Satterfield v. Ameritech Mobile Communications, Inc.

[Cite as Satterfield v. Ameritech Mobile Communications, Inc., 2017-Ohio-928.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 104211
CINDY SATTERFIELD, ET AL.
PLAINTIFFS-APPELLEES
vs.
AMERITECH MOBILE COMMUNICATIONS,
INC., ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-03-517318
BEFORE: Kilbane, J., Keough, A.J., and Laster Mays, J.
RELEASED AND JOURNALIZED: March 16, 2017
ATTORNEYS FOR APPELLANT
For Cincinnati SMSA Limited Partnership
James F. Lang
Matthew J. Kucharson
Calfee, Halter & Griswold, L.L.P.
1405 East Sixth Street
Cleveland, Ohio 44114
Kerin Lyn Kaminski
Karen L. Giffen
Giffen & Kaminski, L.L.C.
1300 East Ninth Street, Suite 1600
Cleveland, Ohio 44114
Hans J. Germann (pro hac vice)
Mayer Brown, L.L.P.
71 South Wacker Drive
Chicago, Illinois 60606
ATTORNEYS FOR APPELLEES
For Intermessage Communications
Randy J. Hart
Randy J. Hart, L.L.P.
3601 South Green Road, #309
Beachwood, Ohio 44122
Carla M. Tricarichi
Tricarichi & Carnes, L.L.C.
3601 Green Road, Suite 309
Beachwood, Ohio 44122
Dennis R. Rose
Royce R. Remington
Hahn Loeser & Parks, L.L.P.
200 Public Square, Suite 2800
Cleveland, Ohio 44114-2316
Thomas R. Theado
Gary, Naegele & Theado, L.L.C.
401 Broadway Avenue, Unit 104
Lorain, Ohio 44052-1745
Mark D. Griffin
Law Offices of Mark Griffin
175 Honeybelle Oval
Orange, Ohio 44022
MARY EILEEN KILBANE, J.:
{¶1} Defendant-appellant, Cincinnati SMSA Limited Partnership (operating
under the trade name Ameritech Mobile (“Ameritech”)), appeals from the trial court’s
order certifying a class action complaint brought by plaintiffs-appellees, Cindy Satterfield
(“Satterfield”), Cindy Satterfield, Inc., n.k.a. Highland Speech Services, Inc.
(“Highland”), and Intermessage Communications (“Intermessage”) (collectively referred
to as “plaintiffs”). For the reasons set forth below, we affirm.
{¶2} In December 2003, Satterfield, Highland, and Intermessage filed a class
action complaint against Ameritech, Ameritech Mobile Communications, Inc., Verizon
Wireless a.k.a. New Par, Verizon Wireless (“VAW”), L.L.C., and Airtouch Cellular
Eastern Region, L.L.C. (the last three of which are collectively referred to as
(“Verizon”)). Ameritech and Verizon are providers of wholesale and retail cellular
telecommunications services and equipment.
{¶3} Satterfield and Highland purchased cellular service from Verizon.
Intermessage was a retail customer of Ameritech owned primarily by Kevin Moore
(“Moore”) and Robert Schimmelphennig (“Schimmelphennig”). Intermessage operated
a two-way radio business and sold backup panels for alarm systems. Intermessage
purchased cellular service from Ameritech and placed it into a product that was used to
back up the alarm systems it sold. Intermessage paid Ameritech directly for the cost of
the cellular service and then passed those costs to its customers. Intermessage dissolved
in 2001 and Moore and Schimmelphennig created a new business, Wireless Associates,
Ltd. (“Wireless Associates”). Moore sold his interest in Wireless Associates to
Schimmelphennig in 2005.
{¶4} The complaint is based upon a prior ruling of the Public Utilities
Commission of Ohio (“PUCO”), finding that Ameritech and Verizon discriminated
against Cellnet, an independent reseller of cellular services, with respect to their offering
of wholesale services to Cellnet. See In the Matter of Complaint of Westside Cellular,
Inc. d.b.a. Cellnet v. New Par Cos. d.b.a. AirTouch Cellular & Cincinnati SMSA Ltd.
Partnership, PUCO Case No. 93-1758-RC-CSS, 2001 Ohio PUC LEXIS 18 (Jan. 18,
2001) (“Cellnet Order”). Cellnet alleged that Ameritech and Verizon had discriminated
against it by unlawfully providing cellular service, equipment, and features to their own
retail operations at rates, terms, and conditions more favorable than those that they made
available to Cellnet. The PUCO found that Ameritech and Verizon committed numerous
acts prohibited by R.C. Chapter 4905 (titled Public Utilities Commission — General
Powers), commencing October 18, 1993.1 Specifically, Ameritech and Verizon provided
retail cellular service to end users at rates and upon terms and conditions more favorable
than those that they made available to Cellnet.
