Ohio’s Consumer Sales Practices Act is embroiled in a three-way battle between the legislature, the courts, and the governor. While the struggle plays out, damages recoverable under the CSPA will be unclear.
The CSPA prohibits unfair or deceptive acts or practices in connection with a consumer transaction. In general, the CSPA defines unfair deceptive consumer’s sales practices as those that mislead consumers about the nature of the product or service they are receiving, while unconscionable acts or practices relate to manipulating a consumer’s understanding of the nature of the transaction at issue. Since its enactment, the CSPA has provided a potential remedy of three times the amount of a plaintiff’s “actual damages.”
In Whitaker v. M.T. Automotive, 111 Ohio St.3d 177, 2006-Ohio-5481, the Supreme Court of Ohio held that all forms of compensatory relief, including non-economic damages, are included within the “actual damages” subject to trebling under R.C. 1345.09(B).
Plaintiff Craig Whitaker attempted to lease a vehicle from M.T. Automotive. After a credit manager for M.T. Automotive agreed to lease Mr. Whitaker a truck for $230.00 a month, all appropriate agreements were signed. In turn, Mr. Whitaker sold his own truck, paid a total of approximately $1,500.00 for his deposit on the lease, and installed a new stereo in his new leased truck. A few days later Mr. Whitaker returned the vehicle to the dealer for repair. When he returned to pick up his vehicle, the dealership informed him that it could not find a bank to finance the truck’s purchase with the promised payments of $230.00 a month, and could only find a bank to finance $297.00 per month. Mr.
Whitaker refused the deal and it was suggested that he find a co-signer on the lease.
The next day, Mr. Whitaker returned with his father, as a co-signer. However, the lease papers had increased the monthly payments from $230.00 to $240.00 and changed certain favorable terms. When Mr. Whitaker refused the new deal, the dealership informed Mr. Whitaker that it would not refund his deposit. Further, when Mr. Whitaker returned to the dealership with the original truck radio as instructed, his upgraded stereo was missing from the dealership. Unable to recover his deposit and his radio, Mr. Whittaker sued the dealership under the CSPA, and for breach of contract, conversion, and fraud.
A jury returned with a verdict in favor of Mr. Whitaker and against the dealership. It determined that M.T. Automotives had knowingly committed eleven (11) separate violations of the CSPA. The jury awarded Mr. Whitaker $105,000.00 in a general verdict, as well as $367.15 for the conversion of the stereo. Finding that R.C. 1345.09(B) was satisfied, the trial court trebled the CSPA award to $315,000.00 and awarded $155,056.70 in attorney fees and case expenses.
In a direct response to the Whitaker ruling, the Ohio legislature enacted Substitute Senate Bill 117, without public hearings in the closing days of the legislative session. The Act nullifies the Whitaker decision, and limits non-economic damages to a maximum of $5,000.00. The Act was opposed by both the outgoing and incoming Ohio Attorneys General, who were denied any opportunity to testify in opposition to the legislation. The Bill was sent to the outgoing Governor, Bob Taft, on December 27, 2006. The Governor voiced opposition to the bill but did not issue a veto before leaving office. The legislature maintains that the bill is effective because it was not vetoed on or before January 6, 2007. However, in one of his first substantive acts, the incoming Governor, Ted Strickland, issued a veto on January 8, 2007, and maintains that the veto is within the 10 day period as calculated by law. Under certain circumstances the Ohio Constitution and statutory provisions exclude Sundays and holidays from calculations of time. Thus, the governor’s rejection of the bill would likely be timely if the legislature were in session and the bill was being returned to the legislature with objections. However, the Ohio Constitution is less than clear, and the applicability of statutory definitions are arguable, when the bill is vetoed after the close of the legislative session.
The battle over the CSPA is not only a classic example of a battle among branches of government; it is also a battle with significant consequences for consumers and businesses in Ohio. The Whitaker decision is viewed by some as a non-controversial application of an established consumer protection statute. To others it stands as another example of a litigation related windfall. However the decision is viewed, the legislative response would profoundly change Ohio’s most important consumer protection statute, by capping non-economic damages under the CSPA at $5,000.00, irrespective of the nature of the conduct or the severity of its non-economic consequences.
To request a copy of the Whittaker decision or a copy of S.B. 117, or to discuss concerns as to how the Supreme Court’s Whitaker ruling may effect a present or future case, please feel free to contact one of our Finance and Creditor Rights Practice attorneys.