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Wisconsin Supreme Court Review and Preview – Event Audio/Video

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2014 North Carolina Supreme Court Judicial Candidate Forum – Event Video

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Las Vegas Lawyers Chapter, February 05, 2016 – Event Audio/Video

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Voter Identification and the Right to Vote

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Iowa Lawyers Chapter, 29 February 2012 – Event Audio/Video

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Felix v. Ganley Chevrolet, Inc.

October 26, 2015

When the Ohio Supreme Court interprets state class-action law, it often relies on decisions from the Supreme Court of the United States interpreting federal class-action law.1  But in Felix v. Ganley Chevrolet, Inc.,2 the Ohio Supreme Court reached an issue the nation’s high court has yet to, but might soon, resolve: May courts certify classes that include members who have not “suffered [an] injury as a result of the conduct challenged in the suit?”3  Felix held they may not, at least not in cases alleging violations of the Ohio Consumer Sales Practices Act.4

I. Felix arose out of Jeffrey and Stacy Felix’s attempt to buy a Chevy Blazer from Ganley Chevrolet. Enticed (they say) by Ganley’s offer of zero-percent financing, the Felixes signed a contract to purchase the vehicle—a contract that contained an arbitration clause.5

The deal fell through.  When the Felixes learned they had been approved for financing at nine percent interest, and not the zero percent (they say) was initially offered, they backed out.6  They then sued Ganley in state court, alleging, among other things, that its practices “pertaining to” the arbitration clause violated the Ohio Consumer Sales Practices Act (the “Act”).7

Their case grew into a class action.  Following years of litigation over ancillary issues, the trial court certified a class comprising:

All consumers of Vehicles from [Ganley] … within the two-year period preceding commencement through the present date … who signed a purchase agreement containing the arbitration clause at suit or one substantially similar thereto.8

Under Ohio law, a class may be certified only if it constitutes one of three “types” of class actions recognized by Rule 23(B) of the Ohio Rules of Civil Procedure.  The trial court held that the Felixes’ case was covered by Rule 23(B)(3), because “the questions of law or fact common to class members predominate[d] over any questions affecting only individual members.”9  Thus, the court certified a class that included “[a]ll consumers,” without regard to whether they were injured by Ganley’s use of the arbitration clause.

On the merits, the trial court ruled that Ganley’s practices violated the Act, and entered judgment for the plaintiff class.  Noting the impracticality of litigating each class member’s entitlement to relief, and relying on its “discretion” in setting damages, the court awarded $200 per transaction to every class member. 10

On appeal to the Cuyahoga County Court of Appeals, Ganley argued that, in suits brought under the Act, courts may not certify classes that include members who have not been injured by the challenged conduct.  The Court of Appeals rejected this argument, and affirmed the trial court.11

II. The Supreme Court of Ohio reversed. In a 6–1 decision written by Chief Justice Maureen O’Connor, the Court held that, in class actions brought under the Act, courts may not certify classes if they include consumers not injured by the defendant’s alleged violations.

The Court’s holding turned on the application of Ohio Civil Rule 23.  Because the Rule is modeled on Rule 23 of the Federal Rules of Civil Procedure, the Court interpreted Ohio Rule 23 with reference to federal class-action case law.12  Those cases—especially Wal-Mart Stores v. Dukes13—make clear that Rule 23 is “not ‘a mere pleading standard.’”14  To the contrary, class-action plaintiffs must “affirmatively demonstrate compliance” with Rule 23’s requirements.15

The class plaintiffs failed to do so.  “During the period set forth in the class action,”16 the Act permitted plaintiffs in individual actions to seek the larger of three times the amount of their actual damages, or $200.17  But it expressly limited the relief available in class actions to actual damages; neither treble damages, nor the $200 statutory damages, were available.18  Thus, those who brought class actions under the Act were required to “allege and prove that actual damages were proximately caused by the defendant’s conduct.”19  And that, the Court explained, had important ramifications for the Rule 23(B)(3) predominance inquiry.  For in classes that include uninjured consumers, questions specific to individual class members—namely, whether each member was actually damaged by the alleged wrongdoing—will predominate.  Questions common to the class—for example, whether the defendant violated the law—will not.  Rule 23(B)(3) is thus not satisfied when a proposed class includes uninjured members.

Here, the class certified by the trial court plainly included individuals in no way harmed by Ganley’s practices;20 for example, those who never had any dispute with Ganley, and who were therefore unaffected by the arbitration clause’s inclusion.  For these reasons, the Court reversed the certification order.