{¶5} In their complaint, Satterfield, Highland, and Intermessage defined the
members of its class as all subscribers to the Verizon defendants’ service from 1991-1997
1 Under R.C. Chapter 4905, the PUCO requires all Ohio cellular phone
companies to sell cellular service at nondiscriminatory wholesale rates. By
increasing the number of competitors that could offer cellular service, the public
would benefit from the lower prices that such competition would naturally cause.
and all subscribers to Ameritech service from 1993-1998. Plaintiffs asserted the
following three causes of action: (1) recovery for treble damages under R.C. 4905.61;
(2) unjust enrichment; and (3) tortious acquisition of a benefit. They essentially claimed
that
[Ameritech] cheated Ohio cellular telephone consumers out of millions of
dollars by excluding competitors that charged lower rates and by locking-in
customers before other competitors could enter the market. By
manipulating the market for cellular telephone service in Ohio — practices
for which the PUCO has already found [Ameritech] liable — [Ameritech]
caused each Class Member, including [Intermessage], to pay more for
cellular telephone service than the market otherwise would have charged.
{¶6} In January 2006, the trial court dismissed plaintiffs’ causes of action for
unjust enrichment and tortious acquisition, finding that R.C. 4905.61 is the exclusive
remedy for the plaintiffs. Under R.C. 4905.61, a plaintiff may recover against a public
utility when the PUCO finds that a public utility engaged in conduct prohibited by statute
or a PUCO order and the plaintiff suffered damages as a result of that conduct.
{¶7} In September 2008, the court granted Verizon’s motion for judgment on the
pleadings against Satterfield and Highland on statute of limitations grounds. In October
2008, the parties agreed to dismiss all claims against Ameritech Mobile Communications,
Inc. Therefore, the remaining cause of action before the trial court was Intermessage’s
claim against Ameritech under R.C. 4905.61, which was limited by the trial court to the
period of October 18, 1993 through September 8, 1995.
{¶8} Also in September 2008, the trial court concluded that Intermessage’s claim
for 1995-1998 was barred by the statute of limitations. The court found that the statute
of limitations for the 1995-1998 claim expired on January 18, 2002, which was one year
after the PUCO issued the Cellnet Order. The court found, however, that Intermessage
could maintain its claim for the 1993-1995 period because such claim is controlled by the
Ohio Supreme Court’s decision that reviewed the Cellnet Order — Westside Cellular,
Inc. v. Pub. Utils. Comm., 98 Ohio St. 3d 165, 2002-Ohio-7119, 781 N.E.2d 199. In
Westside Cellular, the Ohio Supreme Court reversed that part of the Cellnet Order,
finding that Cellnet could not have suffered economic injury prior to 1995 because it had
not earlier made a formal request to Ameritech for wholesale service. Instead, the court
held that the applicable time frame commenced on October 18, 1993, which was the date
of Cellnet’s complaint to the PUCO. Id. at ¶ 10.
{¶9} Then in December 2008, Intermessage filed a motion for class certification.
Intermessage sought certification on behalf of “all retail subscribers of [Ameritech] who
purchased service with an Ohio area code during the period October 18, 1993 through
September 8, 1995.” In June 2015, the trial court conducted a pretrial conference to
discuss the pending motion and required the parties to submit proposed orders.
{¶10} On February 9, 2016, the trial court entered an opinion and order granting
Intermessage’s motion for class certification. In a 19-page order, the trial court certified
a class under Civ.R. 23(A) and (B)(3) consisting of “all retail subscribers of [Ameritech]
who purchased service with an Ohio area code within geographic areas in which the
PUCO decision found wholesale price discrimination during the period October 18, 1993
through September 8, 1995.” In a thorough 19-page opinion, the trial court certified this
class “on all the remaining claims, issues, and defenses presented in this action.”
{¶11} It is from this order that Ameritech appeals, raising the following
assignment of error for review.
Assignment of Error
The trial court erred in granting the motion for class certification filed by
[Intermessage].
{¶12} In the sole assignment of error, Ameritech claims the court erred in granting
class certification to Intermessage because it lacks standing to pursue its purported claim
against Ameritech. Ameritech further argues that even if Intermessage had standing to
bring the class action, the class was erroneously certified because: (1) it necessarily
includes persons who were not injured; (2) individualized issues predominate over
common questions of fact or law; (3) its claims are not typical of the purported class; and
(4) a class action is not superior to other methods of adjudication.
Standing
{¶13} Ameritech first argues that the class certification fails because Intermessage
lacks standing as an adequate class representative for the following three reasons: (1)
Intermessage no longer owns its claim against Ameritech, but assigned it to others after it
dissolved; (2) after dissolving, Intermessage failed to pursue its claim against Ameritech
as speedily as practicable under R.C. 1701.88(D); and (3) the violations at issue found by
the PUCO concerned duties Ameritech owed to an independent reseller regarding the
provision of wholesale services, while Intermessage and the purported class it seeks to
represent consist of indirect, retail purchasers. We disagree.
{¶14} R.C. 1701.88, which establishes the powers of a corporation after
dissolution, provides that “[a]ny claim existing or action or proceeding pending by or
against the corporation may be prosecuted to judgment, with right of appeal as in other
cases.” Id. at (C). Therefore, “the dissolution of a corporation does not abate ‘[a]ny
claim existing or action or proceeding pending by or against the corporation or which
would have accrued against it * * *.’” State ex rel. Falke v. Montgomery Cty.
