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According to an Ohio federal court, only disputes falling within the scope of an arbitration agreement are arbitrable, and the court cannot compel arbitration of disputes beyond the agreement’s scope in order to avoid piecemeal litigation.
In Verizon Advanced Data, Inc. v. Frognet, Inc., No. 2:05-CV-955, 2006 WL 2373265 (S.D. Ohio Aug. 14, 2006), Verizon sued Frognet to recover money owed under two separate contracts (“Contract 1” and “Contract 2”). Frognet moved to stay the proceedings and compel arbitration because Contract 2 contained an arbitration provision.
Verizon conceded that its claims arising under Contract 2 were arbitrable, but contended that it should not have to arbitrate claims under Contract 1, which did not contain an arbitration provision. Frognet argued that all of the claims should proceed to arbitration “to avoid piecemeal litigation.”
The Court held that Verizon could not be required to arbitrate claims it did not agree to arbitrate. “Arbitration is a matter of contract and . . . despite the strong policy in favor of arbitration, courts can require arbitration only of those claims that the parties have agreed to arbitrate, even if this results in ‘bifurcated proceedings.’”
Because Verizon did not agree to arbitrate disputes arising under Contract 1, the Court held that only Contract 2 disputes would continue to arbitration. In its discretion, the Court stayed all litigation until after arbitration of the Contract 2 disputes.
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