The Ohio Consumer Sales Practices Act (CSPA) was intended to deter deceptive practices by sellers in consumer transactions. To that end, it permits individuals to recover statutory damages of $200. R.C. 1345.09(B). Of course, a consumer would have a difficult time finding an attorney to pursue a $200 claim. So, a statutory damages claim under the CSPA would seem ideal for a Civil Rule 23 class action. Unfortunately for consumers interested in pursuing such a claim, R.C. 1345.09(B) prohibits class members from recovering statutory damages under the CSPA. But that is not the final word on the subject. In federal court, Federal Rule 23 – in certain circumstances – displaces any conflicting state statutory provision that precludes a class action.
The U.S. Supreme Court rejected a New York statute barring class actions for statutory damages in Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393 (2010). Justice Scalia’s plurality opinion held that when a federal district court is sitting in diversity, Rule 23 displaces New York’s bar on class actions for statutory minimum damages. Presumably, the same rule would apply in Ohio. But district courts have declined to apply Justice Scalia’s plurality opinion to the CSPA. In re Whirlpool Corp. Front-Loading Washer Products Liability Litigation, 2010 WL 2756947, No. 1:08-WP-65000 (N.D. Ohio July 12, 2010); Phillips v. Phillip Morris Companies Inc., 290 F.R.D. 476 (N.D. Ohio 2013).
In the view of Ohio district courts, it is Justice Stevens’ concurrence in Shady Grove that determines whether Federal Rule 23 displaces the CSPA’s prohibition on class claims for statutory damages. According to Ohio federal courts, “Rule 23 is ultra vires under the approach of Justice Stevens (the crucial fifth vote in Shady Grove) because it ‘would abridge, enlarge, or modify [Ohio’s] rights or remedies and thereby violate the [Rules] Enabling Act.’” In re Whirlpool, at *2.
Holding is Binding
The problem with applying Justice Stevens’ concurrence is that, under Marks v. United States, 430 U.S. 188 (1977), Stevens’ concurrence is not controlling. The Supreme Court requires that “[w]hen a fragmented court decides a case and no single rationale … enjoys the assent of five Justices, the holding of the Court may be viewed as that position taken by those members who concurred in the judgments on the narrowest grounds.” Marks, 430 U.S. at 193. An “opinion can be meaningfully regarded as ‘narrower’ than another—only when [that] opinion is a logical subset of the other, broader opinions.” King v. Palmer, 950 F.2d 771, 781 (D.C.Cir.1991). And the portions of Justice Stevens’ Shady Grove concurrence applied by Ohio district courts are not a logical subset of the plurality opinion. See In re Hydroxycut Marketing and Sales Practices Litigation, 299 F.R.D. 648, 653 (S.D. Cal. 2014). Instead, Justice Scalia expressly rejected the portions of Stevens’ concurrence that Ohio district courts have relied on in concluding that the CSPA’s ban on class actions for statutory damages survives the plurality opinion in Shady Grove. Shady Grove, 559 U.S. at 411.
The 11th Circuit addressed Stevens’ concurrence in Lisk v. Lumber One Wood Preserving, LLC, 792 F.3d 1331 (11th Cir. 2015). The Lisk court explained: “[I]t is important to note that Justice Stevens joined parts of Justice Scalia’s opinion. Those parts, labeled sections I and II-A, thus were joined by five justices; those parts were the opinion of the Court. And those parts confirmed the analysis long followed in resolving conflicts between the Federal Rules of Civil Procedure and contrary provisions of state law.” Id. at 1335. According to the 11th Circuit, “[u]nder the plain terms of [28 U.S.C. § 2072], a federal rule applies in any federal lawsuit, and thus displaces any conflicting state provision, so long as the federal does not ‘abridge, enlarge or modify any substantive right.’” Id. at 1335. The five justices in the Shady Grove majority agreed that “applying Rule 23 to allow a class action for a statutory penalty created by New York law did not abridge, enlarge, or modify a substantive right; Rule 23 controlled. Regardless of which Shady Grove opinion is binding, the holding is binding. On this there can be no dispute.” (Emphasis sic.) Id.
Shady Grove Rule
Given the holdings in Shady Grove and List, Ohio CSPA’s restriction on class actions for statutory damages conflict with Federal Rule 23 if the class action is brought in federal court. For the protection of Ohio consumers, the federal courts should follow the Shady Grove rule and acknowledge, as Justice Scalia, Justice Stevens, and the 11th Circuit have, that state legislatures may not interfere with the Federal Rules of Civil Procedure in this way. Patrick J. Brickman