Residential Dev., 40 Ohio St. 3d 71, 74, 531 N.E.2d 688 (1988), quoting R.C. 1701.88(B).
{¶15} Ameritech argues that Intermessage lacks standing because Intermessage
transferred its claim to either Wireless Associates, Ltd., or Schimmelphenning and
Moore, after dissolving. In support of its contention, Ameritech relies on certain
deposition testimony of Moore and Schimmelphennig. However, when asked about
Intermessage’s assets Schimmelphennig stated that “I can’t tell you specifically * * *
[b]ecause I don’t recall.” Additionally, Moore was never asked whether Intermessage
had transferred its claim against Ameritech. In his affidavit attached to Intermessage’s
motion for class certification, he stated that “[t]he claims brought in this suit on behalf of
[Intermessage] existed in favor of [Intermessage] at the time of its dissolution, and are
being pursued in this litigation pursuant to [R.C. 1701.88.]” Thus, Intermessage’s claim
against Ameritech remained an asset of Intermessage after dissolution.
{¶16} Ameritech also contends that Intermessage lacks standing to pursue its claim
against it because Intermessage did not commence this action “as speedily as is
practicable” when winding up its affairs. R.C. 1701.88(D) provides that the directors of
a dissolved corporation “shall proceed as speedily as is practicable to a complete winding
up of the affairs of the corporation.” “A corporation continues to exist after dissolution,
for the purpose of winding up its affairs[.]” Diversified Prop. Corp. v. Winters Natl.
Bank & Trust Co., 13 Ohio App. 2d 190, 193, 234 N.E.2d 608 (2d Dist.1967), paragraph
one of syllabus.
{¶17} Ameritech claims that Intermessage waited 33 months to bring this suit.
Ameritech acknowledges that Intermessage filed within the statute of limitations, but
argues that it was not “speedily enough.” The damages Intermessage seeks against
Ameritech occurred from October 18, 1993, through September 8, 1995. However,
recovery of those damages can be only be obtained through a lawsuit brought under R.C.
4905.61, which cannot be initiated without a prior finding that the utility had violated a
PUCO statute or order. Cleveland Mobile Radio Sales, Inc. v. Verizon Wireless, 113
Ohio St. 3d 394, 2007-Ohio-2203, 865 N.E.2d 1275, ¶ 21, citing R.C. 4905.61; Milligan v.
Ohio Bell Tel. Co., 56 Ohio St. 2d 191, 383 N.E.2d 575 (1978), paragraph one of the
syllabus. In the instant case, the liability finding was not made until 2001 by the Cellnet
Order, which was not rendered final until 2002 by Cincinnati SMSA L.P. v. Pub. Util.
Comm. of Ohio, 98 Ohio St. 3d 282, 2002-Ohio-7235, 781 N.E.2d 1012. That finding
expressly excluded the period of time now at issue in this lawsuit — October 18, 1993
through September 8, 1995. Cellnet Order, 2001 Ohio PUC LEXIS 18 at 269-271. The
first finding of liability involving the relevant 1993-1995 time period was not made until
December 26, 2002, by the Supreme Court in Westside Cellular. Intermessage’s
complaint was filed within a year later on December 16, 2003. R.C. 1701.88(A)
provides that a corporation may do such acts as are required to wind up its affairs and for
this purpose the dissolved corporation “shall continue as a corporation for period of five
years from the dissolution[.]” Intermessage filed this lawsuit within three years of its
dissolution. Therefore, Intermessage commenced its complaint as speedily as
practicable in accordance with R.C. 1701.88.
{¶18} Ameritech further argues that Intermessage lacks standing because the
Cellnet Order did not establish liability as to Intermessage or any other retail customer.
In the Cellnet Order, the PUCO held that Ameritech had violated Ohio statutes and
PUCO orders, which provided that cellular telephone companies were required to
maintain separate wholesale and retail operations; and the terms, conditions, and rates that
the Ameritech’s wholesale operations made available to Ameritech’s affiliated retail
operations were to be made available to any unaffiliated wholesale customer of
Ameritech.
{¶19} In the Cellnet Order, the PUCO found that Ameritech was providing its own
affiliated reseller with service and equipment for free, while charging, or attempting to
charge, the unaffiliated reseller Cellnet for the same service. This resulted in Ameritech
being able to charge its own customers for service when it had minimized the
competition. Intermessage’s economic expert believes that the price Ohio consumers
would have paid without Ameritech’s conduct is about two-thirds of what they did pay.
R.C. 4905.61 does not require anything more than a finding of unlawful conduct on the
part of a public utility in order to permit an injured party to institute an action for damages
in common pleas court.
{¶20} Thus, based on the foregoing, we find that Intermessage has standing to
recover damages against Ameritech for the injury caused by the PUCO violations.
{¶21} Having found that Intermessage has standing to bring the class action
against Ameritech, we now address Ameritech’s arguments regarding the trial court’s
certification of the class action.
