[Cite as Martin v. Lamrite West, Inc., 2017-Ohio-8170.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 105395
BARBARA MARTIN, ET AL.
PLAINTIFFS-APPELLANTS
vs.
LAMRITE WEST, INC.
DEFENDANT-APPELLEE
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-12-783766
BEFORE: Kilbane, J., E.A. Gallagher, P.J., and Celebrezze, J.
RELEASED AND JOURNALIZED: October 12, 2017
ATTORNEYS FOR APPELLANTS
Nicole T. Fiorelli
Patrick J. Perotti
Dworken & Bernstein Co., L.P.A.
60 South Park Place
Painesville, Ohio 44077
ATTORNEYS FOR APPELLEE
Daniel M. Blouin
Kristine R. Argentine
Seyfarth Shaw L.L.P.
233 S. Wacker Drive - Suite 8000
Chicago, Illinois 60606
Anthony M. Catanzarite
Brian Sullivan
Reminger Co., L.P.A.
1400 Midland Building
101 Prospect Avenue, West
Cleveland, Ohio 44115
MARY EILEEN KILBANE, J.:
{¶1} Plaintiffs-appellants, Barbara Martin and Erin Bovee (collectively
“appellants”), appeal from the order of the common pleas court granting judgment on the
pleadings in favor of defendant-appellee, Lamrite West, Inc. d.b.a. Pat Catan’s (“Pat
Catan’s”), on appellants’ putative class action claim under the Ohio Consumer Sales
Practices Act (the “CSPA”). For the reasons set forth below, we affirm.
{¶2} In Martin v. Lamrite West, Inc., 2015-Ohio-3585, 41 N.E.3d 850 (8th Dist.)
(“Martin I”), this court reversed the trial court’s summary judgment ruling on Martin and
Bovee’s CSPA deceptive advertising claim. We affirmed the trial court’s dismissal of
Martin and Bovee’s unjust enrichment, fraud, and breach of contract claims. Martin I
summarizes the relevant facts of this case and appellants’ arguments underlying its CSPA
claim as follows:
[Martin and Bovee] brought this action against [Pat Catan’s], alleging that
Pat Catan’s deceptively advertises savings. Bovee alleged that she
purchased supplies from Pat Catan’s on the basis of advertising that she
could “Save 40% or more ON THOUSANDS OF ITEMS EVERY DAY!”;
Martin alleged that she purchased picture framing services that had been
advertised by Pat Catan’s as “50% Off Your CUSTOM FRAMING Order
EVERY DAY.” The appellants alleged that the advertised percentage off
its everyday prices was illusory because Pat Catan’s always sells those
items for that discount — in other words, the advertised item is always the
same percentage off, every day, such that the claimed savings are
non-existent.
Id. at 1.
{¶3} In Martin I, we noted that R.C. 1345.02(B)(8) makes it a deceptive act for a
supplier in a consumer transaction to represent “that a specific price advantage exists, if it
does not.” Id. at 3. We considered Martin and Bovee’s allegations under Ohio
Adm.Code 109:4-3-12, titled “Price Comparisons.” This code section states, in relevant
part:
(A) Declaration of policy
This rule is designed to define with reasonable specificity certain
circumstances in which a supplier’s acts or practices in advertising price
comparisons are deceptive and therefore illegal. For purposes of this rule,
price comparisons involve a comparison of the present or future price of the
subject of a consumer transaction to a reference price, usually as an
incentive for consumers to purchase. This rule deals only with out-of-store
advertisements as defined in paragraph (B)(3) of this rule. The rule stems
from the general principle, codified in division (B) of section 1345.02 of the
Revised Code, that it is deceptive for any claimed savings, discount,
bargain, or sale not to be genuine, for the prices which are the basis of such
comparisons not to be bona fide, genuine prices, and for out-of-store
advertisements which indicate price comparisons to create false
expectations in the minds of consumers.
***
(E) Comparison with supplier’s own price
(1) It is deceptive for a supplier in its out-of-store advertising to make any
price comparison by the use of such terms as “regularly.........., now ..........,”
“....... per cent off,” “reduced from ........ to ..........,” “save $.......,”
unless:
(a) The comparison is to the supplier’s regular price; or
(b) If the reference price is the regular price of a previous season, the
season and year are clearly and conspicuously disclosed; or
(c) There is language in the advertisement which clearly and conspicuously
discloses that the comparison is to another price and which discloses the
nature of the reference price.
