In re Lumber Liquidators Chinese-Manufactured Flooring Durability Mktg. & Sales Practice Litig.

IN RE: LUMBER LIQUIDATORS CHINESE-MANUFACTURED FLOORING

DURABILITY MARKETING AND SALES PRACTICE LITIGATION

This Document Relates to ALL Cases

MDL No. 1:16md2743 (AJT/TRJ)

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

July 7, 2017

MEMORANDUM OPINION

(Defendant's Motion to Dismiss Plaintiffs' Representative Class Action Complaint)

Presently pending before the Court is Defendant Lumber Liquidators, Inc.'s "Motion to Dismiss the Representative Class Action Complaint" [Doc. No. 53] (the "Motion").¹ Upon consideration of the Motion, the memoranda in support thereof and in opposition thereto, the arguments of counsel at the hearing held on June 12, 2017, and for the reasons set forth below, the Motion is GRANTED as to:

(1) all Plaintiffs' claims for breach of implied warranty (Count I);

(2) Alabama Plaintiff Erin Florez's claim for fraudulent concealment (Count II);

(3) Virginia Plaintiff Logan Perel's claim for breach of written warranty under the Magnuson-Moss Warranty Act (Count III);

(4) California Plaintiff Jim Moylen's claim for damages under the California Legal Remedies Act (Count VI); and

(5) Alabama Plaintiff Erin Florez's claim under the Alabama Deceptive Trade Practices Act (Count VII).

The Motion is otherwise DENIED, and the following claims will remain for adjudication:

(1) all Plaintiffs' claims for fraudulent concealment other than that of Alabama Plaintiff Erin Florez (Count I);

(2) all Plaintiffs' implied warranty claims and all Plaintiffs' written warranty claims under the Magnuson-Moss Warranty Act other than that of Virginia Plaintiff Logan Perel (Count III);

(3) California Plaintiff Jim Moylen's claim under the California Unfair Competition Law (Count IV);

(4) California Plaintiff Jim Moylen's claim under the California False Advertising Law (Count V);

(5) California Plaintiff Jim Moylen's claim for injunctive relief under the California Legal Remedies Act (Count VI); and

(6) Nevada Plaintiff Kelly Ryan's claim under the Nevada Deceptive Trade Practices Act (Count VIII);

(7) New York Plaintiff Karen Hotaling's claim under the New York General Business Law (Count IX); and

(8) Virginia Plaintiff Logan Perel's claim under the Virginia Consumer Protection Act (Count X).²

I. CLAIMS AND PROCEDURAL HISTORY

Plaintiffs collectively have asserted the following ten causes of action in the Representative Complaint.³

Count I: breach of implied warranties (by all Plaintiffs and all classes) (Compl. ¶¶ 116-24);

Count II: fraudulent concealment (by all Plaintiffs and all classes) (Compl. ¶¶ 125-48);

Count III: violation of the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301 et seq. ("MMWA") (by all Plaintiffs and all classes) (Compl. ¶¶ 149-65);Count IV: violation of the California Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200 et seq. by (Plaintiff Jim Moylen ["Moylen"] and the California class) (Compl. ¶¶ 166-73);

Count V: violation of the California False Advertising Law ("FAL"), Cal. Bus. & Prof. Code §§ 17500 et seq. (by Plaintiff Moylen and the California class) (Compl. ¶¶ 174-77);

Count VI: violation of the California Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750 et seq. (by Plaintiff Moylen and the California class) (Compl. ¶¶ 178-84);

Count VII: violation of the Alabama Deceptive Trade Practices Act ("ADTPA"), Ala. Code §§ 8-19-1 et seq. (by Plaintiff Erin Florez ["Florez"] and the Alabama class) (Compl. ¶¶ 185-92);

Count VIII: violation of the Nevada Deceptive Trade Practices Act ("NDTPA"), Nev. Rev. Stat. § 41.600; id. §§ 598.0915 et seq. (by Plaintiff Kelly Ryan ["Ryan"] and the Nevada class) (Compl. ¶¶ 193-203);

Count IX: violation of New York General Business Law §§ 349 et seq. (by Plaintiff Karen Hotaling ["Hotaling"] and the New York class) (Compl., Count IX, ¶¶ 1-12⁴); and

Count X: violation of the Virginia Consumer Protection Act ("VCPA"), Va Code §§ 59.1-198 et seq. (by Plaintiff Logan Perel ["Perel"] and the Virginia class) (Compl. ¶¶ 204-09).

II. FACTS

Plaintiffs' Complaint alleges the following:

A. Lumber Liquidators' Business and Marketing Representations

Defendant Lumber Liquidators sold composite wood-based laminate products, including Chinese-manufactured composite wood flooring manufactured under the private label "Dream Home" brand ⁵ (the "Products"). Compl. ¶¶ 1, 9. Lumber Liquidators then distributed, marketed, and sold its Chinese-manufactured composite wood flooring in Alabama, California,Nevada, New York, and Virginia, where the Plaintiffs purchased the Products, as well as in other states. Id. ¶ 2.