Class Action — Standard of Review
{¶22} A trial court has broad discretion in determining whether to certify a class
action, and an appellate court should not disturb that determination absent an abuse of
discretion. Marks v. C.P. Chem. Co., 31 Ohio St. 3d 200, 509 N.E.2d 1249 (1987),
syllabus. “The term ‘abuse of discretion’ connotes more than an error of law or
judgment; it implies that the court’s attitude is unreasonable, arbitrary or
unconscionable.” (Citations omitted.) Blakemore v. Blakemore, 5 Ohio St. 3d 217,
219, 450 N.E.2d 1140 (1983), quoting State v. Adams, 62 Ohio St. 2d 151, 404 N.E.2d
144 (1980). In Hamilton v. Ohio Sav. Bank, 82 Ohio St. 3d 67, 694 N.E.2d 442 (1998),
the Ohio Supreme Court noted that “the appropriateness of applying the
abuse-of-discretion standard in reviewing class action determinations is grounded * * * in
the trial court’s special expertise and familiarity with case-management problems and its
inherent power to manage its own docket.” Id. at 70, citing Marks; In re NLO, Inc., 5
F.3d 154 (6th Cir.1993). “A finding of abuse of discretion * * * should be made
cautiously.” Marks at 201.
{¶23} The Hamilton court further noted that the trial court’s discretion in deciding
whether to certify a class must be exercised within the framework of Civ.R. 23. Id.
The trial court is required to “carefully apply the class action requirements” and to
conduct a “rigorous analysis” into whether the prerequisites for class certification under
Civ.R. 23 have been satisfied. Id. Cullen v. State Farm Mut. Auto. Ins. Co., 137 Ohio
St.3d 373, 2013-Ohio-4733, 999 N.E.2d 614, paragraph one of the syllabus.
Requirements for Class Action Certification
{¶24} In determining whether a class action is properly certified, the first step is to
ascertain whether the threshold requirements of Civ.R. 23(A) have been met. Once
those requirements are established, the trial court must turn to Civ.R. 23(B) to discern
whether the purported class comports with the factors specified therein. Accordingly,
before a class may be properly certified as a class action, the following seven
prerequisites must be met: (1) an identifiable class must exist, and the definition of the
class must be unambiguous; (2) the named plaintiff representatives must be members of
the class; (3) the class must be so numerous that joinder of all the members is
impracticable; (4) there must be questions of law or fact common to the class; (5) the
claims or defenses of the representatives must be typical of the claims or defenses of the
class; (6) the representative parties must fairly and adequately protect the interests of the
class; and (7) one of the three requirements under Civ.R. 23(B) must be met. Hamilton,
82 Ohio St. 3d at 71, 694 N.E.2d 442, citing Civ.R. 23(A) and (B); Warner v. Waste Mgt.
Inc., 36 Ohio St. 3d 91, 96, 521 N.E.2d 1091 (1988). Of the Civ. R. 23(B) requirements,
subsection (3) is applicable to the instant case. This section provides that a class action
may be allowed if “the questions of law or fact common to class members predominate
over any questions affecting only individual members, and that class action is superior to
other available methods for fairly and efficiently adjudicating the controversy.” We note
that the burden of establishing that a cause of action merits treatment as a class action
rests on the party bringing the lawsuit. State ex rel. Ogan v. Teater, 54 Ohio St. 2d 235,
247, 375 N.E.2d 1233 (1978), citing Tolbert v. Western Elec. Co., 56 F.R.D. 108
(N.D.Ga. 1972); McFarland v. Upjohn Co., 76 F.R.D. 29 (E.D.Pa. 1977).
{¶25} Here, Ameritech raises arguments similar to those it raised before the trial
court. It argues that the class certification must be reversed because the class necessarily
includes persons who were not injured; individualized issues predominate; Intermessage
failed to establish harm and damages on a class-wide basis; Intermessage cannot prove
typicality; and a class action is not superior to other methods of adjudication. The trial
court addressed these arguments and found in favor of Intermessage. We agree with the
trial court.
{¶26} In its thoughtful and detailed opinion granting class action certification, the
court wrote:
Typicality: This case satisfies Civ.R. 23(A)(3), requiring that the claims or
defenses of the representative parties are typical of the claims or defenses of
the class. To satisfy this requirement, the claims of the named plaintiff
“need not be identical” to those of other class members.
[PlannedParenthood Assn. v. Project Jericho, 52 Ohio St. 3d 56, 64, 556
N.E.2d 157].
[A] plaintiff’s claim is typical if it arises from the same event or practice or
course of conduct that gives rise to the claims of other class members, and
if his or her claims are based on the same legal theory. When it is alleged
that the same unlawful conduct was directed at or affected both the named
plaintiff and the class sought to be represented, the typicality requirement is
usually met irrespective of varying fact patterns which underlie individual
claims.
Baughman v. State Farm Mut. Auto. Ins. Co., 88 Ohio St. 3d 480, 485,
2000-Ohio-397, 727 N.E.2d 1265 (2000), quoting Newberg on Class
Actions (3 Ed.1992) Sec. 3.13 (internal quotation omitted). The purpose
of typicality is to protect absent class members and promote economy of
class action by ensuring the named plaintiffs’ interests are substantially
aligned with the class. Typicality is met where there is no express conflict
between the class representatives and the class. Hamilton, [82 Ohio St.3d
at 77, 694 N.E.2d 442].
