Felix v. Ganley Chevrolet, Inc. (Slip Opinion) , 145 Ohio St. 3d 329 ( 2015 )

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Felix v. Ganley Chevrolet, Inc., Slip Opinion No. 2015-Ohio-3430.]
NOTICE
This slip opinion is subject to formal revision before it is published in
an advance sheet of the Ohio Official Reports. Readers are requested
to promptly notify the Reporter of Decisions, Supreme Court of Ohio,
65 South Front Street, Columbus, Ohio 43215, of any typographical or
other formal errors in the opinion, in order that corrections may be
made before the opinion is published.
SLIP OPINION NO. 2015-OHIO-3430
FELIX ET AL., APPELLEES, v. GANLEY CHEVROLET, INC., ET AL., APPELLANTS.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Felix v. Ganley Chevrolet, Inc., Slip Opinion
No. 2015-Ohio-3430.]
Class actions—Ohio Consumer Sales Practices Act—R.C. Chapter 1345—All
members of a plaintiff class alleging violations of the Ohio Consumer
Sales Practices Act must have suffered injury as a result of the conduct
challenged in a suit under the act.
(No. 2013-1746—Submitted September 24, 2014—Decided August 27, 2015.)
APPEAL from the Court of Appeals for Cuyahoga County,
No. 098985, 2013-Ohio-3523.
_____________________
O’CONNOR, C.J.
{¶ 1} In this appeal, we address whether all members of a plaintiff class
alleging violations of the Ohio Consumer Sales Practices Act (“OCSPA”), R.C.
Chapter 1345, must have suffered injuries as a result of the conduct challenged in
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the suit. We hold that they must and therefore reverse the judgment of the court
of appeals.
RELEVANT BACKGROUND
{¶ 2} This appeal arises from two related class-action lawsuits that were
first brought by appellees, Jeffrey and Stacy Felix, nearly 15 years ago. In each
suit, the Felixes sought damages from appellants, Ganley Chevrolet, Inc., and
Ganley Management Company (collectively, “Ganley”), as well as declaratory
and injunctive relief. Although the issues before us are discrete legal ones, we
summarize the history of the case for context.
The Transaction
{¶ 3} The Felixes contend that they went to Ganley in March 2001 to
purchase a 2000 Chevy Blazer. They allege that Ganley used a zero-percent-
interest financing offer to lure Jeffrey Felix to sign a contract to purchase the
vehicle.
{¶ 4} The purchase contract provided that it was “not binding unless
accepted by seller and credit is approved, if applicable, by financial institution.”
The contract also contained an arbitration clause that required that “any dispute
between you and dealer (seller) will be resolved by binding arbitration.”1
{¶ 5} When the Felixes returned a few days later to sign the promissory
note and security agreement, Ganley purportedly told them that the financing
institution would approve them for financing only at 1.9 percent interest, not at
1
The arbitration clause was placed immediately after the heading “Optional Equipment:”
B. OPTIONAL EQUIPMENT Arbitration-Any dispute between you
and dealer (seller) will be resolved by binding arbitration. You give up your
right to go to court to assert your rights in this sales transaction (except for any
claim in small claims court). Your rights will be determined by a neutral
arbitrator, not a judge or jury. You are entitled to a fair hearing, but arbitration
procedures are simpler and more limited than rules applicable in court.
Arbitrator decisions are as enforceable as any court order and are subject to a
very limited review by a court. See general manager for information regarding
arbitration process.
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the zero percent interest previously represented to them. The Felixes reluctantly
agreed to the 1.9 percent rate.
{¶ 6} More than a month later, Ganley informed the Felixes that they had
not been approved for financing at the 1.9 percent interest rate. Ganley told the
Felixes that they could obtain a 9 percent interest rate with Huntington Bank; the
Felixes claim that Ganley contacted Huntington Bank without their permission.
The Felixes refused. Soon thereafter, they brought the first of two suits against
Ganley in the Cuyahoga County Common Pleas Court.
The Initial Lawsuit
{¶ 7} In their first action, which would become a class-action suit with the
Felixes as representatives of the class, the Felixes sought damages under the
OCSPA.2
{¶ 8} The first three counts of the complaint alleged the class-action
claims that are at issue here. The first count asserted that the arbitration clause
used by Ganley was unconscionable and that various practices of Ganley
pertaining to the clause violated the OCSPA. Counts two and three alleged that
Ganley had committed unfair and deceptive consumer sales practices against the
class.
{¶ 9} In their prayer for relief for the class, the Felixes sought certification
of their proposed classes of plaintiffs and defendants, an order declaring the
arbitration clause unconscionable and void, injunctive relief, “monetary damages
against Defendants, jointly and severally, where appropriate to each plaintiff,”
and reasonable attorney fees and costs. The Felixes did not specifically request
$200 in damages for each class member. Nor did they seek actual damages for
2
The original complaint was filed in 2001 as a suit by the Felixes, individually, against Ganley.
The fourth amended complaint, filed in May 2003, brought suit by the Felixes on their own behalf
and on behalf of a class. The Felixes described the class as “all consumers of vehicles from any of
the Ganley companies, within the two year period preceding commencement or since, who signed
a purchase agreement containing the following arbitration clause, or anything substantially similar
to it * * *.”
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each class member. They did, however, make those requests in their prayer for
relief in their individual capacities. More specifically, in their individual capacity,
they sought “three times the amount of their actual damages or two hundred
dollars ($200.00), for each unlawful act specified, whichever is greater,” punitive
damages, attorney fees and costs, and injunctive relief.