Lumber Liquidators advertised that the Products were durable and, in particular, that they complied with the European abrasion criteria or class "AC3." Id. ¶ 3. There is no applicable state or federal law that regulates the durability of laminate flooring; however, the Complaint alleges that AC3 is the industry standard for measuring the durability of laminate flooring. Id. More specifically, "[a]n AC3-rated laminate is considered . . . as suitable for general household use, including high traffic areas such as hallways and kitchens." Id. ¶ 4. Major flooring retailers in the United States, including Lowe's and Home Depot, have settled on AC3 as the suitable minimum product standard, and customers have come to expect at least that level of durability. Id. ¶ 34. The AC3 compliance representation was made on the Products' "landing pages" on LL's website,⁶ id. ¶ 58, and Lumber Liquidators sales personnel made various representations about the Products' durability "[b]ased upon the [Products'] claimed AC3 compliance," id. ¶ 67.

Lumber Liquidators also used various terms to describe the strength of its Products, including statements that they were "very durable," "extremely durable," "scratch resistant," and "harder than hardwood." Id. ¶ 10. Plaintiffs informed Lumber Liquidators personnel that they had pets and needed flooring suitable for use by domestic animals, and sales personnel further represented that the Products "wood [sic] not scratch from pet nails" and would "hold up" to pets. Id. ¶ 67. These sorts of representations appeared on Lumber Liquidators' website product pages for the Products and were orally made by Lumber Liquidators' store managers and sales staff to these Plaintiffs before they made their purchases. Id. "Lumber Liquidators has promoted the [Products] through its in-store management and sales staff, who are trained based upon—andare encourage [sic] to consult and repeat—the product specifications, features, and supposed 'advantages' described on product pages for each of the [Products] on the Lumber Liquidators web site [sic]." Id. ¶ 12. Plaintiffs claim that in the context in which LL used these terms, they constituted specific representations that the Products were at least AC3-compliant. Id. ¶ 30. LL also claimed in its "limited warranties" that the Products each met the "industry's highest standards." Id. ¶ 13(c).

B. Plaintiffs' Experience with the Products

Plaintiffs aver that "the [Products] are not AC3 compliant and not durable, as revealed by extensive, recent product testing as part of the investigation leading to this action." Id. ¶ 14. Plaintiffs state that "[o]ver the 22 months, samples of the [Products] were tested by a certified and accredited laboratory. The testing method used by the lab is the same standardized test method used worldwide throughout the flooring industry to determine the AC rating of laminate flooring products. The [Products] failed to meet the AC3 standard." Id. ¶ 75. However, the Complaint only specifically references Plaintiffs Ryan's (Nev.) and Hotaling's (N.Y.) particular flooring as actually purchased flooring that was tested and found to not be AC3 compliant. Id. ¶¶ 98, 100.

Plaintiffs additionally allege that they experienced the following specific problems, inter alia, with the Products: (1) "[v]isible and unsightly scratching in normal everyday use, including but not limited to pet traffic," (2) "[w]ear patterns that expose and deteriorate the photographic paper layer of the laminate," (3) "[c]hipping," (4) "[f]ading," (5) "[b]ubbling," (6) "[w]arping/curling," and (7) "[s]taining." Id. ¶ 15. When approached about these problems, LL "engages in a pattern and practice of delay and obfuscation," id. ¶ 77, including blamingdurability problems and defects on installers, moisture problems, normal product variability, and consumer misuse, id. ¶ 79.

The Complaint also alleges facts specific to each of the Representative Plaintiffs. See id. ¶¶ 94-95 (Florez); ¶¶ 96-97 (Moylen); ¶¶ 98-99 (Ryan); ¶¶ 100-01 (Hotaling); and ¶¶ 102-03 (Perel). Briefly summarized, the Complaint alleges that each Representative Plaintiff purchased the Products in reliance on Defendant's various statements and guarantees that the Products were durable and AC3 compliant, became aware that the Products were in fact not durable for the reasons stated above, and suffered harm in the form of the purchase price of the floors, installation costs, and replacement costs.

C. Warranties and Disclaimers

The first page of the invoices that LL provided to Plaintiffs at the time of sale states that each Product comes with a "[30-]year warranty." Id. ¶ 69 (alteration in original). However, those invoices did not state the substance of the "limited warranty," and no "limited warranty" was ever presented or shown to Plaintiffs at the time of the sale. Id. ¶ 70. Rather, each of the invoices contained a section titled "Limited Warranty" which stated, "Products may or may not have a limited warranty as specified in information with the product or available as set forth below." Defendant's Reply in Support of its Motion to Dismiss [Doc. No. 65] ("Def.'s Reply"), Exs. 2A at 2, 2B at 3, 2C at 2, 2D at 2, 2E at 2, DF at 4. "Set forth below" was the statement that "[f]or written copies of limited product warranties, . . . visit the website at www.lumberliquidators.com or contact the Customer Care Department at (800) 366-4204." Id. The...