Cassidy v. The Teaching Company, LLC d/b/a The Great Courses
Filing
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OPINION and ORDER granting in part and denying in part 4 Motion to Dismiss for Failure to State a Claim. The Plaintiff's class allegations are DISMISSED. The Plaintiff will be permitted to proceed with her individual claim against the Defendant. Signed by Judge James L Graham on 4/21/14. (ds)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Susan Cassidy,
Case No. 2:13-cv-884
Plaintiff,
v.
Judge Graham
The Teaching Company, LLC,
d/b/a The Great Courses,
Magistrate Judge King
Defendant.
OPINION AND ORDER
The Plaintiff brings this action on behalf of herself and two putative classes of Ohio
residents, alleging violations of the Ohio Consumer Sales Practices Act (the OCSPA or the Act),
O.R.C. § 1345.01 et seq. This matter is before the Court on the Defendant’s Motion to Dismiss
(doc. 4) filed on November 8, 2013. For the reasons that follow, the Court will GRANT IN
PART AND DENY IN PART the Defendant’s Motion.
I.
Background
The following allegations are taken from the Plaintiff’s First Amended Complaint:
The Defendant is an online and mail-order retailer that sells recordings of lectures by
college professors and high school teachers. First Am. Compl. at ¶ 8, doc. 2. Consumers can
purchase the lectures on CD, DVD, and other formats. Id. On June 19, 2012, the Plaintiff
purchased “Experiencing Hubble: Understanding the Greatest Images of the Universe” on DVD
from the Defendant for $34.95. Id. at ¶ 13. Before and after purchasing the DVD from the
Defendant, the Plaintiff viewed numerous advertisements from the Defendant offering its
products at major discounts. Id. at ¶ 15. The Plaintiff viewed these advertisements in a variety of
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publications, including the Defendant’s website, www.thegreatcourses.com, the Wall Street
Journal, Vanity Fair, and other catalogs and advertisements received by mail and e-mail. Id. at ¶
16. The Plaintiff relied on the Defendant’s advertisements and purchased the “Experiencing
Hubble” DVD course because of the advertised discount. Id. at ¶¶ 20–21.
To make the discount appear larger than it actually was, the “Experiencing Hubble”
course had a falsely inflated “regular” price. First Am. Compl. at ¶ 22. The Defendant advertises
its products at heavily discounted prices available for limited periods of time. Id. at ¶ 23. The
Defendant’s advertised specials do not always reference a non-sale price. Id. at ¶ 27. In reality,
most of the Defendant’s advertised products are always on sale and the majority of its sales are at
discounted prices. Id. at ¶¶ 24–25. The Defendant’s “sale” prices are, in effect, the “regular”
price at which consumers can purchase the Defendant’s products. Id. at ¶¶ 28–30.
The Plaintiff filed a Complaint (doc. 1) against the Defendant on September 6, 2013. On
September 9, 2013, the Plaintiff filed her First Amended Complaint (doc. 2). In her Amended
Complaint, the Plaintiff brings a class action lawsuit against the Defendant for alleged violations
of the Ohio Consumer Sales Practices Act. The sole count in the Plaintiff’s Amended Complaint
alleges that the Defendant violated the OCSPA. However, the Plaintiff alleges multiple
violations of the OCSPA, including that the Defendant violated the OCSPA when it: (1) made
representations that specific price advantages exist when they did not in violation of O.R.C. §
1345.02(B)(8); (2) advertised that a sale or discount would terminate within a given or
anticipated period of time when they did not in violation of Ohio Admin. Code § 109:4-3-12(D);
(3) advertised using price comparisons without comparing the advertised sales to its actual
regular prices in violation of Ohio Admin. Code § 109:4-3-12(E); (4) advertised price
comparisons without clearly and conspicuously disclosing the nature of the reference price in
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violation of Ohio Admin. Code § 109:4-3-12(E); (5) made fictitious price comparisons in
violation of 16 C.F.R. § 233.1(a); and (6) employed a price that was not openly offered to the
public in violation of 16 C.F.R. § 233.1(a). The Defendant filed its Motion to Dismiss on
November 8, 2013.
