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Mutuality of obligation to arbitrate is required unless a contract is supported by ample consideration, a federal court in Ohio held.
In Cook v. All State Homes Mortgage, Inc., No. 1:06 CV 1206, 2006 WL 2252538 (N.D. Ohio Aug. 7, 2006), Cook brought Fair Labor Standards Act complaints against All State, his former employer. All State petitioned the Court to compel arbitration of the claims, pursuant to an arbitration agreement in the employment contract.
Cook first argued that he should not be compelled to arbitrate his claims because there was no mutuality of obligation in the arbitration agreement. However, the Court disagreed because “[m]utuality of obligation is not a requirement of a valid arbitration clause so long as the contract as a whole is supported by consideration,” and the employment agreement was “supported by ample consideration.”
But the Court concluded that it did not need to rely on this rule to decide in All State’s favor. The arbitration agreement contained an exception for claims for injunctive relief brought by Employer or Employee. The Court held that this disclaimer “reflect[ed] that both parties are bound to submit their disputes to arbitration.” Therefore, the Court found that there was mutuality in the agreement, and compelled arbitration of Cook’s claims.
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