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In re Lumber Liquidators Chinese-Manufactured Flooring Durability Marketing and Sales Practice Litigation

United States District Court, E.D. Virginia, Alexandria Division

July 7, 2017

IN RE LUMBER LIQUIDATORS CHINESE-MANUFACTURED FLOORING DURABILITY MARKETING AND SALES PRACTICE LITIGATION This Document Relates to ALL Cases

          MEMORANDUM OPINION

          ANTHONY J. TRENGA UNITED STATES DISTRICT JUDGE.

         (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, ¶¶ 1-12[4]); 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-and are 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 blaming durability 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 full terms of the limited warranties were posted on the LL website listed, and Defendant has attached copies of the limited warranties pertaining to each of Plaintiff's purchases to its Memorandum in Support of its Motion to Dismiss [Doc. No. 54] (“Def.'s Mem. Supp.”) as Exhibit 1.[7] For example, the limited warranty for the St. James Collection of flooring, which Plaintiff Hotaling (N.Y.) purchased (and which does not appear materially different from the limited warranty applicable to the Kensington Manor Collection purchased by Plaintiffs Florez (Ala.), Ryan (Nev.), and Perel (Va.)) states in part:

• “Each board is meticulously inspected throughout the manufacturing process to make sure it complies with St [sic] James's unwavering standards.” Id., Ex. 1 at 12.
• The flooring “is warranted against finish wear from normal household conditions resulting in the exposure of the paper layer” of the laminate but such warranty does not include “5% of the total square footage of your purchase” as a standard “waste factor.” Id., Ex. 1 at 12.
• Coverage is disclaimed for, inter alia, “[d]amages caused by moisture, ” which “can cause issues such as cupping, crowning, warping, buckling, peeling, seam swelling, twisting, delaminating, or gapping”; “indentations and scratches (caused by pets, furniture, appliances, tools, heels, toys, etc.)”; “[f]adding or loss of gloss”; “[d]effects in flooring that do not exceed the waste factor”; “[l]osses, damages or expenses relating to anything other than the floor itself”; and “costs relating to the removal of defective flooring or installation of replacement flooring.” Id., Ex. 1 at 16-17.
• LL “will provide a store credit for the purchase price paid for the defective portion of the flooring (excluding any installation costs and labor) in excess of the applicable waste factor. . . . A store credit is the sole remedy.” Id., Ex. 1 at 14.
• “UNDER NO CIRCUMSTANCES WILL WE BE LIABLE FOR ANY DIRECT, INDIRECT OR CONSEQUENTIAL DAMAGES” and “UNDER NO CIRCUMSTANCES WILL OUR LIABILITY ARISING OUT OF OR RELATING TO THE PURCHASE OF YOUR . . . FLOORING EXCEED THE TOTAL SUM PAID BY YOU FOR THE FLOORING AT ISSUE.” Id., Ex. 1 at 14.
• “The terms above represent the sole and exclusive warranty with regard to your St. James flooring. WE DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OF FITNESS FOR A PARTICULAR PURPOSE, EXCEPT TO THE EXTENT THAT ANY SUCH WARRANTIES CANNOT BE VALIDLY DISCLAIMED UNDER APPLICABLE LAW.” Id., Ex. 1 at 14.

         The warranty pertaining to the purchase of Plaintiff Moylen (Cal.) is also substantially similar to the St. James Collection warranty described above but differs in its disclaimer (which does not make any specific mention of the implied warranty of merchantability):

The terms above represent the sole and exclusive warranty with regard to your Dream Home flooring. WE DISCLAIM ALL OTHER WARRANTIES, EXCEPT TO THE EXTENT THAT ANY SUCH WARRANTIES CANNOT BE VALIDLY DISCLAIMED UNDER APPLICABLE LAW.

Id., Ex. 1 at 47. It does not make any specific mention of the implied warranty of merchantability.

         III. LEGAL STANDARD

         A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the complaint. See Randall v. United States, 30 F.3d 518, 522 (4th Cir. 1994); Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1994). A claim should be dismissed “if, after accepting all well-pleaded allegations in the plaintiff's complaint as true . . . it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief.” Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999); see also Trulock v. Freeh, 275 F.3d 391, 405 (4th Cir. 2001). In considering a motion to dismiss, “the material allegations of the complaint are taken as admitted, ” Jenkins v. McKeithen, 395 U.S. 411, 421 (1969) (citations omitted), and the court may consider exhibits attached to the complaint, Fayetteville Inv'rs v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991).

         Moreover, “the complaint is to be liberally construed in favor of plaintiff.” Id.; see also Bd. of Trustees v. Sullivant Ave. Props., LLC, 508 F.Supp.2d 473, 475 (E.D. Va. 2007). In addition, a motion to dismiss must be assessed in light of Rule 8's liberal pleading standards, which require only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8. Nevertheless, while Rule 8 does not require “detailed factual allegations, ” a plaintiff must still provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (The complaint “must be enough to raise a right to relief above the speculative level” to one that is “plausible on its face.”); see also Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). As the Supreme Court stated in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2008), “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the Court to draw a reasonable inference that the defendant is liable for the conduct alleged.”

         IV. ANALYSIS OF ISSUES APPLICABLE TO MULTIPLE CLAIMS

         Although there are ten distinct counts pleaded in the Complaint, there are certain core questions that cut across these claims, including whether Plaintiffs have sufficiently alleged that (1) LL made a misrepresentation or omission, (2) LL's misrepresentation was material, and (3) Plaintiffs relied on that misrepresentation.

         A. Whether Plaintiffs Have Sufficiently Alleged a Misrepresentation or Omission

         Many of Plaintiffs' claims require proof that LL's Products were not, in fact, as LL advertised them to be or that LL failed to provide Plaintiffs with information which it was required to provide by law. Some claims additionally require Plaintiffs to show that Defendant knew that its representations were false.

         The Complaint alleges that LL advertised that the Products were AC3 compliant, that AC3 compliance is a measure of the durability of laminate flooring, and that AC3 is the industry standard in laminate flooring in the United States. In support of its claim that LL's Products were not AC3 compliant, Plaintiffs allege that the Products underwent “extensive, recent product testing as part of the investigation leading to this action.” Compl. ¶ 14. It further alleges that “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. Although Plaintiffs do not allege that the named Plaintiffs' individual Products were tested other than those of Plaintiffs Ryan and Hotaling, they allege that “the [Products] comprise a single product, which are substantial [sic] similar in every way material to the claims presented herein.” Id. ΒΆ 17. In addition to their allegations of AC3 non-compliance, ...


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