Friday, October 29, 2010

Ohio Bar Exam July 2010 Results - Case Western Law School Finishes First

Ohio Bar Exam results are out for the July 2010 Bar Exam.  I passed! :-)

Congratulations to Case Western Reserve Law School, after years of dwindling bar passage rates, the school has regained its prominence with the highest overall passage rate in the state, 91%! Congrats to all that passed!

Saturday, October 23, 2010

Cleveland Morning From My Office

Defense to Credit Card Collection Lawsuits And "Account Actions" Under Ohio Law

An "account", is a right to payment for a monetary obligation.  Under Ohio Rev. Code § 1309.102 (2)(A), any sort of transaction that involves the sale, lease, license, or assignment of property, or a transaction for any type of performance of a service, is considered an account.  While many different monetary obligations represent "accounts," a very easy or common example is a credit card.  In exchange for credit in the purchase of goods and services, consumers incur a monetary obligation to the credit card company.  If a consumer does not pay their obligation on their account, the credit card company (or an assignee debt collector) may bring an action on the account to collect on the debt that is owed.

In order for a creditor or debt collector to bring a successful action on account it must jump through several hoops to prove that they are the party that is entitled to collect on the debt and that the amount of debt owed on the account is what they claim it is.  For example, Ohio Rules of Civil Procedure 10(D)(1) provides that "a copy of the account or written instrument must be attached to the pleading."  Additionally, where an assignee (debt collector) brings an action on an account obtained from another entity, it must establish the existence of a valid assignment agreement. Worldwide Asset Purchasing, L.L.C. v. Sandoval, 8th Dist. No. 2007-CA-00159, 2008-Ohio-6343, ¶26.

Other requirements also exist. To prevail in an action on an account, a copy of the account or written instrument attached to the pleadings must establish the existence of the account in the name of the party charged (the debtor), as well as,
"(1) a beginning balance of zero, or a sum that can qualify as an account stated, or some other provable sum; (2) listed items, or an item, dated and identifiable by number or otherwise, representing charges, or debits, and credits; and (3) a summarization by means of a running or developing balance, or an arrangement of beginning balance and items that permits the calculation of the amount claimed to be due." Great Seneca Fin. v. Felty, 170 Ohio App.3d 737, 2006-Ohio-6618, 869 N.E.2d 30, ¶6.
Capital Fin. Credit, L.L.C. v. Mays, 1st Dist. No. 09-CV-19312, 2010-Ohio-4423, addresses a valid defense to actions on accounts concerning the third requirement, the need to provide a running or developing balance of the amount due.  In Capital Finance, the Hamilton County Court of Appeals reversed summary judgment and remanded because the plaintiff debt collector failed to attach documents to the pleadings that itemized the credits and debits allegedly owed on an overdue credit card account. The court explained,
“When the balance due on a credit-card account is not substantiated by an itemization of the credits and debits leading to that balance, a genuine issue of material fact remains concerning the amount due on the account. Here, the evidence that CFC had properly placed before the trial court as attachments to the litigation director’s affidavit established only that (1) Mays had opened a credit-card account with Citibank under the terms of a credit agreement attached to the affidavit; (2) Mays’s account with Citibank had been properly assigned to CFC; and (3) according to the text of the affidavit itself, “[c]rediting all payments received to date, [Mays had an unpaid balance] of $7,909.43 plus interest at the rate of 23.90% per annum on $4,676.09 from June 5, 2009.” This statement in the director’s affidavit was the sole evidence establishing the amount due on Mays’s account. No evidence was presented that substantiated the credits and debits leading to that balance.”
Therefore, the court found that a genuine issue of material fact existed concerning the amount allegedly due on the credit card and it reversed the previous ruling of the trial court, which had granted summary judgment in favor of the debt collector.

