Give Them Back Their Rights, Court of Appeals Says

Arbitration sucks, we've said it before and we'll say it again. Arbitration sucks. 

But whatever you think about it, in Ohio a binding mandatory arbitration clause can not be used to take away a consumer's rights under Ohio's Udap law, the Ohio Consumer Sales Practices Act. Still, more and more arbitration clauses are trying to not only take away a consumer's right to go to court, but to also change the laws they can use.

Ohio's Udap law, the CSPA, makes it illegal for any merchant to do anything that is "unfair or deceptive" (the words in the law) to a consumer. And if they do, then the consumer may be able to recover triple their actual damages, attorney fees, and up to $5,000 in non economic damages for aggravation and inconvenience, etc. Car dealers hate this law.

Its no wonder then that Autos Direct, a Cleveland area internet-based car dealer, was sticking mandatory and binding arbitration clauses in its sales paperwork with consumers. But it went one step further and added a sentence that said "The non-prevailing party shall pay, and the arbitrators shall award the prevailing party's arbitration costs and expenses, including reasonable attorney's fees." Lawyers call that a "loser pays" clause and it means that if you are going to sue the car dealer then you sure better win or they might go after you to make you pay their attorney fees. But that's not what the the law in Ohio says.

In other words, car dealers like Autos Direct not only wanted you to not be able to go into a courtroom where the public can find out what they did to you, but they also didn't want you to be able to use consumer protection laws against them at all. Ah, c'mon, guys, don't you think that's a little too much?

Well the Eighth District Court of Appeals thought so, when it decided Tamara Hedeen v Autos Direct Online, Inc. on Sept 25, 2014, and tossed out their arb clause.

 Attorney Beth Wells, with Burdge Law Office in Dayton, Ohio, reports that the appellate court ruled that "where a consumer's CSPA (Ohio's Udap law) claim is subject to binding arbitration, limitations on a consumer's right should not be allowed by a private arbitration forum." A couple of pages later in the court decision, the appellate judges threw out the arbitration clause entirely and held that Ms Hedeen now has the right to go to court.

In Hadeen's case, the court noted, she had bought a used 2011 Mercedes online for $28,000 and later discovered that it had sustained over $20,000 in undisclosed damage and over $7,000 of the damage had never been repaired. It's things like that which explain why some car dealers don't want consumers to go to court at all. Hadeen filed her case against the dealership with claims that they had committed unfair and deceptive acts in violation of Ohio's Udap law and Ohio's little-known Motor Vehicle Sales Rule, OAC 109:4-3-109.

A public court, where the public can see what is happening in our Justice system - that's what Justice should be all about. A Big Round of Applause to Attorney Beth Wells on a job well done.