Henry v. Kohl's Dept. Stores, Inc. , 2019 Ohio 2094 ( 2019 )

[Cite as Henry v. Kohl's Dept. Stores, Inc., 2019-Ohio-2094.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
LAKE COUNTY, OHIO
LAURA HENRY, : OPINION
Plaintiff-Appellant, :
CASE NO. 2018-L-113
- vs - :
KOHL’S DEPARTMENT STORES, INC., :
Defendant-Appellee. :
Civil Appeal from the Lake County Court of Common Pleas, Case No. 2013 CV 001398.
Judgment: Affirmed.
Patrick J. Perotti, Nicole T. Fiorelli, and Frank A. Bartela, Dworken & Bernstein Co.,
L.P.A., 60 South Park Place, Painesville, OH 44077 (For Plaintiff-Appellant).
Lisa Babish and Katie L. Steiner, Vorys Sater Seymour & Pease, LLP, 200 Public
Square, Suite 1400, Cleveland, OH 44114 (For Defendant-Appellee).
MARY JANE TRAPP, J.
{¶1} Appellant, Laura Henry (“Ms. Henry”), appeals the judgment of the Lake
County Court of Common Pleas granting summary judgment in favor of appellee, Kohl’s
Department Stores, Inc. At issue is whether the trial court erred in determining a Kohl’s
advertisement was not deceptive under the Consumer Sales Practices Act as a matter of
law. After a careful review of the record and pertinent law, we affirm.
Substantive History and Procedural Background
{¶2} This case involves whether an advertisement from Kohl’s Department
Stores, Inc. (“Kohl’s”) violates Ohio’s Consumer Sales Practices Act (“CSPA”).
{¶3} Kohl’s issued advertisements and marketing materials offering customers
the opportunity to earn $10 Kohl’s Cash coupons for every $50 the customers spent
during a specified “earning period” (the “Kohl’s Cash advertisement”). The recipient of
Kohl’s Cash coupons could then redeem them on purchases at Kohl’s during a specified
“redemption period.”
{¶4} Kohl’s permitted its customers to combine their Kohl’s Cash coupons with
other coupons, including percent-off coupons that Kohl’s periodically issued to its
customers. When a customer used a Kohl’s Cash coupon along with a percent-off
coupon, Kohl’s practice was to apply the Kohl’s Cash coupon first and the percent-off
coupon second.
{¶5} Kohl’s did not disclose this order of application in the Kohl’s Cash
advertisement. However, Kohl’s did disclose the order of application directly on the back
of the Kohl’s Cash coupon.
{¶6} On March 30, 2013, Ms. Henry purchased $375.89 of merchandise at a
Kohl’s store. Kohl’s then issued her a $70 Kohl’s Cash coupon, consistent with the Kohl’s
Cash advertisement offering $10 Kohl’s Cash coupons for every $50 spent.
{¶7} On April 2, 2013, Ms. Henry purchased $80.24 of merchandise at a Kohl’s
store and presented two coupons—the $70 Kohl’s Cash coupon and a 20 percent-off
coupon. Consistent with its practice, Kohl’s deducted the $70 Kohl’s Cash coupon first
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to reduce the price to $10.24. It then applied the 20 percent-off coupon to reduce the
price by an additional $2.05, for a total purchase price of $8.19 plus tax.
{¶8} If Kohl’s had applied the 20 percent-off coupon before the Kohl’s Cash
coupon, the price would have first been reduced by $16.05 to $64.19. After deducting
the $70 Kohl’s Cash coupon, Ms. Henry would have retained $5.81 in Kohl’s Cash instead
of owing additional funds.
{¶9} Ms. Henry filed a class action complaint against Kohl’s in the Lake County
Common Pleas Court alleging deceptive advertising in violation of the CSPA.
