Nip it in the Bud: CSPA Cure Offers May Steer More Than Just CSPA Claims Toward Early Resolution

Posted on May 16th, 2017 by sutter-admin

R.C. 1345.092 is a relatively new provision of Ohio’s Consumer Sales Practices Act (CSPA).  Enacted in 2012, the statute allows a supplier to possibly limit its liability when receiving unfavorable verdicts for CSPA claims.  Under R.C. 1345.092, a supplier may issue a “cure offer” to resolve any CSPA claims.  The supplier may only issue this cure offer within 30 days of service of the Complaint.  The consumer must then respond to the cure offer within 30 days of its receipt.

A consumer’s rejection of a cure offer can seriously impact a supplier’s liability.  If, after trial or arbitration, the consumer receives an award that is less than the amount offered in the cure offer, the consumer is no longer entitled to: 1) treble damages; 2) attorney’s fees incurred after receiving the cure offer; and 3) court costs incurred after receiving the cure offer.

Considering that cure offers are only valid if made in the earliest stage of litigation, the evident purpose of R.C. 1345.092 is to facilitate the early resolution of legal claims.  But an issue arises as to whether the statute confines cure offers to CSPA claims.  While no Ohio state court opinions address the issue, two recent opinions from the Southern District of Ohio discuss the scope of cure offers.

In Lucas v. Telemarketer Calling from (407) 476-5670, 2013 U.S. Dist. LEXIS 156337, 2013 WL 5934422 (S.D. Ohio Oct. 31, 2013), the Plaintiff brought a lawsuit pro se against numerous telemarketing entities for allegedly illegal telemarketing activities, asserting both CSPA and federal claims.  Court procedure then referred the lawsuit to a Magistrate Judge for review and disposition.

At the onset of the litigation, the Defendants issued a “cure offer” to Plaintiff under R.C. 1345.092.  The cure offer was to “resolve [the] matter in its entirety,” including state law CSPA claims and the federal claims.  Plaintiff “accepted” the cure offer, but only as to the state law claims.

The Plaintiff later moved for summary judgment, seeking to enforce the terms contained in the Defendants’ cure offer.  Although the Plaintiff only accepted the cure offer as to the state law claims, the Plaintiff argued that the acceptance was valid because cure offers are confined to CSPA claims, stating that R.C. 1345.092 clearly provides that a cure offer “consists solely of monetary compensation to resolve alleged violations of [the CSPA.]”

The Magistrate Judge disagreed.  The Magistrate Judge explained that the word “solely” modified “monetary compensation” and not the clause involving the “alleged violations”.   The Magistrate Judge further explained that nothing in the statute limits cure offers to only CSPA claims.  For example, the “notice” language necessary for a valid cure offer only requires notice that the offer “includes a ‘cure offer’ that is being offered to settle all alleged violations of the [CSPA].”  The statute accordingly requires a cure offer to cover a CSPA claim but does not limit the offer to the CSPA claim.  The Magistrate Judge then found that Plaintiff’s failure to unconditionally accept the cure offer constituted a rejection and accordingly recommended denying Plaintiff’s motion for summary judgment.

The District Court reviewed the decision in Lucas v. Telemarketing Calling from (407) 476-5680, 2014 U.S. Dist. LEXIS 8873, 2014 WL 296645 (S.D. Ohio Jan. 23, 2014).  During review, the Court took a different position as to the scope of cure offers, stating that R.C. 1345.092 did not “very clearly” anticipate claims beyond the CSPA.  After finding no relevant state court opinions, the Court held that the Defendants’ cure offer was facially invalid because the offer covered more than just CSPA claims.  The Court offered little explanation for this finding, other than noting that enforcing a global settlement in a case involving a pro se litigant seemed inconsistent with the legislative intent of the CSPA.  Eventually adopting the Magistrate’s recommendation, the denial of Plaintiff’s motion for summary judgment was based on the failure to unconditionally accept the offer under traditional contract principles.

In light of these cases, courts will hopefully provide additional guidance on the scope of cure offers.  Should courts expand cure offers beyond just CSPA claims, far more cases involving CSPA claims could steer toward early resolution, satisfying the apparent purpose of cure offers under R.C. 1345.092.

If you have any questions or concerns about cure offers or any other matter regarding your defense, Sutter O’Connell attorneys are here to help.