Atlas Roofing Corp. v. Atlas Roofing Corp.

IN RE ATLAS ROOFING CORPORATION CHALET SHINGLE PRODUCTS LIABILITY LITIGATION

PATRICIA and DAVID DICKSONon behalf of themselves and all others similarly situated, et al., Plaintiffs, v. ATLAS ROOFING CORPORATION, Defendant.

MDL DOCKET NO. 2495

1:13-md-2495-TWT

CIVIL ACTION FILE NO. 1:13-CV-4222-TWT

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

June 8, 2017

OPINION AND ORDER

This is a multi-district class action arising out of the marketing and sale of allegedly defective roofing shingles. It is before the Court on the Plaintiffs Patricia and David Dickson's Motion for Class Certification [Doc. 54]. For the reasons set forth below, the Plaintiffs' Motion for Class Certification [Doc. 54] is DENIED.

I. Background

The Plaintiffs and putative class members are purchasers of Atlas Chalet and Stratford Shingles ("Shingles").¹ The Defendant Atlas Roofing Corporation ("Atlas") designed, manufactured, and sold the Shingles.² Atlas represented and continues to represent that the Shingles are durable, reliable, free from defects, and compliant with industry standards and building codes.³ The Plaintiffs allege that the Shingles were defective at the time of sale due to a flaw in the manufacturing process.⁴ Specifically, the manufacturing process "permits moisture to intrude into the Shingle which creates a gas bubble that expands when the Shingles are exposed to the sun resulting in cracking and blistering of the Shingles."⁵ The Plaintiffs further allege that despiteAtlas's knowledge of the defect, Atlas did nothing to correct the defective design and continued to market and warrant the Shingles as durable.⁶

Atlas provided four different limited warranties throughout the eleven-year class period.⁷ The initial limited warranty was a twenty-five-year warranty, and it provided that the Shingles were "free from manufacturing defects, which would reduce the useful life of the product."⁸ The warranty was transferrable to future property owners.⁹ On January 1, 2002, Atlas began issuing thirty-year limited warranties.¹⁰ The thirty-year warranty provided that the Shingles were "free from manufacturing defects, which results in leaks."¹¹ Atlas also limited the number of transfers of the warranty. For the thirty-year warranty, the coverage could only be transferred once and the second owner had to provide Atlas notice of the transfer of coverage.¹²

The named Plaintiffs Patricia and David Dickson, who are residents of Clover, South Carolina, purchased a home in 1999 and decided to install the Shingles.¹³ They also purchased the Shingles for other additions to their home.¹⁴ Upon discovery of the alleged defect in the Shingles, the Plaintiffs state that they filed a timely warranty claim with Atlas.¹⁵ But, according to the Plaintiffs, Atlas denied their claim, blaming weather events as the true cause of the deterioration of the Shingles.¹⁶ On June 3, 2013, the named Plaintiffs filed suit in the United States District Court for the District of South Carolina¹⁷ on behalf of themselves and others similarly situated in the state of South Carolina.¹⁸ They seek to bring their suit as a class action. Because similar consumer class actions were filed in other states, the Judicial Panel on MultidistrictLitigation transferred all related class actions pending in federal court to this Court for coordinated or consolidated pretrial proceedings.¹⁹

After the Motion to Dismiss stage, the Plaintiffs' remaining claims in this class action are for Breach of Express Warranty (Count I), Breach of Implied Warranties of Merchantability and Fitness for a Particular Purpose (Count II), Fraudulent Concealment (Count V), and Violation of the Magnuson-Moss Warranty Act (Count VI).²⁰ The Plaintiffs seek both damages and equitable relief.²¹ As damages, the Plaintiffs seek the cost of replacing the Shingles. They propose two methods for calculating the replacement costs. First, they state that a common formula that calculates replacement costs on a square foot basis could be employed, allowing class members to recover by merely showing the size of their roofs.²² This method accounts for the fact that "each class member's damages are the expense of removing and discarding the defective shingles, including the cost of the replacement shingles plusall associated labor costs."²³ In the alternative, they propose that individual class members can prove their actual replacement costs through a claims process.²⁴

