Ritt v. Billy Blanks Ents., 88012.

• Decision Date: 12 April 2007
• Docket Number: No. 88012.,No. 88034.,88012.,88034.
• Citation: 2007 Ohio 1695,171 Ohio App.3d 204,870 N.E.2d 212
• Parties: RITT et al., Appellees and Cross-Appellants, v. BILLY BLANKS ENTERPRISES; Memberworks, Inc., et al., Appellants and Cross-Appellees.
• Court: Ohio Court of Appeals

870 N.E.2d 212

171 Ohio App.3d 204

2007-Ohio-1695

RITT et al., Appellees and Cross-Appellants, v. BILLY BLANKS ENTERPRISES; Memberworks, Inc., et al., Appellants and Cross-Appellees.

No. 88012.

No. 88034.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Decided April 12, 2007.

Landskroner-Grieco-Madden, Ltd., and Jack Landskroner, Cleveland; and Lerach, Coughlin, Stoia, Geller, Rudman & Robbins, L.L.P., Elizabeth Acevedo, Kevin K. Green, Frank J. Janecek Jr., San Diego, CA, and Sylvia Wahba Keller, for appellees and cross-appellants.

Manzanec, Raskin & Ryder, John T. McLandrich, and Todd M. Raskin, Cleveland; and Bondurant, Mixson & Elmore, L.L.P., Jerome M. Elmore, Corey F. Hirokawa, Frank M. Lowrey, and Joshua F. Thorpe, Atlanta, GA, for appellant and cross-appellee West Corporation.

Shearman & Sterling, L.L.P., William Hauptman, William J.F. Roll III, and Kirsten M. Nelson, New York, NY; and Calfee, Halter & Griswold, L.L.P., and Robert N. Rapp, Cleveland, for appellant and cross-appellee Memberworks, Inc.

BOYLE, Judge.

{¶ 1} Defendants, Memberworks, Inc. ("MWI"), West Corporation and West Telemarketing Corporation (collectively, "West"), appeal from a March 28, 2006 judgment of the Cuyahoga County Court of Common Pleas, granting plaintiffs' (also cross-appellants') motion to certify a class pursuant to Civ.R. 23.

{¶ 2} Plaintiffs, Brandy L. Ritt, Kathleen Soppelsa, and Denise Reeves, cross-appeal from the same judgment, arguing that the scope of the trial court's class definition should be expanded.

{¶ 3} This is the second appeal in this case regarding class certification.¹ In Ritt v. Blanks, 8th Dist. No. 80983, 2003-Ohio-3645 ("Ritt I"), this court set forth at length the background facts underlying plaintiffs' statutory and common law claims, and thus we need not repeat them entirely here. Succinctly stated, in their fourth amended complaint, plaintiffs, on behalf of themselves and other persons similarly situated, filed suit against defendants for claims pursuant to the Ohio Deceptive Trade Practices and Consumer Sales Practices Act, as well as for fraud and deceit, negligent misrepresentation, breach of contract, unjust enrichment, and civil conspiracy.² Plaintiffs alleged that defendants knowingly engaged in a coordinated, fraudulent telemarketing scheme, involving the use of a deceptive script, in a concerted effort to defraud plaintiffs.

{¶ 4} Briefly, the fraudulent telemarketing scheme, as alleged, consisted of plaintiffs calling a toll-free number to order Tae-Bo videotapes. After the Tae-Bo transaction was complete, an alleged deceptive script was then read to callers, purportedly informing them that they would be sent a "risk-FREE" membership which included discounts at various businesses, and that they "WON'T BE BILLED."³ Plaintiffs alleged that it was not clearly communicated to them that they would be billed $70-$100 annually for this "membership" unless they cancelled within 30 days. Approximately 650,000 Tae-Bo customers were enrolled in, and charged for, a MWI "annual membership." Plaintiffs allege that many were charged more than once.

{¶ 5} In Ritt I, plaintiffs appealed the trial court's denial of class certification. We agreed and reversed and remanded the matter. On remand, and after nearly three more years of litigation, on March 28, 2006, the trial court certified a class pursuant to Civ.R. 23.⁴

{¶ 6} It is this judgment from which defendants filed their notice of appeal and plaintiffs filed notice of their cross-appeal.

{¶ 7} MWI submits the following sole assignment of error for our review:

{¶ 8} "The trial court abused its discretion in granting plaintiffs' renewed motion for class certification and by certifying the class defined in the Journal Entry and Opinion dated March 28, 2006."

{¶ 9} West submits the following two assignments of error for review:

{¶ 10} "1. The trial court abused its discretion in certifying a class.

{¶ 11} "2. The trial court abused its discretion in failing to hold an evidentiary hearing on class certification, as required by this Court's July 10, 2003 Opinion."

{¶ 12} On cross-appeal, plaintiffs set forth the following two assignments of error:

{¶ 13} "[1] The class definition erroneously excludes many Ohio residents who are part of the class pursuant to this Court's instructions in Ritt [I]. * * *

{¶ 14} "[2] The relevant law and undisputed record compel certification of a nationwide class, not merely a fully inclusive Ohio class. * * *."