***
(F) Comparison with prices which are not the supplier’s own
(1) It is deceptive for a supplier in its out-of-store advertising to use as a
reference price in making a price comparison any “list,” “catalogue,”
“manufacturer’s suggested,” “competitor’s,” or any other price which is not
its own unless:
(a) Such a reference price is genuine; and
(b) The advertisement clearly and conspicuously indicates that the
reference price is not the supplier’s own price.
Id.
{¶4} In Martin I, we also found that there was nothing in Pat Catan’s out-of-store
advertisements that indicated that the sales price referenced a reduction on prices offered
by other retailers or a reduction from the manufacturer’s suggested retail price, as Pat
Catan’s contends. Martin I. We held that regardless of whether the advertisements
promoted illusory savings (as appellants claim) or were intended as a comparison of a
competitor’s price or the manufacturer’s suggested price (as Pat Catan’s contends),
reasonable minds could find the relevant advertisements to be deceptive under
R.C. 1345.02(B)(8) and Ohio Adm.Code 109:4-3-12 because the advertised discounts did
not specifically reference the prices to which the discounts applied. Accordingly, we
found that summary judgment on Martin and Bovee’s CSPA claim was improper. Id. at
2-13.
{¶5} Following our remand in Martin I, the trial court set a case management
schedule for certification of Martin and Bovee’s class claim. A few months later, Pat
Catan’s moved for judgment on the pleadings, arguing that appellants’ CSPA claim could
not survive as a class action claim because they did not adequately plead, nor could they
ultimately establish, that they suffered actual damages as a result of the allegedly
deceptive act and that Pat Catan’s had prior notice that its conduct was deceptive and
unconscionable, both required elements to maintain a CSPA class action claim under R.C.
1345.09. The trial court granted Pat Catan’s motion, finding that “[Martin and Bovee]
failed to allege actual damages as a result of the allegedly deceptive act as required for
class claims under the Ohio CSPA.”
{¶6} It is from this order that Martin and Bovee now appeal, raising the
following single assignment of error for our review.
Assignment of Error
The trial court erred in granting [Pat Catan’s] motion for judgment on the
pleadings on [Martin and Bovee’s] class [CSPA] claim.
{¶7} We review a ruling on a motion for judgment on the pleadings de novo.
Matthews v. United States Bank Natl. Assn., 8th Dist. Cuyahoga No. 105315,
2017-Ohio-7079, ¶ 8. Civ.R. 12(C) provides that a party may move for judgment on the
pleadings after the pleadings are closed but within such time as to not delay trial.
Duncan v. Cuyahoga Community College, 2012-Ohio-1949, 970 N.E.2d 1092, ¶ 16 (8th
Dist.). A motion for judgment on the pleadings raises only questions of law, and the
court may look to only the allegations in the pleadings in deciding the motion. Id. The
pleadings must be construed liberally and in a light most favorable to the party against
whom the motion is made, indulging every reasonable inference in favor of the party
against whom the motion is made. Id., citing Case W. Res. Univ. v. Friedman, 33 Ohio
App.3d 347, 515 N.E.2d 1004 (8th Dist.1986).
“In order to be entitled to a dismissal under Civ.R. 12(C), it must appear
beyond doubt that [the nonmovant] can prove no set of facts warranting the
requested relief, after construing all material factual allegations in the
complaint and all reasonable inferences therefrom in [the nonmovant’s]
favor.”
Matthews at ¶ 8, quoting State ex rel. Toledo v. Lucas Cty. Bd. of Elections, 95 Ohio St.3d
73, 74, 2002-Ohio-1383, 765 N.E.2d 854.
{¶8} We note that class actions are authorized for violations of the CSPA under
R.C. 1345.09(B); however, the scope of available damages is limited. Konarzewski v.
