Willard Peters v. the State Lottery Commission, 90-LW-4285

• Decision Date: 18 December 1990
• Docket Number: 90AP-194,90-LW-4285
• Parties: WILLARD PETERS, ET AL., Plaintiffs-Appellants v. THE STATE LOTTERY COMMISSION, Defendant-Appellees (Cross-Appellant) CASE
• Court: Ohio Court of Appeals

WILLARD PETERS, ET AL Plaintiffs-Appellants v. THE STATE LOTTERY COMMISSION, Defendant-Appellees (Cross-Appellant)

No. 90AP-194. Judgment affirmed, 63 Ohio St. 3d 296 (1992)

90-LW-4285 (10th)

10th District Court of Appeals of Ohio.

December 18, 1990

Appeal from the Ohio Court of Claims.

MR ROSS F. SPRAGUE, for appellants (cross-appellees).

MR ANTHONY J. CELEBREZZE, JR., Attorney General, MR. SIMON KARAS and MR. CHRISTOPHER KELLER, for appellee (cross-appellant).

OPINION

WHITESIDE J.,

Plaintiffs, Willard Peters and Earl DeJournett, Jr., appeal from a judgment of the Ohio Court of Claims rendered in favor of defendant, State of Ohio, acting through the Ohio Lottery Commission ("commission"), on plaintiffs' claims for breach of contract and unfair or deceptive sales practices resulting from plaintiffs' purchase of lottery tickets. Plaintiffs raise the following six assignments of error:

"1. It was error for the Court of Claims to rule that the Lottery's jackpot advertising did not constitute unfair or deceptive sales practices under R.C. 1345.02 and R.C. 1345.03 (Page 6 of Decision) after finding (1) that such advertising `. . . apparently led Plaintiffs to believe that if only one "winner" were to "claim" a jackpot, th(e)n that winner would also be entitled to any and all unclaimed monies from that particular drawing (Page 4 of Decision), (2) that the ... defendant's advertising does not specifically state that unclaimed prizes are retained by defendant (Page 6 of Decision), and (3) that the Lottery's advertising was `offensive' (Tr. 489, lines 8 -10). Thomas v. Sun Furniture and Appliance Co. (1978), 61 Ohio App. 2d 78; Ohio Administrative Code 109:4-3-02.

"2. It was error to decide on the evidence presented at the trial that the contract and agreement of the parties involved anything other than that which appeared on the face of subject Lottery tickets and the advertising and promotional material used to promote said game. Jean H. Carson, et al., v. The Ohio Lottery Commission (1980), No. 79-AP-558 and Frieda Howard v. The Ohio Lottery Commission (1980), No. 79-AP-559.

"3. It was error for the Court of Claims to rule that:

... the words "winning ticket" do not connote presentment of a ticket but rather the information supplied to defendant through its computer system identifying the number of winning selections out of the player pool ...' Jean H. Carson, et al., v. The Ohio Lottery Commission (1980), No. 79-AP-558 and Frieda Howard v. The Ohio Lottery Commission (1980), No. 79-AP-559; R.C. 3770.07; O.A.C. 3770: 1-7-33; O.A.C. 3770:1-7-45; O.A.C. 3770:1-8-04; Attorney General's Opinion Letter of May 22, 1987 to the Executive Director of the Ohio Lottery Commission.

"4. It was error for the Court of Claims to conclude that the Lottery was entitled to claim the jackpot shares in question under the `unclaimed prize' provisions of R.C. 3770.07(B).

"5. The Court of Claims erred in overruling plaintiffs' motion to exclude from evidence as Totem Pole hearsay the Lottery's computer output of ticket sales. Schmitt v. Casting Co. (1944), 143 Ohio St. 421, 425; Zeigler Milling Co. v. Denman (1946), 79 App. 250; Staff Notes of Evidence Rule 803(8); Westinghouse Electric v. Dolly Madison Leasing & Furniture Corp. (1975), 42 Ohio St. 2d 122.

"6. It was error for the Court of Claims to admit the Lottery's computer printout into evidence when it is the product of a uniquely complex business record system which yearly experienced millions of `Errored Transactions,' millions of cancel led wagers and thousands of operating problems including an average of over two problems per month per wagering terminal. Robinson-Lloyds, Ltd., Appellee v. Department of Liquor Control of the State of Ohio, Appellant. (1952), 91 Ohio App. 521; Ohio Rule of Evidence 803(6); Ohio Rule of Evidence 803(8)."

The state raises the following three cross-assignments of error:

"1. The court below erred in not granting the state's motion for dismissal at the end of appellants' case in chief.

"2. The court below erred in finding the lottery within the terms of Ohio's Consumer Sale[s] Practices Act.

