COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NOS. 73390, 73399 and 73410 ACRS, INC., ET AL. : : Plaintiffs-appellees : : -vs- : JOURNAL ENTRY : BLUE CROSS & Blue Shield of MN.,: AND ET AL. : : OPINION Defendants-appellants : : : DATE OF ANNOUNCEMENT : OF DECISION : OCTOBER 29, 1998 CHARACTER OF PROCEEDING : Civil appeal from Common Pleas Court Case #CV-299,322 JUDGMENT : Affirmed. DATE OF JOURNALIZATION : APPEARANCES: For Plaintiffs-Appellees Karen B. Newborn, Esq. ACRS, Inc.: Jordan B. Berns, Esq. Jeffrey K. Rohrs, Esq. Baker & Hostetler 3200 National City Center 1900 East Ninth Street Cleveland, Ohio 44114-3485 For Defendants-Appellants Jonathan R. Cooper, Esq. Blue Cross & Blue Shield of James L. McCrystal, Jr. Esq. Minnesota, Inc., et al.: Martindale, Brzytwa & Quick 900 Skylight Office tower 1600 West Second Street Cleveland, Ohio 44113-1411 Defendants-Appellants continued: Mark Wine, Esq. Oppenheimer, Poms, Smith 2029 Century Park East 38th Floor Los Angeles, CA 90067 -2- For Pharmacy Gold: Richard J. Nygaard, Esq. Randall H. Lentz, Esq. Eric J. Magnuson, Esq. Rider, Bennett, Egan & Arundel, L.L.P. 2000 Metropolitan Center 333 S. Seventh Street Minneapolis, MN 55402 Robert D. Monnin, Esq. Mark L. Rodio, Esq. Suzanne Bretz Blum, Esq. Thompson, Hine & Flory 3900 Key Center 127 Public Square Cleveland, Ohio 44114-1216 For The Inteq Group: David D. Drechsler, Esq. Buckingham, Doolittle, Burroughs 50 S. Main Street P.O. Box 1500 Akron, Ohio 44309-1500 For The Inteq Group, Inc.: Michael J. Wagner, Esq. 5445 La Sierra Dr. Suite 440 Dallas, Texas 75231 For Nat'l Pharmacy Marketing & Jeffrey M. Embleton, Esq. Wrights: David B. Cathcart, Esq. Mansour, Gavin, Gerlack, Manos 55 Public Square Suite 2150 Cleveland, Ohio 44113-1994 -3- MICHAEL J. CORRIGAN, J.: Blue Cross and Blue Shield of Minnesota, et al., defendants- appellants, appeal from the judgment of the Cuyahoga County Court of Common Pleas, Case No. CV-299322, in which the trial court denied defendants-appellants' motions to stay litigation and compel arbitration. Defendants-appellants assign one error for this court's review. Defendants-appellants' appeal is not well taken. On November 30, 1995, Ambulatory Care Review Services, Inc. ( ACRS ), and FFI Rx Managed Care, ( FFI ), plaintiffs-appellees, filed suit against Blue Cross and Blue Shield of Minnesota, Inc. ( BCBSM ), Pharmacy Gold, Inc. ( PGI ), Debra Dullinger and William Jenison personally and in their corporate capacity at PGI, The Inteq Group, Inc. ( Inteq ), National Pharmacy Marketing Corporation ( NPMC ) and James and Richard Wright in their corporate capacity at NPMC, alleging fraud, negligent misrepresentation, and deceptive trade practices against all defendants; defamation against BCBSM and PGI; promissory estoppel, breach of contract and a violation of Ohio's pattern of corrupt activities act as set forth in R.C. 2923.31 against BCBSM, PGI, Inteq and NPMC. These claims arose out of the administration of a pharmaceutical rebate program designated as R.Ph.'s Choice program. The program allegedly provided cash rebates to pharmacies from drug manufacturersfor the sale of certain prescription drugs purchased by cash customers who were without insurance or other third-party -4- payor coverage for prescription drugs. Plaintiffs-appellees maintain that this program differs from third-party payor pharmaceutical rebate programs where manufacturers provide rebates to pharmacies for prescription drugs purchased by customers who have prescription drug coverage through their medical insurance carrier. Plaintiffs-appellees' complaint alleged that a contract had been executed whereby PGI was responsible for obtaining rebates from the manufacturer, a percentage of which were to be paid to pharmacies whose cash customers participated in the R.Ph.'s Choice program. The rebates in question were to be obtained through master contracts that PGI had already entered into with various prescription drug manufacturers. Inteq contracted with PGI whereby PGI agreed to provide a list of prescription drugs for which rebates were being offered. Essentially, under their agreement, Inteq was a claims processor for PGI. Inteq, in turn, entered into a contract with NPMC whereby NPMC agreed to market and administer the R.Ph.'s Choice program. Plaintiffs-appellees were retained by NPMC to market the R.Ph.'s Choice program to retail chain pharmacies. Plaintiffs-appellees maintained that they were not financially compensated as called for under the terms of the contract. Plaintiffs-appellees maintained further that defendants- appellants materially misrepresented both the scope of the program as well as the actual amount of the rebates offered. Initially, PGI, NPMC and James and