Specifically, Ms. Henry alleged Kohl’s violated Ohio Admin.Code 109:4-3-02(A)(1), an
administrative rule issued pursuant to the CSPA, by “advertis[ing] its Kohl’s Cash
promotion in written and/or printed advertising or promotional literature without stating
* * * in close proximity to the words stating the offer any * * * any reservations, limitations,
* * * or conditions” on how [Kohl’s] applies percent-off coupons to transactions by
customers using earned Kohl’s Cash.”
{¶10} Because Kohl’s did not disclose in close proximity to the Kohl’s Cash
advertisement the order in which Kohl’s Cash coupons and percent-off coupons were
applied, Ms. Henry argues Kohl’s committed a deceptive act prohibited by the CSPA.
{¶11} Following discovery, the parties filed cross motions for summary judgment.
The trial court subsequently granted Kohl’s motion for summary judgment and denied Ms.
Henry’s motion for summary judgment.
{¶12} The trial court determined there was “no evidence that [Kohl’s] practice of
applying a Kohl’s Cash coupon before applying a percentage off coupon when a
consumer stacks two coupons amounts to an unfair or deceptive practice.” Specifically,
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the trial court held: (1) the practice does not exclude, reserve, limit, modify or set forth a
condition for redeeming a Kohl’s Cash coupon, (2) the Kohl’s Cash coupon specifically
states the practice, and (3) Ms. Henry and no other consumer had a reasonable belief
that Kohl’s Cash would not be applied first, because the Kohl’s Cash coupon explicitly
stated the practice.
{¶13} Ms. Henry now appeals, asserting the following assignment of error:
{¶14} “The trial court erred by granting Defendant’s motion for summary judgment
on the Plaintiff’s Consumer Sales Practices Act claim when Defendant committed a
deceptive act by failing to disclose a material limitation on a written offer in close proximity
to the offer.”
{¶15} We affirm the trial court's granting of summary judgment to Kohl’s, albeit for
different reasons than those given by the trial court.
Standard of Review
{¶16} We review de novo a trial court's order granting summary judgment. Sabo
v. Zimmerman, 11th Dist. Ashtabula No. 2012-A-0005, 2012-Ohio-4763, ¶9. “A reviewing
court will apply the same standard a trial court is required to apply, which is to determine
whether any genuine issues of material fact exist and whether the moving party is entitled
to judgment as a matter of law.” Id.{¶17} “Since summary judgment denies the party his or her ‘day in court’ it is not
to be viewed lightly as docket control or as a ‘little trial’. The jurisprudence of summary
judgment standards has placed burdens on both the moving and the nonmoving party.
In Dresher v. Burt [75 Ohio St.3d 280 (1996)], the Supreme Court of Ohio held that the
moving party seeking summary judgment bears the initial burden of informing the trial
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court of the basis for the motion and identifying those portions of the record before the
trial court that demonstrate the absence of a genuine issue of fact on a material element
of the nonmoving party’s claim. The evidence must be in the record or the motion cannot
succeed. The moving party cannot discharge its initial burden under Civ.R. 56 simply by
making a conclusory assertion that the nonmoving party has no evidence to prove its
case but must be able to specifically point to some evidence of the type listed in Civ.R.
56(C) that affirmatively demonstrates that the nonmoving party has no evidence to
support the nonmoving party's claims.” Welch v. Ziccarelli, 11th Dist. Lake No. 2006-L-
229, 2007-Ohio-4374, ¶40.
{¶18} “If the moving party fails to satisfy its initial burden, the motion for summary
judgment must be denied. If the moving party has satisfied its initial burden, the
nonmoving party has a reciprocal burden outlined in the last sentence of Civ.R. 56(E) to
set forth specific facts showing there is a genuine issue for trial. If the nonmoving party
fails to do so, summary judgment, if appropriate shall be entered against the nonmoving
party based on the principles that have been firmly established in Ohio for quite some
time in Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 526 N.E.2d 798.” Id.Law and Analysis
{¶19} The CSPA is codified in R.C. Chapter 1345. It prohibits an “unfair or
deceptive act or practice in connection with a consumer transaction.” R.C. 1345.02(A).