[Ameritech] argues [Intermessage] is uniquely atypical because it passed on
the entire cost of cellular service it purchased to its customers.
[Intermessage] was manufacturer and seller of backup panels for alarm
systems. [Intermessage] purchased cellular service for the backup panels
from [Ameritech], and then sold the panels to its customers. Thus,
[Intermessage] did not suffer the overcharge damages claimed by other
class members.
However, this argument constitutes “passing-on” defense, rebutted by the
well-established rule that an offense is complete at the time of injury,
regardless of the victim’s later acts in mitigation. [Hanover Shoe, Inc., v.
United Shoe Machine Corp., 392 U.S. 481, 88 S. Ct. 2224, 20 L. Ed. 2d 1231
(1968)]. [Intermessage] purports that the class is comprised of retail
purchasers of cellular service, rather than retail users. Additionally,
merely because [Intermessage] passed on the overcharge to its customers
does not establish conflict between [Intermessage] and the other class
members.
The evidence of record shows [Intermessage’s] claim against [Ameritech]
arises from the same events, practices, and conduct that give rise to the
claims of every other class member, and the claims of each class member
are based on the same legal theory. [Intermessage] alleges the same
unlawful conduct was directed at or affected the named [Intermessage] and
every other member of the class. More importantly, there is no conflict,
express or otherwise, between the named [Intermessage] and the class.
The typicality criterion for class certification is satisfied in this action.
Adequacy: This case also satisfies Civ.R. 23(A)(4), requiring that the
representative parties fairly and adequately protect the interests of the class.
This requirement “is divided into consideration of the adequacy of the
representatives and the adequacy of counsel.” [Warner, 36 Ohio St. 3d at
98, 521 N.E.2d 1091 (1988)]. [Ameritech] does not contest the adequacy
of [Intermessage’s] counsel to represent the class, but [Ameritech] does
contend [Intermessage] is an inadequate class representative.
A named plaintiff is deemed adequate so long as his or her interest is not
antagonistic to the interest of other class members. Hamilton, [82 Ohio
St.3d at 77-78, 694 N.E.2d 442]; Warner [at 98]; Marks, [31 Ohio St.3d at
203, 509 N.E.2d 1249]. The evidence of record shows the interests of
[Intermessage] are not antagonistic to the interests of any other member of
the class. [Intermessage] was a retail subscriber and purchased service
with an Ohio area code during the relevant time period. [Intermessage’s]
interest is compatible with the interest of other class members who were
also retail subscribers.
[Ameritech] argues [Intermessage] is an inadequate class representative
because [Intermessage] may be distracted by an arguable defense peculiar to
it. Specifically, [Intermessage] is a dissolved corporation that failed to
bring this matter as speedily as practicable to complete the winding up of its
affairs as required by [R.C. 1701.88(D)]. [Intermessage] was voluntarily
dissolved in March 2001 and brought the present action in December 2003.
However, there is no strict rule requiring dissolved corporation to complete
the winding up of its affairs by set date. Pursuant to [R.C. 1701.88(A)], a
corporation may do such acts as are required to wind up its affairs and for
this purpose the dissolved corporation shall continue as corporation for
period of five years from the dissolution. [Intermessage] filed this lawsuit
within three years of its dissolution. [Ameritech]’s argument has no merit.
Also, [Ameritech] now asserts [Intermessage] is an inadequate class
representative because [Intermessage’s] status as a dissolved corporation
means it lacks standing to bring this claim. Standing involves the question
of whether party has sufficient stake in an otherwise justiciable controversy
to obtain judicial resolution of that controversy. Fed. Home Loan Mortg.
Corp. v. Schwartzwald, 134 Ohio St. 3d 13, 17, 2012-0hio-5017, 979 N.E.2d
1214. The standing argument is similar to [Ameritech’s] argument that
[Intermessage] failed to bring this matter as speedily as practicable to
complete the winding up of its affairs as required by R.C. 1701.88(D).
Both arguments invoke the Ohio statute dictating how a voluntarily
dissolved corporation may bring lawsuit.
Under Ohio law, a dissolved corporation may bring lawsuit if it is brought
as part of the company’s winding up of its affairs. Under R.C. 1701.88(A),
“when a corporation is dissolved voluntarily . . . the corporation shall cease
to carry on business and shall do only such acts as are required to wind up
its affairs * * * and for such purposes it shall continue as corporation for
period of five years from the dissolution, expiration, or cancellation.”
Pursuant to [R.C. 1701.88(B)], the voluntary dissolution of corporation
shall not eliminate any remedy available to the corporation prior to its
dissolution if the corporation brings an action within the time limits
otherwise permitted by law.
In this case, [Intermessage] was dissolved in March 2001 and filed this
lawsuit in December 2003. [Intermessage] seeks remedy arising from
conduct which occurred between October 18, 1993 and September 8, 1995.
The PUCO decision finding that [Ameritech] had engaged in price
discrimination was released on January 18, 2001. Both [Ameritech’s]
alleged conduct and the PUCO decision occurred prior to the corporation’s
dissolution. There is no dispute the case was brought within the applicable
statute of limitations. Accordingly, [Intermessage] is an adequate class
representative and will not be distracted by an arguable defense peculiar to
it.
