Ohio’s Consumer Sales Practices Act (“CSPA”) was originally enacted in the early 1970’s. The CSPA defines certain business practices as illegal. It also provides for a host of remedies, including triple damages and attorney fees, for consumers when a supplier breaks some provision of the Act.
Ohio’s legislature recently signed into a law long-needed provision in the CSPA. R.C. §1345.092, effective July 3, 2012, allows a supplier to protect itself from triple damages and attorney’s fees that are typically sought by plaintiffs and their attorneys in fee shifting cases.
R.C. §1345.092 allows a supplier to deliver a “cure offer” to the consumer within thirty days “after being served with a complaint that sets forth a CSPA claim and demands damages under R.C. 1345.09.” The cure offer must be sent by certified mail to the consumer or the consumer’s attorney. The cure offer must also be filed with the Court.
The consumer has thirty days after receipt of the cure offer to respond to it. The consumer’s acceptance or rejection of the cure offer must also be filed with the Court. If a consumer does not respond to the cure offer, the consumer is deemed to have rejected it.
If the cure offer is rejected by the consumer, and a judge, jury, or arbitrator subsequently awards actual economic damages “that are not greater than the value of [the] supplier’s remedy included in a cure offer,” the consumer is not entitled to an award of triple damages, attorney’s fees, or court costs. See R.C. §1345.092(G).
A supplier’s cure offer must “clearly explain the resolution being offered by the supplier.” The resolution must include “monetary compensation to resolve [the] alleged violations of [the CSPA], [r]easonable attorney’s fees that consist of legal fees necessary or reasonably related to the filing of the initial complaint, not to exceed two thousand five hundred dollars; [and,] [c]ourt costs incurred by the consumer that are related to the filing of the initial complaint.” See R.C. §1345.092(D).
If the consumer accepts the cure offer, the consumer must make a request for attorney’s fees (up to two thousand five hundred dollars) and a request for court costs. The consumer must also provide evidence in support of the consumer’s request for attorney’s fees (i.e. bills). If the supplier agrees with the amount requested, it can pay it. Otherwise, the supplier can request a hearing and the court will decide the “reasonable” attorney’s fees. The attorney’s fees cannot exceed two thousand five hundred dollars. The court is then obligated to review the evidence provided by the consumer and make an award.
R.C. §1345.092 also provides that the Court may extend the deadlines for moving or otherwise pleading in response to a complaint that sets forth a CSPA claim. This extension allows adequate time to make a cure offer and for the consumer to respond to any cure offer made by the supplier.
R.C. §1345.092 addresses a problem that has faced suppliers and defendants in CSPA cases in Ohio for several years. Because Ohio does not have offers of judgment, plaintiffs who obtained a verdict in their favor at trial were able to move for attorney fees and treble damages even in those cases where the verdict was less than what was offered before trial. This resulted in excessive demands and no leverage to suppliers against such demands. We believe that this new provision in the statute helps level the playing field.
The requirements of the cure offer are specific and require certain language be included in the letter. A supplier must be swift and decisive to avail itself of the benefits of this new section, as the cure offer must generally be made within thirty days after being served with a complaint setting forth an alleged CSPA violation. It is imperative that this new section be considered at the outset of litigation to determine if a cure offer should be tendered. Please contact one of our practice area leaders if you have any questions regarding this new statute, its impact, or application.
Please contact one of our Finance & Creditor’s Rights and Liability Practice Area Leaders if you have any questions regarding this new statute, or any other question touching upon consumer financial transactions.
