111111111 COURT OF COMMON PLEAS

HAMILTON COUNTY, OHIO

RICHARD PURDUE, et al., Case No. A2202290

Plaintiffs, Judge Megan E. Shanahan

v. ENTRY DENYING MOTION OF

DEFENDANT, THE KROGER
THE KROGER CO., COMPANY, TO DISMISS
PLAINTIFFS' COMPLAINT
Defendant.

This case is before the Court on the motion of Defendant, The Kroger Company

("Defendant"), to dismiss the complaint filed by Plaintiffs, Richard Purdue and Anne Purdue

("Plaintiffs"), for lack of jurisdiction and for failure to state a claim upon which relief can be

granted. Having considered the papers filed by the parties, the oral arguments of counsel and the

relevant law, the Court denies the motion.

I. Facts

Plaintiffs have asserted claims on behalf of themselves and two putative classes for

purported violation of the Ohio Consumer Sales Practices Act ("CSPA"), for unjust enrichment

and for declaratory and injunctive relief.

Plaintiffs are members of the Kroger Rx Savings Club ("Savings Club"), a prescription

savings plan. The Savings Club website provides that the "Kroger Rx Savings Club is a yearly

membership program providing drastically reduced prices on thousands of popular prescription

drugs for you and your family." Plaintiffs assert that the savings are misrepresented by Kroger

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and, in fact, a member often pays more for a prescription drug than non-members. According to

Plaintiffs, members often pay a penalty instead of reaping any savings at all.

The terms and conditions of the Savings Club state that the Savings Club is "provided

and operated by GoodRx, Inc." and set forth "the legally binding terms and conditions that

govern [consumers'] use of the Site, the mobile applications (the "App"), [their] membership and

card ("Card") and any communications from [GoodRx] to [consumers]."

Plaintiffs allege that they purchased a family membership in 2019. At some time

thereafter, "Plaintiffs discovered that they were paying more for their prescriptions using the

Savings Club than if they used the GoodRx discount at their pharmacy," (Compl. ¶ 14), and that

"some of the drugs had a Savings Club price that was actually higher than the retail price."

(Compl. ¶ 17).

Defendant argues that the case should be dismissed for a number of reasons. First, the

Court lacks subject matter jurisdiction. Second, the CSPA claim fails as a matter of law. Third,

the unjust enrichment claim fails as a matter of law. Fourth, the claim for injunctive and

declaratory relief fails as a matter of law.

II. Law

A. Lack of subject matter jurisdiction

Rule 12(B)(1) of the Ohio Rules of Civil Procedure provides that:

Every defense, in law or fact, to a claim for relief in any pleading, whether a
claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the
responsive pleading thereto if one is required, except that the following defenses
may at the option of the pleader be made by motion: (1) lack of jurisdiction over
the subject matter ....

When determining a Civ.R. 12(B)(1) motion, thCourt must determine whether the

plaintiff has "alleged any cause of action which the court has authority to decide." Carter v.

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Trotwood-Madison City Bd. of Educ., 181 Ohio App.3d 764, 2009-Ohio-1769, 910 N.E.2d 1088,

27 (2d Dist.). "Whenever it appears by suggestion of the parties or otherwise that the court

lacks jurisdiction on the subject matter, the court shall dismiss the action." Civ.R.12(1-1)(3).

Defendant argues that Plaintiffs entered in a contract governing the terms and conditions

of their Savings Club membership and that contract limits their relief to individual claims

brought against GoodRx, Inc. to arbitration. Accordingly, Defendant argues, this Court lacks

subject matter jurisdiction.

Plaintiffs counter that this argument fails for at least three reasons: 1) the arbitration

provision does not apply to disputes with Kroger and this dispute is with Kroger; 2) the

arbitration clause is invalid as applied to this dispute as unconscionable and a violation of public

policy; and 3) even if the GoodRx arbitration clause were applicable, this Court would have

subject-matter jurisdiction over the issues that are not subject to arbitration.

