The Ohio Consumer Sales Practices Act (CSPA) provides consumers with remedies against suppliers who engage in deceptive or unconscionable acts or practices. The CSPA allows consumers to recover economic and non-economic damages as well as treble damages, attorney’s fees and court costs in some situations. The prospect of large payouts by pursuing CSPA claims in court however, causes many plaintiffs, and their attorneys, to reject reasonable settlement offers in the hopes of getting much larger payouts through litigation. The result is a statute that is far more punitive to businesses and a windfall for plaintiff’s attorneys than it is a remedy for damaged consumers.

In an effort to balance the effects of the CSPA and encourage settlement instead of litigation, on April 2, 2012 Governor Kasich signed Ohio House Bill 275 into law enacting ORC 1345.092. Effective since July 3, 2012, ORC 1345.092 provides suppliers with an opportunity to avoid the most significant penalties of the CSPA by offering settlement to the consumer early in the litigation process.

ORC 1345.092 allows suppliers to make a cure offer to the consumer within 30 days of being served with a CSPA suit. The cure offer must include a settlement for damages known as a “supplier’s remedy” and in addition must offer to pay attorney’s fees up to $2,500 and court costs. The consumer then has 30 days to accept or reject the offer by filing notice with the court. If the consumer rejects the offer, they cannot collect treble damages, court costs or attorney fees incurred after the offer date unless the court awards damages in an amount greater than the supplier’s remedy.

The supplier’s cure offer must follow a number of requirements to provide the defendant with protection from increased damages. The supplier must deliver the cure offer via certified mail, return receipt requested, in addition to filing a copy with the court. A prominent notice must also be included in the offer with specific statutory language. If the consumer accepts the offer, they must submit documentation of attorney’s fees and court costs to the supplier. The supplier then has the opportunity to contest any unreasonable attorney fees before paying the settlement.

If the consumer declines the settlement offer and proceeds with litigation, the supplier will have some protection against excessive damage awards. If the consumer wins the case but is granted a damage award less than or equal to the amount offered by the defendant as a supplier’s remedy, the consumer will be barred from receiving treble damages as well as all attorney’s fees and court costs incurred after the cure offer was made. If the consumer receives a damage award greater than the supplier’s remedy however, the consumer will retain all rights to collect treble damages, attorney’s fees and court costs.

The result of ORC 1345.092’s enactment is a strong incentive for both consumer and supplier to settle CSPA disputes early in the litigation. If a supplier can reasonably estimate the potential damages that may be awarded to a consumer plaintiff in a dispute, they can offer an appropriate settlement and protect themselves from the most severe penalties of the CSPA. Consumers likewise are encouraged to accept reasonable settlement offers as rejecting them will result in a similar damage award offset against their own attorney’s fees. In addition to avoiding practices that violate the CSPA, suppliers should consider the potential benefits of using the new cure provision to reduce their liability under the statute.

** Many thanks to William Abbey for his contributions to this article.  William is a law clerk with Slovin & Associates Co., L.P.A. and student at the University of Cincinnati College of Law.  **