The Second Lawsuit
{¶ 10} The second lawsuit, brought several months after the first suit, is a
declaratory-judgment action. The declaratory-judgment action also became a
class-action suit.
{¶ 11} The first count of the declaratory-judgment complaint sought a
declaration that the arbitration clause is unconscionable. The second, third, and
fourth counts sought declarations that Ganley committed unfair and deceptive
consumer sales practices with respect to the arbitration clause. And count five
requested a declaration that Ganley made false statements, representations, and
disclosures of fact and defrauded customers as to the arbitration clause.
{¶ 12} Ganley moved to stay the proceedings in both suits so that
arbitration in accordance with the arbitration clause could proceed. The trial court
held a consolidated hearing on the motions and denied them without opinion.
Ganley appealed that order to the Eighth District Court of Appeals.3 Felix v.
Ganley Chevrolet, Inc., 8th Dist. Cuyahoga Nos. 86990 and 86991, 2006-Ohio-
4500, 2006 WL 2507469 (“Felix I”).
The Initial Appeal: Felix I
{¶ 13} In its appeal from the denial of the motion to stay, Ganley argued
that the trial court erred by failing to stay the proceedings pending arbitration
pursuant to R.C. 2711.02 because the purchase contract contains a clear and
conspicuous arbitration clause. The Eighth District affirmed the trial court’s
3
An order granting or denying a motion for stay pending arbitration is a final, appealable order.
R.C. 2711.02(C).
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judgment, holding that the arbitration clause was unconscionable and that there
was no valid, enforceable agreement that required the parties to arbitrate.
{¶ 14} In so doing, the appellate court recognized that R.C. 2711.02(B)
requires a trial court, upon application of a party, to stay proceedings in any action
in which the court is satisfied that an issue in the case is subject to arbitration
pursuant to a written agreement between the parties. Felix I at ¶ 12. But it also
noted that R.C. 2711.01(A) provides that a provision for arbitration “shall be
valid, irrevocable, and enforceable, except upon grounds that exist at law or in
equity for the revocation of any contract.” Id. at ¶ 15. It then turned to the
Felixes’ claims that the arbitration provision was unconscionable and concluded
that it was both procedurally and substantively unconscionable. Id. at ¶ 22-23.
{¶ 15} We declined Ganley’s request for review of that decision, Felix v.
Ganley Chevrolet, Inc., 112 Ohio St. 3d 1470, 2007-Ohio-388, 861 N.E.2d 144,
and therefore the unconscionability of the arbitration clause is not before us in this
appeal. The issues before us arose after the Eighth District remanded the cause to
the trial court.
The Remand
{¶ 16} After remand, the parties litigated for another five years.
Eventually, the trial court certified a class of plaintiffs pursuant to Civ.R. 23(B)(2)
and (B)(3) and ruled that all class members could recover damages.
{¶ 17} The putative class includes the following:
All consumers of Vehicles from any of the 25 Ganley Companies (see
Plaintiff's Chart, Exhibit A, filed August 18, 2003) within the two-year
period preceding commencement through the present date (the Class
Period), who signed a purchase agreement containing the arbitration
clause at suit or one substantially similar thereto.
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{¶ 18} The trial court held that Ganley’s inclusion of the arbitration
provision in its purchase agreements with consumers violated the OCSPA and
established a basis for classwide relief under Civ.R. 23(B)(2) and (B)(3). It then
announced that it would “issue relief to protect those class members from
prejudice” caused by Ganley’s “common course of conduct” in the use of the
arbitration clause. It noted that “[r]e-litigating a class member’s right to relief
over and over again would be a drain on the judiciary and serve no valid purpose”
and that “[f]ew if any class members would likely be able to effectively challenge
[Ganley] due to the cost of litigation.” The trial court ruled that the OCSPA at
least permitted, and perhaps required, a classwide award of damages for Ganley’s
conduct, which it described as a “significant violation of the law.” The trial court
wrote, “To allow [Ganley] to emerge from this seven-year legal battle, during
which time they continued to use the offending clause, without sanction, would
defeat the policies underlying CSPA and the rule of law” and “reward lawlessness
aimed primarily at consumers.” Citing its “discretion,” the trial court awarded
$200 per transaction to each class member.
{¶ 19} Ganley again appealed.
The Second Appeal: Felix II
{¶ 20} Before the Eighth District, Ganley argued that the trial court “erred
as a matter of law and abused its discretion in certifying, for purposes of a claim
under the [CSPA], a class of customers who signed purchase agreements that
included an arbitration provision.” (Brackets sic.) A divided panel of the
appellate court affirmed the trial court’s order certifying the class. 8th Dist.
Cuyahoga No. 98985, 2013-Ohio-3523, 2013 WL 4238945 (“Felix II”). In so
doing, it rejected Ganley’s claims that the class definition and time period were
overbroad and ambiguous, id. at ¶ 12-15, and that the Felixes had not established
the commonality, predominance, and typicality prerequisites to class certification
set forth in Civ.R. 23(B), id. at ¶ 17-36.
