Arbitration provisions are appearing in more and more contracts lately, in everything from employment contracts to consumer contracts. With increasing frequency, companies are looking to block employees and consumers access to the courts, in the event that they have a complaint against the company.
In a recent class action lawsuit, Ganley Chevrolet and Ganley Automotive Stores, tried to force a consumer class action lawsuit against them into arbitration. The courts, on the other hand, have agreed that the dealership group’s sales agreement was “incomplete and misleading” and therefore unenforceable.
The dispute began in March 2001 when Jeffrey and Stacy Felix purchased a 2000 Chevy Blazer. Ganley allegedly told the Felixes that they were approved for 0.0% financing but that the offer would expire that evening. They agreed and traded in their van as part of the deal. Ganley allegedly insisted that they take the new car home with them. A few days later though. Ganley told the couple that the bank would approve only 1.9% financing, which they accepted. After having the car for more than a month, the Felixes were told that the bank had decided not to approve the 1.9% financing but that Ganley had found another bank which would give them a loan with a 9.44% financing rate. The Felixes refused to sign a new agreement at such a high rate. They kept the vehicle though, and have been putting money in escrow to purchase it.
Meanwhile, they filed a lawsuit against Ganley Chevrolet and Ganley Automotive Stores alleging “bait and switch tactics.” This is a practice in which a dealer will offer goods at one low price to get the customer interested, then suddenly raise the price at the last minute. It is also a violation of the Ohio Consumer Sales and Practices Act. The lawsuit further alleges misrepresentation and emotional distress. It includes individual claims as well as class action claims and challenges the validity of the arbitration provision in the sales agreement.
The lower court judge found the arbitration provision to be “ambiguous and misleading” and therefore rejected Ganley’s request for arbitration and approved class action status on behalf of all consumers whose sales agreement with any Ganley store had the same provision from June 1999 until the company changed the provision in 2007. The judge also awarded $200 in damages to each of the “thousands of members” of the certified class.
Ganley appealed the decision and the case went to the Ohio Court of Appeals which upheld the class certification in a 2-1 decision. The court found that class action status in this case was appropriate under the consumer protection law. The one dissenting judge agreed that, Ganley’s use of the arbitration provision might be an “unfair or deceptive practice” that would justify individual lawsuits in court. However, he argued that the plaintiffs failed to meet the requirements for class action status and such was his reason for dissent.
In order to qualify for class action status, the plaintiffs must meet certain criteria. These criteria include: 1) an identifiable class must exist, and its definition must be clear; 2) the named plaintiff representatives must be members of the class; 3) the class must be large enough to make joining all of the members practicable; 4) the class must have in common questions of law or fact; 5) the claims or defenses of the representatives must be typical of the claims or defenses of the class; and 6) the representative parties must fairly and adequately protect the interests of the class.
Ganley argues that the trial court should not have certified the class because the class definition and time period are too broad and ambiguous. Ganley also argued that the commonality, predominance, and typicality prerequisites to class certification had not been met. The Court of Appeals disagreed and upheld the lower court’s ruling.
The Chicago class action attorneys at Lubin Austermuehle have decades of experience representing consumers throughout the greater Chicago area and the Mid-West region, including Illinois, Indiana, Wisconsin and Iowa. Class action lawsuits give consumers a way to assert their rights in cases of consumer fraud, even if they lack the resources individually to fight a much larger opponent. Please contact us today online, at (630) 333-0333, or at (833) 306-4933 to schedule a confidential consultation with one of our Naperville class action attorneys.