Richard Wright filed answers and counterclaims against plaintiffs-appellees. The -5- answers asserted a number of affirmative defenses including one alleging that the underlying case must be sent to arbitration pursuant to the terms of the various contracts between the parties. The remaining defendants; BCBSM, Inteq, William Jenison and Debra Dullinger filed motions to dismiss the action on March 29, 1996 for lack of personal jurisdiction. Extensive motion practice and discovery followed. On October 2, 1996, the trial court overruled defendants' motions to dismiss the action on jurisdictional grounds. On September 24, 1996, plaintiffs-appellees filed their first amended complaint. The defendants who had not yet answered filed their respective answers and counterclaims in a timely manner. All defendants asserted a number of affirmative defenses in their respective answers including the enforcement of written arbitration clauses contained within the underlying contracts.1 On April 11, 1997, the trial court established a briefing schedule for motions to compel arbitration. On May 13, 1997, PGI, William Jenison and Debra Dullinger moved to stay the litigation and compel arbitration pursuant to the terms of the underlying contract and R.C. 2711.02. All remaining defendants joined in the motion to stay litigation and compel arbitration pursuant to R.C. 2711.02. The motion was fully briefed by the parties. On September 1BCBSM set forth its affirmative defense in the following manner; Plaintiffs' claims for breach of contract and all related claims are barred by the terms of Plaintiffs' contract with NPMC. -6- 24, 1997, the trial court denied defendants' motion to stay litigation and compel arbitration. PGI, William Jenison and Debra Dullinger filed their timely notice of appeal on October 23, 1997. Inteq filed its timely notice of appeal on October 24, 1997. BCBSM filed its timely notice of appeal on October 27, 1997. On November 24, 1997, this court consolidated all three cases for purposes of appeal. Defendants-appellants' sole assignment of error on appeal states: THE TRIAL COURT ERRED IN REFUSING TO COMPEL ARBITRATION AND STAY LITIGATION IN THIS CASE SINCE THE PARTIES' AGREEMENTS ALL REQUIRED ARBITRATION OF THIS DISPUTE. Defendants-appellants argue, through their sole assignment of error, that the trial court erred in failing to grant their motion to stay litigation and compel arbitration of the underlying dispute pursuant to R.C. 2711.02 and the arbitration clauses contained in the underlying contracts between the parties. It is defendants- appellants' position that Ohio law requires the enforcement of arbitration clauses. Defendants-appellants maintain that they specifically raised arbitration as an affirmative defense in their answers pursuant to R.C. 2711.02 and therefore did not waive the contractual right to arbitration nor did they cause an unnecessary delay in the proceedings by failing to file their respective motions to compel arbitration until eighteen months after the filing of the original complaint. Defendants-appellants argue any delay was precipitated by jurisdictional issues which had to be determined prior to any further rulings on substantive issues by -7- the trial court. Defendants-appellants maintain further that the contract between NPMC and ACRS contained an arbitration clause that is binding upon all claims brought under this action by both ACRS as well as FFI, particularly in light of the chain of contracts between the respective parties involved.2 It is defendants- appellants' position that plaintiffs-appellees admitted this fact in their brief in opposition to defendants-appellants' motion to dismiss for lack of personal jurisdiction and are therefore bound by their prior admission. Plaintiffs-appellees argue that defendants-appellants effectively waived their right to arbitrate the underlying disputes through an unnecessary delay in filing the motion to stay litigation and compel arbitration. Even if defendants-appellants did not waive their right to arbitrate, it is plaintiffs-appellees' position that the contract that forms the basis for their complaint is based solely upon the pharmaceutical rebate program designated as R.Ph.'s Choice, a cash rebate program, which was not covered by any written arbitration clause. Accordingly, defendants-appellants cannot rely upon a chain of contracts dealing with other pharmaceutical rebate programs to compel arbitration in this specific matter. Plaintiffs-appellees contend further that, an initial review of the record demonstrates defendants-appellants failed to present admissible evidence in support of the motion to 2Defendants-appellants maintain that FFI is, in reality, a subcontractor for ACRS as