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{¶ 21} The appellate court rejected Ganley’s claim that certifying an “all
customers” class for the OCPSA violation was improper on the ground that the
class contained individuals who had not sustained actual damages as a result of
Ganley’s inclusion of the arbitration provision in its sales agreements. But it did
so without squarely addressing the crux of Ganley’s claim, i.e., that there was no
showing that all class members had suffered damages. Instead, the majority held
that the propriety of the trial court’s order on damages was outside the scope of
the appellate court’s scope of review because Ganley had assigned as error only
the trial court’s certification of the class. Id. at ¶ 44.
The Appeal Before Us
{¶ 22} Ganley sought this court’s discretionary review. We agreed to
address the following propositions of law:
A class action cannot be maintained on behalf of a putative class
that includes individuals who did not sustain actual harm or damage as a
result of the challenged conduct, which is a required part of the rigorous
analysis under Ohio R. Civ. P. 23; [and]
In a class action brought under the Ohio Consumer Sales
Practices Act, R.C. 1345.09(B) requires the consumers to have
sustained actual damages as a result of the challenged conduct.
See 138 Ohio St. 3d 1413, 2014-Ohio-566, 3 N.E.3d 1215.
ANALYSIS
{¶ 23} This appeal arises at the intersection of class-action suits and the
OCSPA.
{¶ 24} The procedural aspects of class-action litigation in Ohio are
controlled by Fed.R.Civ.P. 23 and Civ.R. 23, depending on whether the matter
proceeds in a federal or state court in Ohio. Here, Civ.R. 23 governs. Because
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the Ohio Rules of Civil Procedure are modeled after the Federal Rules of Civil
Procedure, federal law interpreting the federal rule is appropriate and persuasive
authority in interpreting a similar Ohio rule. Stammco, L.L.C. v. United
Telephone Co. of Ohio, 136 Ohio St. 3d 231, 2013-Ohio-3019, 944 N.E.3d 408,
¶ 18, citing Myers v. Toledo, 110 Ohio St. 3d 218, 2006-Ohio-4353, 852 N.E.2d
1176, ¶ 18, and Marks v. C.P. Chem. Co., Inc., 31 Ohio St. 3d 200, 201, 509
N.E.2d 1249 (1987).
{¶ 25} We are mindful that class-action suits are the exception to the usual
rule that litigation is conducted by and on behalf of only the individually named
parties. Comcast Corp. v. Behrend, 569 U.S. ___, 133 S. Ct. 1426, 1432, 185
L. Ed. 2d 515 (2013), citing Califano v. Yamasaki, 442 U.S. 682, 700-701, 99 S. Ct.
2545, 61 L. Ed. 2d 176 (1979). To fall within that exception, the party bringing the
class action must affirmatively demonstrate compliance with the procedural rules
governing class actions. Id., citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S.
____, 131 S. Ct. 2541, 2551-2552, 180 L. Ed. 2d 374 (2011).
{¶ 26} The United States Supreme Court has insisted that courts give
careful consideration to the class-certification process, holding that Fed.R.Civ.P.
23 is not “a mere pleading standard.” Dukes, 564 U.S. ____, 131 S.Ct. at 2551.
Rather, the party seeking class certification must affirmatively demonstrate
compliance with the rules for certification and be prepared to prove “that there are
in fact sufficiently numerous parties, common questions of law and fact, etc.”
(Emphasis sic.) Id. After Dukes, there can be no dispute that a trial court’s
rigorous analysis of the evidence often requires looking into enmeshed legal and
factual issues that are part of the merits of the plaintiff’s underlying claims. Id. at
2552. See also In re Rail Freight Fuel Surcharge Antitrust Litigation—MDL No.
1869, 725 F.3d 244, 253 (D.C.Cir.2013). In doing so, however, the trial court
may probe the underlying merits of the cause of action only for the purpose of
determining that the plaintiff has satisfied Civ.R. 23. Stammco at ¶ 40.
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{¶ 27} Because the appeal before us involves the certification of a class
for claims based on alleged violations of the OCSPA, it is necessary to set forth
briefly the relevant provisions in that statutory scheme.
{¶ 28} During the period set forth in the class action, the OCSPA provided
that a consumer was entitled to relief in an individual action by rescinding the
transaction or recovering damages. Former R.C. 1345.09(A), Am.Sub.H.B. No.
681, 137 Ohio Laws, Part II, 3219, 3226-3227. The term “damages” as used in
the OCSPA encompasses all forms of pecuniary relief, although it does include
“actual damages” and “compensatory damages.” See Whitaker v. M.T.
Automotive, Inc., 111 Ohio St. 3d 177, 2006-Ohio-5481, 855 N.E.2d 825, ¶ 14.
{¶ 29} Although the OCSPA authorized class actions, it limited the scope
of damages that were available in them. Treble and statutory damages were not
available in class-action claims brought under the OCSPA. Former R.C.
1345.09(B), 137 Ohio Laws, Part II, at 3227 (“the consumer may rescind the
transaction or recover, but not in a class action, three times the amount of his
actual damages or two hundred dollars, whichever is greater, or recover damages
or other appropriate relief in a class action under Civil Rule 23” [emphasis
added]). Instead, according to one Ohio court, the OCSPA limited the damages
available in class actions to actual damages, Washington v. Spitzer Mgt., Inc., 8th
Dist. Cuyahoga No. 81612, 2003-Ohio-1735, ¶ 33.