The Ohio Attorney General has the express authority to define “with reasonable
specificity” acts which violate the CSPA. R.C. 1345.05(B)(2). These rules must be
“liberally construed and applied to promote their purposes and policies.” Ohio
Admin.Code 109:4-3-01(A)(1).
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The Advertisement Rule
{¶20} As previously indicated, the Kohl’s Cash advertisement offered customers
the opportunity to earn $10 Kohl’s Cash coupons for every $50 the customers spent
during a specified “earning period.”
{¶21} Ms. Henry alleges the Kohl’s Cash advertisement violated Ohio
Admin.Code 109:4-3-02(A)(1), entitled “[e]xclusions and limitations in advertisements,”
which is a substantive rule the Ohio Attorney General promulgated pursuant to its rule-
making authority (the “advertisement rule”). It states as follows:
{¶22} “It is a deceptive act or practice [1] in connection with a consumer
transaction [2] for a supplier, [3] in the sale or offering for sale of goods or services, [4] to
make any offer in written or printed advertising or promotional literature [5] without stating
clearly and conspicuously in close proximity to the words stating the offer [6] any material
exclusions, reservations, limitations, modifications, or conditions. Disclosure shall be
easily legible to anyone reading the advertising or promotional literature and shall be
sufficiently specific so as to leave no reasonable probability that the terms of the offer
might be misunderstood.” Ohio Admin.Code 109:4-3-02(A)(1).
{¶23} The undisputed evidence establishes that under the CSPA, this matter
involves a “consumer transaction,” and Kohl’s is a “supplier.”
{¶24} The CSPA administrative rules define “offer” as “any attempt to effect, or
solicitation of an offer to enter into a consumer transaction by agent, advertisement, or
otherwise.” Ohio Admin.Code 109:4-3-01(C)(3). The Kohl’s Cash advertisement was an
“offer,” since it solicited customers to offer to purchase Kohl’s merchandise and earn
Kohl’s Cash coupons. This “offer” was also contained in “written or printed advertising or
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promotional literature” that involved “the sale or offering for sale of goods.” Ohio
Admin.Code 109:4-3-02(A)(1).
{¶25} The parties dispute centers on Ms. Henry’s assertion that Kohl’s practice of
applying Kohl’s Cash coupons before percent-off coupons (the “order of application”)
constituted a “material limitation” on the offer contained in the Kohl’s Cash advertisement.
Therefore, the meaning of “material limitation” as applied to the language of the Kohl’s
Cash advertisement is dispositive.
Material Limitation
{¶26} The CSPA administrative rules do not define “material limitation.” Instead,
the advertisement rule contains several examples of the “types of material exclusions,
reservations, limitations, modifications, or conditions of offers which must be clearly
stated.” Ohio Admin.Code 109:4-3-02(A)(2).
{¶27} These examples include: (1) “additional charges” relating to motor vehicles,
clothing, floor covering, delivery, and mail orders, (2) different features or higher rates at
other outlets controlled by the suppler, (3) hour or day restrictions, (4) a requirement that
a complete set be purchased, (5) a requirement that a minimum or maximum amount be
purchased, (6) trade-ins, and (7) rebates that require repeat purchases. See Ohio
Admin.Code 109:4-3-02(A)(2)(a)-(j).
{¶28} Kohl’s contends that the advertisement rule defines “material limitations” as
“those that limit the offer to certain times, places, amounts, or products and those that
impose additional charges before the offer may be redeemed.” This appears to be Kohl’s
characterization of the above examples rather than an actual definition, so we decline to
adopt it. In addition, the examples are “intended to be illustrative only and do not limit the
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scope of any section of the Revised Code or of this or any other rule or regulation.” Ohio
Admin.Code 109:4-3-02(A)(3).
{¶29} None of the Ohio courts which have applied the advertisement rule have
specifically defined “material limitation,” but some of the cases provide additional
examples of acts that violate the rule.
