Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—SDOhio: Ohio District Court Declines to Certify Consent Judgment Notice Issue, (Jan 17, 2013)

By Jody Coultas, J.D.

The federal district court in Columbus declined to certify a question to the Ohio Supreme Court concerning whether a consent judgment which contains findings of fact and conclusions of law and which the Attorney General has chosen to place in the Public Inspection File constitute prior notice under the Ohio consumer protection law (Amber Gascho v. Global Fitness Holdings, LLC, January 16, 2013, Smith, G.).

Gym members alleged that Global Fitness Holdings, LLC violated the Ohio Consumer Sales Practices Act (CSPA) and Ohio Deceptive Trade Practices Act (DTPA) by misrepresenting the terms and conditions of membership contracts, making unauthorized deductions from members’ bank accounts, failing to provide members with copies of contracts at the time of signing, failing to orally inform members at the time of signing of their right to cancel, failing to provide copies of “notice of cancellation” documents in the form required under Ohio law, and failing to honor contract cancellations.

The court dismissed the DTPA claim and limited the class claims under the CSPA. On appeal, the gym members sought to certify a question to the Ohio Supreme Court: Does a consent judgment which contains findings of fact and conclusions of law and which the Attorney General has chosen to place in the Public Inspection File constitute prior notice under the CSPA? Also, the gym members moved for reconsideration of the court’s ruling that consent judgments do not contain determinations by a court under the CSPA.

Motion for Certification

The court declined to certify the question as requested. Although the issue proposed for certification was not settled under Ohio law, certifying the question at this procedural juncture would allow the gym members another bite at the apple. The request for certification was made after the issue was resolved despite the gym members knowing that this issue was potentially dispositive of their argument.

Motion for Reconsideration

The gym members argued for reconsideration to correct the court clear error in not finding that reasoned consent judgments in the PIF constitute prior notice under the CSPA. Specifically, the gym members argued that the court should have deferred to the Ohio Attorney General’s judgment as to whether or not consent judgments provide prior notice under the CSPA. The court was not persuaded that the Ohio General Assembly delegated to the Ohio Attorney General the authority to determine what constitutes a “judgment” under the CSPA. The Attorney General is required to make judgments available for public inspection. That role did not alter a reviewing court’s authority to determine whether a particular case constitutes prior notice under the CSPA.

The court also held that it did not misapply or fail to consider the proper case law. The gym members argued that the court applied the holding in Kline v. Mortgage Electronic Sec. Systems, 2010 WL 6298271 (S.D. Ohio 2010) too broadly and failed to consider Charvat v. Telelytics, LLC, 2006 WL 2574019 (Ohio Ct. App. 2006). Kline, according to the gym members, allegedly held that consent judgments with an analysis of the merits do constitute prior notice. However, the court disagreed with the gym members concerning the holding in Kline. Rather, Kline stood for the idea that a consent judgment does not constitute “prior notice” under the CSPA because consent judgments lack precedential value. The court rejected the holding of Charvat and stated that the Ohio Supreme Court would as well.

Judgment on the Pleadings

In arguing for judgment on the pleadings, Global Fitness relied exclusively on the language and terms of the contracts it submitted. However, the court was unwilling to rely on the documents, and the language and terms contained therein, as proof of the terms of contracts between the parties. The gym members put forth sufficient evidence to bring into question the validity, accuracy, or completeness of these documents.

The case is No. 2:11-CV-00436.

Attorneys: Gregory M Travalio (Isaac, Brant, Ledman & Teetor, LLP) for Amber Gascho. Dan L Cvetanovich (Bailey Cavalieri LLC) for Global Fitness Holdings, LLC.

Companies: Global Fitness Holdings, LLC

Cases: StateUnfairTradePractices OhioNews