{¶ 30} This damage limitation is consistent with a policy determination
that while treble or statutory damages, punitive damages, and attorney fees are
available in actions under consumer-protection statutes to encourage consumers
with smaller amounts of damages to bring their claims, Whitaker at ¶ 11, citing
Parker v. I&F Insulation Co., Inc., 89 Ohio St. 3d 261, 268, 730 N.E.2d 972
(2000); see also Sovern, Private Actions Under the Deceptive Trade Practices
Acts: Reconsidering the FTC Act as Rule Model, 52 Ohio St.L.J. 437, 462 (1991),
treble statutory damages are not awarded in class actions because class-action
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lawsuits deter violations of the law by permitting the aggregation of claims. In
fact, some courts have suggested that the General Assembly limited damages for
class-action suits under the OCSPA in order to protect defendants from being held
liable for “huge damage awards.” See, e.g., Washington at ¶ 33.
{¶ 31} Plaintiffs bringing OCSPA class-action suits must allege and prove
that actual damages were proximately caused by the defendant’s conduct.
Konarzewski v. Ganley, Inc., 8th Dist. Cuyahoga No. 92623, 2009–Ohio–5827,
¶ 46 (“class action plaintiffs must prove actual damages under the CSPA”). Proof
of actual damages is required before a court may properly certify a class action.
Searles v. Germain Ford of Columbus, L.L.C., 10th Dist. Franklin No. 08AP-728,
2009-Ohio-1323, ¶ 22. See also Butler v. Sterling, Inc., 6th Cir. No. 98-3223,
2000 WL 353502, *4 (Mar. 31, 2000); Johnson v. Jos. A. Bank Clothiers, Inc.,
S.D.Ohio No. 2:13-cv-756, 2014 WL 4129576, *3-4 (Aug. 19, 2014).
{¶ 32} These requirements are consistent with the majority of decisions by
other states’ appellate courts, which also hold that plaintiffs who bring private
causes of actions under their states’ consumer-protection statutes are required to
plead and prove actual damages or injury.4 See, e.g., Meyer v. Sprint Spectrum
4
Some courts treat the failure to sufficiently allege and demonstrate damages in consumer-
protection claims as a failure to establish standing or ripeness. See, e.g., Neese v. Lithia Chrysler
Jeep of Anchorage, Inc., 210 P.3d 1213, 1219, 1222 (Alaska 2009) (holding that there was no
error in dismissing, on standing grounds, a complaint alleging violation of Alaska’s consumer-
protection law and other claims when the complaint did not allege that an injury was caused by a
car dealership); Lee v. Am. Express Travel Related Servs., 348 Fed.Appx. 205, 207, 2009 WL
2017665 (9th Cir.2009) (affirming dismissal of putative class-action claims against credit-card
issuers who allegedly violated California’s consumer-protection statute by including
unconscionable arbitration provisions in their credit-card agreements because the plaintiffs had not
been injured by the “mere inclusion” of those provisions in the agreements); Rivera v. Wyeth-
Ayerst Laboratories, 283 F.3d 315, 319-320 (5th Cir.2002) (holding that plaintiffs lacked standing
to bring complaint alleging violation of Texas’s consumer-protection law and other claims against
a drug manufacturer because the complaint did not allege injury and causation); Bowen v. First
Family Fin. Servs., Inc., 233 F.3d 1331, 1341 (11th Cir.2000) (“In light of the increasing use of
[arbitration] agreements in a wide variety of consumer transactions, as well as in the employment
context, requiring a plaintiff seeking relief from an arbitration agreement to demonstrate a real
threat that the agreement will be invoked against him helps maintain a manageable caseload for
the courts and prevents courts from becoming merely legal counselors and their adjudications
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L.P., 45 Cal. 4th 634, 642-643, 88 Cal. Rptr. 3d 859, 200 P.3d 295, (2009); Wallis
v. Ford Motor Co., 362 Ark. 317, 327-328, 208 S.W.3d 153 (2005); Tietsworth v.
Harley-Davidson, Inc., 270 Wisc.2d 146, 169, 677 N.W.2d 233 (2004); Frank v.
DaimlerChrysler Corp., 292 A.D.2d 118, 741 N.Y.S.2d 9, 12-13 (2002); Yu v.
Internatl. Business Machines Corp., 314 Ill.App.3d 892, 845-846, 732 N.E.2d
1173 (2000); Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105
Wash.2d 778, 783-784, 792, 719 P.2d 531 (1986). See also Rule v. Fort Dodge
Animal Health, Inc., 607 F.3d 250, 255 (1st Cir.2010) (suggesting that recent
decisions of the Supreme Judicial Court of Massachusetts show that an actual
injury is required to succeed on claim brought pursuant to the Massachusetts
consumer-protection statute). It is also consistent with the Supreme Court’s
instruction that trial courts are to give more careful consideration in the class-
certification process. See, e.g., Dukes, 564 U.S.____, 131 S.Ct. at 2552, 181
L. Ed. 2d 374.
{¶ 33} Plaintiffs in class-action suits must demonstrate that they can
prove, through common evidence, that all class members were in fact injured by
the defendant’s actions. In re Rail Freight Fuel Surcharge Antitrust Litigation—
MDL No. 1869, 725 F.3d at 252. Although plaintiffs at the class-certification
stage need not demonstrate through common evidence the precise amount of
damages incurred by each class member, Behrend, 569 U.S. ____, 133 S.Ct. at
1433, 185 L. Ed. 2d 515, citing Story Parchment Co. v. Patterson Parchment
merely advice. If and when [the lender] seeks to compel arbitration of a [Truth in Lending Act, 15
U.S.C. 1601 et seq.] claim, the plaintiffs can challenge the agreement as unenforceable at that
time” [footnote omitted]), citing Bd. of Trade of the City of Chicago v. Commodity Futures
Trading Comm., 704 F.2d 929, 933 (7th Cir.1983). The questions before us are framed neither as
standing nor ripeness issues, and we intimate no opinion on those questions of law, particularly
given that the United States Supreme Court is now considering, on standing grounds only,
whether a plaintiff may bring suit under the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq.,
alleging as his injury only violations of his statutory rights under the act. Robins v. Spokeo, Inc.,
742 F.3d 409 (9th Cir.2014), cert. granted, ____ S.Ct. ____, 82 U.S.L.W. 3689, 2015 WL
1879778 (Apr. 27, 2015).
