Ohio Supreme Court Holds That All Members of a CSPA Class Must Have Suffered Injury
Business Litigation Update
Date: August 31, 2015
Businesses in the United States have faced the growing burden of “no-injury” class actions in a variety of forms in recent years. Although the United States Supreme Court held in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), that Rule 23(a)(2) commonality exists only if all members of a putative class suffered the same injury, subject to common proof, the viability of proposed classes including uninjured members continues to be litigated in many lower federal and state courts, and in a variety of contexts.
On August 27, 2015, the Ohio Supreme Court resolved one aspect of this issue under Ohio law by holding in Felix v. Ganley Chevrolet, Inc., Slip Opinion No. 2015-Ohio-3430, that plaintiffs alleging violations of the Ohio Consumer Sales Practices Act (CSPA) must show that all members of a putative class suffered injury or “damage in fact” as a result of the challenged conduct. Felix was decided under a former version of the CSPA, but key language remains in the statute, meaning that the decision should have prospective application as well.
The plaintiffs in Felix had signed a purchase contract with a car dealer. They were not approved for advertised financing and later sued the dealer, claiming that an arbitration clause in the contract and other dealer practices violated the CSPA. The trial court later certified a class of consumers who had signed similar contracts, and awarded each class member $200 despite the absence of any showing of actual damages – relief the Ohio Supreme Court characterized as being “based on a fiction.” Noting that having suffered some injury is “[p]erhaps the most basic requirement to bringing a lawsuit,” the Ohio Supreme Court reversed certification of the class and vacated the judgment in its favor, finding that there was no evidence that members of the class had been injured or suffered damages.
The court reasoned that a key purpose of the “predominance” requirement under Rule 23(b)(3) is to ensure that a proposed class is sufficiently cohesive to warrant group adjudication. If a class plaintiff fails to show that all class members were actually damaged, there can be no showing that common issues predominate over individual ones. To justify certification of a class, a plaintiff therefore “must adduce some common evidence that shows all class members suffered some injury.” The court relied in part on the guidance of Dukes requiring that trial courts give careful consideration to the class certification process, and that parties seeking class certification affirmatively demonstrate that the requirements for maintaining a class action are met.
The court rejected the trial judge’s finding that it could award $200 to each class member as a matter of discretion. It noted that a trial judge’s discretion is not unlimited, that there was no authority for awarding damages under the CSPA to class plaintiffs who had suffered no injury, and that the lower courts ignored the clear distinction in the CSPA between the kinds of damages available in an individual action and the actual damages available in a class action.
The court’s ruling in Felix provides added protection against “no-injury” class actions under the CSPA for businesses doing business in Ohio.
FOR MORE INFORMATION
For more information, please contact:
Brian A. Troyer
Martin J. Mackowski
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