"3. The court below erred in not disqualifying counsel upon a showing of potential violations of the Code of Professional Responsibility."

On July 30, 1986, Willard Peters selected the winning numbers in the Ohio Super Lotto drawing. Similarly, on February 28, 1987, Earl DeJournett, Jr., selected the winning numbers in the Ohio Lotto drawing. Both lotteries are pari-mutuel games in which players select from a pool of forty numbers in the Ohio Lotto and forty-four numbers in the Ohio Super Lotto. To be entitled to the winning jackpot, a purchaser of a ticket must have selected the six numbers determined by the commission to be the winning selection. Both plaintiffs were determined to be winners of the respective drawings. However, because the lottery computers indicated that two winning tickets had been purchased in each drawing, each plaintiff received only one-half of the respective jackpots. Mr. DeJournett, for example, was awarded $630,819 out of a $1,261,638 jackpot, and Mr. Peters was awarded $2,500,000 out of a $5,000,000 jackpot. These prizes will be disbursed to plaintiffs over a twenty-year period.

When the other holder of the winning ticket in each drawing did not present that ticket to the commission within the one-year limitations period, plaintiffs requested that the commission pay each of them the other half of the jackpot to which they believed they were entitled. Plaintiffs claimed that as the only holders of valid winning tickets they each were entitled to the entire amount of the respective jackpots. After the commission refused to pay the other half of the jackpots to plaintiffs, plaintiffs brought suit against the commission alleging breach of contract and unfair or deceptive sales practices under R.C. 1345.02 and 1345.03. This action was commenced in the Court of Claims on May 12, 1988. On January 19, 1990, the Court of Claims found for defendant state, holding that plaintiffs had proved neither breach of contract nor unfair or deceptive sales practices. On February 16, 1990, plaintiffs brought the instant, timely appeal, and the state cross-appealed.

Plaintiffs' first and second assignments of error are interrelated in that both pertain to the representations made by the commission to plaintiffs. Consequently, we shall discuss both assignments of error together. By their first assignment of error, plaintiffs allege that the commission violated R.C. 1345.02 and 1345.03 because its advertising constituted an unfair or deceptive sales practice. The trial court found that the commission had not violated the statute, concluding that:

"* * * [D]efendant's advertising does not specifically state that unclaimed prizes are retained by defendant and placed in a designated fund, however the court finds that the defendant did not misrepresent its lottery games in this fashion. The court is of the opinion that defendant's advertising aid not constitute unfair or deceptive sales practices. See R.C. 1345.02 and 1345.03." (Decision, p. 6.)

The Ohio Legislature enacted Chapter 1345 of the Ohio Revised Code to protect consumers from deceptive and unconscionable sales practices. The statute specifically provides that "[n]o supplier shall commit an unfair or deceptive act or practice in connection with a consumer transaction." R.C. 1345.02. Unconscionable acts or practices are similarly prohibited by R.C. 1345.03. A state agency commits an unfair or deceptive act or practice by making "[a]ny offer in written or printed advertising or promotional literature without stating clearly and conspicuously in close proximity to the words stating the offer any material exclusions, reservations, limitations, modifications, or conditions." Ohio Adm. Code 109:4-3-02(A) (1).

Plaintiffs contend that the commission violated this section by failing to disclose that any unclaimed prizes would be placed in a fund and retained by the commission. The lottery advertisements, brochures, and tickets all explain that any player agrees to comply with the rules and regulations of the commission upon purchasing a lottery ticket. In turn, those rules and regulations require that any prize not claimed within one year of the drawing be placed in a fund and distributed pursuant to R.C. 3770.06. Ohio Adm. Code 3770:1-8-02(C). R.C. 3770.07 specifically provides that any unclaimed prize must be placed in a fund and distributed pursuant to R.C. 3770.06. Furthermore, both plaintiffs admitted that, had they known about the unclaimed prize fund, they would nevertheless have played the lottery on the dates in question. Because plaintiffs freely admit that they were not influenced by the commission's representations, the absence of a detailed explanation did not affect their decisions to purchase the tickets. The illustrations of "material exclusions, reservations, limitations, modifications, and conditions" provided in the Ohio Administrative Code indicate that the commission's failure to disclose the information about the unclaimed prize fund was not an unfair or deceptive practice. Although the better practice would be for the commission to disclose the existence of the unclaimed prize fund, its failure to do so did not violate Ohio law and was not an unfair or deceptive sales practice. Accordingly, plaintiffs' first assignment of error is not well-taken.

Under the related second assignment of error, plaintiffs argue that defendant's advertisements were fraudulent misrepresentations in that each plaintiff was lead to believe that if he turned in the only valid winning ticket, he would be entitled to one-hundred percent of the respective jackpot. The trial court found no reliance by either plain...