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Paper Co., 282 U.S. 555, 563, 51 S. Ct. 248, 75 L. Ed. 544 (1931), they must
adduce common evidence that shows all class members suffered some injury. In
re Rail Freight Fuel Surcharge Antitrust Litigation at 252, citing Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 623–624, 117 S. Ct. 2231, 138 L. Ed. 2d 689 (1997),
and Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 815-816 (7th
Cir.2012).
{¶ 34} The inquiry into whether there is damage-in-fact is distinct from
the inquiry into actual damages: “[f]act of damage pertains to the existence of
injury, as a predicate to liability; actual damages involves the quantum of injury,
and relate to the appropriate measure of individual relief.” Martino v.
McDonald’s Sys., Inc., 86 F.R.D. 145, 147 (N.D.Ill.1980). As one federal trial
court recently explained,
When evaluating damages in the predominance inquiry, “[t]he amount of
damages is invariably an individual question and does not defeat class
action treatment.” Blackie v. Barrack, 524 F.2d 891, 905 (9th cir.1975)
(emphasis added); see also Negrete v. Allianz Life Ins. Co. of North
America, 238 F.R.D. 482 (C.D.Cal.2002). While determining the amount
of damages does not defeat the predominance inquiry, a proposed class
action requiring the court to determine individualized fact of damages
does not meet the predominance standards of Rule 23(b)(3). See In re
Live Antitrust Litigation, 247 F.R.D. 98 (C.D.Cal.2007) (recognizing the
distinction between demonstrating the fact of damages and the amount of
damages, and determining that while the latter does not preclude class
certification, the former does.); Catlin v. Washington Energy Co., 791
F.2d 1343, 1350 (9th Cir.1986) (“[T]he requirement that plaintiff prove
‘both the fact of damage and the amount of damage * * * are two separate
proofs.’ ”)
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Gonzales v. Comcast Corp., E.D.Cal. No. 10–cv–01010–LJO–BAM, 2012 WL
10621, *18 (Jan. 3, 2012).
{¶ 35} If the class plaintiff fails to establish that all of the class members
were damaged (notwithstanding questions regarding the individual damages
calculations for each class members), there is no showing of predominance under
Civ.R. 23(b)(3). See Behrend, 569 U.S. ___, 133 S.Ct. at 1432; see also Cullen v.
State Farm Mut. Auto. Ins. Co., 137 Ohio St. 3d 373, 2013-Ohio-4733, 999 N.E.3d
614, ¶ 48. Indeed, a key purpose of the predominance requirement is to test
whether the proposed class is sufficiently cohesive to warrant adjudication by
representation. Amchem Prods. at 623.
{¶ 36} “Perhaps the most basic requirement to bringing a lawsuit is that
the plaintiff suffer some injury. Apart from a showing of wrongful conduct and
causation, proof of actual harm to the plaintiff has been an indispensable part of
civil actions.” Schwartz & Silverman, Common Sense Construction of Consumer
Protection Acts, 54 U.Kan.L.Rev. 1, 50 (2005). We agree, and we hold that all
members of a class in class action litigation alleging violations of the OCSPA
must have suffered injury as a result of the conduct challenged in the suit.
{¶ 37} Here, the class, as certified, fails because there is no showing that
all class members suffered an injury in fact. The broadly defined class
encompasses consumers who purchased a vehicle at Ganley through a purchase
contract that contained the unconscionable arbitration provision. But there is
absolutely no showing that all of the consumers who purchased vehicles through a
contract with the offensive arbitration provision were injured by it or suffered any
damages.
{¶ 38} The trial court’s holding that it could award $200 to each member
of the class as a matter of the trial court’s discretion is based on a fiction. There is
no authority in the statutory scheme or in our precedent to support a damages
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award to a class member in class action litigation arising from the OCSPA absent
a showing that the class member was injured and sustained damages as a result of
the defendant’s conduct.
{¶ 39} To the extent that the Felixes contend that they and other class
members are entitled to statutory damages as class members because R.C.
1345.09 does not limit the term “damages” to “actual damages,” they are
mistaken. That conclusion ignores the General Assembly’s clear intent, expressed
in the statute’s language, to distinguish between damages available “in an
individual action,” former R.C. 1345.09(A), 137 Ohio Laws, Part II, at 3227, “but
not in a class action,” former R.C. 1345.09(B), id.
{¶ 40} Nor is our review of the question of class members’ damages, or
lack thereof, foreclosed for want of a final, appealable order, as the Felixes
contend. The certification of the putative class is before us, and as the dissenting
judge in the court of appeals recognized, “the CSPA’s damages limitation impacts
not only the damages that may ultimately be recovered by a properly certified
class but whether a putative class may be properly certified as a Civ. R. 23(B)(3)
CSPA class in the first instance.” Felix II, 2013-Ohio-3523, ¶ 72 (Rocco, J.,
dissenting).
