Chizniak v. Certainteed Corp.

BARBARA CHIZNIAK, WAYNE BAILEY, RICHARD WILLIS,LARRY JOHNSON, JEAN DUCHAM, JEFFREY BROOM, and ROBBIE SHEETS,on behalf of themselves and others similarly situated, Plaintiffs, v. CERTAINTEED CORPORATION d/b/a CertainTeed Saint-Gobain;and SAINT-GOBAIN CORPORATION d/b/a Saint-Gobain North America,d/b/a Saint-Gobain, Defendants.

1:17-CV-1075 (FJS/ATB)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

January 30, 2020

APPEARANCES

DREYER BOYAJIAN LLP

75 Columbia Street

Albany, New York 12210

Attorneys for Plaintiffs

KERRANE STORZ, P.C.

37 Interlocken Boulevard

Suite 630

Broomfield, Colorado 80021

Attorneys for Plaintiffs

PEPPER HAMILTON LLP

3000 Two Logan Square

18th and Arch Streets

Philadelphia, Pennsylvania 19103

Attorneys for Defendants

HARRIS BEACH, PLLC

677 Broadway

Suite 1101

Albany, New York 12207

Attorneys for Defendants

OF COUNSEL

DONALD W. BOYAJIAN, ESQ.

JAMES R. PELUSO, JR., ESQ.

MICHAEL J. LOWDER, ESQ.

ANTHONY VALE, ESQ.

CHRISTOPHER W. WASSON, ESQ.

LEAH GREENBERG KATZ, ESQ.

ROBERT L. HICKOK, ESQ.

ELLIOT A. HALLAK, ESQ.

SCULLIN, Senior Judge

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiffs bring this action against Defendants seeking (1) certification of a class action, (2) declaratory and injunctive relief, (3) compensatory, statutory, and punitive damages, and (4) attorneys' fees. See generally Dkt. No. 1, Class Compl. Defendants have moved to dismiss all claims in Plaintiffs' complaint for lack of personal jurisdiction and failure to state a claim pursuant to Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure. See generally Dkt. Nos. 21 and 22.

II. BACKGROUND

Defendant CertainTeed—a wholly owned subsidiary of Saint-Gobain Delaware Corporation, which is a wholly owned subsidiary of Defendant Saint-Gobain Corporation—manufactures and distributes building materials, including vinyl siding. Defendant CertainTeed provides a transferable Lifetime Limited Warranty ("Limited Warranty") to property owners that CertainTeed vinyl siding is free from manufacturing defects and will maintain its structural integrity, which includes protection from peeling, flaking, blistering, corroding, and excessive fading under normal exposure and weathering conditions. Defendant CertainTeed warrants that, if the siding products have a manufacturing defect, it will pay to repair, replace, refinish, orcoat any siding product or refund the amount paid by the original property owner for the siding products plus the cost of the labor of the original installation.

Seven Plaintiffs filed a class complaint against Defendants after the CertainTeed vinyl siding on their homes blistered and degraded. Plaintiff Chizniak is the only Plaintiff who resides in New York. The other Plaintiffs ("the Out-of-State Plaintiffs") reside in (and suffered injuries in) other states, including Maine, South Carolina, Tennessee, Michigan, New Hampshire, and Minnesota. Plaintiffs each contacted Defendant CertainTeed to make a claim under their Limited Warranties. Defendant CertainTeed denied each warranty claim because the damage was caused by heat distortion from glass reflection. Plaintiffs' Limited Warranties contain exclusionary clauses that state the warranties do not apply to "siding products which have been distorted or melted due to an external heat source (including but not limited to a barbecue grill, fire, reflection from windows, doors, or other objects)."

Plaintiffs argue that, as a result of Defendant CertainTeed's warranty denials, they have suffered and will continue to suffer damages to repair, replace, and remedy their defective CertainTeed vinyl siding. Based on these allegations, Plaintiffs' class complaint asserts the following eight causes of action:

(1) breach of express warranty;

(2) breach of implied warranties;

(3) breach of the implied covenant of good faith and fair dealing;

(4) deceptive and unfair trade practices;

(5) false advertising;

(6) unjust enrichment;

(7) equitable indemnity/restitution; and

(8) declaratory and injunctive relief.

See generally Dkt. No. 1.

