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Hamilton v. Ulta Beauty Inc.

United States District Court, N.D. Ohio

June 21, 2018

ULTA BEAUTY, INC., et al., Defendants.

          OPINION & ORDER [RESOLVING DOCS. 10, 16]


         Plaintiff Vanessa Hamilton alleges that Defendant Ulta Salon, Cosmetics & Fragrance, Inc.[1](“Ulta”) violated the Ohio Deceptive Trade Practices Act (“ODTPA”).[2] Defendant Ulta now moves to dismiss Plaintiff Hamilton's complaint for failure to state a claim, arguing that consumers do not have an ODTPA private right of action.[3] Plaintiff Hamilton opposes dismissal and moves the Court to certify to the Ohio Supreme Court the question of whether consumers have an ODTPA private right of action.[4]

         For the reasons below, the Court GRANTS Defendant Ulta's motion to dismiss and DENIES Plaintiff Hamilton's motion to certify the ODTPA question to the Ohio Supreme Court.

         I. FACTS

         Defendant Ulta is the “largest beauty retailer in the United States.”[5] Ulta operates a number of retail stores throughout Ohio that sell various beauty supply products.[6] Plaintiff Hamilton says she regularly shops at Ulta's Ohio stores.[7]

         Ulta offers a liberal return policy that allows customers to return any item for any reason and receive a full refund.[8] These returned items do not have to be in new and unused condition.[9]

         Plaintiff Hamilton alleges that Ulta stores, including Ohio Ulta stores, have a policy or practice of selling returned, used merchandise as new.[10] Plaintiff alleges that Ulta does not mark or otherwise identify these used items, and instead simply commingles used, returned products with new and unused products on the same shelf.[11]

         Plaintiff Hamilton notes that news agencies have covered these Ulta practices, including Business Insider.[12] Business Insider found that “two [former Ulta employees] admitted that used products often made their way back to the shelves” and that “[a] former manager for an Ulta location in Ohio reached out to [Business Insider] to share a similar story, and claims there was often pressure to sell used products.”[13]

         Plaintiff Hamilton now seeks to enjoin Defendant Ulta from continuing its alleged practice of selling used beauty products as new.

         II. Legal Standard

         When considering a motion to dismiss for failure to state a claim, the Court construes the complaint in the light most favorable to the nonmoving party, accepting its allegations as true, and drawing all reasonable inferences in favor of finding the complaint sufficient.[14] In order to survive a motion to dismiss, the complaint must allege sufficient facts “to state a claim for relief that is plausible on its face.”[15] While “detailed factual allegations” are unnecessary, a plaintiff must provide more than a “formulaic recitation of the elements of a cause of action.”[16]

         III. Analysis

         Defendants argue that consumers, like Plaintiff Hamilton, [17] do not have a cause of action under the ODTPA.[18] The Court agrees.

         The ODTPA gives standing to bring a civil action to a “person who is likely to be damaged by a person who commits a deceptive trade practice” or a “person who is injured by a person who commits a deceptive trade practice.”[19] The ODTPA defines a “person” as “an individual, corporation, government, governmental subdivision or agency, business trust, estate, trust, partnership, unincorporated association, limited liability company, two or more of any of the foregoing having a joint or common interest, or any other legal or commercial entity.”[20]

         A broad majority of the courts to directly address this issue have held that the ODTPA does not give consumers standing.[21] These courts include the Sixth Circuit, [22] several Ohio appellate courts, [23] and this Court.[24]

         Courts finding no ODTPA consumer standing have collectively given three reasons for that holding. First, Ohio courts look to the federal Lanham Act when interpreting the ODTPA, [25] and the Lanham Act does not give a consumer right of action.[26] This is because the Lanham Act, like the ODTPA, “protects persons engaged in commerce, not individual consumers.”[27]

         Second, the definition of “person” in the ODTPA qualifies the list of individuals and entities permitted to sue with the phrase “or any other legal or commercial entity.”[28] This phrase implies that an individual may bring suit under the ODTPA in his or her “capacity as a participant in commercial activity, ”[29] but may not bring suit as a non-commercial consumer.

         Third, the Ohio Consumer Sales Practices Act (“OCSPA”) provides consumer standing and prohibits virtually the same practices as the ODTPA.[30] Courts finding no ODTPA consumer standing have found that statute would become superfluous if the ODTPA also provided consumer standing.[31]Most relevant here, the OCSPA explicitly gives consumers a cause of action to sue when a business represents “[t]hat the subject of a consumer transaction is new, or unused, if it is not.”[32]

         As a rebuttal, Plaintiff points to two Southern District of Ohio decisions finding ODTPA consumer standing.[33] Both decisions concluded that the ODTPA's plain language does not exclude a consumer standing.[34] But, these decisions represent a minority view among the state and federal courts to consider this issue. Indeed, even within the Southern District of Ohio, these cases no longer represent the majority view.[35]

         Plaintiff also points to three Ohio Court of Appeals decisions.[36] But none of these decisions discuss ODTPA standing. They instead address substantive ODTPA issues, either because the parties did not raise ODTPA ...

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