The Court finds that the arbitration clause applies to disputes with GoodRx. As the

Plaintiffs' claims are against Kroger, the Court finds that it has subject matter jurisdiction.

B. Failure to state a claim upon which relief can be granted

Ohio Civ.R. 12(B)(6) provides that a claim may be dismissed for "failure to state a claim

upon which relief can be granted." "A Civ.R. 12(B)(6) motion to dismiss for failure to state a

claim upon which relief can be granted tests the sufficiency of the complaint." When ruling on a

Civ.R. 12(B)(c) motion, the court "must accept the complaint's factual allegations as true and

must draw all reasonable inference in favor of the nonmoving party." Makrauer v. Hal Holmes,

Inc., 2020-Ohio-945 (1St Dist.), ¶ 6. "A complaint should not be dismissed for failure to state an

actionable claim unless it appears beyond doubt from the complaint that the plaintiff can prove

no set of facts entitling him to recovery." Id

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 1. The CSPA claim

Defendant argues that Plaintiffs' CSPA claims fail for several reasons. First, the claims

are time-barred. Second, the conduct about which Plaintiffs complain is not the sort of conduct

that constitutes a violation of the CSPA. Finally, with regard to the claim of the putative class,

Plaintiffs have not satisfied the required notice provision of the CSPA and are therefore

precluded from asserting a claim on behalf of a class.

a. The time-bar

Regarding the time bar, Defendant claims the events giving rise to the claim occurred

more than two years prior to the initiation of this action and therefore are time-barred pursuant to

R.C. 1345.10(C).

Plaintiffs acknowledge that the statute of limitations begins to run when the violation

occurs and state that a new violation occurred each time they renewed their Savings Club

membership and each time Defendant sold a prescription to Plaintiffs in excess of what was

charged at retail or through Good Rx. In the case of remedial legislation such as the CSPA, the

term "occurrence of the violation," where the violation is continuing or episodic, will denote the

time when the violation ceases. Roelle v. Orkin Exterminating Co., 2000 Ohio App. LEXIS 5141

*22 (10th Dist.). "Statutes of limitation generally are to be construed liberally to permit the

decision of cases upon their merits." Gregory v. Flowers, 32 Ohio St.2d 48, 290 N.E.2d

181(1972).

In Roelle, the court found that the annual renewals entered into by the parties constituted

a continuing contract, and for statute of limitation purposes the action accrued, and the statute

began to run, only upon termination of the final renewal. Roelle at *22.

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 This Court finds that, taking each allegation of the Complaint as true for purposes of this

motion, a violation occurred each time Plaintiffs renewed their Savings Club membership and

each time Defendant sold a prescription to Plaintiffs in excess of what was charged at retail or

through GoodRx. The claims that occurred within the two years of filing the Complaint are not

time-barred. Plaintiffs' damages may be limited by the two-year rule but the cause of action is

not time-barred.

b. Conduct that constitutes a violation of the CSPA

Second, Defendant states that the conduct about which Plaintiffs complain is not the sort

of conduct that constitutes a violation of the CSPA. According to Defendant, Plaintiffs'

allegations do not satisfy the provisions Plaintiffs claim were violated because 1) Plaintiffs do

not allege that Kroger ever made a false representation, 2) the applicable statutory provisions do

not apply to representations regarding prices, 3) the price differentials are not substantially in

excess, and 4) it cannot be shown that Plaintiffs are unable to receive a substantial benefit from

the Savings Club.

(1) False representations

R.C. 1345.02(A) prohibits a party from engaging in any "deceptive act or practice in

connection with a consumer transaction." In determining whether an act or practice is deceptive

for purposes of the CSPA, "the question is whether the supplier did or said something, regardless

of intent, that has the likelihood inducing in the mind of a consumer that was not in accord with

the facts." Frank v. WNB Group, LLC, 2019-Ohio-1687, 135 N.E.3d 1142, ¶ 26 (1' Dist.).