III. DISCUSSION

A. Legal standards

1. Personal jurisdiction

Courts may dismiss a complaint pursuant to Rule 12(b)(2) if a plaintiff fails to make a "prima facie showing of jurisdiction through its own affidavits and supporting materials." Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981); see also Harris v. Ware, No. 04-CV-1120 (JG), 2005 U.S. Dist. LEXIS 3302, *5 (E.D.N.Y. Mar. 4, 2005) (quotation omitted). "In other words, prior to discovery, a plaintiff may defeat [a motion to dismiss for lack of personal jurisdiction] 'by pleading, in good faith, see Fed. R. Civ. Proc. 11, legally sufficient allegations of jurisdiction.'" Harris, 2005 U.S. Dist. LEXIS 3302, at *4 (quoting Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir. 1998)). The Court must construe the pleadings and submissions in the light most favorable to the plaintiffs and must resolve all doubts in their favor. See Southern New Eng. Tel. Co. v. Global NAPs Inc., 624 F.3d 123, 138 (2d Cir. 2010) (quoting Porina, 521 F.3d at 126).

When a defendant moves to dismiss under Rule 12(b)(2) for lack of personal jurisdiction, district courts must perform a two-part analysis. See Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999). First, the court "must determine whether there is [personal] jurisdiction over the defendant under the relevant forum state's laws[.] ..." Id. Second, the court "must determine whether an exercise of [personal] jurisdiction under these laws is consistent with federal due process requirements." Id. (citation omitted).

2. Failure to state a claim

A motion to dismiss pursuant to Rule 12(b)(6) "challenges only the 'legal feasibility' of a complaint." Goel v. Bunge, Ltd., 820 F.3d 554, 558 (2d Cir. 2016) (quoting Global Network Commc'ns, Inc. v. City of New York, 458 F.3d 150, 155 (2d Cir. 2006)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting [Bell Atl. Corp. v. Twombly, 550 U.S. 544,] 570, 127 S. Ct. 1955 [(2007)]). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (citation omitted).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations ... a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.] ..." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and quotations omitted). "Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679 (citation omitted). When making its decision, this court must "accept all well-pleaded facts as true and consider those facts in the light most favorable to the plaintiff." Chapman v. N.Y. State Div. for Youth, 546 F.3d 230, 235 (2d Cir. 2008) (citing Patane v. Clark, 508 F.3d 106, 111 (2d Cir. 2007) (per curiam)).

B. Plaintiffs' claims against Defendant Saint-Gobain

Defendant Saint-Gobain argues that its status as a parent corporation is insufficient to support a claim against it for the alleged acts of its subsidiary, Defendant CertainTeed. See Dkt. No. 22-2 at 11. "It is fundamental that a parent is considered a legally separate entity from its subsidiary, and cannot be held liable for the subsidiary's actions based solely on its ownership of a controlling interest in the subsidiary." N.Y. State Elec. & Gas Corp. v. FirstEnergy Corp., 766 F.3d 212, 224 (2d Cir. 2014) (citing Bestfoods, 524 U.S. at 61, 118 S. Ct. 1876; Carte Blanche (Singapore) Pte., Ltd. v. Diners Club Intern., Inc., 2 F.3d 24, 26 (2d Cir. 1993)).

However, as Plaintiffs argue, a parent company may be held liable for its subsidiary's actions under the "alter ego" theory of liability. See Dkt. No. 31-1 at 10. The Court may hold the parent company liable under this theory if it can "pierce the corporate veil." Specifically, "[u]nder New York law, a court may pierce the corporate veil where 1) 'the owner exercised complete domination over the corporation with respect to the transaction at issue,' and 2) 'such domination was used to commit a fraud or wrong that injured the party seeking to pierce the veil.'" MAG Portfolio Consult, GmbH v. Merlin Biomed Grp. LLC, 268 F.3d 58, 63 (2d Cir. 2001) (quoting Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d Cir. 1997) (emphasis added)). "Determining that veil-piercing is appropriate is a 'fact specific' inquiry, and courts consider many factors, including:

'(1) disregard of corporate formalities; (2) inadequate capitalization; (3) intermingling of funds; (4) overlap in ownership, officers, directors, and personnel; (5) common office space, address and telephone numbers of corporate entities; (6) the degree of discretion shown by the allegedly dominated corporation; (7) whether the dealings between the entities are at arms length; (8) whether the corporations are treated as independent profit centers; (9) payment or guarantee of the corporation's debts by the dominating entity, and (10) intermingling of property between the entities.'

Id. at 63 (quoting Freeman v. Complex Computing Co., 119 F.3d 1044, 1053 (2d Cir. 1997)).

"This standard is 'very demanding' such that piercing the corporate veil 'is warranted only in extraordinary circumstances, and conclusory allegations of dominance and control will not suffice to defeat a motion to dismiss.'" Graham v. HSBC Mortg. Corp., No. 18-CV-4196 (KMK), 2019 U.S. Dist. LEXIS 116231, *17 (S.D.N.Y. July 12, 2019) (quoting Capmark Fin. Grp. v. Goldman Sachs Credit Partners L.P., 491 B.R. 335,...