Background
Perri Kushan and Linda Novak-Eedy were dietitians employed at a long-term care facility in Beachwood, Ohio, for over three decades. When King David Post Acute Nursing & Rehabilitation LLC acquired the facility in 2023, it required employees to sign onboarding documents, including a Mutual Arbitration Agreement (“Arbitration Agreement”), through an electronic portal called HostedTime. The Arbitration Agreement covered “any and all claims” arising from employment, including discrimination claims under state and federal law. It contained a 30-day rescission period and a one-year contractual limitations period requiring arbitration to be initiated within one year of the event giving rise to the dispute.
Both employees were terminated on September 9, 2024. They filed discrimination charges with the Ohio Civil Rights Commission in late September and October 2024, and filed suit in Cuyahoga County Court of Common Pleas on January 21, 2025, alleging age discrimination, aiding and abetting age discrimination, and retaliation. The defendants did not initially assert arbitration; their answer asserted 38 affirmative defenses but did not mention arbitration.
On July 21, 2025—six months after the complaint was filed and months after the Arbitration Agreement had appeared in the record as an exhibit to the defendants’ motion to dismiss in a related case—the defendants moved to stay proceedings pending arbitration. The trial court initially referred the case to court-administered arbitration but later vacated that order and granted the defendants’ motion to stay pending arbitration under the parties’ agreement on October 1, 2025. The plaintiffs appealed.
The Court’s Holding
The Ohio Court of Appeals affirmed the trial court’s decision to enforce the Arbitration Agreement and stay the proceedings. The court held that the agreement was not unconscionable under either substantive or procedural scrutiny. On substantive unconscionability, the court rejected the employees’ arguments that the fee-splitting provision imposed prohibitive costs (finding no concrete evidence of such costs), that the one-year limitations period was unreasonably short (noting it afforded a meaningful opportunity to assert claims and the employees had filed within one year anyway), and that the agreement depleted substantive rights (finding arbitration merely provides an alternative forum, not a waiver of statutory remedies).
On procedural unconscionability, the court found the agreement was a clear, stand-alone four-page document advising employees to consult counsel and conspicuously warning of waiver of jury trial rights. Most importantly, the 30-day rescission period substantially undermined any claim of oppression or unfair surprise; the employees had a full month to consult counsel and withdraw without consequences, which they did not exercise. The court also noted that the employees were educated professionals with decades of work experience, and that the adhesive nature of an employment contract alone does not establish unconscionability under Ohio law.
The court further held that the defendants did not waive their right to arbitration despite the six-month delay in asserting it. Although the defendants had knowledge of the Arbitration Agreement by March 18, 2025 (when it was filed as an exhibit in a related case), they did not invoke the court’s jurisdiction through affirmative claims, engaged in minimal merits-based litigation activity, did not take depositions or respond substantively to discovery, and caused no demonstrable prejudice to the employees beyond ordinary litigation costs. The court acknowledged that the delay and initial failure to plead arbitration “gave the court pause,” but concluded these facts alone did not overcome Ohio’s strong public policy favoring arbitration.
Key Takeaways
- Under Ohio law, a party seeking to invalidate an arbitration agreement on unconscionability grounds must prove both procedural and substantive unconscionability; a deficiency in either prong is fatal to the challenge.
- A contractually shortened limitations period (one year in this case) is commercially reasonable if it affords a meaningful opportunity to assert claims; Ohio courts will not find substantive unconscionability merely because arbitration changes the forum rather than eliminating statutory remedies.
- A meaningful rescission or opt-out provision substantially undermines claims of procedural unconscionability based on lack of choice or oppression, even when the agreement is presented as a condition of continued employment.
- Waiver of arbitration requires not only knowledge of the right but conduct completely inconsistent with that right; a six-month delay in asserting arbitration, without affirmative invocation of court jurisdiction and significant merits litigation, does not constitute waiver under Ohio’s strong pro-arbitration policy.
Why It Matters
This decision reinforces Ohio’s robust presumption in favor of enforcing arbitration agreements and sets a high bar for employees challenging such agreements in employment discrimination cases. Employers presenting arbitration agreements as a condition of continued employment can rely on this decision to uphold such agreements even when procedures are imperfect, provided the agreement includes a rescission period and contains no substantively unreasonable terms. The court’s finding that a one-year contractual limitations period does not waive statutory employment remedies clarifies that the venue change does not diminish substantive rights under state discrimination statutes.
However, the decision also leaves open a potentially significant question for future cases: whether a defendant who fails to initiate arbitration within the agreement’s contractual window (here, within one year of the termination) may nonetheless compel arbitration after that deadline has passed. The opinion suggests this question should be decided by an arbitrator rather than a court, but that issue was not fully addressed in this decision, leaving some uncertainty for defendants who move to stay proceedings long after the contractual deadline.