Garrard v. Rust-Oleum Corp.

575 F.Supp.3d 995

Allen GARRARD, individually and on behalf of all others similarly situated, Plaintiff,

v.RUST-OLEUM CORPORATION, Defendant.

Case No. 20-cv-00612

United States District Court, N.D. Illinois, Eastern Division.

Signed December 14, 2021

Amy Renee Jackson, Pro Hac Vice, Matthew L. Dameron, Pro Hac Vice, Williams Dirks Dameron LLC, Kansas City, MO, Eric S. Johnson, Trent B. Miracle, Simmons Hanly Conroy, Alton, IL, Jason O. Barnes, Simmons Hanly Conroy, St. Louis, MO, Mitchell M. Breit, Simmons Hanly Conroy, New York, NY, for Plaintiff.

Anthony Joseph Monaco, Madison Shepley, Swanson, Martin & Bell, LLP, Chicago, IL, Charles Walter Steese, Pro Hac Vice, IJay Palansky, Pro Hac Vice, Armstrong Teasdale LLP, Denver, CO, for Defendant.

MEMORANDUM OPINION AND ORDER

Martha M. Pacold, Judge

Plaintiff Allen Garrard filed suit against defendant Rust-Oleum Corporation on behalf of himself and a putative class alleging that Rust-Oleum's wood finishing products are defective and Rust-Oleum made numerous misrepresentations about the products’ quality and effectiveness. Rust-Oleum moved to dismiss the complaint and strike many of the complaint's class action allegations. [25]. For the reasons set forth below, the motion is granted in part and denied in part.

BACKGROUND

Rust-Oleum manufactures and sells wood finishes and related products, including Deck Start Wood Primer, Restore 2X One Coat Solid Stain, and Restore 4X Deck Coat (collectively, "the Restore Products" or "Products"). [1] at 1.¹ Rust-Oleum has its principal place of business in Vernon Hills, Illinois. Id. ¶ 6. According to Rust-Oleum's marketing, Deck Start Wood Primer "simplifies prep & promotes topcoat adhesion" without requiring "sanding or stripping." Id. ¶¶ 30–31. Restore 4X Deck Coat "[r]efinishes weathered surfaces," "[c]onceals hairline cracks," and provides "[s]uperior coverage" and "long lasting protection." Id. ¶ 22 (alterations in original). Rust-Oleum promotes Restore 2X Coat Solid Stain as "provid[ing] ‘superior water repellency’ with special ‘algae and mildew resistant coating.’ " Id. ¶ 24.

Garrard lives in Cass County, Missouri. Id. ¶ 5. In June 2017, Garrard purchased the Restore Products from a local store in Cass County. Id. ¶¶ 9–14. Garrard finished applying the Products to his "cedar wooden deck" in September 2017. Id. ¶ 16. "By May 2018, the Restore Products already were detaching from several spots on the deck." Id. ¶ 17. And, by January 2019, the Products "were detaching, peeling, and flaking in several locations on the floor and railings of the deck." Id. ¶ 18. Further, there was "moisture, bubbling, and even plant-life growing from where [Garrard] applied Restore Products." Id. ¶ 20.

Garrard filed this lawsuit alleging that Rust-Oleum's representations about the Restore Products are "false," the Products are defective, and Rust-Oleum "knew or should have known about the defects." Id. ¶¶ 33, 36. The complaint includes claims for a declaratory judgment, violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.020.1, unjust enrichment, and breach of the implied warranty of merchantability under 810 ILCS § 5/2-314.² Garrard seeks to represent multiple consumer classes from states across the country. Id. ¶¶ 50–58.

Rust-Oleum moved to dismiss the complaint and strike certain class allegations. [25].

LEGAL STANDARD

When reviewing a motion to dismiss under Rule 12(b)(6), the court "accept[s] as true all factual allegations in the complaint and draw[s] all permissible inferences in plaintiff[’s] favor." Boucher v. Fin. Sys. of Green Bay, Inc. , 880 F.3d 362, 365 (7th Cir. 2018). "To survive a motion to dismiss, a plaintiff must allege ‘enough facts to state a claim to relief that is plausible on its face.’ " Id. at 365–66 (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 366 (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). Federal pleading standards do "not require detailed factual allegations, but [they] demand[ ] more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft , 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation marks omitted). "[N]aked assertion[s] devoid of further factual enhancement" are insufficient. Id. (second alteration in original, internal quotation marks omitted).

Rule 9(b) imposes a heightened pleading standard for claims "alleging fraud or mistake." For such claims, "a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). " Rule 9(b) requires a plaintiff to provide precision and some measure of substantiation to each fraud allegation." Menzies v. Seyfarth Shaw LLP , 943 F.3d 328, 338 (7th Cir. 2019) (internal quotation marks omitted). "Put more simply, a plaintiff must plead the who, what, when, where, and how of the alleged fraud." Id. (internal quotation marks omitted).