II.
Standard of Review
Federal Rule of Civil Procedure 8(a) requires that a pleading contain a “short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
When considering a motion under Rule 12(b)(6) to dismiss a pleading for failure to state a claim,
a court must determine whether the complaint “contain[s] sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court should
construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded
material allegations in the complaint as true. Iqbal, 556 U.S. at 679; Erickson v. Pardus, 551 U.S.
89, 93–94 (2007); Twombly, 550 U.S. at 555–56.
Despite this liberal pleading standard, the “tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of
the elements of a cause of action, supported by mere conclusory statements, do not suffice.”
Iqbal, 556 U.S. at 678; see also Twombly, 550 U.S. at 555, 557 (“labels and conclusions” or a
“formulaic recitation of the elements of a cause of action will not do,” nor will “naked
assertion[s]” devoid of “further factual enhancements”); Papasan v. Allain, 478 U.S. 265, 286
(1986) (a court is “not bound to accept as true a legal conclusion couched as a factual
allegation”). The plaintiff must provide the grounds of his entitlement to relief “rather than a
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blanket assertion of entitlement to relief.” Twombly, 550 U.S. at 555 n.3. Thus, “a court
considering a motion to dismiss can choose to begin by identifying pleadings that, because they
are no more than conclusions, are not entitled to the assumption of truth.” Iqbal, 556 U.S. at 679.
When the complaint does contain well-pleaded factual allegations, “a court should
assume their veracity and then determine whether they plausibly give rise to an entitlement to
relief.” Iqbal, 556 U.S. at 679. “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. at 678. Though “[s]pecific facts are not necessary,” Erickson, 551 U.S.
at 93, and though Rule 8 “does not impose a probability requirement at the pleading stage,”
Twombly, 550 U.S. at 556, the factual allegations must be enough to raise the claimed right to
relief above the speculative level and to create a reasonable expectation that discovery will reveal
evidence to support the claim. Iqbal, 556 U.S. at 678–79; Twombly, 550 U.S. at 555–56. This
inquiry as to plausibility is “a context-specific task that requires the reviewing court to draw on
its judicial experience and common sense. . . . [W]here the well-pleaded facts do not permit the
court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has
not ‘show[n]’– ‘that the pleader is entitled to relief.’” Iqbal, 556 U.S. at 679 (quoting Fed. R.
Civ. P. 8(a)(2)).
III.
Discussion
The Defendant asserts that the Plaintiff’s Amended Complaint should be dismissed for
failure to state a claim upon which relief may be granted. First, the Defendant argues that the
Plaintiff’s Amended Complaint is composed of conclusory allegations unsupported by any wellplead facts. Second, the Defendant asserts that the Court should strike the Plaintiff’s class
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allegations. The Defendant maintains that the Plaintiff’s class allegations fail to meet the
requirements of Ohio Revised Code § 1345.09(B) and that the Plaintiff lacks standing to assert
claims for products she did not purchase. The Court addresses each of these arguments in turn.
A.
Failure to State a Claim Under the Ohio Consumer Sales Practices Act
In arguing for dismissal under Rule 12(b)(6), the Defendant emphasizes that “Plaintiff
relies entirely on allegations made ‘upon information and belief’” in her Amended Complaint.
Def.’s Mot. to Dismiss at 6, doc. 4. According to the Defendant, “[a]llegations based ‘upon
information and belief’ are speculative and conclusory assertions, not factual allegations. Such
allegations do not pass muster for pleading under Twombly and Iqbal.” Id. at 8. Further, the
Defendant states, “[a]llegations made merely on ‘information and belief’ cannot form the basis
of a complaint.” Id. The Court disagrees.
“Although there is no express authorization in the federal rules for pleading on
information and belief, allegations in this form have been held to be permissible, even after the
Twombly and Iqbal decisions.” Charles A. Wright and Arthur R. Miller, 5 Fed. Prac. & Proc.
