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Gembarski v. Partssource, Inc.

Court of Appeals of Ohio, Eleventh District, Portage

December 11, 2017

PARTSSOURCE, INC., Defendant-Appellant.

         Civil Appeal from the Portage County Court of Common Pleas, Case No. 2013 CV 0001.

          Thomas J. Connick, Connick Law, LLC, (For Plaintiff-Appellee).

          Jeffrey J. Wedel, Stephen S. Zashin, and Helena Oroz, Zashin & Rich Co., L.P.A., Ernst & Young Tower, (For Defendant-Appellant).



         {¶1} Appellant, PartsSource, Inc., appeals from the judgment of the Portage County Court of Common Pleas, granting a motion to certify class action filed by appellee, Edward F. Gembarski. At issue is whether a class defined as all current and former employees who earned commissions from the sales of medical equipment and whose earned commissions were subject to rescission if the accounts were not paid within a ninety-day period satisfies the requirements of Civ.R. 23 for certification. We affirm the trial court's judgment.

         {¶2} On October 1, 2012, appellee filed a class-action complaint for damages against appellee in the Summit County Court of Common Pleas. Appellee filed an answer and the case was transferred to the Portage County Court of Common Pleas by stipulation of the parties. On September 22, 2015, appellee filed a motion to certify class action and a motion to modify/amend class definition. Appellee opposed the motion. On March 31, 2016, the motion to modify/amend class definition was granted On May 2, 2016, appellant filed a brief in opposition to appellee's motion to certify class action and, on June 23, 2016, a class certification hearing was held before the magistrate.

         {¶3} On September 30, 2016, the magistrate issued findings of fact and conclusions of law. The following are taken from the magistrate's findings:

         {¶4} "Mr. Gembarski was an Account Representative, i.e., salesman, who sold medical replacement parts. PartsSource is in the business of selling medical equipment replacement parts.

         {¶5} "Mr. Gembarski was paid by commission only. He did not receive a salary.

         {¶6} "There were allegedly at least 75 persons who were in the same position as Mr. Gembarski and earned their commissions in the same manner he did. Other employees have placed that number, to their knowledge, at anywhere between 45-65.

         {¶7} "Commissions are allegedly earned when a part is sold and then delivered to a customer, and then paid to the Account Manager within 30 days therefrom on the next commission statement. Then, that money actually went into the Account Manager's paycheck and allegedly became their personal property.

         {¶8} "PartsSource allegedly took back the commissions allegedly earned by Plaintiff and the putative class, and that money has never been returned. And this same alleged wrongful taking of the alleged earned commissions happened to Mr. Gembarski as well as approximately 75-120 other Account Managers. Mr. Gembarski has personal knowledge of the list of Account Managers PartsSource regularly sent out advising that they were having their commissions pulled, and whose complaints were exactly the same as Mr. Gembarski's.

         {¶9} The court certified the class and defined the same as follows: "All current and/or former PartsSource, Inc. Account Managers and/or employees who are or ever have been subject to Defendant PartsSource, Inc.'s policy and wrongful practice of reducing, withholding or deducting, i.e. taking back or 'pulling' earned commissions on sales of medical equipment and/or supplies."

         {¶10} Appellant filed objections to the magistrate's decision, which were opposed by appellee. Ultimately, the trial court overruled appellant's objections and adopted the magistrate's decision. Appellant now appeals and assigns three errors for our review. Its first assignment of error provides:

         {¶11} "The trial court abused its discretion by adopting the magistrate's findings, which adopted appellee's proposed findings verbatim, over appellant's objection where the record does not contain competent and credible evidence supporting those findings."

         {¶12} "A trial court must conduct a rigorous analysis when determining whether to certify a class pursuant to Civ.R. 23 and may grant certification only after finding that all of the requirements of the rule are satisfied; the analysis requires the court to resolve factual disputes relative to each requirement and to find, based upon those determinations, other relevant facts and the applicable legal standard, that the requirement is met." Cullen v. State Farm Mut. Auto. Ins. Co., 137 Ohio St.3d 373, 2013-Ohio-4733, paragraph one of the syllabus.

         {¶13} The Ohio Supreme Court has identified seven prerequisites for maintaining a class action derived from Civ.R. 23:

         {¶14} "(1) an identifiable class must exist and the definition of the class must be unambiguous; (2) the named representatives must be members of the class; (3) the class must be so numerous that joinder of all members is impracticable; (4) there must be questions of law or fact common to the class; (5) the claims or defenses of the representative parties must be typical of the claims or defenses of the class; (6) the representative parties must fairly and adequately protect the interests of the class; and (7) one of the three Civ.R. 23(B) requirements must be met." Hamilton v. Ohio Savings Bank, 82 Ohio St.3d 67, 71 (1998).

         {¶15} Moreover, "Civ.R. 23(B)(3) states that in order to certify a class in an action for damages, two findings must be made by the trial court. First, it must find that questions of law or fact common to the members of the class predominate over any questions affecting only individual members; and second, the court must find that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." In re Consol. Mgte. Satisfaction Cases, 97 Ohio St.3d 465, 2002- Ohio-6720, ¶7. "A party seeking certification pursuant to Civ.R. 23 bears the burden of demonstrating by a preponderance of the evidence that the proposed class meets each of the requirements set forth in the rule. Cullen, supra, at paragraph three of the syllabus.