***
[Intermessage] has satisfied the adequacy criterion for class certification.
Predominance: Questions of law and fact common to the members of the
class must predominate over any questions affecting individual members.
Predominance is met when there exists generalized evidence which proves
or disproves an element on simultaneous, class-wide basis, since such proof
obviates the need to examine each class member’s individual position.
[Baughman v. State Farm Mut. Auto Ins. Co., 88 Ohio St. 3d 480, 489, 727
N.E.2d 1265 (2000).]
In determining whether common questions predominate, “the focus of the
inquiry is directed toward the issue of liability.” Cicero v. U.S. Four, Inc.,
10th Dist. Franklin No. 07AP-310, 2007-0hio-6600, ¶ 38. The
predominance requirement is satisfied where the questions of law or fact
common to the class represent a significant aspect of the case and are able
to be resolved for all members of the class in single adjudication. Schmidt
v. AVCO Corp. 15 Ohio St. 3d 310, 313, 473 N.E.2d 822 (1984).
The central issue of this case is to what extent [Ameritech] is liable to
[Intermessage] for [Ameritech’s] wholesale price discrimination. In [the
Cellnet Order,] the PUCO found [Ameritech] had engaged in unlawful
discriminatory pricing practices. Under [R.C. 4905.61], a public utility
which engages in price discrimination is liable to any person, firm, or
corporation injured by such violation.
The issues presented by [Intermessage’s R.C. 4905.61] claims are common
to the proposed class — e.g., whether [Ameritech’s] conduct affected the
market and proximately caused retail cellular prices to be artificially
inflated; whether [Ameritech’s] conduct prevented resellers from increasing
their market share by lowering their prices; whether [Ameritech’s] conduct
prevented other resellers from entering the Ohio market; and whether and to
what extent [Ameritech’s] conduct proximately caused injury to the
members of the class. These issues “represent significant aspect of the
case” and are “able to be resolved for all members of the class in a single
adjudication.” Schmidt, [15 Ohio St.3d at 313, 473 N.E.2d 822]. All of
the issues bearing upon [Ameritech’s] liability are common to the class as
whole. These issues can be adjudicated in single, class-wide trial and
predominate over any individual issues that might remain.
[Intermessage’s] expert Dr. Gale opined that without discriminatory pricing,
resellers would have been more competitive, whether as group because
there are more of them, or because particular reseller became more
competitive, causing prices to decline. The price decline would have
impacted all consumers. Gale Dep. at 67.
Dr. Gale further stated: “It is my opinion that the alleged acts by
[Ameritech] had class-wide impact, and that there are feasible and
widely-used methodologies for showing the impact through common
proof.” Report of John M. Gale (“Gale Report”), at p. 2. Dr. Gale
identified one possible model for measuring damages the
“McFadden/Woroch model” developed for the damages litigation arising
from the PUCO determination[.] During this litigation, Dr. Gale assisted
Professors McFadden and Woroch with “preparing an expert report which
included damage estimate for Cellnet [aka Westside Cellular, the plaintiff in
the PUCO case] based on standard model of competition and consumer
demand well documented in the economics literature.” Gale Report at p. 4.
Dr. Gale described the McFadden/Woroch model as follows: “[t]he
damages model employed by Professors McFadden and Woroch estimated,
for each year in each of seven Ohio SMSAs [Standard Metropolitan
Statistical Areas], retail prices and sales for each of the two facilities-based
cellular providers and Cellnet but for the price discrimination. The model
relied upon data for costs, revenues, subscribers, and prices provided by
defendants and Cellnet. In addition, the model used estimates of consumer
demand for wireless services published in the economics literature. The
methodology did not vary across SMSAs and years. During the [Cellnet]
litigation, variations of the damages model were introduced by one
defendant’s expert that included entry of multiple resellers at the
non-discriminatory wholesale prices.” Gale Report at p. 4. As explained
by Dr. Gale, “[t]hese models, relied upon by both Cellnet’s and defendant’s
experts demonstrate not only that model which shows class-wide impact is
available, but that such model has already been developed and used.” [Id.]
[Ameritech] argues the court must deny class certification because Dr. Gale
does not propose definite method allocating damages among the proposed
class. [Ameritech] challenges Dr. Gale’s Report because, as Dr. Gale
admits, he has never used the McFadden/Woroch model to determine
class-wide impact and damages in this case. In fact, the model would have
to be adapted to show class-wide impact across the retail market. Gale
Dep. p. 69.
[Ameritech] relies principally on the United States Supreme Court’s
decision in [Comcast Corp. v. Behrend, 133 S. Ct. 1426, 185 L. Ed. 2d 515
(2013)]. [Ameritech] argues that Comcast stands for the proposition that
[Intermessage] must provide damages model susceptible to measurement
across the entire class in order to satisfy the predominance requirement.
This reading of the Comcast holding is unduly broad.
***
Comcast was unusual because the plaintiff’s damages model was
disconnected from the plaintiff’s theory of liability. Comcast is
distinguished because in this case [Intermessage’s] proposed theory of
damages is consistent with its theory of liability. [Intermessage’s] expert
may not have an exact measure of damages, but as the Comcast court
acknowledges, at this stage of class certification an exact measure is not
required. Id.
