Duncan Place Owners Ass'n, On Its Own Behalf And, Stephen Okawa, Elizabeth K. Selleck, Mariye Wick Sorenson, Cassandra Jung, Cathy Tan, David Hanson, Kai Shi Hsu, Colby Wick, Junwon Su, Lee W., Stephanie Tran, Maggie Tang, Hsiang June Chen, Xue Chen, Terry L. Day, Fung Ming Chan, Harry R. Calbom Iv, John Space, John Chang, Imahn Moin, Jennie Le, Peter J. Wu, Naomi Avery, Jerilyn L.C. v. Danze, Inc.

DUNCAN PLACE OWNERS ASSOCIATION, on its own behalf andas assignee of Association members JAMES WEST, STEPHEN OKAWA,ELIZABETH K. SELLECK, MARIYE WICK SORENSON,CASSANDRA JUNG, CATHY TAN, DAVID HANSON, KAI SHI HSU, COLBY WICK,JUNWON SU, LEE WEST, STEPHANIE TRAN, MAGGIE TANG,HSIANG JUNE CHEN, XUE CHEN, TERRY L. DAY, FUNG MING CHAN,HARRY R. CALBOM IV, JOHN SPACE, JOHN CHANG, IMAHN MOIN,JENNIE LE, PETER J. WU, NAOMI AVERY, JERILYN L.C. YOUNG,GWENDOLYN HERR GLASS, JOHN H. FINEFROCK, DONALD BAIN MACKINTOSH III,JAMES R. LUBY, TSZ CHUN LO, CINDY CHAN, TAM, MATHEW CHAM,ALI KHREIS, SHUAI WANG, DOUGLAS STUMBERGER, JIA PING WU,ANAND PANDIT, TONEY JIANG, KRISHNAN GAWRY,JUAN-FU CHEN; and WEI-LING CHEN; and DANIEL DONNELLY,individually and on behalf of others similarly situated, Plaintiffs, v. DANZE, INC., f/k/a GLOBE UNION AMERICA CORPORATION,and GLOBE UNION GROUP, INC., Defendants.

No. 15 C 01662

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

June 30, 2016

Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER

Plaintiffs Duncan Place Owners Association, the forty-one individual condo owners who have assigned their claims to Duncan Place, and Daniel Donnelly bring this class action against Defendants Danze, Inc. and Globe Union Group, Inc. (for convenience's sake, Defendants will be referred to collectively as "Danze"), alleging that Danze sold them faulty faucets and engaged in fraudulent and deceptive marketing practices.¹ Danze, Inc. and Globe Union Group, Inc. move to dismiss [R. 61]² Plaintiffs' Second Amended Complaint [R. 60] under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons explained below, Danze's motion to dismiss is granted in part and denied in part.

I. Background

Danze, Inc. and Globe Union Group, Inc. previously moved to dismiss [R. 32] Plaintiffs' First Amended Complaint, arguing that Duncan Place lacked associational standing to sue on behalf of individual faucet-consumers under Federal Rule of Civil Procedure 12(b)(1), and that the amended complaint failed to state a claim for relief under Federal Rule of Civil Procedure 12(b)(6). At that time, only Duncan Place and Phyllis Zisser were named as plaintiffs. R. 21, Am. Compl. The Court granted the motion in part and denied it in part. R. 56, 09/15/15 Opinion. The Court agreed that Duncan Place lacked associational standing to bring suit on behalf of the individual condo owners, all of whom had suffered varying degrees ofdamage due to the allegedly faulty Danze faucets, and that some of the amended complaint's eight counts failed to state a claim. Id. The Court disagreed, however, that all counts against both Duncan Place and Zisser required dismissal. Id.

Since then, the parties have taken several steps: forty-one of the individual condo owners at Duncan Place Condominium (Duncan Place's condo-complex is located in Washington state) assigned their claims to Duncan Place, R. 60, Second Am. Compl. ¶ 7; Daniel Donnelly, an Illinois citizen, joined the case as a named plaintiff, id. ¶ 9; Phyllis Zisser accepted a Rule 68 Offer of Judgment, and was dismissed from the case with prejudice, R. 70, Stipulation of Dismissal; R. 71, 03/29/16 Minute Entry; and Duncan Place and Donnelly together (and at the time, Zisser as well) filed a Second Amended Complaint, R. 60, Second Am. Compl.

Because the prior opinion describes the allegations of this case in detail, only the most pertinent facts are discussed here, as well as those facts that are new to the Second Amended Complaint. (For convenience's sake, the Court will refer to the Second Amended Complaint simply as the Complaint going forward.) Danze, Inc., a subsidiary of Globe Union Group, Inc., markets and sells faucets in the U.S. and abroad, through wholesalers, retail outlets, and on the internet. Second Am. Compl. ¶¶ 12, 21. Danze advertises its faucets as "safe, reliable, and worry-free," stating that customers "never have to worry about a drip." Id. ¶ 23. Online, Danze emphasizes the "high level of craftsmanship" of its faucets; it describes its kitchen faucets as "top-notch without a top-notch price tag" and invites consumers to "examine the fit, finish and design of [Danze's] products to appreciate their superiorquality." Id. ¶ 24. Danze also highlights the longevity of its faucets, stating that it "design[s] and engineer[s] [its] products to meet exacting standards," and that when consumers choose Danze, "[they] choose a high-quality faucet that can ... [be] depend[ed] on for many years to come." Id. For all of its faucets, Danze offers a "limited lifetime warranty," warranting to "the original purchaser" that "all parts of the Danze faucet [will] be free from defects in material and workmanship, for as long as the consumer purchaser owns it," and that Danze will "replace 'free of charge', during the warranty period, any part that proves defective in material and/or workmanship under normal residential application." Id. ¶ 25 (citing Danze's service warranty on its website, http://www.danze.com/service/warranty/).