Defendant relies upon the First District for the proposition that "[for conduct to be deceptive

under the CSPA, it must be both false and material to the consumer transaction." Lester v. FCA

US LLC, 2022-Ohio-1776, 1137 (1st Dist.). In support of this statement, the First District cites

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 th
Grgat v. Giant Eagle. Inc., 2019-Ohio-4582, 135 N.E.3d 846 (8 Dist.), and Richards v.

Beechmont Volvo, 127 Ohio App.3d 188, 711 N.E.2d 1088 (1st Dist.1998). In Richards, the court

noted that the CSPA is a remedial Act that courts must liberally construe in favor of the

consumer. Einhorn v. Ford Motor Co.,48 Ohio St.3d 27, 29, 548 N.E.2d 933, 935. The focus of

any inquiry into whether an act is deceptive is the likely effect on the consumer. Smaldino v.

Larsick, 90 Ohio App.3d 691, 697, 630 N.E.2d 408, 411-412.

Defendant states that Plaintiffs do not contend that anything Kroger said about the

Savings Club was false.

Plaintiffs counter that the CSPA prohibits unfair and deceptive acts and practices under

R.C. 1345.02 and unconscionable acts and practices under R.C. 1345.03 and that "[w]hether any

given act or practice may be unfair or deceptive is an issue of fact to be decided from all the

relevant facts and circumstances in the particular case." Mannix v. DCB Serv., Inc., 2004-Ohio-

6672, ¶ 18 (2nd Dist.). Plaintiffs assert that it is "[t]he likelihood of deception or the propensity to

deceive [that] is the criterion by which the act or practice is judged." Thomas v. Sun Furniture &

Appliance Co., 61 Ohio App.2d 78, 82, 399 N.E.2d 567 (Pt Dist.1978). Although the impression

left upon a reasonable consumer must be false to bring a claim for deceptive conduct under the

CSPA, it has long been held that a statement itself may be deceptive even if it is literally true.

See Rashid v. Cherokee Motors, Inc., Hamilton C.P. No. A8006561, 1981 WL 169163, *1 (Mar.

11, 1981).

Plaintiffs further argue that, in addition to the 10 deceptive practices listed in R.C.

1345.02(B), "two other authorities can determine what constitutes a violation of the CSPA: (1)

the rules adopted by the Ohio Attorney General and found in the Ohio Administrative Code and

(2) the judiciary." Frank v. WNB Group, LLC, 2019-Ohio-1687, 135 N.E.3d 1142, 1117 (1st

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Dist.). Plaintiffs maintain that they allege claims under the general directive of R.C. 1345.02(A),

as well as independent violations of Administrative Code sections 109-4-3-02, 109-4-3-10(A),

and 109-4-3-12.

The Court finds that Plaintiffs' allegations sufficiently set forth unfair and deceptive acts

and practices under R.C. 1345.02 to survive this motion to dismiss. Plaintiffs have identified

statements that, at the very least, have "the likelihood of inducing in the mind of a consumer a

belief that was not in accordance with the facts." Frank v. WNB Group, LLC, 2019-Ohio-1687,

135 N.E.3d 1142,1126 (1st Dist.).

(2) Statutory provisions do not apply to representations regarding prices

Defendant argues that the portions of Plaintiffs' claim arising out of R.C. 1345.02(B)(1)

and (B)(5) also fail because those provisions do not apply to representations involving price.

Defendant claims this is the only kind of representation Plaintiffs identify. Plaintiffs respond that

Defendants fail to address the Ohio Administrative Code that provides that "[i]t is deceptive for a

supplier in its out-of-store advertising to use such terms as `sale,' discount,"bargain,' or any

other terms indicating a savings or reduction in prices unless: (1) The savings or reduction is a

meaningful reduction; or (2) The actual amount or percentage of savings is clearly and

conspicuously identified in the advertisement." OAC 109:4-3-12.

