Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES —Ohio App.: Class certification upheld in suit by auto purchasers claiming unfair arbitration clause, (Aug 16, 2013)

By Edward L. Puzzo, J.D.

The action of automobile purchasers claiming unfair trade practices under the Ohio Consumer Sales Practices Act was properly certified as a class, the Ohio Appellate Court in Cleveland has ruled (Jeffrey Felix v. Ganley Chevrolet, Inc., August 15, 2013, Kilbane, J.).

In a class action brought by automobile purchaser Felix against auto dealer Ganley Chevrolet under the Ohio Consumer Sales Practices Act (CSPA), it was alleged that, among other claims, Ganley had engaged in unfair and deceptive unfair trade practices in inducing customers to sign purchase agreements containing an arbitration clause by representing that they had been approved for financing when they had not been so approved.

Upon appeal, Ganley challenged whether the lower court had properly certified the class action. The appellate court therefore reviewed the lower court's basis for finding that each prerequisite for a class action under CSPA had been met.

Public policy favoring arbitration. Ganley argued that, due to the public policy favoring arbitration and the individualized assessment necessary for a determination of procedural unconscionability, class-wide relief was precluded. The court responded that the fact that an arbitration provision is generally presumed valid does not preclude a finding that inclusion of a misleading provision in a consumer sales contract constitutes an unfair and deceptive practice under the CSPA, and the violation applied class-wide, regardless of whether the arbitration provision was substantively and procedurally unconscionable under contract law principles.

Identifiable class. Since the lower court ruling had limited the class to consumers who had purchased vehicles from Ganley and affiliates within a specific two-year period, it would be administratively feasible to determine whether or not someone was a member of the class. Thus, the description of the class was sufficiently definite and unambiguous.

Class membership. Felix did purchase a vehicle from Ganley during the specified period and signed a purchase agreement with the arbitration clause in question, so he met the requirement that a class representative must share the same injury as all members of the class he seeks to represent.

Commonality. The commonality requirement, that a nucleus of facts exists so that questions of fact and law are common to all members of the class, was met by the common facts of a purchase of a vehicle during the specified time period, involving a purchase agreement substantially identical to that at issue, containing an arbitration clause violative of the CSPA.

The appellate court also found that the other prerequisites of numerosity, typicality, and adequate representation had been met, that the trial court had presided over the case for 11 years, and that it had conducted a rigorous analysis into whether the prerequisites for class certification under Civ.R. 23 had been satisfied. Thus, the court ruled that the lower court had not abused its discretion in certifying the class.

Dissent. In his dissent from the majority, Judge Rocco opined that Felix had not met certain requirements for maintaining a CSPA class action. Among other objections, he maintained that the time period specified for the class was ambiguous, since certain parties were added after commencement of the case; that the defined class was overly broad in that it included individuals who had sustained no actual damages; and that sufficient prejudgment notice had not been provided to class members.

The case is Civil Action No. 2013-Ohio-3523.

Attorneys: David D. Yeagley (Ulmer & Berne LLP) for Ganley Chevrolet, Inc. Lewis A. Zipkin (Zipkin Whiting Co., LPA) for Jeffrey Felix.

Companies: Ganley Chevrolet, Inc.

Cases: StateUnfairTradePractices OhioNews