         {¶16} "A trial judge has broad discretion in determining whether a class action may be maintained and that determination will not be disturbed absent an abuse of discretion." Marks v. C.P.Chem. Co., Inc., 31 Ohio St.3d 200 (1987), syllabus. The abuse of discretion standard "applies to the ultimate decision of the trial court, * * * as well as to its determination regarding each requirement of the rule." Cullen, supra, at ¶19. Nevertheless, as in a general civil case, where "the burden of persuasion is only by a preponderance of the evidence, * * * evidence must still exist on each element (sufficiency) and the evidence on each element must satisfy the burden of persuasion (weight)." Id. at ¶19, citing Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179, ¶19.

         {¶17} Under its first assignment of error, appellant contends the trial court erred by adopting, verbatim, appellee's proposed findings of fact and conclusions of law, despite the submission being "replete with verbatim errors, misstated testimony, and other inaccuracies." Appellant incorporates by reference its "forty-two objections, filed with the trial court on October 4, 2016, " but, "in interest of brevity, " provides illustrative examples of errors in the magistrate's decision.

         {¶18} First, appellant challenges the magistrate's finding that appellee seeks certification "of a class of Account Managers who sold medical equipment and/or parts for Defendant PartsSource, " and, in a footnote, observed that "Account Managers, Sales Representatives and Customer Service Representatives are used, at times, interchangeably herein." Appellant counters that, at the certification hearing, appellee testified that the proposed class included account managers, senior account managers, and strategic account managers, but not product managers. Appellant also notes that Charles Koch, its Chief Administrative Officer, testified that different categories of employees were compensated differently so that the titles were not interchangeable.

         {¶19} We find the objection fails to identify a recognizable error. The class certified by the trial court includes any of appellant's employees who received commissions from the sale of medical equipment and/or supplies and who were subject to an allegedly improper policy of having earned commissions rescinded. Membership in the class does not depend on job title, responsibilities, or overall compensation package. Moreover, Koch testified by deposition that there were a variety of titles that were applied to salespersons who were, nonetheless, paid by commission.[1]

         {¶20} Appellant next asserts the magistrate erred when it found that appellee was employed with it through 2011 when, in fact, he was employed through 2012. Appellant acknowledges that the trial court recognized this objection as valid and corrected the error, but counters that if the court had conducted a thorough review of the Magistrate's Decision before adopting it, there would have been no need to raise an objection.

         {¶21} Appellant also maintains the magistrate erred when it identified appellee as an Account Representative, not acknowledging that he held other positions and/or titles during his employment with it.

         {¶22} These objections are inconsequential to the ultimate issue of class certification. As such, any error is harmless as a matter of law.

         {¶23} Next, appellant argues the magistrate erred in finding that at least 75 persons "were in the same position as Mr. Gembarski and earned their commissions in the same manner he did." Appellant counters that appellee testified that he only had personal knowledge of six other employees' compensation plans and, therefore, speculated about the actual number.

         {¶24} We discern no error in the foregoing. The magistrate's finding fairly reflects appellee's testimony, which was based on complaints he heard from approximately 50 or 60 other salespersons ("100 percent" of them) who had commissions "pulled back." The magistrate also cited the deposition testimony of Daniel Brenner, the Director of Customer Implementation for appellant, who estimated that there were between 45 and 65 persons who sell medical parts for commission at any given time. Koch in his deposition testimony referred to "140 or so sales reps" who had received reduced commissions over a number of years. The magistrate's finding is therefore adequately supported by the record.

         {¶25} Appellant next contends the magistrate's finding that a salesperson's "money actually went into the Account Manager's paycheck and allegedly became their personal property" is based only on appellee's opinion. We do not agree.

         {¶26} The magistrate properly conditioned the status of the money that went into a salesperson's paycheck by the use of the qualifying adverb "allegedly." That such money became the salesperson's personal property was not only Gembarski's opinion, but that of Brenner and Koch as well. The point at which a commission is actually earned is, of course, one of the ultimate factual issues to be decided in this case. For the purpose of class certification, the magistrate is not deciding the ultimate issues of the case, but merely describing appellee's theory of recovery. Such analysis is expressly sanctioned by the Ohio Supreme Court. See Stammco, LLC. v. United Tel. Co. of Ohio, 136 Ohio St.3d 231, 2013-Ohio-3019, syllabus. ("At the certification stage in a class-action lawsuit, a trial court must undertake a rigorous analysis, which may include probing the underlying merits of the plaintiff's claim, but only for the purpose of determining whether the plaintiff has satisfied the prerequisites of Civ.R. 23.")

         {¶27} With respect to appellant's remaining 37 objections, we decline to consider them as they have not been properly raised before this court. "Parties cannot simply incorporate by reference arguments they made to the trial court in their appellate brief." Deutsche Bank Natl. Trust Co. v. Taylor, 9th Dist. Summit No. 28069, 2016-Ohio-7090, ¶14, fn. 1, citing App.R. 16(A)(7) ("[t]he appellant shall include in its brief * * * [a]n argument containing the contentions of the appellant with respect to each assignment of error presented for review") and App.R. 12(A)(2) ("[t]he court may disregard an assignment of error presented for review if the party raising it * * * fails to argue the assignment separately in the brief, as required under App.R. 16(A)"); see also Kulikowski v. State Farm Mut. Ins. ...

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