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John W. Ferron v. Search Cactus, LLC

Corporate Officers Can Be Held Personally Liable For Corporation's Transmission Of Deceptive Email Advertisements

Court holds that defendants, individual officers of co-defendant Search Cactus LLC (“Search Cactus”) can be held personally liable for violations of the Ohio Consumer Sales Practices Act (“OCSPA”) arising out of the transmission by Search Cactus of allegedly misleading and deceptive promotional emails, if “the officer took part in the act, specifically directed the act, or participated or cooperated in the act.”  Because the complaint alleged that the individual defendants approved the content of the promotional emails in question, the Court denied the individual defendants’ motion to dismiss, and allowed plaintiff, a recipient of such emails, to pursue his OCSPA claim against them.

Officers That Approved Email Ads Content Face Personal Liability

Plaintiff John Ferron, a lawyer residing in Ohio, claimed that he received misleading and deceptive email solicitations from defendant Search Cactus that offered “free products” without adequately disclosing the conditions attached to claiming those purported “prizes.”  The individual defendants Aaron Weitzman and David Weinberg are corporate officers of Search Cactus who were alleged to have approved all of Search Cactus’ email advertisements.  As a result of this conduct, plaintiff brought suit, charging defendants with violation of O.R.C. Section 1345.02(A), which provided that “no supplier shall commit an unfair or deceptive act or practice in connection with a consumer transaction.”

The individual defendants moved to dismiss, arguing that they could not be held liable for Search Cactus’ acts unless plaintiff could pierce the corporate veil, and hold that Search Cactus was their ‘alter ego.’  The Court rejected this argument, and denied defendants’ motion to dismiss.  A corporate officer can be personally liable for OSCPA violations if “the officer took part in the act, specifically directed the act, or participated or cooperated in the act.”  It is not necessary, as defendants contend, to pierce the corporate veil, or establish that the corporation is the individual defendants’ alter ego, to establish liability.  Because the complaint alleged that the individual defendants approved the content of the misleading emails, it adequately alleged their participation in the acts at issue sufficiently to expose the individual defendants to liability under applicable Ohio statutes.

Lastly, the Court rejected defendants’ argument that Michigan law, and not that of Ohio, applied, because defendants’ websites so specified in the site’s terms and conditions.  While not entirely clear from the Court’s decision, presumably, the emails at issue referred the reader to these websites for the terms and conditions of defendants’ offers.  No express agreement between the parties to apply Michigan law was alleged.  Defendants solicited business in Ohio.  The Court held that under Ohio choice of law principals, Ohio will apply the law of the place of the injury in tort cases.  “Because the alleged injuries in the present case occurred in Ohio [the Court held that] Ohio’s law should [accordingly] govern.”