{¶30} These additional examples include: (1) failing to disclose an additional
limitation on obtaining a refund for an extended warranty plan. Lewis v. DR Sawmill
Sales, Inc., 10th Dist. Franklin No. 04AP-1096, 2006-Ohio-1297, ¶17-18; (2) failing to
disclose that an advertised financing rate was “subject to approved credit.” Crow v. Fred
Martin Motor Co., 9th Dist. Summit No. 21128, 2003-Ohio-1293, ¶20, 25; (3) failing to
disclose the supplier’s ability to change terms of a sales commission program. State ex
rel. Montgomery v. Purchase Plus Buyer’s Group, Inc., 10th Dist. Franklin No. 01AP-
1073, 2002 WL 723707, *6-7 (Apr. 25, 2002); (4) a model agency’s failure to disclose that
a model must first purchase photographs, photography services, or a modeling portfolio.
Doody v. Worthington, Franklin M.C. No. M 9011CVI-37581, 1991 WL 757571, *3 (Apr.
10, 1991); (5) failure to disclose eligibility conditions on receiving a prize. State ex rel.
Fisher v. Lasson, Logan C.P. No. 92 10 0193, 1994 WL 912252, *3 (Oct. 14, 1994); and
(6) failing to disclose age restrictions, income limitations, the requirement that both
spouses attend a sales presentation, and the length of the sales promotion in the offering
of memberships in a camping resort. State ex rel. Celebrezze v. Erie Shores Resort &
Marina, Inc., Ashtabula C.P. No. 88320, 1989 WL 572075, *1 (Apr. 26, 1989).
{¶31} Ms. Henry cites one Ohio case and several federal cases for the proposition
that “cost” and/or “price” is “material.” None of these cases is relevant to our inquiry, as
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they either do not involve the CSPA, and/or the courts were determining the issue of
“materiality” in a much different setting than in this case. Further, our inquiry is not
whether “cost” and/or “price” is “material” but whether the order of application is a
“material limitation.”
{¶32} In the absence of an express definition of “material limitation,” we must
determine and apply its common usage. State ex rel. Baroni v. Colletti, 130 Ohio St.3d
208, 2011-Ohio-5351, ¶18, quoting State ex rel. Turner v. Eberlin, 117 Ohio St.3d 381,
2008-Ohio-1117, ¶14 (courts “must read undefined words and phrases [in statutes and
administrative rules] in context and construe them in accordance with rules of grammar
and common usage”).
{¶33} “The interpretation of statutes and administrative rules should follow the
principle that neither is to be construed in any way other than as the words demand.” Id.Courts “do not have the authority” to dig deeper than the plain meaning of an
unambiguous rule “under the guise of either statutory interpretation or liberal
construction.” Jacobson v. Kaforey, 149 Ohio St.3d 398, 2016-Ohio-8434, ¶8, quoting
Morgan v. Adult Parole Auth., 68 Ohio St.3d 344, 347 (1994).
{¶34} This remains true even in the context of the CSPA. See Renner v. Procter
and Gamble Co., 54 Ohio App.3d 79, 88 (4th Dist.1988) (applying plain meaning of a
CSPA administrative rule did not “contravene the liberal construction to be accorded the
rules”); Motzer Dodge Jeep Eagle, Inc. v. Ohio Atty. Gen., 95 Ohio App.3d 183, 186 (12th
Dist.1994) (the language of a CSPA administrative rule required “no construction”);
Struna v. Ohio Lottery Comm., 10th Dist. Franklin No. 03AP-787, 2004-Ohio-5576, ¶19
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(expert’s conclusions that materials were deceptive did not consider the “plain language”
of a CSPA administrative rule).
{¶35} Further, “nothing in the statutory mandate to liberally construe the CSPA
requires [a court] to adopt an unreasonable construction.” Shumaker v. Hamilton
Chevrolet, Inc., 184 Ohio App.3d 326, 2009-Ohio-5263, ¶18 (4th Dist.). In fact, courts
are directed to avoid such results. Id., quoting State ex rel. Cincinnati Post v. Cincinnati,
76 Ohio St.3d 540, 543-44 (1996) (“We must also construe statutes to avoid
unreasonable or absurd results”).