{¶ 41} Because the class certified in this case includes plaintiffs whose
damages are, at best, inchoate, the class as certified is inconsistent with former
R.C. 1345.09(B), 137 Ohio Laws, Part II, at 3227, and Civ.R. 23. See Stammco,
L.L.C., 136 Ohio St. 3d 231, 2013-Ohio-3019, 994 N.E.2d 408, ¶ 53, quoting
Messner, 669 F.3d at 824 (“ ‘If * * * a class is defined so broadly as to include a
great number of members who for some reason could not have been harmed by
the defendant’s allegedly unlawful conduct, the class is defined too broadly to
permit certification’ ”). Although trial judges enjoy broad discretion in
determining whether a class can be certified, that discretion is not unlimited,
particularly when, as here, the trial judge completely misconstrues the letter and
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spirit of the law. Howland v. Purdue Pharma L.P., 104 Ohio St. 3d 584, 2004-
Ohio-6552, 821 N.E.2d 141, ¶ 25.
{¶ 42} Accordingly, we vacate the trial court’s order certifying the class
and remand the cause to the trial court for proceedings consistent with this
opinion’s guidance on the necessity of actual damages in class-action litigation
based on the OCSPA. See Warner v. Waste Mgt., Inc., 36 Ohio St. 3d 91, 99, 521
N.E.2d 1091 (1988). Accord Stammco, L.L.C., 125 Ohio St. 3d 91, 2010-Ohio-
1042, 926 N.E.2d 292, ¶ 12, citing Marks v. C.P. Chem. Co., Inc., 31 Ohio St. 3d
200, 201, 509 N.E.2d 1249 (1987) (even when an appellate court finds that the
trial court abused its discretion in crafting a class, the appellate court should not
proceed to formulate the class or issue itself).
CONCLUSION
{¶ 43} We reverse the judgment of the Eighth District Court of Appeals,
and we remand the cause to the trial court for further proceedings consistent with
our opinion.
Judgment reversed
and cause remanded.
PFEIFER, O’DONNELL, LANZINGER, KENNEDY, and FRENCH, JJ., concur.
O’NEILL, J., dissents.
_____________________
O’NEILL, J., dissenting.
{¶ 44} Respectfully, I dissent.
{¶ 45} I believe the majority blurs the line between maintaining a class
action and meeting the burden of proof in a class action that alleges violations of
the Ohio Consumer Sales Practices Act (“OCSPA”), R.C. Chapter 1345. The
majority distorts the distinction between the inquiry authorized by Civ.R.
23(B)(3) and the fundamental burden on all tort plaintiffs to prove damages. I
write to express my concern that this confusion will fundamentally affect the
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class-action practice in Ohio. And that would be a terrible outcome, for class
actions do indeed provide a vital protection for all citizens of Ohio.
{¶ 46} The majority holds that certifying a class in this case requires
showing actual damages, but it fails to state whether this is a requirement under
the OCSPA that is independent of the requirements laid out in Civ.R. 23. Instead,
this court fuses R.C. 1345.09(B) and the Fed.R.Civ.P. 23(B)(3) predominance
principles set forth in Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ___, ___, 131
S. Ct. 2541, 2551, 180 L. Ed. 2d 374 (2011). The majority concludes that the class
could not be certified, because appellees here had not shown that all the class
members suffered an injury in fact.
{¶ 47} I agree with the majority that Dukes “requires looking into
enmeshed legal and factual issues that are part of the merits of the plaintiff’s
underlying claims,” but “only for the purpose of determining that the plaintiff has
satisfied Civ.R. 23.” Majority opinion at ¶ 26. Dukes recognized the “necessity
of touching aspects of the merits” in order to decide the very preliminary issue of
class certification. Dukes at 2552; Civ.R. 23(C)(1) (“As soon as practicable after
the commencement of an action brought as a class action, the court shall
determine by order whether it is to be so maintained” [emphasis added]). The
majority applies these principles but then elevates the preliminary inquiry into a
full-blown examination of whether damages have been proved. This is simply not
required in a preliminary inquiry under Civ.R. 23(B)(3). In effect, the majority
touches on the merits in order to decide the merits at the class-certification phase.
Under the rule announced today by the court, class-action plaintiffs will have to
prove their case before they are given the opportunity to prove their case.
{¶ 48} The predominance inquiry under Civ.R. 23(B)(3) requires that
plaintiffs show that there are “questions of law or fact that are common to the
class.” (Emphasis added.) Stammco, L.L.C. v. United Tel. Co. of Ohio, 136 Ohio
St.3d 231, 2013-Ohio-3019, 944 N.E.3d 408, ¶ 19. Plaintiffs do not need to show
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up with answers to those questions when they are seeking class certification.
Indeed, the United States Supreme Court clarified the preliminary nature of class
certification in the post-Dukes era in Amgen, Inc., v. Connecticut Retirement
Plans & Trust Funds, ___ U.S. ___, 133 S. Ct. 1184, 185 L. Ed. 2d 308 (2013).
The court considered whether class-action plaintiffs had to prove an element of
their claim as a prerequisite to class certification: “[Fed.R.Civ.P.] 23(b)(3)
requires a showing that questions common to the class predominate, not that those
questions will be answered, on the merits, in favor of the class.” (Emphasis sic.)
