Ohio Supreme Court Rejects No-Injury Class Actions

On August 27, 2015, the Ohio Supreme Court ruled in Felix v. Ganley Chevrolet, Inc., 2015-Ohio-3450 (Aug. 27, 2015), that courts cannot certify class actions that include uninjured members.  ATRA had filed an amicus brief urging the court to review the case, and, when it did so, to reject such “empty suit” litigation.  In holding that “all members of a plaintiff class alleging violations of the Ohio Consumer Sales Practices Act (“OCSPA”) must have suffered injuries as a result of the conduct challenged in the suit,” the Court found ATRA’s arguments persuasive.

The decision reverses a trial court’s certification of a class action that included all consumers who purchased vehicles from a dealership by signing a contract that included an unenforceable arbitration provision.  There was no evidence that any class member, aside from the class representative, had a dispute with the dealership or had experienced a loss resulting from the inclusion of the provision in a sales agreement.  Most consumers were likely satisfied with their purchases and, since they had no dispute with the dealership, were not affected by the provision.  Nevertheless, the trial court found it had “discretion” to award each consumer an arbitrary $200, a result at odds with Ohio’s consumer protection law, which authorizes statutory damages only for individual claims. An intermediate appellate court affirmed.

In a 6-1 decision authored by Chief Justice O’Connor, the Ohio Supreme Court held that unless all members of a plaintiff class have suffered injuries as a result of the conduct challenged in the suit, the class fails to meet the predominance standard required for class certification.  Quoting scholarship by ATRA General Counsel Victor E. Schwartz and his colleague Cary Silverman, the court recognized that “[p]erhaps the most basic requirement to bring a lawsuit is that the plaintiff must suffer some injury.  Apart from a showing of wrongful conduct and causation, proof of actual harm to the plaintiff has been an indispensable part of civil actions.”  For that reason, the court held that “all members of a class in class action litigation alleging violations of the [state’s consumer protection law] must have suffered injury as a result of the conduct challenged in the suit.”

ATRA applauds the Ohio Supreme Court for bringing sanity to consumer class actions.  Consumer protection laws should provide a remedy for individuals who experienced a financial loss as a result of unfair or deceptive business practice.  Providing windfall awards to uninjured people is a misuse of the legal system and needlessly increases the price of goods and services for all.