both entities are wholly owned subsidiaries of a parent company known as First Florida InternationalHoldings, Inc. Therefore the terms of the ACRS-NPMC contract should apply to FFI as well. -8- stay in that only unauthenticated copies of contracts containing the alleged arbitration agreements between the parties were attached as exhibits to the motions. Plaintiffs-appellees argue that these documents do not constitute sufficient evidence of the existence of a contract to compel arbitration of the disputes at issue. Lastly, plaintiffs-appellees maintain that FFI cannot be compelled to arbitrate any claims against defendants-appellants since it never entered into any written agreement whatsoever with any of the defendants-appellants in this case. R.C. 2711.02 provides that the trial court may stay an action and refer that action to arbitration once the court has been *** satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration ***. In applying this statute, appellate courts have indicated that the determination as to whether an issue can be referred to arbitration turns upon the specific language in the written arbitration provision to which the parties agreed. Painsville Twp. Local Schoool Dist. v. Natl. Energy Mgt. Inst. (Aug. 23, 1996), Lake App. No. 96-L-128, unreported; Cirino v. Christian & Timbers, Inc. (Nov. 27, 1996), Cuyahoga App. No. 70564, unreported. It is well established that a written arbitration clause in a contract providing for dispute resolution should not be denied effect unless it may be said with positive assurance that the clause in question is not susceptible to an interpretation that covers the subject matter of the underlying dispute. A strong presumption exists in favor of the validity of a written -9- arbitration clause. St. Vincent Charity Hosp. v. URS Consultants, Inc. (1996), 111 Ohio App.3d 791, quoting Didado v. Lamson & Sessions Co. (1982), 81 Ohio App.3d 302, 304. This holding is predicated upon the fact that public policy favors the resolution of disputes by arbitration. Windham Foods, Inc. v. Fleming Companies, Inc. (May 2, 1997), Trumbull App. No. 96-T-5515, unreported. However, as a general rule, a party to an action cannot be ordered to submit a claim to arbitration if that party has not agreed to arbitrate the dispute in writing. AT & T Technologies, Inc. v. Communications Workers of America (1986), 475 U.S. 643, 648. The issue of whether a controversy is arbitrable under the provisions of a contract, is a question for the court to decide upon examination of the contract. Sexton v. Kidder Peabody & Co., Inc., et al. (March 7, 1996), Cuyahoga App. No. 69093, unrepoted, citing Divine Constr. Co. v. Ohio-American Water Co. (1991), 75 Ohio App.3d 311. A court will enforce an arbitration clause unless it is firmly convinced that the clause is inapplicable to the underlying dispute or issue in question. Sexton, supra, citing Ervin v. American Funding Corp. (1993), 89 Ohio App.3d 519. As with all other contractual rights, the right to arbitrate is subject to waiver. See R.C. 2711.02 and 2711.03. See, also, Rock v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1992), 79 Ohio App.3d 126, 606 N.E.2d 1054; Standard Roofing Co. v. Construction Co. (1977), 54 Ohio App.2d 153, 376 N.E.2d 610. Waiver typically requires knowledge of the right to arbitrate and actions -10- inconsistent with that right that usually involve delay and prejudice to the adverse party. Jones v. Honchell (1984), 14 Ohio App.3d 120, 122, 470 N.E.2d 219; Phillips v. Lee Homes, Inc. (Feb. 17, 1994), Cuyahoga App. No. 64353, unreported. A court may also examine the motives of the party that has allegedly waived its right to arbitrate. Manos v. Vizar (July 9, 1997), Medina App. No. 96 CA 2581-M, unreported. Therefore the question of waiver is usually a fact-driven issue and an appellate court will not reverse a finding of waiver absent a showing of an abuse of discretion. Phillips, supra; R.C. 2711.03. An abuse of discretion connotes more than an error in law or judgment but implies that the trial court's attitude was unreasonable, arbitrary or unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219. In the case sub judice, a review of the record demonstrates that the trial court properly overruled defendants-appellants' motion to stay litigation and compel arbitration. Initially, it must be noted that defendants-appellants did not waive their right to request arbitration of the underlying dispute. Although a significant amount of time passed between the filing of the original complaint and the filing of the subject motions to compel arbitration, that delay was necessitated by jurisdictional questions which had to be determined prior to any subsequent rulings on