Id. at 1191. The alternative, requiring the plaintiffs to “establish that [they] will
win the fray,” would “put the cart before the horse.” Id. Whether the plaintiffs
can or have met their burden of proof is a question appropriately relegated to a
later phase of litigation—especially with regard to the element of damages. Id. at
1197 (“[An alleged failure of proof as to an element of the plaintiffs' cause of
action] is properly addressed at trial or in a ruling on a summary-judgment
motion. The allegation should not be resolved in deciding whether to certify a
proposed class”). Under the rule announced today by the majority, from this
point forward, courts in Ohio could ignore the guidance of the United States
Supreme Court and might require putative class-action plaintiffs to affirmatively
prove liability or causation prior to certification of a class. That is nonsense.
{¶ 49} I do not believe that the trial court abused its discretion in
determining that appellees met their burden under Civ.R. 23. This case is similar
to Amgen, not Dukes. In Amgen, the putative-class plaintiffs alleged that Amgen,
Inc., had made misrepresentations regarding its flagship drugs that caused an
artificial inflation of Amgen’s stock. Amgen at 1195-1196. Amgen argued that
for the class claim to predominate over individual claims, the plaintiffs had to
prove that the misrepresentation was material. See Amgen at 1191, 1195. The
court observed that the question of materiality would be an objective one,
applicable to the entire class of buyers. Amgen at 1196. Therefore, there was no
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risk that a failure of proof on the issue would require consideration of
individualized questions, rather than questions common to the class, about
reliance on the misrepresentation. Amgen at 1196. Rather, failure of proof on
that element would be a “ ‘fatal similarity’ ” that would sink the entire case at a
later stage. Amgen at 1197, quoting Nagareda, Class Certification in the Age of
Aggregate Proof, 84 N.Y.U.L.Rev. 97, 107 (2009).
{¶ 50} In Dukes, the court had to wade into the merits in order to
determine whether there was a common policy of discrimination used by all of the
thousands of supervisors responsible for each of the 1.5 million putative-class
members. Dukes, ___ at ___, 131 S.Ct. at 2555-2556, 180 L. Ed. 2d 374. The
court’s limited inquiry into the merits clarified that factual questions about
discriminatory personnel practices would differ at each Wal-Mart store, and thus
it was proper not to certify a class. Dukes at 2553-2555. That is the type of case
that fails for an inadequate showing of predominance under Civ.R. 23(B)(3).
{¶ 51} Like the plaintiffs in Amgen, however, appellants, Ganley
Chevrolet, Inc., and Ganley Management Company (collectively, “Ganley”),
allegedly used unconscionable arbitration terms in contracts with the putative-
class members. The legal issue—whether use of an unconscionable arbitration
term is a violation of the OCSPA—is overwhelmingly and obviously common to
the class members because every single class member’s claim would be won or
lost on the answer to that question. Appellees did not fail to show a class for
whom common questions of law or fact predominate over any individual
questions; every member of the class could lose on the question of damages at the
same time. See Cope v. Metro. Life Ins. Co., 82 Ohio St. 3d 426, 429-430, 696
N.E.2d 1001 (1998) (“It is now well established that ‘a claim will meet the
predominance requirement when there exists generalized evidence which proves
or disproves an element on a simultaneous, class-wide basis, since such proof
obviates the need to examine each class member’s individual position.’
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January Term, 2015
Lockwood Motors, Inc. v. Gen. Motors Corp. (D.Minn.1995), 162 F.R.D. 569,
580”).
{¶ 52} This court also granted jurisdiction over Ganley’s second
proposition of law: “In a class action brought under the Ohio Consumer Sales
Practices Act, R.C. 1345.09(B) requires the consumers to have sustained actual
damages as a result of the challenged conduct.” I can readily agree with this
proposition as it correctly states Ohio law. Under R.C. 1345.09(B), plaintiffs may
“recover damages or other appropriate relief in a class action under Civil Rule 23,
as amended.” (Emphasis added.)
{¶ 53} The last sentence of R.C. 1345.09(B) has nothing to do with class
certification under Civ.R. 23. “Recover” means “to obtain (relief) by judgment or
other legal process.” Black’s Law Dictionary 1466 (10th Ed.2014). Recovery is
an aspect of the very last event in a lawsuit—the judgment. But under Civ.R.
23(C)(1), class certification is one of the very first events in a lawsuit. It is hard
to find any practical or conceptual relationship between R.C. 1345.09(B) and
Civ.R. 23, beyond that the former refers to the latter without modifying it. To the
extent that this court’s past opinions can be read to hold otherwise, it was as
wrong then as it is now. See Marrone v. Phillip Morris USA, Inc., 110 Ohio St. 3d
5, 2006-Ohio-2869, 850 N.E.2d 31, syllabus.5 Even in Marrone, we were able to
carefully distinguish the requirements of the OCSPA from those of Civ.R. 23.
Marrone at ¶ 8 (“this opinion does not address whether the requirements of Civ.R.