Ganley, Inc., 8th Dist. Cuyahoga No. 92623, 2009-Ohio-5827, ¶ 45. R.C. 1345.09(B)
provides, in relevant part:
Where the violation was an act or practice declared to be deceptive or
unconscionable by rule adopted under [R.C. 1345.05(B)(2)] before the
consumer transaction on which the action is based, or an act or practice
determined by a court of this state to violate [R.C. 1345.02] * * * and
committed after the decision containing the determination has been made
available for public inspection under division (A)(3) of [R.C. 1345.05], the
consumer may rescind the transaction or recover, but not in a class action,
three times the amount of the consumer’s actual economic damages or two
hundred dollars, whichever is greater, plus an amount not exceeding five
thousand dollars in noneconomic damages or recover damages or other
appropriate relief in a class action under Civil Rule 23, as amended.
(Emphasis added.)
{¶9} Pat Catan’s correctly argues that, in order to maintain their class action
claim, Martin and Bovee must demonstrate that (1) Pat Catan’s acted in the face of prior
notice that its advertising was deceptive or unconscionable, and (2) that they suffered
actual damages as a result of Pat Catan’s violation of the CSPA. See Marrone v. Philip
Morris USA, Inc., 110 Ohio St.3d 5, 2006-Ohio-2869, 850 N.E.2d 31, ¶ 9; Felix v.
Ganley Chevrolet, Inc., 145 Ohio St.3d 329, 2015-Ohio-3430, 49 N.E.3d 1224, ¶ 31.
Prior Notice
{¶10} R.C. 1345.09(B) provides that a consumer may qualify for class action
status only when a supplier acted in the face of prior notice that its conduct was deceptive
or unconscionable. Marrone at ¶ 9. Pat Catan’s argues that Martin and Bovee failed to
adequately plead and cannot ultimately establish that Pat Catan’s had prior notice that its
out-of-store advertisements constitute a deceptive or unconscionable act. The prior
notice may be in the form of (1) a rule adopted by the Attorney General under R.C.
1345.05(B)(2) or (2) a court decision made available for public inspection by the Attorney
General under R.C. 1345.05(A)(3). Id. A consumer may qualify for class action
certification under Ohio’s CSPA only if the defendant’s alleged violation of the CSPA is
substantially similar to an act or practice previously declared to be deceptive by one of
these methods identified in R.C. 1345.09(B). Id. at ¶ 2.
{¶11} Pat Catan’s argues that the cases Martin and Bovee cite in their complaint
do not constitute prior notice under R.C. 1345.09(B). Martin and Bovee contend that
Ohio Adm.Code 109:4-3-12 serves as sufficient prior notice under R.C. 1345.09(B). We
agree with Martin and Bovee.
{¶12} Under R.C. 1345.05, the Ohio Attorney General has the authority to adopt
rules “defining with reasonable specificity the acts or practices that violate” the CSPA.
See also Ohio Adm.Code 109:4-3-12. As we discuss above, in Martin I, this court
considered Pat Catan’s advertisements under one of these rules promulgated by the
Attorney General, Ohio Adm.Code 109:4-3-12. We found that “reasonable minds could
find [the advertising in question] deceptive” as defined by the Attorney General in Ohio
Adm.Code 109:4-3-12. Therefore, we find that this rule constituted prior notice to Pat
Catan’s that its advertising, in which Pat Catan’s purports to compare its prices to that of
competitors and the manufacturer’s suggested price without stating so specifically, was
deceptive and unconscionable. This advertising makes price comparisons in a manner
that was specifically declared deceptive and unconscionable by the Ohio Attorney
General in Ohio Adm.Code 109:4-3-12.
Actual Damages
{¶13} The Ohio Supreme Court has interpreted R.C. 1345.09(B) to require that
“[p]laintiffs bringing [CSPA] class-action suits must allege and prove that actual damages
were proximately caused by the defendant’s conduct.” Felix, 145 Ohio St.3d 329,
2015-Ohio-3430, 49 N.E.3d 1224, at ¶ 31, citing Konarzewski, 8th Dist. Cuyahoga No.
92623, 2009-Ohio-5827, at ¶ 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 under R.C. 1345.09(B). Id., citing Searles v. Germain Ford of Columbus,
L.L.C., 10th Dist. Franklin No. 08AP-728, 2009-Ohio-1323, ¶ 22.
{¶14} Actual damages under the CSPA are defined as “damages for direct,
incidental, or consequential pecuniary losses resulting from a violation of [R.C. Chapter
1345] and does not include damages for noneconomic loss as defined in [R.C. 2315.18].”