{¶36} With these principles in mind, we define “material limitation.” According to
the Merriam-Webster Dictionary, “material” means “having real importance or
great consequences.” Merriam-Webster Dictionary, https://www.merriam-
webster.com/dictionary/material (accessed May 22, 2019). “Limitation” means
“something that limits,” which is further defined as “something that bounds, restrains, or
confines.” Id., https://www.merriam-webster.com/dictionary/limitation (accessed May 22,
2019) and https://www.merriam-webster.com/dictionary/limits (accessed May 22, 2019).
In other words, the order of application must constitute an important restriction on the
offer set forth in the Kohl’s Cash advertisement.
Application of the Advertisement Rule
{¶37} Based on the above authorities, Kohl’s practice of applying Kohl’s Cash
coupons before percent-off coupons does not constitute a “material limitation” on the offer
contained in the Kohl’s Cash advertisement.
{¶38} The “offer” contained in the Kohl’s Cash advertisement was an offer to
purchase Kohl’s merchandise and earn $10 Kohl’s Cash coupons for every $50 spent.
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The order of application did not restrict Ms. Henry’s ability to purchase Kohl’s
merchandise and earn $10 Kohl’s Cash coupons for every $50 spent to any extent. In
fact, on March 30, 2013, Ms. Henry did just that—she purchased $375.89 in merchandise
and earned a $70 Kohl’s Cash coupon, consistent with the Kohl’s Cash advertisement.
{¶39} The trial court held that the order of application did not “exclude, reserve,
limit, modify or set forth a condition for redeeming a Kohl’s Cash coupon.” (Emphasis
added.) Even if we construe the Kohl’s Cash advertisement as an offer to redeem a
Kohl’s Cash coupon, the order of application did not constitute a “material limitation” on
this offer either. The order of application did not restrict Ms. Henry’s ability to redeem her
Kohl’s Cash coupon to any extent. In fact, on April 2, 2013, Ms. Henry purchased $80.24
in merchandise, produced a $70 Kohl’s Cash coupon, and received a price reduction of
$70.
{¶40} Ms. Henry argues that the order of application is a “material limitation”
because a customer “always pays more” when a Kohl’s Cash coupon is applied first.
{¶41} Ms. Henry’s total purchase price would have been less if Kohl’s had applied
the percent-off coupon before the Kohl’s Cash coupon. For instance, during the April
2nd transaction, Ms. Henry produced a 20 percent-off coupon in addition to her $70 Kohl’s
Cash coupon. Kohl’s applied the percent-off coupon second, which further reduced the
purchase price by $2.05. If Kohl’s had applied the 20 percent-off coupon first, the
purchase price would have been initially reduced by $16.05.
{¶42} However, this is a result of the order of application’s effect on the percent-
off coupon rather than any effect on the Kohl’s Cash coupon. The total dollar amount of
savings realized under a percent-off coupon is necessarily dependent on the purchase
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price. Obviously, 20 percent of $80.24 amounts to a larger dollar figure (i.e., $16.05) than
20 percent of $10.24 (i.e., $2.05). By contrast, a Kohl’s Cash coupon will always reduce
the purchase price by the total dollar amount listed on the particular Kohl’s Cash coupon,
as Ms. Henry’s April 2nd transaction illustrates.
{¶43} If anything, the order of application restricts a customer’s ability to use a
percent-off coupon. However, the percent-off coupon is not the target of Ms. Henry’s
CSPA claim.1
{¶44} Ms. Henry also argues that the order of application constitutes an “additional
charge” similar to the examples set forth above. We disagree. Ms. Henry did not have
to pay any more than advertised to earn a Kohl’s Cash coupon. In addition, Ms. Henry
did not have to spend any particular amount to redeem the Kohl’s Cash coupon. The
order of application only affected the total amount of Ms. Henry’s savings under the
percent-off coupon. Under either order of application, Ms. Henry still saved money using
both the Kohl’s Cash coupon and the percent-off coupon.