Civ. § 1224 (3d ed. 2013). “The Twombly plausibility standard . . . does not prevent a plaintiff
from ‘pleading facts alleged on information and belief’ where the facts are peculiarly within the
possession and control of the defendant, or where the belief is based on factual information that
makes the inference of culpability plausible.” Arista Records, LLC v. Doe 3, 604 F.3d 110, 120
(2d Cir. 2010) (internal citations omitted). District courts in the Sixth Circuit have reached a
conclusion similar to the Second Circuit with respect to pleadings based on “information and
belief.” See e.g., Price’s Collision Ctr., LLC v. Progressive Haw. Ins. Corp., 2013 WL 5782926,
at *4 (M.D. Tenn. Oct. 28, 2013) (quoting Arista Records, LLC, 604 F.3d at 120); Kline v.
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Mortg. Elec. Registration Sys., Inc., No. 3:08cv408, 2011 WL 1233642, at *6 (S.D. Ohio Mar.
29, 2011) (citing Arista Records, LLC, 604 F.3d at 120; Simonian v. Blistex, Inc., No. 10 CV
01201, 2010 WL 4539450, at *3 (N.D. Ill. Nov. 3, 2010)) (“even in the post-Iqbal world, courts
have recognized that facts may be alleged on the basis of information and belief, particularly
when those facts are within the possession of the defendant”); Antioch Litig. Trust v. McDermott
Will & Emery LLP, 738 F. Supp. 2d 758, 765 (S.D. Ohio 2010) (“As an initial matter, Defendant
claims that Plaintiff’s allegations that are based ‘upon information and belief’ . . . and allegations
that use the term “appear” . . . should be dismissed because they are speculative. However,
Defendant fails to cite any legal authority supporting its contention. Moreover, qualifying words
such as ‘upon information and belief’ and ‘appear’ are the appropriate manner to plead when a
plaintiff is drawing reasonable inferences from facts.”); Lewis v. Taylor, No. 1:10–CV–00108,
2010 WL 3875109, at *2–3 (S.D. Ohio Sept. 21, 2010) (allegations upon “information and
belief” sufficient from which a court may infer a plausible cause of action). Allegations made on
“information and belief” are therefore appropriate where a complaint contains supporting factual
allegations.
The Defendant’s stronger argument is that the Plaintiff’s “information and belief”
allegations are, in fact, substantively conclusory and are unsupported by the Plaintiff’s factual
allegations. Curiously, the parties offer competing arguments as to the conclusory nature of the
Plaintiff’s allegations in a vacuum. Neither party analyzes the Plaintiff’s allegations in the
context of the Ohio Consumer Sales Practices Act (OCSPA or the Act), the basis for the instant
litigation. This makes analysis of the Defendant’s argument difficult at best.
In the Defendant’s view, the following allegations “upon information and belief” are
conclusory and unsupported by the Plaintiff’s factual allegations:
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22.
[T]he DVD course Plaintiff purchased from Defendant had a falsely
inflated regular price, which made the discount appear larger.
25.
Defendant advertises “limited time offers,” but most of its advertised
products are actually always on sale, indicating that there is no real
termination of the sale period at all.
26.
Defendant’s advertised prices for a “special sale,” “70% off,” or the like,
are misleading and deceptive because Plaintiff alleges there is really no
end to any of Defendant’s “specials,” or the end is illusory.
29.
[T]he advertised price is Defendant’s typical sale price because Defendant
sells few, if any, of its products at the former or “regular” prices, and if the
products are ever offered at the “regular” price, they are offered at such for
such a short period of time that it is illusory.
30.
Therefore, Defendant knowingly advertises its products for alleged
discounts while knowing the products are not really discounted at all.
