Arbitration: mandatory hearings
Just a quick note today, on the 8th District's decision last week in Bencivenni v. Dietz, where the plaintiffs had filed suit against a home inspection company they'd hired prior to purchasing a house. The plaintiffs alleged that the inspection company had done a shoddy job, and the inspection company responded by asking the trial court to enforce the arbitration clause which was contained in the contract the plaintiffs had signed. The plaintiffs argued that the arbitration clause was unconscionable, but the trial court disagreed, and granted the motion to stay. The court of appeals reversed, finding that although the arbitration statute, RC 2711.02, "does not require a hearing... where a party disputes the making of the agreement, or alleges that the arbitration clause is unconscionable, a hearing should be held."
This is the same result the court reached in a case last year; in fact, the latter case actually was a little stronger, essentially holding that a hearing was required where "enforceability and validity of the agreement were in issue."
It's arguable that the 8th District has become one of the most arbitration-unfriendly districts in Ohio, at least in the context of such clauses in consumer contracts. The decisions in these two cases go substantially beyond the Supreme Court's 2003 decision in Maestle v. Best Buy, which rejected the notion that a hearing was required under RC 2711.02. In fact, I commented last summer that
Unless you’re Warren Buffett or take a lawyer along with you to sign the contract, procedural unconscionability is going to be more or less inferred from the disparity in bargaining power between corporation and consumer, and the adhesionary nature of the contract.
The plaintiff in the case last week didn't take a lawyer with him: he was a lawyer. That certainly would have allowed the appellate court an out. That it didn't take it is a good sign for those who are troubled by the increasing use of arbitration provisions in consumer contracts.
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