Sutter O’Connell attorneys recently obtained a dismissal with prejudice of a putative class action against an international retailer in the U.S. District Court for the Northern District of Ohio. The putative class plaintiff contended that the client’s distribution of in-store coupons on an alleged daily basis was deceptive and fraudulent because consumers purportedly paid the “full price” rather than the promised discount on the coupon. The original complaint asserted the following class and individual claims: (1) violation of the sections 1345.02(B)(1) and (B)(8) of the Ohio Consumer Sales Protection Act (“OCSPA”); (2) breach of contract; (3) fraud; and (4) unjust enrichment. In two separate orders, the court completely rejected the basis and theory for the class action and the claims asserted.
In response to a partial motion to dismiss filed on behalf of the client, the federal court dismissed all claims, except for the individual claim for alleged violation of section 1345.02(B)(8) of the OCSPA. To allege a class action claim under the OCSPA, a plaintiff must demonstrate that the defendant had prior notice that its conduct was “deceptive or unconscionable.” In this case, the court concluded that the putative class representative did not satisfy the prior notice requirement and dismissed the OCSPA class claims with prejudice. The three prior cases relied upon by the plaintiff in her complaint did not qualify as prior notice because they were not substantially similar to the retailer’s alleged conduct (in-store coupons versus out-of-store coupons and other dissimilarities) and consent decrees and default judgments cannot serve as a basis for prior notice. Furthermore, the court ruled that Ohio Administrative Code 109:4-3-12(E) is not prior notice because it does not apply to in-store coupons – it applies only to out-of-store advertisements, which were not alleged to have been made in this case.
In addition, the court agreed that section 1345.02(B)(1) does not apply to representations involving price and dismissed that individual claim with prejudice. The court also dismissed with prejudice the breach of contract claim, as plaintiff could not establish that the in-store coupon qualified as a contract. The court then dismissed the fraud and unjust enrichment claims (which was based on fraud) for failure to plead fraud with particularity as required under Fed. R. Civ. P. 9(b). However, the court granted the putative class plaintiff leave to refile her fraud and unjust enrichment claim with particularity.
In her amended complaint, the putative class plaintiff pursued only the fraud and unjust enrichment claims. She abandoned her section 1345.02(B)(8) individual claim in her amended complaint. After discovery, the retailer moved for summary judgment, which the court granted. The court concluded that there was nothing misleading about the in-store coupons. In fact, the plaintiff failed to point to a false statement to substantiate the fraud claim. As the court stated: “The undisputed facts do not support plaintiff’s theory that she paid ‘full price’ for her purchase.” Because the unjust enrichment claim was derivative of the fraud claim, the court granted summary judgment on that claim as well. In the end, all of plaintiff’s claims were dismissed with prejudice and her theory rejected. The court never reached the plaintiff’s motion to certify a class.
These fraudulent coupon and advertisement lawsuits have become popular for class plaintiffs to pursue. Although many settle, the above case proves that these lawsuits can be defeated. These opinions will be helpful to other retailers and corporations fighting baseless class action lawsuits.
Sutter O’Connell attorneys Matt O’Connell, Brian Roof, Theresa Bratton, Christina Marshall, and Joseph Darwal were involved in the defense and briefing of this case.