Hyde v. Sherwin-Williams Co.

[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

EDMAP.

{¶ 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.