II. Class Certification Standard

To maintain a case as a class action, the party seeking class certification must satisfy each of the prerequisites of Rule 23(a) and at least one of the provisions of Rule 23(b).²⁵ Rule 23(a) sets forth the four prerequisites to maintain any claim as a class action:

One or more members of a class may sue or be sued as representative parties on behalf of all members only if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.²⁶

These prerequisites are commonly referred to as: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation.²⁷ Failure to establish any one of thefour factors precludes certification. In addition, under Rule 23(b), the individual plaintiffs must convince the Court that: (1) prosecuting separate actions by or against individual members of the class would create a risk of prejudice to the party opposing the class or to those members of the class not parties to the subject litigation; (2) the party opposing the class has refused to act on grounds that apply generally to the class, necessitating final injunctive or declaratory relief; or (3) questions of law or fact common to the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for fair and efficient adjudication of the controversy.²⁸ The party seeking class certification bears the burden of proving that these requirements are satisfied.²⁹

The decision to grant or deny class certification lies within the sound discretion of the district court.³⁰ When considering the propriety of class certification, the court should not conduct a detailed evaluation of the merits of the suit.³¹ Nevertheless, thecourt must perform a "rigorous analysis" of the particular facts and arguments asserted in support of class certification.³² Frequently, that "rigorous analysis" will entail some overlap with the merits of the plaintiff's underlying claim.³³

III. Discussion

A. Rule 23(b)(3) Class

1. Class Definition

Though not explicitly stated in Rule 23, it is well accepted that "[b]efore a district court may grant a motion for class certification, a plaintiff . . . must establish that the proposed class is adequately defined and clearly ascertainable."³⁴ "An identifiable class exists if its members can be ascertained by reference to objective criteria."³⁵ The analysis of the objective criteria must be administratively feasible, meaning identifying class members is a "manageable process that does not requiremuch, if any, individual inquiry."³⁶ "A proponent of class certification may rely on the defendant's business records to identify prospective class members, but it is not enough to simply allege that the defendant's records will allow for identification."³⁷ "[T]he plaintiff must also establish that the records are in fact useful for identification purposes."³⁸

Here, the Plaintiffs seek certification of the following Rule 23(b)(3) class:

All those who as of the date class notice is issued: (a) own a home or other structure in the State of South Carolina on which Atlas Chalet or Stratford roofing shingles are currently installed; or (b) incurred unreimbursed costs to repair or replace Atlas Chalet or Stratford roofing shingles on a home or other structure which they currently own or previously owned in the State of South Carolina.³⁹

The Defendant raises two objections to the proposed class definition. First, it argues that the class definition is overly broad. By including current and former owners who incurred costs in repairing or replacing their roofs, the Defendant contends that the class definition does not require the owners to have suffered any damage due to analleged manufacturing defect. The Defendant also argues that the class is not ascertainable. It contends that determining who qualifies as a member under the second category would require "mini-trials."⁴⁰

The Court agrees with both of the Defendant's objections. For the Defendant's first objection, the Court finds that this issue is better addressed in its predominance discussion. The Plaintiffs allege that every Shingle is defective, and so the question becomes whether the former and current owners can prove that the alleged defect caused their injuries - the replacement or repair costs of their roofs - or were they due to other causes. This causation question raises concerns regarding individualized evidence, and thus the Court will address it in the predominance section of its Order. Still, the Plaintiffs have failed to demonstrate that identification of Atlas Chalet/Stratford Shingles is administratively feasible. The Defendant usually did not sell the Shingles directly to homeowners. The Plaintiffs contend that there are reliable methods for determining membership, including markings on the Shingles and warranty claims.⁴¹ But other than a list of warranty claims made in South Carolina, the Plaintiffs have failed to put forth evidence demonstrating how class members can beeasily ascertained.⁴² The Defendant has offered evidence that most warranty claims were generated by roofers soliciting business by advertising that the Atlas Shingles were defective. And the warranty claims only...