{¶ 15} For the sake of convenience, we will address the assignments and cross-assignments out of order. First, we will address West's second assignment; i.e., that the trial court erred when it failed to hold an evidentiary hearing on class certification as required by Ritt I. MWI and plaintiffs both contend that after four years of additional discovery and evidence, the record was sufficient for the trial court to decide the issue without a hearing.

{¶ 16} In Ritt I, we held that the trial court abused its discretion by failing to hold an evidentiary hearing when it denied plaintiffs' motion to certify the class. However, for the reasons that follow, we disagree that the trial court erred in not following this court's mandate in Ritt I, since its class certification on March 28, 2006, occurred over four years after it first denied it.

{¶ 17} At the outset, we note that West conceded at oral argument that an evidentiary hearing was not necessary. We will still briefly address the issue.

{¶ 18} Civ.R. 23 is silent as to whether a hearing must be held on the issue of class certification. However, in Warner v. Waste Mgt. (1988), 36 Ohio St.3d 91, 98, 521 N.E.2d 1091, the Supreme Court of Ohio recognized that an evidentiary hearing is not required in all cases. See, also, Gottlieb v. S. Euclid, 157 Ohio App.3d 250, 2004-Ohio-2705, 810 N.E.2d 970, at ¶ 49-50; Franks v. Kroger Co. (C.A.6, 1981), 649 F.2d 1216, 1223 (interpreting Fed. R.Civ.P. 23 to not require an evidentiary hearing on class certification). An evidentiary hearing is not required in cases where the pleadings in a class action are so clear that a trial court may find by a preponderance of the evidence that certification is or is not proper. Warner, 36 Ohio St.3d at 98, 521 N.E.2d 1091.

{¶ 19} In Ritt I, 2003-Ohio-3645, 2003 WL 21545138 at ¶ 37, citing Warner, we stated, "[T]he parties must be afforded the opportunity to discover and present documentary evidence on the issue." In Clark v. Pfizer, Inc. (July 13, 1984), 6th Dist. App. No. S-84-7, at 5, the court stated:

{¶ 20} "[A]s long as the trial court provides a sufficient opportunity for a factual development so as to permit a meaningful determination as to whether or not a cause of action should be certified as a class action, the trial court need not conduct a hearing on the certification question. The certification determination is left within the sound discretion of the court."

{¶ 21} Thus, our focus in considering whether a lower court's failure to hold an evidentiary hearing depends upon the development of the evidence, i.e., operative facts, necessary to its determination of the certification question. It follows that if the court had sufficient information before it to rule on certification, it did not abuse its discretion by failing to hold a hearing.

{¶ 22} In Ritt I, we determined that the trial court abused its discretion by not holding a hearing after we determined that it erred when it denied the class certification. The trial court then had over four years of additional discovery and evidence that was developed in the case from the date it originally denied certification on February 6, 2002. Thus, we conclude that because the trial court had sufficient information before it to rule on the question, it did not abuse its discretion by failing to hold an evidentiary hearing. Therefore, West's second assignment of error is without merit.

{¶ 23} Essentially, the remaining assignments of error address whether the trial court abused its discretion by certifying a class, and if not, did it nevertheless unduly restrict the scope of the class. MWI argues in its sole assignment of error that the trial court abused its discretion when it certified a class on remand, and West argues the same in its first assignment. Plaintiffs' cross-assignments of error both address whether the trial court unduly restricted the scope of the class. Thus, we will discuss the remaining assignments concurrently.

{¶ 24} Plaintiffs proposed the following class definition in their motion to certify:

{¶ 25} "All persons in the United States (or such states as may be certified by this Court), who, from September 1, 1998 through July 2, 2001, called a toll-free number and purchased any Tae-Bo product, were asked to take advantage of a risk-free trial MemberWorks, Inc. ("MWI") membership, and were charged for an MWI membership program (the "Class"). Not included within the Class are defendants and their officers, directors, employees, agents, and/or affiliates."

{¶ 26} The trial court, however, in its March 28, 2006 judgment, certified the following class:

{¶ 27} "All residents of Ohio who, from September 1, 1998 through July 2, 2001:(a) called a toll free number marketed by Defendants West and MWI; and (b) purchased any Tae-Bo product, and subsequently:

{¶ 28} "(i) received an offer for a risk-free trial membership, declined the offer, and received an unauthorized credit/debit charge for the membership;

{¶ 29} "(ii) [d]id not receive an offer for a risk-free trial membership, and received an unauthorized credit/debit charge for the membership; or

{¶ 30} "(iii) received an offer for a risk-free trial membership; accepted the membership offer; cancelled the membership within the appropriate timeframe, and still received an unauthorized charge."

{¶ 31} In reviewing whether the trial court erred, we must first determine our standard of review. In Baughman v. State Farm Mut....