{¶45} Since the order of application did not constitute any limitation, much less a
“material limitation,” on the offer contained in the Kohl’s Cash advertisement—the offer to
purchase Kohl’s merchandise and earn a Kohl’s Cash coupon—Kohl’s did not violate the
advertisement rule by failing to disclose it in close proximity to the offer.
{¶46} Ms. Henry cannot establish a “deceptive act” in violation of the
advertisement rule as a matter of law. Accordingly, the trial court did not err in determining
that the advertisement rule did not apply.
1. The back of the 20 percent-off coupon states that “dollar-off discounts” will be applied first. The parties
dispute whether a Kohl’s Cash coupon qualifies as a “dollar-off discount,” but we need not consider this
issue since Ms. Henry’s CSPA claim involves only the Kohl’s advertisement.
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Reasonableness/Deception
{¶47} Some Ohio courts have determined that a technical violation of the CSPA
does not automatically constitute a violation of the statute. See Lester v. Wow Car Co.,
Ltd., S.D.Ohio No. 2:11-cv-850, 2014 WL 2567087, *10 (June 6, 2014).
{¶48} In such instances, courts consider “reasonableness.” See, e.g., Shumaker
supra, at ¶21-22 (despite a technical violation of an FTC rule, the court engaged in a
reasonableness inquiry to determine whether it constituted a violation of the CSPA);
Conley v. Lindsay Acura, 123 Ohio App.3d 570, 575 (10th Dist.1997) (“we decline to hold
that reasonableness plays no part whatsoever in the determination as to whether an act
amounts to deceptive, unconscionable, or unfair conduct”); McPhillips v. United States
Tennis Assn. Midwest, 11th Dist. Lake No. 2006-L-187, 2007-Ohio-3594, ¶27, quoting
Struna v. Convenient Food Mart, 160 Ohio App.3d 655, 2005-Ohio-1861, ¶15 (8th Dist.)
(“Courts shall apply a reasonableness standard in determining whether an act amounts
to deceptive, unconscionable, or unfair conduct”).
{¶49} In addition, courts have considered whether a consumer “could have been
deceived” by a supplier’s conduct. See, e.g., Ferron v. EchoStar Satellite, LLC, 410
Fed.Appx. 903, 908 (6th Cir.2010), citing Chesnut v. Progressive Cas. Ins. Co., 166 Ohio
App.3d 299, 2006-Ohio-2080, ¶24 (8th Dist.) and Crull v. Maple Park Body Shop, 36 Ohio
App.3d 153, 158 (12th Dist.1987).
{¶50} In the present case, the trial court determined that “[Ms. Henry] and no other
consumer had a reasonable belief that Kohl’s Cash would not be applied first.” Since
Ms. Henry is not able to establish a technical violation of the advertisement rule as a
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matter of statutory interpretation, it is not necessary for us to consider reasonableness or
whether Ms. Henry could have been deceived.
{¶51} Finally, although our analysis differs from that of the trial court, this court
has the power to affirm a grant of summary judgment on a different basis than that used
by the trial court. Capital One Bank (USA), NA v. Reese, 11th Dist. Portage No. 2014-P-
0034, 2015-Ohio-4023, ¶70. This is so because reviewing courts affirm and reverse
judgments, not the reasons for the judgments. Geneva v. Fende, 11th Dist. Ashtabula No.
2009-A-0023, 2009-Ohio-6380, ¶33.
{¶52} For the foregoing reasons, the trial court properly granted Kohl’s motion for
summary judgment.
{¶53} Ms. Henry’s sole assignment of error is without merit, and the judgment of
the Lake County Court of Common Pleas is affirmed.
THOMAS R. WRIGHT, P.J.,
CYNTHIA WESTCOTT RICE, J.,
concur.
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