Def.’s Mot. to Dismiss at 7 (citing Pl.’s Am. Compl. at ¶¶ 22, 25, 26, 29, 30); Def.’s Reply at 4
(citing Pl.’s Am. Compl. at ¶¶ 22, 25, 29). According to the Defendant, “[t]hese . . . vague and
conclusory allegations lie at the heart of Plaintiff’s Complaint.” Def.’s Mot. to Dismiss at 7. The
Defendant identifies two flaws with the Plaintiff’s allegations. First, the Defendant argues, the
Plaintiff’s allegations made upon “information and belief” are based on unreasonable and
implausible inferences from her factual allegations. Def.’s Reply at 4–5. Second, the Defendant
insists that the Plaintiff’s factual allegations do not demonstrate any wrongful conduct. Id. at 5–
8.
The Court disagrees. First, in the Court’s view, most of the Plaintiff’s allegations made
upon “information and belief” are plausible inferences based on the Plaintiff’s factual
allegations. Here, the Plaintiff alleges that the Defendant advertises its products at discounts for
limited period of times, but that most, if not all, of the Defendant’s sales come from the selling of
discounted products. First Am. Compl. at ¶¶ 23–24. From these facts, the Plaintiff infers that the
Defendant’s “sales” do not actually end and that the “sale” price of the Defendant’s products is
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actually the “regular” price for the products. Id. at ¶¶ 25–26, 29. Construing the Complaint in the
light most favorable to the Plaintiff, this is a reasonable inference based on the Plaintiff’s factual
allegations. Cf. Arista Records, LLC, 604 F.3d at 120 (internal citations omitted) (“The
Twombly plausibility standard . . . does not prevent a plaintiff from ‘pleading facts alleged on
information and belief’ . . . where the belief is based on factual information that makes the
inference of culpability plausible”); Antioch Litig. Trust, 738 F. Supp. 2d at 765 (“Qualifying
words such as ‘upon information and belief’ and ‘appear’ are the appropriate manner to plead
when a plaintiff is drawing reasonable inferences from facts”). If the Defendant sells its products
at discounts and all (or the majority of) its revenue comes from the sale of discounted items,
then, logically, the Defendant’s sales rarely, if ever, end and the Defendant rarely, if ever, sells
its products at a “regular” or non-discounted price. Consequently, it is a plausible inference that
the “sale” price for the Defendant’s products is in fact the “regular” price.
The force of the Defendant’s second argument is undermined by the failure of the
Defendant’s first argument. The Defendant insists that the Plaintiff’s factual allegations evidence
the Defendant’s law-abiding conduct, consistent with well-established marketing and advertising
practices. But as the Court has noted, the Plaintiff’s factual allegations do, in fact, allow for a
plausible inference of wrongdoing on the part of the Defendant. The Defendant’s alternative
explanation for its conduct does not mandate dismissal of the Plaintiff’s Complaint. Cf. 16630
Southfield Ltd. P’ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 505 (6th Cir. 2013) (“[I]f a
plaintiff’s claim is plausible, the availability of other explanations—even more likely
explanations—does not bar the door to discovery”); Watson Carpet & Floor Covering, Inc. v.
Mohawk Indus., Inc., 648 F.3d 452, 458 (6th Cir. 2011) (“Often, defendants’ conduct has several
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plausible explanations. Ferreting out the most likely reason for the defendants’ actions is not
appropriate at the pleading stage.”)
B.
Strike Class Action Allegations
The Plaintiff seeks to bring a class action suit on behalf of two classes of consumers. See
First. Am. Compl. at ¶¶ 48–71. Class One is composed of “[a]ll persons in Ohio who purchased a
product from Defendant that was advertised at a discounted price or specific price advantage.”
Id. at ¶ 50. Class Two is composed of “[a]ll persons in Ohio who received a direct
communication (e.g., catalog, email, letter, etc.) from Defendant offering product(s) at a
discounted price or specific price advantage.” Id. The Plaintiff seeks non-economic damages of
at least $5,000 for each class member pursuant to O.R.C. § 1345.09(B). 1 Id. at ¶ 85.