other issues. If the trial court determined that it did not possess the requisite jurisdiction over the case, any additional rulings would have been without effect. Clearly, the delay in question was warranted by the facts of this case and -11- defendants-appellants cannot be said to have waived their right to request arbitration of the underlying dispute. Mills v. Cleveland Motors, Inc. (1980), 69 Ohio App.2d 111, 430 N.E.2d 965. Contrary to plaintiffs-appellees' assertion, this matter is significantly different from this court's recent decision in Strattan v. Odyssey Homes, Inc. (Sept. 17, 1998), Cuyahoga App. No. 74068, unreported. In Strattan, the issue on appeal was whether the failure to file a motion to stay litigation and compel arbitration was rendered moot as a result of the filing of a voluntary dismissal of the action followed by a subsequent re-filing of the complaint. Clearly, Strattan is inapplicable to the facts of the case at bar. However, a further review of the record demonstrates that, although defendants-appellants did not waive their right to request arbitration in this matter, defendants-appellants failed to submit sufficient evidentiary material in support of their motion to stay litigation and compel arbitration. Plaintiffs-appellees' complaint specifically refers to an agreement to market R.Ph.'s Choice program, a pharmaceutical cash rebate program. The complaint alleges further that this was an oral agreement between the parties. While defendants-appellants have attached excerpts of purported contracts between the relevant parties containing written arbitration agreements, these documents do not rise to the level of authenticated evidence necessary to compel arbitration. At the very least, defendants-appellants must produce authenticated copies of the entire contract upon which their motion to compel arbitration was based in order to provide the trial court with -12- sufficient evidence of the existence of a written agreement to arbitrate the disputed claims. Without such evidence, the trial court was left with no alternative but to deny defendants- appellants' motions and proceed with litigation. See Sexton, supra; Divine Constr. Co., supra. In addition, the fact that ACRS and NPMC possibly entered into a written contract for marketing a different pharmaceutical rebate program than the one designated in the complaint does not lead one to conclude, as defendants-appellants maintain, that the agreement applies to the underlying disputes in the subject matter. The fact remains that defendants-appellants failed to produce an authenticated copy of a written arbitration clause that was applicable to the R.Ph.'s Choice program which is the subject of the plaintiffs-appellees' complaint. The possible existence of other contracts has no bearing on the arbitration of this dispute. A party cannot be forced to submit to arbitration a dispute which it has not agreed to submit. AT & T Technologies, supra. Similarly, defendants-appellants failed to adequately substantiate their allegation through substantiated evidentiary material that FFI and ACRS were, for all practical purposes, the same entity. Without admissible evidence to the contrary, the trial court could not find that FFI, which did not enter into any contract whatsoever with any of the defendants-appellants, was bound by the terms of a written arbitration clause in a separate contract. Harmon, supra; Kline v. Oak Ridge Builders, Inc. (1995), 102 Ohio App.3d 63, 656 N.E.2d 992. -13- Finally, defendants-appellants' contention that plaintiffs- appellees have admitted that their complaint was based upon a written agreement between ACRS and NPMC is unsupported by the trial court record in this matter. Plaintiffs-appellees did not allege that their complaint was based upon any written agreement between the parties. Rather, plaintiffs-appellees maintained that their complaint was based upon the oral agreement regarding the pharmaceutical cash rebate program designated as R.Ph.'s Choice for which no written arbitration agreement was produced. For the foregoing reasons, defendants-appellants' sole assignment of error is not well taken. Judgment of the trial court is hereby affirmed. -14- It is ordered that appellees recover of appellants costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Cuyahoga County Common Pleas 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. KENNETH A. ROCCO, P.J., AND JAMES D. SWEENEY, J., CONCUR. JUDGE MICHAEL J. CORRIGAN N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc. App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E), unless a motion for reconsideration with supporting brief, per App.R. 26(A) is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .