In re Rust-Oleum Restore Mktg., Sales Practices & Prods. Liab. Litig.

155 F.Supp.3d 772

In re Rust-Oleum Restore Marketing, Sales Practices and Products Liability Litigation.

Related To All Actions.

No. 15 C 1364

MDL No. 2602

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

Signed January 7, 2016

Brennan Tyler Brooks, Millberg, Gordon and Stewart, PLLC, Raleigh, NC, Chad Matthew Clamage, Dana S. Douglas, Joshua D. Yount, Lori E. Lightfoot, Michael David Frisch, Stephen J. Kane, Mayer Brown LLP, Chicago, IL, for Rust-Oleum Restore Marketing, Sales Practices and Products Liability Litigation.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Court Judge:

In this consolidated, multi-district litigation (“MDL”), Plaintiffs¹ are purchasers and users of a paint product called “Deck & Concrete Restore” or “Restore 10X” (collectively “Restore”), manufactured by Defendant Rust-Oleum Corporation (“Rust-Oleum”). Plaintiffs allege that Restore contains latent defects that result in premature degradation upon application. Plaintiffs contend that Rust-Oleum knew that Restore was defective prior to and during its marketing, selling, and warranting the product to Plaintiffs. Before the Court is Rust-Oleum's motion to dismiss Plaintiffs' Consolidated Amended Class Action Complaint under Federal Rule of Civil Procedure 12(b)(6). (See R.30.) For the reasons discussed in detail below, the Court grants the motion in part, grants the motion in part without prejudice, and denies the motion in part.

BACKGROUND

On February 6, 2015, the United States Judicial Panel on Multidistrict Litigation (the “MDL Panel”) transferred this MDL litigation to the undersigned, with the parties' unanimous support. (See R.1.) At that time, the litigation consisted of individual actions pending in this District,² the District of Maryland, the Southern District of New York, the Eastern District of North Carolina, and the Eastern District of Pennsylvania.³ The MDL Panel found that:

[T]hese actions involve common questions of fact, and that centralization will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation. These actions share factual questions arising out of allegations that the deck and concrete resurfacing paint products manufactured and sold by the Rust Oleum Corporation under the Restore brand name are defective because they allegedly bubble, flake, chip, peel, or otherwise degrade prematurely, contrary to the representations in defendant's marketing, labeling, and product warranty. Plaintiffs in all actions further allege that defendants knew or should have known of the purported defects. The common questions of fact will include the design, manufacture, and testing of Restore products; the representations in the products' marketing and labeling; Rust-Oleum's policies and practices with respect to the warranties; and the measure of damages.

(R.1, at 1.)

I. The Complaint & Rust-Oleum's Motion to Dismiss

On April 7, 2015, Plaintiffs filed their Consolidated Amended Class Action Complaint (the “Complaint”) naming 40 Plaintiffs from 27 states⁴ alleging that sometime between 2010 and 2015 they each purchased and applied to a deck or other surface, a paint product called “Deck & Concrete Restore” or “Restore 10X” (collectively “Restore”) that Rust-Oleum has manufactured since September 2012. (See, e.g., R.16, ¶¶ 3, 9-51, 56-58, 116-268.) Plaintiffs further allege that, sometime after applying Restore, the product began to prematurely fail by chipping, peeling, or otherwise deteriorating. (Id. , ¶¶ 4, 116-268.) According to Plaintiffs, those alleged results directly conflict with marketing and warranty promises made in connection with Restore's sales. (Id. , ¶¶ 59-73.) Plaintiffs further assert that Rust-Oleum knew or should have known that Restore would not live up to those promises. (Id. , ¶¶ 82-92.)

Based on these allegations, Plaintiffs bring a putative class action against Rust-Oleum on behalf of all individuals and entities that purchased Restore, not for resale, “in the territories of the United States.” (Id. , ¶¶ 101-02.) Plaintiffs' ten-count Complaint asserts various claims under the laws of all 50 states and the District of Columbia in addition to individual state law claims. Count I seeks declaratory, injunctive, or equitable relief under the Declaratory Judgment Act. (Id. , ¶¶ 269-73.) Count II alleges a failure to comply with obligations under written and implied warranties, in violation of the Magnuson-Moss Warranty Act. (Id. , ¶¶ 274-84.) Count III alleges breach of express warranties under the laws of every state. (Id. , ¶¶ 285-92.) Counts IV and V allege breaches of the implied warranty of merchantability and the implied warranty of fitness for a particular purpose under the laws of every state. (Id. , ¶¶ 293-313.) Count VI asserts violations of various state consumer-fraud statutes. (Id. , ¶¶ 314-22.) Count VII claims violations of the false-advertising statutes of four states. (Id. , ¶¶ 323-30.) Count VIII claims a violation of the California Consumer Legal Remedies Act. (Id. , ¶¶ 331-38.) Count IX alleges negligent misrepresentation. (Id. , ¶¶ 339-45.) Lastly, Count X claims fraudulent concealment. (Id., ¶¶ 346-51.)