III. Justice William O’Neill cast the lone dissenting vote. Justice O’Neill agreed that Rule 23’s predominance requirement prohibits the certification of any class unless common questions of law and fact will predominate. But, he said, the class can be certified even if the common questions lack common answers.21  And because each class member signed a contract with the same arbitration clause, the same issue—whether that clause violated the Act—was “overwhelmingly and obviously common to the class members because every single class member’s claim would be won or lost on the answer to that question.”22  He would therefore have affirmed the trial court.23

IV. While the Court limited its holding to suits “alleging violations of the [Act],”24 Felix arguably stands for a much broader proposition; namely, that in a class action arising under any Ohio law, no class that contains members uninjured by the challenged conduct satisfies the predominance requirement of Rule 23(B)(3). After all, when a class-action plaintiff asserts any cause of action that requires proof of actual injury, questions regarding whether individual members were injured will predominate to the same degree they did in Felix, unless every class member is injured by the challenged conduct.

It remains to be seen how Felix affects cases in which the predominance requirement is not implicated.  As with federal law, Ohio law permits certification of any class that satisfies the numerosity, commonality, typicality, and adequate representation requirements of Rule 23(A), but only if the class action falls within one of the three types of cases set out in Rule 23(B).  Just one type of case expressly includes a predominance requirement; those that fall within Rule 23(B)(3).  (And in fact, the trial court in Felix, in addition to certifying the class under Rule 23(B)(3), also did so under Rule 23(B)(2).25  That section refers to cases in which “final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.”26  But neither the majority nor the dissent addressed the propriety of certifying the class under Rule 23(B)(2).)  Accordingly, while Felix holds “that all members of a class in class action litigation alleging violations of the [Act] must have suffered injury as a result of the conduct challenged in the suit,”27 it is unclear whether this holding is applicable when Rule 23(B)(3) is inapplicable.

Finally, as noted at the outset, the Supreme Court of the United States has not yet decided whether classes that included uninjured members can be certified.  But it might this Term, in Tyson Foods, Inc. v. Bouaphakeo.  That case presents the question whether a class can be certified under Federal Rule 23(b)(3) when it “contains hundreds of members who were not injured and have no legal right to any damages.”28  In light of the heavy reliance Felix placed on the Supreme Court of the United States’ cases interpreting Federal Rule 23(b)(3), the Court’s willingness in Tyson to permit the certification of classes containing uninjured members will likely influence the Supreme Court of Ohio’s willingness to extend or narrow Felix.

*Chad A. Readler is a partner, and Benjamin M. Flowers an associate, at Jones Day’s Columbus, Ohio office. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the law firm with which they are associated.


1 See, e.g., Stammco, L.L.C., v. United Tel. Co. of Ohio, 136 Ohio St.3d 231, 242 (2013) (holding, with reliance on the Court’s decision in Wal-Mart v. Dukes, 131 S.Ct. 2541 (2011), “that at the certification stage in a class-action lawsuit, a trial court must undertake a rigorous analysis, which may include probing the underlying merits of the plaintiff’s claim, but only for the purpose of determining whether the plaintiff has satisfied the prerequisites of Civ.R. 23.”)

2 No. 2015–Ohio–3430 (Ohio Aug. 27, 2015)

3 Id., slip op., at 13.

4 Id.

5 Id., at 2.

6 Id., at 2–3.

7 Id., at 3 (emphasis added).

8 Id., at 5 (emphasis added).

9 Ohio Civ.R. 23(B)(3).

10 Felix, slip op., at 6.

11 Id., at 6-7.

12 Id., at 7–8.

13 131 S.Ct. 2541.

14 Felix, slip op., at 8 (quoting Dukes, 131 S.Ct. at 2551).

15 Id., at 8 (citing Dukes, 131 S.Ct. at 2551).

16 Id., at 9.

17 Id. (citing Former Rev. Code § 1345.09(B), 137 Ohio Laws, Part II, at 3227).

18 Id.

19 Id., at 10.

20 Id., at 14 (“[T]he class certified in this case includes plaintiffs whose damages are, at best, inchoate.”)

21 Id., at 16–17 (O’Neill, J., dissenting) (citing Amgen, Inc., v. Connecticut Retirement Plans & Trust Funds, 133 S. Ct. 1184 (2013)).

22 Id., at 18.

23 Id., at 17.

24 Id., at 13 (majority).

25 Id., at 5.

26 Ohio Civ.R. 23(B)(2).

27 Felix, slip op., at 13.

28 Petn. For Cert. in Tyson Foods, Inc. v. Bouaphakeo, No. 14­–1146, at i. (filed Mar. 19, 2015).

N.C. Appeals Court, Supreme Court candidates answer questions in Federalist Society forum

September 27, 2012

Triangle Lawyers Chapter, 26 September 2012 – Event Audio/Video

Are Judicial Elections a Threat to Judicial Independence?

February 27, 2012

The Federalist Society State Courts Project, 26 October 2006 – Event Audio

Featuring: Harold F. See, Jr., Randall T. Shepard, Tim O’Brien