The court need only probe the underlying merits of plaintiff’s claim for the
purposes of determining whether plaintiff has satisfied the prerequisites of
class certification. Stammco, L.L.C. v. United Tel. Co. of Ohio, 136 Ohio
St.3d 231, 242, 2013-Ohio-3019, 994 N.E.2d 408. [Intermessage] is
pursuing this claim pursuant to [R.C. 4905.61], which allows person, firm
or corporation injured by public utility’s price discrimination to seek
damages. The PUCO already determined that [Ameritech] engaged in
price discrimination. [Intermessage] must prove injury in order to establish
liability. Whether [Intermessage] can provide working damages model
goes directly to the merits of [Intermessage’s] claim. While class brought
pursuant to [R.C. 2905.61] must prove damages to prevail on the merits,
such proof is not prerequisite to class certification. Predominance
“requires showing that questions common to the class predominate, not that
those questions will be answered, on the merits, in favor of the class.”
[Amgen Inc. v. Connecticut Retirement Plans Trust Funds, 133 S. Ct. 1184,
1191, 185 L. Ed. 2d 308 (2013).]
Moreover, [Intermessage] need not prove that each element of claim can be
established by class-wide proof. The rule requires “that common questions
predominate over any question affecting only individual class members.”
Glazer v. Whirlpool Corp. (In re Whirlpool Corp. Front-Loading Washer
Prods. Liab. Litig.), 722 F.3d 838, 860-61 (6th Cir.2013), quoting Amgen
[at 1196] (internal quotation omitted) (emphasis in original). Comcast
does not abrogate existing case law dictating that the court should not delve
too deeply into the merits of plaintiff’s claim at the class certification stage
of the litigation. Stammco, 136 Ohio St. 3d at 242. Moreover, “[w]hether
mathematical formula could be used to calculate individual damages is
irrelevant because the need to calculate damages individually, by itself, is
not reason to deny class certification.” Hoang v. E*Trade Group, Inc., 151
Ohio App. 3d 363, 2003-Ohio-301, ¶ 21, (8th Dist.), jurisdictional motion
overruled, 99 Ohio St. 3d 1437 (8th Dist.2003).
***
[Intermessage’s] claims in this case are common to the class.
[Intermessage’s] theory of liability consists of whether [Ameritech’s]
anti-competitive conduct affected the market and proximately caused retail
cellular prices to be artificially inflated. The damages theory is the
difference between what retail customers actually paid for cellular service
and what retail customers should have paid but-for [Ameritech’s]
anti-competitive conduct. Dr. Gale’s report proposes a model that could be
adapted to measure class-wide damages resulting from [Intermessage’] only
theory of liability.
Although Dr. Gale does not provide an exact model for measuring damages,
the court will have an opportunity through the factual development of the
case to consider whether the damages formula can be established and
utilized. Also, [Intermessage] will be subject to summary judgment if it is
not able to establish damages model. Finally, the court may alter or amend
its certification of the class at any time prior to final order. Civ. R.
23(C)(1)(c).
[Ameritech] additionally argues that determination of injury in fact would
require an individual by individual review of each class member claim and
that this fails the predominance requirement of class certification. In fact,
Dr. Gale testified at his deposition “[i]f wanted to determine the damages to
particular individual, would have to go and find out what they paid, would
have to go and find out how they would choose among alternatives, and
then would have to go and make prediction based on the alternatives that
were available to them in the but-for world, which one of those alternatives
they would choose. Then I could make an estimation of the damages for
that individual.” Gale Dep. at 104:2-10.
However, individualized damages are not fatal to class certification because
predominance focuses on liability, rather than damages. Ojalvo v. Board of
Trustees of Ohio State Univ., 12 Ohio St. 3d 230, 232[, 466 N.E.2d 875]
(1984). It is not necessary for a plaintiff to prove “that each element of
claim can be established by classwide proof: What the rule does require is
that common questions predominate over any questions affecting only
individual class members.” [Glazer, 722 F.3d at 858, quoting [Amgen,
133 S. Ct. at 1196], (internal quotation omitted) (emphasis in original).
To clarify, if common liability issues predominate over issues of individual
liability or damages, then the predominance requirement is satisfied even
though the actual damages may be individualized. Here, the issue of
whether [Ameritech’s] anti-competitive conduct affected the market and
proximately caused retail cellular prices to be artificially inflated is common
to the class.
[Intermessage] has demonstrated that the common liability issues
predominate over individual claims of class members and has satisfied the
predominance requirement for class certification.
Superiority: Finally, this case satisfies the superiority requirement for
class certification. The superiority criterion is satisfied where “the
efficiency and economy of common adjudication outweigh the difficulties
and complexity of individual treatment of class members claims.”