Rust-Oleum argues that Plaintiffs' Complaint fails to state a claim for relief under each of the alleged bases and that dismissal of each claim asserted by each Plaintiff is warranted here. (See R.32, at 2; R.32-1, Ex. A, Summary of Plaintiffs' Claims and Alleged Grounds for Dismissal.) Specifically, Rust-Oleum argues that the Court should dismiss Plaintiffs' claim for declaratory, injunctive, or equitable relief in Count I because it is a request for relief rather than an independent cause of action. (R.21, Part III.) Rust-Oleum also argues that the breach of warranty claims in Counts II-V, depending on the plaintiff and the claim, are barred by the written warranties' exclusive-remedy provision, the warranties' consequential-damages exclusion, a lack of proper pre-suit notice, the failure to plead a particular purpose for Restore, a lack of privity with Rust-Oleum, or the failure to plead reliance. (R.32, Part I.) In addition, Rust-Oleum argues that Plaintiffs' misrepresentation and omission claims in Counts VI through X do not plead fraud with the requisite particularity, nor do they adequately plead causation, reliance, knowledge, or actionable misrepresentations or omissions. (Id. , Part II.) Rust-Oleum further argues that various state-specific requirements and defenses also bar those claims, depending on the plaintiff. (Id. , Part II.) Applicable to all claims, Rust-Oleum asserts that Plaintiffs cannot base any claims on conduct before Rust-Oleum began manufacturing Restore in September 2012. (Id. , Part IV.) Finally, as to state specific issues, Rust-Oleum argues that the New Jersey and Ohio product liability statutes preempt most of Plaintiffs' claims and that the laws of the 24 states in which no Plaintiff either resides or purchased Rust-Oleum have no extraterritorial effect that could support any of Plaintiffs' claims. (Id. , Parts V & VI.)

II. Facts Alleged⁵

Rust-Oleum sells do-it-yourself products for the consumer home improvement market. In particular, Rust-Oleum manufactures, markets, advertises, warrants, and sells a variety of deck coatings, including paints, stains, and resurfacers. (R.16, ¶ 56.) In September 2012, Rust-Oleum's parent company, RPM International, Inc., acquired Synta, Inc. (“Synta”), a producer of wooden deck and concrete coatings. (Id. , ¶ 57.) Synta's primary product line, which Rust-Oleum took over upon acquisition, included a deck resurfacer developed by Synta and marketed as “Restore” to protect and restore weathered outdoor decks and concrete surfaces. (Id. , ¶ 58.) Rust-Oleum sells Restore to consumers through retail home improvement stores which generally sell Restore without making any changes to its marketing materials or warranties. (Id. , ¶ 59.)

A. Warranty

Restore's packaging contains a “Limited Lifetime Warranty” which states:

LIMITED LIFETIME WARRANTY: Rust-Oleum Corporation guarantees product performance for the product in this can only as long as you own or reside in your home when our product was applied according to the label directions. You will receive as your exclusive remedy either a refund of the original purchase price or replacement with a product of equal value. We do not guarantee the product against factors beyond our control, such as damage to the product by others, poor condition of the substrate, structural defects, improper application, etc. We will not be responsible for labor or the cost of labor for removal or application of any product, or replacement of any wood structure.

(R.16, ¶¶ 63, 95, 96, 280, Exs. 1, 2.) The packaging and labeling surrounding the buckets or cans of Restore sold to Plaintiffs also allegedly includes a “LIMITED LIFETIME WARRANTY” which states:

LIMITED LIFETIME WARRANTY

Rust-Oleum Corporation warrants your complete satisfaction with the performance of this product for as long as you own or reside in your home when our product has been applied to the label directions. We do not warrant problems with the product which are caused by factors beyond our control, such as damage to the product by others, poor condition of the substrate, structural defects, improper application, etc. If not satisfied as warranted, return any unused portion along with sales receipt to place of purchase. You will receive as your exclusive remedy either a refund of the original purchase price or replacement with a product of equal value. THIS WARRANTY SPECIFICALLY EXCLUDES LABOR OR COST OF LABOR FOR THE APPLICATION OF ANY PAINT AND CONSEQUENTIAL, INCIDENTAL DAMAGES. Some states do not allow the exclusion of incidental or consequential damages, so the limitation or exclusion contained in the above warranty may not apply to you. This warranty gives you specific legal rights and you may also have other rights which vary from state to state.

(R.16, ¶¶ 63, 95, 96,...