While Danze touts its faucets' superior quality and reliability, Plaintiffs assert that Danze's faucets fall well short of those representations. Plaintiffs contend that "[p]urchasers of Danze faucets make [their] purchasing decisions in part and in reliance []on" Danze's representations and warranty. Second Am. Compl. ¶ 41. And while those representations and warranty lead reasonable consumers to believe that Danze's faucets are "long lasting," "maintenance free," "premier product[s]," in reality, they "suffer from defects ... that cause [them] to fail well prior to their warranted lifetime." Id. ¶¶ 25-27. Plaintiffs highlight one defect in particular: the faucets' defective, steel-braided, water supply hoses, which are allegedly "made from an inferior low nickel stainless steel alloy." Id. ¶ 29. Typically, when flexible, steel-braided hoses are used in plumbing applications, Plaintiffs explain, they are manufactured out of a stainless steel alloy that contains a highernickel content. Id. ¶ 31. According to Plaintiffs, Danze's decision to use a stainless steel alloy with a lower nickel content is what "makes [Danze's] hoses susceptible to stress corrosion cracking" and what "causes the hoses ... to fail ... prematurely." Id. ¶¶ 29, 31. Despite knowing about this defect, Plaintiffs allege that Danze has continued to make false and misleading statements on its website and in its advertisements about its faucets' design, reliability, and performance (as well as omitting information about the faucets' problems). Id. ¶¶ 36-40. Plaintiffs further allege that Danze has failed to honor its warranty promises. Id.

In Duncan Place Condominium, contractors installed Danze faucets in all 63 units, specifically in the bathrooms. Second Am. Compl. ¶ 46. According to Duncan Place, "[a] number of these faucets have failed," resulting not only in "severe property damage," but also in Duncan Place needing "to pay the deductible amount under its property insurance policy for each loss," and in Duncan Place's insurance premiums "greatly increas[ing]." Id. Duncan Place asserts that Danze failed to repair or replace the faucets in accordance with the terms of its warranties, or to reimburse Duncan Place for the resulting damage. Id. ¶ 47. In addition to Duncan Place's own claims, forty-one of the individual condo owners who have allegedly suffered damages from failed Danze faucets have assigned their claims to Duncan Place as well. Id. ¶ 7.

Daniel Donnelly, the other named Plaintiff, purchased a Danze kitchen faucet online from Home Depot in March 2015. Second Am. Compl. ¶ 51. Shortly after installation, the steel-braided hose on that faucet allegedly began leaking andcaused water damage to Donnelly's surrounding cabinetry. Id. Donnelly sent Danze a letter informing Danze of the problem, as well as the resulting damage, and asking Danze to reimburse him for the damages he suffered from the defective faucet. Id. ¶ 52. A few days later, Danze instructed Donnelly to submit a warranty claim, which Donnelly did. Id. That warranty claim is still pending. Id.

Duncan Place and Donnelly seek to bring this case as a class action on behalf of the same proposed class that was described in the first amended complaint: "original consumer end-users of Danze brand faucets installed in homes, residences, buildings, or other structures physically located in the United States, in which Danze faucets are or have been installed since 2000." Second Am. Compl. ¶ 54. Proposed class-eligible faucets include "all faucets incorporating a steel braided supply house manufactured or distributed by [Danze]." Id. The Complaint further proposes multiple subclasses of applicable consumers, just as the first amended complaint did, although this time it includes not only Washington and New York subclasses, but also an Illinois subclass. Id. ¶¶ 55-57. Plaintiffs assert several substantive claims, all of which are similar to the claims included in the first amended complaint and all of which arise under state law: breach of express warranty, breach of implied warranty of merchantability, negligence, strict products liability, and unjust enrichment; in addition, Plaintiffs assert a claim for the Illinois subclass under Illinois's Consumer Fraud and Deceptive Business Practices Act. Id. ¶¶ 70-115. Danze now moves to dismiss the Complaint against all named-Plaintiffs under both Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). R. 61, Mot. toDismiss. Danze again challenges Duncan Place's ability to bring suit on behalf of the individual unit owners. R. 64, Defs.'s Br. at 5. It also challenges the standing of the assigning unit owners, the ripeness of Donnelly's claims, and whether any of the Plaintiffs' causes of action state a claim on which relief can be granted. Id. at 5-24.

II. Legal Standards

Danze brings its motion under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). A Rule 12(b)(6)...