Collection of an overdue debt is commonplace in business.  However, in order to collect upon an account, a running itemized balance of the debt must be provided.  The Capital Finance case serves as an important tool that can be utilized in defending an action for collection on an account. Alternatively, it is a reminder for all seeking to collect on unpaid bills of the requirements necessary to do so. 

Sunday, October 17, 2010

Denial of Discovery Motion Because of No Certification that Parties Attempted to Confer and Resolve There Dispute in Good Faith

A recent post by Chicago IP Litigation Blog highlights a decision by the Northern District of Chicago.  In Chamberlain Group v. The Lear Corp., No. 05 C 3449, Slip Op. (N.D. Ill. Jul. 15, 2010 (St. Eve, J), the court denied a motion to compel deposition of a witness in a patent case merely because the party seeking to compel the deposition failed to comply with the meet and confer rule.  

©Stu Rees. All rights reserved.
Other courts have similarly denied discovery motions when parties fail to comply with meet and confer requirements. See Frazier v. Southeastern Pa. Transp. Auth., 161 F.R.D. 309, 312 (E.D. Pa. 1995) (Plaintiff's motion for protective order denied because party failed to confer with Defendant prior to filing its motion in an attempt to resolve its dispute without court action); Doe v. Nat'l Hemophilia Found., 194 F.R.D. 516, 519 (D. Md. 2000) (Plaintiff's motion to compel answer to discovery interrogatories and document production requests denied because plaintiff failed to attempt to resolve its dispute with the defendant by even informal means); Gibbs v. Oklahoma Dep.'t of Transp., 1991 WL 405514 at *3 (W.D. Okla. August 21, 1991) (court denied otherwise meritorious motion to compel because counsel failed to follow meet and confer rule); Mr. Electric Corp. v. Khalil, 2008 U.S. Dist. LEXIS 103801 (D. Kan. December 23, 2008) (motion to compel answer of discovery requests denied because party did not meet requirement of including certification of a good faith attempt to confer and resolve the issue with opposing counsel).

Federal Rule of Civil Procedure 26(c)(1) is clear, a motion for protective order must include a certificate that the parties "in good faith conferred or attempted to confer with other affected parties in an effort to resolve the dispute without court action." These examples of the inability to follow a simple procedural rules is important because it burns everyones time and money.  They serves as an important reminder to read and follow the rules as they are written.

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Monday, October 11, 2010

Class Action Against Whole Foods for "Case Discount" Problems Certified by the Northern District of Ohio

In May 2010, Cathy Pfaff went to purchase a case of “365 brand water” at her local Whole Foods grocery store but did not receive the advertised 10% “case discount” on her purchase.  Most products Whole Foods sells can be purchased in bulk.  If items are purchased as such, they are eligible for a 10% "case discount."  This is true even if the product is typically sold as a single unit: “Customers wanting a case of something off the shelf (Cereal for example) should ask a [Whole Foods employee] and the [employee] should box up the product for them.”  Although Whole Foods advertised the 10% discount for products bought in bulk, the store never actually coded its registers to give the discount for many of its products.

On behalf of herself and all other consumers similarly situated, Cathy Pfaff has brought a class action case against the grocery chain on allegations of (1) fraud, (2) breach of contract, (3) breach of the duty of good faith and fair dealing, (4) negligent misrepresentation, (5) violation of the Ohio Consumer Sales Practices Act; (6) unilateral mistake; and (7) unjust enrichment.  In Pfaff v. Whole Foods Market Group, Inc., case no. 1:09-cv-02954 (N.D.Ohio September 29, 2010) the court agreed to certify the class and for it to include: 
“All Ohio residents who purchased a case of products from Whole Foods store in Ohio on or after September 8, 2009 for purposes that are primarily personal, family, or household, but did not receive the 10% case discount.”
The Ohio Northern District Court found that the plaintiff class definition met the requirements of numerosity, commonality, typicality, and adequacy as proscribed in FRCP 23(a).  The court also found that the plaintiff class met the requirements of predominance and superiority under FRCP 23(b).  

