Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. Ohio: Consumer’s deceptive advertising claims against retailer of recorded college lectures may proceed, (Apr 22, 2014)

By Linda O’Brien, J.D., LL.M.

A consumer stated plausible deceptive advertising claims against a retailer of college lecture recordings in relation to the advertisement of its products at discounted prices, the federal district court in Columbus, Ohio has ruled. However, the consumer’s class allegations on behalf of two classes of consumers who purchased the defendant’s products were dismissed for failure to allege economic damages (Cassidy v. The Teaching Company, LLC, April 21, 2014, Graham, J.).

The Teaching Company is an online and mail order retailer that sells recordings of lectures by college professors and high school teachers. Consumers can purchase the lectures on CD, DVD, and other formats. Susan Cassidy purchased a lecture on DVD from The Teaching Company after viewing numerous catalogs and advertisements in publications and on websites offering its products at major discounts. Cassidy filed suit against The Teaching Company, alleging deceptive advertising of its price discounts in violation of the Ohio Consumer Sales Practices Act (OCSPA).

Cassidy alleged that the defendant (1) made representations that specific price advantages existed when they did not exist; (2) advertised that a sale or discount would end within a certain time when it would not end with that time; (3) advertised price comparisons with comparing the sale and actual regular prices; (4) advertise price comparisons without clearly and conspicuously disclosing the nature of the reference price; (5) made fictitious price comparisons; and (6) employed a price that was not openly offered to the public. The Teaching Company moved to dismiss for failure to state an OCSPA claim and strike the class allegations.

OCSPA claims. The court found that the plaintiff stated a plausible claim under the OCSPA. A plaintiff can state a plausible claim by pleading facts based on information and belief if the facts are peculiarly within the control of the defendant or the belief is based on factual information. In rejecting the defendant’s arguments that the plaintiff’s allegations based on information and belief were conclusory and unsupported by facts, the court noted that the plaintiff’s claims were plausible inferences based on her factual allegations. Cassidy alleged that the defendant advertised its products at discounts from limited periods of time when most, if not all, of the defendant’s sales came from selling discounted products. From these facts, it could be inferred that the defendant’s sales do not actually end and the advertised sale price was actually the regular price. Thus, the plaintiff’s factual allegations allow for a plausible inference of wrongdoing by the defendant.

Class action allegations. However, the plaintiff’s class allegations were dismissed. A class action complaint under the OCSPA must allege actual, as opposed to noneconomic, damages that were the proximate result of the defendant’s deceptive act. In this case, the plaintiff only alleged that class members suffered noneconomic damages and failed to allege any facts to support a claim for actual damages, the court concluded.

The case is No. 2:13-cv-884.

Attorneys: Troy John Doucet (Doucet & Associates, Inc.) for Susan Cassidy. Stephen Douglas Jones (Roetzel & Andress) for The Teaching Company

Companies: The Teaching Company, LLC

Cases: Advertising StateUnfairTradePractices OhioNews