stated unequivocally that binding arbitration was the “sole and final process and remedy.” The
court further found that the phrase at issue “merely means a party who does
not want arbitration has the option to abandon the claim. A party can
choose between invoking his right to arbitration or forgoing further review.”
Appellants argue that we should reach the same result here.
{¶ 30} But the language of the arbitration agreements in Rutter and the
other cases cited by appellants for this proposition is not relevant to the
clause at issue here. The arbitration agreements in those cases contained
clauses that essentially stated in various ways that “disputes may be referred
to arbitration,” which courts have widely interpreted to mean that a party has
the choice between arbitration and abandonment of his claim. 2 But the
“may” language in the phrase at issue here, i.e., “failure to use these
procedures may preclude employees from pursuing any other legal rights they
may have in court or in other forums,” appears in a different context and is
not used in reference to presenting a claim for arbitration. Further, even
construing the word “may” as permissive, rather than mandatory, as
appellants would have us do, the phrase is subject to several interpretations.
Interpreted one way, the phrase could mean that there may be some
See, e.g., Allis-Chalmers Corp. v. Lueck (1985), 471 U.S. 202, 204, n.1, 105 S.Ct. 1904, 85 2
L.Ed.2d 206 (“questions * * * may be presented for arbitration”); Nemitz v. Norfolk & W. Ry. Co. (C.A.6 1971), 436 F.2d 841, 849 (“disputes may be referred to arbitration”); United States v. Bankers Ins. Co. (C.A.4 2001), 245 F.3d 315, 320-21 (“any * * * dispute may be submitted to arbitration”). situations where using the PRP is an option; interpreted another way, the
phrase could mean that an employee is required to use the PRP in order to
preserve his right to an outside forum. Neither interpretation is consistent
with a conclusion that the phrase simply means that an employee has the
option of proceeding with arbitration or giving up his claim.
{¶ 31} Furthermore, as evidenced by Sherwin-Williams’ dealings with
Hyde regarding his dispute, it is apparent that even Sherwin-Williams and
its representatives are unable to determine exactly what is required by the
PRP/ EDMAP procedures. The PRP states that “the issues covered under
these procedures shall include the full range of employment-related issues
including * * * performance evaluations,” and Hyde’s claims are premised
upon the negative performance evaluations he received from defendants
McIlwee and White. After the parties participated in mediation, Hyde
requested that the parties submit their dispute to arbitration. Although the
PRP specifically states that the procedures cover performance evaluations, in
response to Hyde’s request, Sherwin-Williams’ Vice President of Employee
Relations informed him that “disputes regarding performance evaluations per
se are not subject to mediation/arbitration pursuant to the EDMAP policy”
and asked that he amend his request to identify “the appropriate triggering
claim.” But now, despite the response from Sherwin-Williams’
representative indicating that Hyde’s complaint was not subject to arbitration, appellants argue that the PRP and EDMAP “explicitly
encompass” his claims.
{¶ 32} Nevertheless, appellants’ actions in this case indicate that the
procedures are not mandatory. On several occasions during the
PRP/EDMAP procedures, Hyde requested amendments to the procedures, all
of which Sherwin-Williams denied. Sherwin-Williams’ representative
advised Hyde that the PRP procedures were “non-negotiable” and that the
parties “must adhere” to the process to maintain the “integrity” of same. But
although Sherwin-Williams insisted that Hyde’s obligations under the
procedures were mandatory, appellants did not comply with the procedures
that outlined what they were required to do during the PRP/EDMAP process.
The record reflects that appellants missed every deadline imposed by their
own “mandatory” procedures for responding to Hyde’s complaint, telling Hyde
their tardy responses were due to “extenuating circumstances” or “travel
schedules.” Thus, appellants ignored the mandates imposed on them by the
“mandatory” language of the procedures but now argue that the procedures
impose a mandatory obligation on Hyde. One can only conclude from
appellants’ unilateral determination that the “shall” language of the
procedures imposed only permissive obligations on them that the procedures
are in actuality permissive, not mandatory.
{¶ 33} Despite the strong policy favoring arbitration, we are compelled to find that in light of the language of the PRP/EDMAP and appellants’
actions with respect to Hyde’s dispute, Hyde did not agree to mandatory
arbitration as the exclusive remedy for his dispute. Accordingly, the trial
court did not err in denying appellants’ motion to stay proceedings and
compel arbitration.
{¶ 34} Appellants’ assignments of error are overruled.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this
judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
Rule 27 of the Rules of Appellate Procedure.
KATHLEEN ANN KEOUGH, JUDGE
MARY EILEEN KILBANE, A.J., CONCURS; and COLLEEN CONWAY COONEY, J., DISSENTS WITH SEPARATE OPINION.
COLLEEN CONWAY COONEY, J., DISSENTING:
{¶ 35} I respectfully dissent. I would reverse the court’s denial of the
stay because Hyde’s complaint is subject to the arbitration provision he
requested two years ago. Hyde pursued every step in his employer’s dispute resolution policy, unlike the plaintiffs in Hardwick who were unaware of the
policy in 1999-2000. The version of the policy in effect at that time consisted
of a one-page leaflet — a far different scenario than presented by Hyde in
2009. Therefore, I find Hardwick easily distinguishable.
{¶ 36} The EDMAP specifically states:
{¶ 37} “WAIVER OF EMPLOYEES’ RIGHTS TO UTILIZE OTHER LEGAL PROCEDURES FOR RESOLVING DISPUTES
{¶ 38} In the absence of this policy, employees with covered disputes which were not resolved by the internal steps of the applicable Group/Division Problem Resolution Procedures, would need to initiate legal proceedings, which may entail time consuming proceedings, lengthy delays and expensive legal costs. Accordingly, by giving employees the right to utilize mediation and/or arbitration under this policy, the Company is granting a benefit to employees to which they would not otherwise be entitled.
{¶ 39} In exchange for this benefit, the Company and its employees shall be deemed by virtue of the employment and as a condition of employment, to have agreed to the fullest extent permitted by law, to resolve covered disputes through mediation and/or arbitration pursuant to this policy, and to waive any right they may have to utilize any other legal procedures for resolving disputes, including but not limited to the right to sue in court or to have a jury trial. However, nothing in this policy or any other Company policy, procedure or document prevents employees from exercising protected rights to file a charge or a complaint, or to otherwise participate in any manner in investigations, hearings, or proceedings with administrative agencies, including but not limited to the Equal Employment Opportunity Commission, state or local agencies handling discrimination claims, the National Labor Relations Board, the Department of Labor or state or local agencies handling wage and hour claims, etc.”
{¶ 40} Hyde understood this condition of his employment, this benefit
that would prevent “lengthy delays” if he initiated legal proceedings. I would reverse the denial of the motion for stay so the parties may pursue the
arbitration they each sought, albeit at different times.