I shop at whole foods every now and again, but I don’t think I have ever tried to get a “case discount.” If you have, you may want to double check your receipt. 

Friday, October 8, 2010

Evidentiary Standards for Preliminary Injunction Hearings in the Sixth Circuit

A preliminary injunction is a temporary court order issued at the beginning of a case, which prevents a party from pursuing a particular course of conduct until the conclusion of a trial on the merits.  Rule of Civil Procedure 65 governs the issuance of preliminary injunctions.  Rule 65 states that a preliminary injunction "shall not be issued without notice to the adverse party.”  Fed. R. Civ. P. 56(a)(1).  Therefore, a party against whom a preliminary injunction is sought must be given an opportunity to appear at a hearing to argue that the injunction should not be granted.  A preliminary injunction is regarded as extraordinary relief.  In order for injunctive relief to be granted, the party requesting the injunction must show that there is a likely chance that they will succeed on the merits of their claims and that there is a substantial likelihood that they will be irreparably harmed unless an injunction is granted immediately.

The preliminary injunction hearing itself is much more informal than a regular trial. Since the hearing is held before a judge, many evidentiary issues, that normally arise in the presence of juries, are no longer that big of a deal.  To paraphrase a judge in a recent hearing that I attended, “I am a big boy and can figure out what value to assign the evidence.” This means that normal evidentiary objections that evidence is hearsay, a question is leading, a response or question is argumentative, or piece of evidence is irrelevant or prejudicial, just doesn’t matter as much because a judge isn’t going to be as affected as a normal layperson.  Indeed, “there is generally a reduced evidentiary standard in preliminary injunction motions.” Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F.Supp.2d 1146, 1154 (C.D. Cal. 2002) cited by United States v. Standring, 2005 U.S. Dist. LEXIS 41330, at *5 (S.D. Ohio March, 2006) (applying a “reduced evidentiary standard" for authentication of websites and screen shots).

Therefore, it is customary for Courts in the Sixth Circuit to relax the standard of what is admissible evidence at preliminary injunction hearings.  For example, while the Court of Appeals for the Sixth Circuit has not explicitly stated whether hearsay evidence may be considered in the context of a preliminary injunction hearing, In re De Lorean Motor Co., 755 F.2d 1223, 1230 n.4 (6th Cir. 1985) (“The parties assume that the Federal Rules of Evidence are fully applicable to a hearing on a motion for preliminary injunction. We express no opinion on this question.”), district courts have readily admitted and considered such evidence during hearings.  See Toledo Area AFL-CIO Council v. Pizza, 898 F. Supp. 554, 558-59 (N.D. Ohio 1995)(“[A] Court…may give even inadmissible evidence some weight…Therefore, all affidavits submitted by all parties will be received for whatever value each may add to these proceedings”);  United States v. O’Brien, 836 F. Supp. 438, 441 (S.D. Ohio 1993) (“The Federal Rules of Evidence do not apply at preliminary injunction hearings....”); Family Trust Found., Inc. v. Wolnitzek, 345 F. Supp. 2d 672, 699 n.10 (E.D. Ky. 2004) (court admitted and gave some weight to hearsay evidence); Performance Abatement Servs. v. Lansing Bd. of Water & Light, 2001 U.S. Dist. LEXIS 2891, *5 (W.D. Mich. Mar. 6, 2001) (“the district court may consider inadmissible evidence in ruling on motions for preliminary injunction.”);  FTC v. Nat’l Testing Servs., LLC, 2005 U.S. Dist. LEXIS 46485, *5 (M.D. Tenn. August 18, 2005) (“A district court may rely on affidavits and hearsay materials....”).

Since there is typically little time to gather materials and prepare for a preliminary injunction hearings, it is a good thing to know that what little time is available to prepare, does not need to be spent worrying as much about evidentiary and  admissibility issues.  For more information on the admissibility and proper authentication of web pages, screen shots, and e-mails in the Sixth Circuit see my post previous post.