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Ohio Enacts a “Right to Cure” Under its Consumer Sales Practices Act
By R. Glenn Knirsch

What would cause the Cleveland Plain Dealer’s consumer rights columnist, Sheryl Harris, to say that “Ohio’s Consumer Sales Practices Act is now one of the weakest consumer laws in the country”? Ohio HB 275 – that’s what.

The Ohio Consumer Sales Practices Act prohibits a “supplier” from engaging in fraudulent, deceptive, and misleading acts and practices when entering into a consumer transaction. The Ohio attorney general has proscribed several acts and practices that he deems unlawful under the Act, several of which implicitly and explicitly regulate the servicing, advertising, or selling of new and used cars by a dealer.

A consumer may sue a supplier for violations of the Act and, if successful, may either rescind the transaction or recover his actual economic damages, non-economic damages in an amount not exceeding $5,000, declaratory and injunctive relief, and treble damages. And, as with most consumer protection statutes, the consumer may recover his reasonable attorney’s fees and costs in a successful action. Many suppliers believe it is this “fee-shifting” mechanism that gives rise to what they believe to be unfounded claims based on “clever” interpretations of the law. It is for this reason that suppliers, in particular a contingent of Ohio auto dealers, strongly supported Ohio HB 275, which now permits a supplier to offer a consumer a “cure offer” if a consumer files an action for an alleged violation of the CSPA. On April 2, 2012, Ohio Governor John Kasich signed this bill into law, which is expected to go into effect on July 2, 2012.

HB 275 gives a supplier who is subject to suit under the CSPA the right to make a “cure offer” to the consumer in cases that do not assert claims for personal injury or death. The supplier must send this cure offer to the consumer or his attorney by certified mail within the first 30 days after being served with the lawsuit. The cure offer must contain language that clearly explains the resolution being offered by the supplier, which must consist of monetary compensation to resolve the alleged violations of the CSPA, the consumer’s attorney’s fees, and the cost of filing the lawsuit. The supplier must file a copy of this cure offer with the court. The consumer has 30 days to notify the supplier if he accepts, and must file that response with the court. If a consumer does not respond to a supplier’s cure offer within the 30-day period, the offer is deemed rejected.

If the consumer accepts the cure offer, the consumer is permitted to demand his attorney’s fees, but those fees are capped at $2,500. The consumer must also send with this request a bill, or other documentation, that supports the amount sought. If the supplier deems the amount requested unreasonable, the supplier must seek a ruling from the court within 10 days. Once the amount of attorney’s fees to be paid is determined, the supplier must pay that amount to the consumer “within a reasonable time.”

If the cure offer is rejected or not responded to within the 30-day time period, the matter proceeds through the court process unaffected, as the cure offer is inadmissible evidence of liability. However, if the consumer ultimately recovers an award of actual economic damages from a judge or jury that is not greater than the value of the cure offer, the consumer forfeits his right to receive treble damages, court costs, and attorney’s fees incurred after rejection of the cure offer.

While suppliers claim that the intent of the bill is to encourage the swift resolution of litigation brought under the CSPA, consumer advocacy groups chided this bill as undermining the deterrent effect that the CSPA once had because it removes the teeth of the CSPA and permits dealers to engage in bad acts without fear of recourse. Given that this is an emotionally charged issue – the classic pro-business vs. pro-consumer debate – and because the bill marginally passed down party lines in a Republican-led House and Senate and was signed by a Republican governor, the shelf life of this bill is far from certain. What is certain is that Democratic lawmakers and candidates will use Republican support of this bill to help paint the picture that Democrats are the party of the common-man consumer and that Republicans are the party of big business. And if both chambers of the Ohio legislature change sides, and if Governor Kasich loses re-election in 2014, HB 275 may be repealed as easily, quickly, and quietly as it was enacted.

R. Glenn Knirsch is an associate in the Maryland office of Hudson Cook, LLP. Glenn can be reached at 410-865-5407 or by email at gknirsch@hudco.com.

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