In an individual action, if a consumer successfully proves a violation of the OCSPA, the
consumer may rescind the transaction or recover economic and noneconomic damages. See
O.R.C. § 1345.09(A) 2; O.R.C. § 1345.09(B) 3. In the alternative, § 1345.09(B) permits a
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In contrast, in her prayer for relief, the Plaintiff seeks “actual damages, economic damages, and non-economic
damages of at least $5,000” for each class member pursuant to O.R.C. § 1345.09(B). First Am. Compl. at pg. 13.
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“Where the violation was an act prohibited by section 1345.02, 1345.03, or 1345.031 of the Revised Code, the
consumer may, in an individual action, rescind the transaction or recover the consumer’s actual economic damages
plus an amount not exceeding five thousand dollars in noneconomic damages.” O.R.C. § 1345.09(A).
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Section 1345.09(B) provides:
Where the violation was an act or practice declared to be deceptive or unconscionable by rule
adopted under division (B)(2) of section 1345.05 of the Revised Code before the consumer
transaction on which the action is based, or an act or practice determined by a court of this state to
violate section 1345.02, 1345.03, or 1345.031 of the Revised Code and committed after the
decision containing the determination has been made available for public inspection under division
(A)(3) of section 1345.05 of the Revised Code, the consumer may rescind the transaction or
recover, but not in a class action, three times the amount of the consumer’s actual economic
damages or two hundred dollars, whichever is greater, plus an amount not exceeding five thousand
dollars in noneconomic damages.
O.R.C. § 1345.09(B).
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consumer to “recover damages or other appropriate relief in a class action under Civ. R. 23.”
Under the OCSPA, “[i]n order to maintain a class action, however, a plaintiff must allege actual
‘damages [that] were a proximate result of the defendant’s deceptive act.’” Johnson v. Jos. A.
Bank Clothiers, Inc., No. 2:13–cv–756, 2014 WL 64318, at *7 (S.D. Ohio Jan. 8, 2014) (quoting
Butler v. Sterling, Inc., 210 F.3d 371, 2000 WL 353502, at *4 (6th Cir. Mar. 31, 2000) (Table
Decision)). See also Searles v. Germain Ford of Columbus, L.L.C., No. 08AP-728, 2009 WL
756645, at *5 (Ohio Ct. App. Mar. 24, 2009) (“The fact that statutory damages are not available
in a class action indicates proof of actual damages is required before certification of an R.C.
1345.09(B) class action is proper”). “‘Actual economic damages’ means damages for direct,
incidental, or consequential pecuniary losses resulting from a violation of Chapter 1345 of the
Revised Code and does not include damages for noneconomic loss as defined in section 2315.18
of the Revised Code.” O.R.C. § 1345.09(G) (emphasis added). See also “Garber v. STS Concrete
Co., L.L.C., 991 N.E.2d 1225, 1232 (Ohio Ct. App. 2013) (citations omitted) (“Actual damages”
are defined as “real, substantial, and just damages, or the amount awarded to a complainant in
compensation for his actual and real loss or injury”).
A class action complaint under the OCSPA must allege actual, as opposed to
noneconomic, damages. Here, the Plaintiff only alleges that class members suffered noneconomic damages of at least $5,000 pursuant to O.R.C. § 1345.09(B). First Am. Compl. at ¶ 85.
Therefore, her class allegations will be dismissed. 4
V.
Conclusion
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To the extent that the Plaintiff’s Complaint could be construed to seek actual damages as part of a class action suit,
see First Am. Compl. at pg. 13 (generally requesting, in her prayer for relief, actual damages and noneconomic
damages), it appears that the Plaintiff has failed to allege any facts to support a claim for actual damages.
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For the foregoing reasons, the Court GRANTS IN PART AND DENIES IN PART the
Defendant’s Motion to Dismiss (doc. 4). The Plaintiff’s class allegations are DISMISSED. The
Plaintiff will be permitted to proceed with her individual claim against the Defendant.
IT IS SO ORDERED.
s/ James L. Graham
JAMES L. GRAHAM
United States District Judge
DATE: April 21, 2014
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