Federal Rule of Civil Procedure 23(d)(1)(D) "provides the Court with the ability to require the pleadings to be amended to remove class action allegations." Bietsch v. Sergeant's Pet Care Prods., Inc. , No. 15 C 5432, 2016 WL 1011512, at *10 (N.D. Ill. Mar. 15, 2016). "Motions to strike class allegations at the pleading stage are appropriate where it is clear from the pleadings that the class claims are defective." Id. "But if the issues concerning class certification are factual, requiring discovery to determine whether certification is appropriate, a motion to strike class allegations at the pleading stage is premature." Id.

DISCUSSION

I. Missouri Merchandising Practices Act

Garrard alleges that Rust-Oleum violated the Missouri Merchandising Practice Act ("MMPA"). Under the MMPA, "[t]he act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce" is unlawful. Mo. Rev. Stat. § 407.020.1. Garrard alleges that Rust-Oleum violated the MMPA in two ways: first, by knowingly selling defective Products and failing to inform Garrard and other purchasers of the defects and, second, by "misrepresent[ing] the characteristics of Restore Products." [1] ¶¶ 73–75.

Rust-Oleum argues that Garrard's MMPA claim should be dismissed because (1) the complaint does not allege that any misrepresentations actually caused harm to Garrard; (2) many of Rust-Oleum's statements regarding the Products are not alleged to be false; (3) the alleged misrepresentations are inactionable puffery; and (4) to the extent Garrard's claim is based on Rust-Oleum's alleged omissions, the complaint does not adequately allege scienter.

"To state a private cause of action under the MMPA a plaintiff must show that (1) he purchased merchandise; (2) he purchased the merchandise for personal, family, or household use; (3) he suffered an ascertainable loss; and (4) the ascertainable loss was caused by a violation of the MMPA." Craggs v. Fast Lane Car Wash & Lube, LLC , 402 F. Supp. 3d 605, 610 (W.D. Mo. 2019). Numerous courts have held that Rule 9(b) applies to MMPA claims, particularly those like Garrard's that are based on alleged misrepresentations and omissions. Id. at 611 (collecting cases).

Regarding the theory of liability that Rust-Oleum misrepresented the characteristics of the Products, the complaint fails to allege causation. "[T]he plain language of the MMPA demands a causal connection between the ascertainable loss and the unfair or deceptive merchandising practice." Owen v. Gen. Motors Corp. , 533 F.3d 913, 922 (8th Cir. 2008) ; see Williams v. HSBC Bank USA, N.A. , 467 S.W.3d 836, 843 (Mo. Ct. App. 2015) (affirming grant of summary judgment to defendant because the "alleged violations did not cause the [plaintiffs’] loss"). The complaint contains no factual allegations establishing how Rust-Oleum's alleged misrepresentations caused Garrard harm. In fact, the complaint does not allege Garrard was even aware of any alleged misrepresentation before purchasing or using the Products. The complaint therefore does not adequately allege causation for liability based on the alleged misrepresentations. Cf. Faltermeier v. FCA US LLC , 899 F.3d 617, 622 (8th Cir. 2018) (affirming grant of summary judgment to defendant where there was "no evidence" the plaintiff "was aware of the misrepresentation"); George v. Omega Flex, Inc. , No. 17-cv-3114, 2020 WL 4718386, at *6–9 (W.D. Mo. Aug. 13, 2020) (granting summary judgment for failure to allege causation).

Garrard's only response on this issue is that Rust-Oleum is improperly trying to incorporate common law fraud elements into the MMPA, which expressly disclaims reliance and knowledge as elements. 15 Mo. C.S.R. §§ 60-8.020(2), 60-9.020(2). But "[w]hile actual reliance on the defendant's misrepresentation by the buyer is not required, ... evidence of some factual connection between the misrepresentation and the purchase is required." Faltermeier , 899 F.3d at 622 ; Bratton v. Hershey Co. , No. 16-cv-4322, 2018 WL 934899, at *3 (W.D. Mo. Feb. 16, 2018) (similar). So although Garrard is correct that MMPA claims do not have the same elements as common law fraud, Garrard is still required to plead causation.

The complaint does, however, adequately allege causation for the theory of liability based on Rust-Oleum's omission of information about alleged defects in the Restore Products. Specifically, the complaint alleges that, "[h]ad Plaintiff and consumers been aware of the defective nature of Restore Products, they would not have purchased Restore Products or would have paid far less money for them." [1] ¶ 48. Thus, taking all reasonable inferences in favor of Garrard,...