Further, Plaintiffs note that Defendant violated R.C. 1345.02 (B)(1) by representing that

the Savings Club, a service, has "sponsorship, approval, performance characteristics, accessories,

uses, or benefits," that it doesn't have and such claim does not rely on a price comparison.

The Court finds that, at the motion to dismiss stage, Plaintiffs have sufficiently pled a

claim under R.C. 1345.02(B).

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 (3) Price differentials are not substantially in excess

Next, Defendant argues that under R.C. 1345.03(B)(2) Plaintiffs must allege that goods

were sold at an unconscionable price. This has been defined as a "substantial excess over the

price for comparable items." Herbort v. Columbia Oldsmobile, Inc., 1991 Ohio App. LEXIS

5638, at *3 (1St Dist.). Plaintiffs argue that they did so, to the tune of a 159% premium on

medication. Further, Plaintiffs argue that the question is ultimately whether a jury could conclude

that the alleged acts and practices were "unscrupulous," "outrageous," or "offensive to the public

conscience." R.C.1345.03(A).

Regarding the allegations in the Complaint as true, the Court finds the price differentials

identified in the Complaint are material and it would be premature to dismiss the case on this

basis.

(4) Receipt of a substantial benefit

Finally, Defendant states that under R.C. 1345.03(B)(3) Plaintiffs must allege sufficient

facts to establish "the inability to receive a substantial benefit from the subject consumer

transaction." Plaintiffs respond that the proper focus of this claim is whether Plaintiffs received

a substantial benefit from each of the transactions in which they paid more for their medication

than they would be required to pay without a Savings Club membership. This Court agrees.

2. The class claims under the CSPA

Defendant states that to pursue a violation of the CSPA on behalf of a class, Plaintiffs

must allege that Kroger had prior notice that its conduct was "deceptive or unconscionable."

According to Defendant, Plaintiffs' reliance on two cases and a provision of the Ohio

Administrative Code are insufficient to put Kroger on notice that its, conduct was deceptive or

unconscionable.

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 Plaintiffs respond that the pleading stage is not the time to address the issue of the

viability of the class claims. This Court agrees.

3. The unjust enrichment claim

Defendant argues that Plaintiffs' unjust enrichment claim fails because it is precluded by

the express contract between Plaintiffs and GoodRx. Plaintiffs have stated, and this Court has

agreed, that Plaintiffs are not proceeding under the contract between Plaintiffs and GoodRx.

Regarding the elements of an unjust enrichment claim, Defendant asserts that

Plaintiffs' Complaint fails to allege that the benefit conferred upon Kroger was unjust. Yet

Plaintiffs do assert that it would "be unjust for Kroger to retain amounts paid by Savings Club

members that were in excess of the retail price or the available GoodRx discount price."

Plaintiffs assert that the retention of profits from the sale of overpriced prescription medication is

unjust because it is unfair, deceptive and unconscionable.

The Court cannot say at this time that there is no set of facts upon Plaintiffs can prevail

on an unjust enrichment claim.

4. The injunctive and declaratory relief claim

According to Defendant, Plaintiffs' claims for injunctive and declaratory relief are

premised on Plaintiffs' CSPA claims and, as the CSPA claims fail, so must the declarative and

injunctive relief claims fail. As the Court has not found that the CSPA claims fail as a matter of

law, the Court will not find that the claims for declaratory and injunctive relief fail at this time.

The matter is set for a case management conference on March 2, 2023 at 1:00 p.m.

04,133
ENTERED Megan E. Shanahan, Judge
JAN 26 2023
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 Copy to:

W.B. Markovits
bmarkovits@msdlegal.com

Terence R. Coates
tcoates@msdlegal.corn

Dylan J. Gould
dgould@msdlegal.com

, William H. Blessing
bill@blessingwallacelaw.corn

David S. Blessing
david@blessingwallacelaw.com
Nathaniel Lampley, Jr.
nlampley@vorys.com

David F. Hine
dfhine@vorys.com

Petra G. Bergman
pgbergman@vorys.com

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