5
In the order that was appealed, the trial court addressed the requirement found in Marrone that a
defendant must have sufficient notice that its conduct was deceptive and found that the
requirement had been met because Ohio Adm.Code 109:4-3-12(B)(22) described the provision
used by Ganley as deceptive. The trial court ably resolved a vague point of our holding in
Williams v. Spitzer Autoworld Canton, L.L.C., which held that Ohio Adm.Code 109:4-3-12(B)(22)
was unconstitutional “[t]o the extent that [the rule] conflicts with the parol evidence rule * * * and
allows parol evidence contradicting the final written contract.” 122 Ohio St. 3d 546, 2009-Ohio-
3554, 913 N.E.2d 410, paragraph one of the syllabus. With no parol-evidence issue presented, and
with a number of common pleas court judgments published in the attorney general’s public-
information file, the trial court did not abuse its discretion by finding that the Marrone
requirement was met.
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23 were met. We address only the narrow issue of whether defendant had
sufficient notice for purposes of R.C. 1345.09(B) that its alleged conduct was
deceptive”). The majority writes additional language into the Revised Code to
state that the OCSPA requires proof of damages as a prerequisite of class
certification under Civ.R. 23(B)(3). This is an inquiry that should be resolved at
the trial-court level as the case progresses.
{¶ 54} The majority points to less-than-helpful cases to support muddling
the class-certification standard under Civ.R. 23(B)(3) with an actual-damages
requirement. See, e.g., Butler v. Sterling, Inc., 6th Cir. No. 98-3223, 2000 WL
353502, *3 (Mar. 31, 2000) (class claims were brought under the Truth-in-
Lending Act, but the trial court had disposed of the plaintiff’s OCSPA claim on
summary judgment before denying class certification); Johnson v. Jos. A. Bank
Clothiers, Inc., S.D.Ohio No. 2:13-cv-756, 2014 WL 4129576, *2-8 (Aug. 19,
2014) (trial court granted motion to dismiss under Fed.R.Civ.P. 12(B)(6) based on
the heightened federal-pleadings standard set forth in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)); In re Rail
Freight Fuel Surcharge Antitrust Litigation–MDL No. 1869, 725 F.3d 244, 254-
255 (D.C.Cir.2013) (class certification order vacated and remanded based on new
case law regarding statistical modeling and because the district court failed to
rigorously analyze the class plaintiffs’ means of calculating damages—not
because there were no damages in fact); Konarzewski v. Ganley, Inc., 8th Dist.
Cuyahoga No. 92623, 2009-Ohio-5827, ¶ 49 (recognizing that a Civ.R. 23(B)(3)
inquiry is different than the inquiry under R.C. 1345.09(B)); Washington v.
Spitzer Mgt., Inc., 8th Dist. Cuyahoga No. 81612, 2003-Ohio-1735, ¶ 38-53
(making no mention of R.C. 1345.09(B) throughout the predominance inquiry).
Only the Tenth District Court of Appeals has amalgamated the requirements of
Civ.R. 23(B)(3) and R.C. 1345.09(B) in the same way as the majority in this case
does. Searles v. Germain Ford of Columbus, L.L.C., 10th Dist. Franklin No.
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January Term, 2015
08AP-728, 2009-Ohio-1323, ¶ 21-24. We are not bound by this decision, and we
should not “put the cart before the horse” by accepting its misguided logic.
Amgen, ___ U.S. at ___, 133 S.Ct. at 1191, 185 L. Ed. 2d 308.
{¶ 55} It is possible that Ganley could have prevailed in this matter by
filing a successful motion for dismissal under Civ.R. 12(B)(6), for judgment on
the pleadings under Civ.R. 12(C), or for summary judgment under Civ.R. 56.
Unlike the foregoing procedures, the inquiries required by Civ.R. 23 should not
determine the merits of a claim.
{¶ 56} As a final matter, I do not believe that answering the propositions
of law before us would have completely resolved this matter. That is to say, there
may have been other good reasons for reversal. Although appellees properly
proposed a class, it seems plainly erroneous that the trial court summarily handed
out “discretionary damages” immediately upon certifying the class. Ganley asked
this court to consider issues surrounding that mistake in their memorandum in
support of jurisdiction. I believe it was unwise to accept jurisdiction on the class-
action issue without accepting jurisdiction over the entire matter. The majority,
which clearly quarrels with an award of damages that should be irrelevant to the
issue before the court, now does actual damage to Civ.R. 23 in order to make its
point.
{¶ 57} Class certification is, and should remain, an issue distinct from the
resolution of the merits. Therefore, I dissent.
_____________________
Ulmer & Berne, L.L.P., Joseph A. Castrodale, and David D. Yeagley; and
A. Steven Dever Co., L.P.A., and A. Steven Dever, for appellants.
Zipkin Whiting Co., L.P.A., and Lewis A. Zipkin; and Law Offices of
Mark Schlachet and Mark Schlachet, for appellees.
Shook, Hardy & Bacon, L.L.P., Victor E. Schwartz, and Cary Silverman,
pro hac vice, urging reversal for amici curiae American Insurance Association,
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American Tort Reform Association, Chamber of Commerce of the United States
of America, NFIB Small Business Legal Center, Ohio Alliance for Civil Justice,
and Ohio Chamber of Commerce.
Stockamp & Brown, L.L.C., David A. Brown, and Deanna L. Stockamp,
urging reversal for amici curiae Greater Cleveland Automobile Dealers
Association and Ohio Automobile Dealers Association.
Bricker and Eckler, L.L.P., Drew H. Campbell, Ali I. Haque, and Kara H.
Herrnstein, urging reversal for amicus curiae Ohio Association of Civil Trial
Attorneys.
_____________________
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