R.C. 1345.09(G); see Ice v. Hobby Lobby Stores, Inc., N.D.Ohio No. 1:14 CV 744, 2015
U.S. Dist. LEXIS 131336, at 18 (Sept. 29, 2015).
{¶15} Here, Martin and Bovee claim they were damaged because they “did not
receive the price reductions advertised by [Pat Catan’s], and therefore, did not receive the
value that they expected” and they “have incurred damages in the amount of that fake
discount.”
{¶16} We rejected Martin and Bovee’s contention that they are entitled to a partial
refund or reduction of the purchase price based upon the amount of
the advertised discounts in Martin I. In addressing the trial court’s dismissal of Martin
and Bovee’s unjust enrichment claim, we found
disagreement as to whether Pat Catan’s committed a violation of the CSPA
is not the same as saying that Pat Catan’s was unjustly enriched.
Regardless of the nature of the discounts, both [Martin and Bovee] received
the benefit of what they paid for in an arm’s-length transaction, so they
cannot recover on the basis that it would be unjust to allow Pat Catan’s to
retain the purchase price.
Martin I, 2015-Ohio-3585, 41 N.E.3d 850 (8th Dist.), 16.
{¶17} In addressing the dismissal of their breach of contract claim, we found that
[Martin and Bovee] paid a price that had been mutually agreed to and
received their products as agreed. They do not allege that the items were
defective or worth less than what they actually paid. They received the
benefit of their bargain and no breach occurred.
Id. at 22.
{¶18} Martin and Bovee argue these findings should not affect our current analysis
because their CSPA claim “is not about the value of goods[,]” but rather “about the
deceptive advertisements prohibited by the CSPA.” This argument, however, fails to
recognize the CSPA’s distinction between the remedies available to individual consumers
and the more limited damages available to class action plaintiffs. The CSPA provides
statutory and treble damages to individual consumers, but as discussed above, class
plaintiffs must allege and prove that they have suffered actual damages. R.C.
1345.09(B). As it applies to the putative class claim, we previously held that Martin and
Bovee did not suffer actual damages as a result of Pat Catan’s advertising, but rather, they
received the benefit of their bargain in an arm’s-length retail transaction. Martin I at
16, 22.
{¶19} We note that federal courts considering similar allegations of illusory price
comparisons have found that putative class plaintiffs who claim damages only in the
amount of the purported discount fail to allege actual injury sufficient to support a class
claim under the Ohio CSPA. See Gerboc v. ContextLogic, Inc., N.D.Ohio No. 1:16 CV
928, 2016 U.S. Dist. LEXIS 153351, at 16-18 (Nov. 4, 2016), aff’d, 6th Cir. No. 16-4734,
2017 U.S. App. LEXIS 15378, at 11-13 (Aug. 16, 2017); Ice, N.D.Ohio No. 1:14 CV
744, 2015 U.S. Dist. LEXIS 131336, at 17 (Sept. 29, 2015).
{¶20} Martin and Bovee also assert that their class claim should stand because
restitution is “appropriate in this case and available as a class-wide remedy under R.C.
1345.09(B).” As discussed above, we found in Martin I that Martin and Bovee had not
shown that Pat Catan’s was unjustly enriched by sales related to their advertising in
question. Martin I at 16. “‘[R]estitution is appropriate only where there has been a
showing of unjust enrichment.’” United States v. United Technologies Corp., 190 F.
Supp.3d 752, 758 (S.D.Ohio 2016), quoting United States ex rel. Taylor v. Gabelli,
S.D.N.Y.No. 03-cv-8762, 2005 U.S. Dist. LEXIS 26821, at 16 (Nov. 3, 2005).
Accordingly, Martin and Bovee’s argument that they are entitled to restitution fails as a
matter of law.
{¶21} As pled, Martin and Bovee’s complaint does not support a claim for actual
damages. Thus, under R.C. 1345.09(B), they cannot maintain their CSPA class action
claim. Therefore, the trial court properly granted Pat Catan’s motion for judgment on the
pleadings on Martin and Bovee’s CSPA class claim.
{¶22} Accordingly, the sole assignment of error is overruled.
{¶23} Judgment affirmed.
It is ordered that appellee 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
EILEEN A. GALLAGHER, P.J., and
FRANK D. CELEBREZZE, JR., J., CONCUR