Opinion ID: 2831533
Heading Depth: 1
Heading Rank: 1

Heading: analysis

Text: {¶ 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 7 SUPREME COURT OF OHIO 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. 8 January Term, 2015 {¶ 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 9 SUPREME COURT OF OHIO 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,  (Mar. 31, 2000); Johnson v. Jos. A. Bank Clothiers, Inc., S.D.Ohio No. 2:13-cv-756, 2014 WL 4129576, -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 consumerprotection 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 consumerprotection 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. WyethAyerst 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 10 January Term, 2015 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 classcertification 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). 11 SUPREME COURT OF OHIO 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.’ ”) 12 January Term, 2015 Gonzales v. Comcast Corp., E.D.Cal. No. 10–cv–01010–LJO–BAM, 2012 WL 10621,  (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 13 SUPREME COURT OF OHIO 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 14 January Term, 2015 spirit of the law. Howland v. Purdue Pharma L.P., 104 Ohio St.3d 584, 2004Ohio-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-Ohio1042, 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).