[Warner, 36 Ohio St. 3d at 96, 521 N.E.2d 1091]. “[I]n determining
whether class action is superior method of adjudication, the court must
make comparative evaluation of the other processes available to determine
whether class action is sufficiently effective to justify the expenditure of
judicial time and energy involved therein.” Westgate Ford Truck Sales,
Inc. v. FordMotor Co., 8th Dist. Cuyahoga No. 86596, 2007-Ohio-4013,
¶ 78, quoting [Schmidt, 15 Ohio St. 3d at 313, 473 N.E.2d 822.] (internal
quotations omitted). Class certification should be granted where
“[r]epetitious adjudication of liability, utilizing the same evidence over and
over, could be avoided.” [Marks, 31 Ohio St. 3d at 204, 509 N.E.2d 1249].
In the instant case, class certification will permit class-wide adjudication of
all issues bearing upon [Ameritech’s] liability. Without class certification,
adjudication of class members claims would require tens of thousands of
individual suits with concomitant duplications of costs, attorneys’ fees, and
demands upon court resources. Ojalvo, supra, 12 Ohio St.3d at 235 (a
class action is “the ideal means of adjudicating in single proceeding what
might otherwise become three thousand to six thousand separate
administrative actions”). Similar benefits will accrue to [Ameritech]
through avoidance of multiple suits and multiple jury determinations.
Moreover, if class members were required to pursue their claims
individually, the potential for recovery likely would be outweighed by the
cost of investigation, discovery, and expert testimony. Class certification
overcomes the lack of incentive individuals would face in attempting to
recover small amounts with individual actions. [Hamilton, 82 Ohio St. 3d
67 at 80, 694 N.E.2d 442]. The aggregation of class members claims in
class action will ensure there is “a forum for the vindication of rights” that
is economical enough to pursue. Cope v. Metro. Life Ins. Co., 82 Ohio
St.3d 426, 431, 1998-Ohio-405, 696 N.E.2d 1001, quoting Hamilton [at 80]
(1998) (internal quotations omitted).
Based on the whole of the parties’ submissions and the evidence presented,
class action is the most efficient means of adjudicating [Ameritech’s]
alleged liability and the damages allegedly caused to the proposed class
members. A class action will avoid the repetitious adjudication of liability
and is sufficiently effective as to justify the judicial time and energy
involved. [Intermessage] has satisfied the superiority requirement for
class certification.
{¶27} We agree with the detailed findings of the trial court. Intermessage has
satisfied the predominance, typicality, superiority, and adequacy requirements for class
certification. Intermessage’s claim against Ameritech arises from the same events,
practices, and conduct that give rise to the claims of every other class member, and the
claims of each class member are based on the same legal theory. Furthermore, the
PUCO has already determined that Ameritech engaged in price discrimination. In the
instant case, Intermessage is pursuing its claim under R.C. 4905.61, which allows a
corporation injured by public utility’s price discrimination to seek damages. In support
of its predominance contention, Ameritech’s relies on Felix v. Ganley Chevrolet, Inc.,
145 Ohio St. 3d 329, 2015-Ohio-3430, 49 N.E.2d 1224 and Ford Motor Credit v.
Agrawal, 8th Dist. Cuyahoga No. 103667, 2016-Ohio-5928, and argues that Intermessage
did not suffer any injuries because it passed the costs on to its customers.2 The court
found, and we agree, that the issue of whether Ameritech’s anticompetitive conduct
affected the market and proximately caused retail cellular prices to be artificially inflated
is common to the class. If common liability issues predominate over issues of individual
liability or damages, then the predominance requirement is satisfied even though the
actual damages may be individualized.
2Felix and Ford Motor Credit stand for the proposition that all class members must be in fact
injured by defendant’s actions. Felix was an Ohio Sales Consumer Practices Act (“OSCPA”) case
that carried an extra burden of proof for the plaintiff. In Ford Motor Credit, this court found
that individualized inquiry is necessary to determine injury. Id. at ¶ 30. These
cases are factually distinguishable as the instant case does not involve the OSCPA
and the record demonstrates an injury to all class members.
{¶28} We are mindful that
due deference must be given to the trial court’s decision. A trial court that
routinely handles case-management problems is in the best position to
analyze the difficulties which can be anticipated in litigation of class
actions. * * * A finding of abuse of discretion * * * should be made
cautiously.
Marks, 31 Ohio St. 3d at 201, 509 N.E.2d 1249.
{¶29} Here, the trial court presided over the instant case for over 13 years and
concluded that Intermessage established the requirements to maintain a class action under
Civ.R. 23. In doing so, the trial court conducted a 19-page analysis into whether the
prerequisites for class certification under Civ.R. 23 have been satisfied. Cognizant of the
fact that a class-action certification does not go to the merits of the action, the trial court
acknowledged that it will have an opportunity to consider whether damages can be
established, summary judgment is possible if Intermessage is not able to establish
damages, and the court’s ability to alter or amend its certification of the class at any time
prior to final order.
{¶30} Therefore, based on the foregoing, we find that the trial court did not abuse
its discretion in certifying the class in the instant case.
{¶31} The sole assignment of error is overruled.
{¶32} Accordingly, judgment is affirmed.
It is ordered that appellees recover of appellant 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 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.
MARY EILEEN KILBANE, JUDGE
KATHLEEN ANN KEOUGH, A.J., and
ANITA LASTER MAYS, J., CONCUR