|
The Ohio Court of Appeals held that an arbitration agreement was not unconscionable where it clearly allocated the costs of arbitration to the party initiating arbitration, even though the arbitration filing fee was $1,700 and the court filing fee was only $150.
In Peltz v. Moyer, No. 06 BE 11, 2007 WL 2758604 (Ohio Ct. App. Sept. 17, 2007), Peltz sued Moyer, his investment adviser, alleging that Moyer guaranteed investment returns which never materialized. Moyer moved to stay further proceedings pursuant to an arbitration agreement in the parties’ contract. In opposing the motion, Peltz argued that the arbitration agreement was unconscionable.
The trial court ruled that the arbitration agreement was not unconscionable so long as Moyer paid for the arbitration. Accordingly, the trial court issued an order staying further proceedings but on the condition that Moyer pay the filing fee and other arbitration expenses.
On appeal, the issue before the Court was whether the arbitration agreement was unconscionable.
Peltz argued that the agreement was procedurally unconscionable because it was never explained to him despite his relative lack of sophistication. In rejecting this argument, the Court cited five factors: (1) there was no evidence of Peltz’s background; (2) a voluntary investment decision implies “that a certain level of sophistication is to be expected;” (3) Peltz could have refused to sign the agreement and sought investment services elsewhere; (4) there was no evidence that Peltz was denied an opportunity to seek counsel; and (5) Peltz could have asked questions about the agreement.
In arguing substantive unconscionability, Peltz relied on the costs of arbitration and the omission of those details from the arbitration agreement. The Court rejected this argument because even though the agreement did not specify the costs of arbitration, it referred the parties to the governing body of rules. Moreover, the Court found that the $1,700 filing fee was not particularly significant given the amount in controversy. Plus, Peltz presented no evidence demonstrating that he could not afford the filing fee.
Based on its analysis, the Court held that the arbitration agreement was not unconscionable and, accordingly, that the agreement was enforceable in its entirety. The Court thus affirmed the order staying the case pending arbitration, but held that Peltz must pay the filing fee in accordance with the parties’ agreement.
Subscribe to a free weekly update on ADR case law and
legislation
|