Smith et al v. NVR, Inc.
Filing
114
MEMORANDUM Opinion and Order written by the Honorable Gary Feinerman on 12/16/2019. Mailed notice.(jlj, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
PAUL SMITH and DEBORAH SMITH,
Plaintiffs,
vs.
NVR, INC.,
Defendant.
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17 C 8328
Judge Gary Feinerman
MEMORANDUM OPINION AND ORDER
On behalf of themselves and a putative class of fellow homebuyers in the Tall Pines
development in Plainfield, Illinois, Paul and Deborah Smith allege that NVR, Inc. violated the
Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq.
(“ICFA”), and committed breach of contract by selling them a home with features different than
NVR promised. Doc. 46. The court dismissed some of the Smiths’ claims but allowed others—
including their putative class claims that NVR violated the ICFA as to the home’s cabinetry and
shingles—to proceed. Docs. 44-45 (reported at 2018 WL 2718038 (N.D. Ill. June 6, 2018));
Docs. 73-74 (reported at 2018 WL 6335051 (N.D. Ill. Dec. 5, 2018)). The Smiths now move
under Civil Rule 23 to certify a class of Tall Pines homebuyers on those ICFA claims. Doc. 84.
The motion is denied.
Background
“Unlike a motion under Federal Rule of Civil Procedure 12(b)(6), a motion to certify a
class under Rule 23(c) is not one for which the court may simply assume the truth of the matters
as asserted by the plaintiff[s]. Instead, if there are material factual disputes, the court must
receive evidence and resolve the disputes before deciding whether to certify the class.” Priddy v.
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Health Care Serv. Corp., 870 F.3d 657, 660 (7th Cir. 2017) (citation, alterations, and internal
quotation marks omitted). Still, “[i]n conducting this analysis, the court should not turn the class
certification proceedings into a dress rehearsal for the trial on the merits.” Bell v. PNC Bank,
N.A., 800 F.3d 360, 376 (7th Cir. 2015) (internal quotation marks omitted).
This court’s prior opinions describe the factual backdrop of this case, so only the
pertinent details are set forth here. On April 28, 2016, the Smiths agreed to purchase from NVR
a home in the Tall Pines development. Doc. 46 at ¶ 8; Doc. 58-1 at 2. NVR’s sales
representatives provided the Smiths with advertising and sales materials, including a brochure
titled “Tall Pines at Grande Park Included Features.” Doc. 46 at ¶¶ 10-11; Doc. 85-2. Paul
Smith avers that the Included Features document was “one of the factors [the Smiths] considered
when deciding to purchase [their] new home.” Doc. 84-3 at ¶ 6. The document indicated that
the home would have TAMKO 30-year shingles, TIMBERLAKE honey oak or maple kitchen
cabinets, and TIMBERLAKE natural oak vanity cabinets in the bathroom. Doc. 46 at ¶ 12; Doc.
85-2 at 2. The Smiths received instead 25-year shingles and cabinets with an artificial non-wood
wrap. Doc. 46 at ¶¶ 13-14.
Paul Smith further avers that he saw “that some of [his] neighbors have the same
Included Features sale document,” Doc. 84-3 at ¶ 7 (emphasis added); that said, he has personal
knowledge only that seven other homes have or had the document, Doc. 105 at ¶ 5, and he does
not say one way or the other whether any of his neighbors did not receive it. Four of the Smiths’
neighbors aver that they received a copy of the Included Features document. Doc. 101 at p. 3,
¶ 6; Doc. 102 at p. 3, ¶ 7; Doc. 103 at p. 2, ¶ 7; Doc. 104 at ¶ 7. An NVR division manager avers
that the document was discontinued “while [Tall Pines] homes were still being constructed and
sold in the Subdivision.” Doc. 92-1 at pp. 4-5, ¶ 18.
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The Smiths and NVR agree that 22 of the 46 Tall Pines homes received 25-year shingles.
Doc. 92 at 6; Doc. 99 at 6. An NVR sales representative avers that “as part of the sales process,
[a] sales and marketing representative reviewed the features of the home with prospective
purchasers, including the fact that (at the pertinent time) purchasers would receive a 25-year
shingle.” Doc. 92 at 13 (citing Doc. 92-3 at ¶¶ 17-18). The sales representative further avers
that purchasers were again advised of the use of the 25-year shingle during the pre-construction
meeting, when they reviewed the Selection Acknowledgment Report with an NVR
representative. Doc. 92-3 at ¶ 19. Paul Smith counters that he and his wife were not told they
would be receiving 25-year shingles. Doc. 84-3 at ¶ 10. The four aforementioned affiants
likewise aver that their NVR sales representative “did not advise or point out … that a 25-year
shingle would be used at [their] home[s] as opposed to the 30-year shingle promised in the
‘Included Features’ sales sheet.” Doc. 101 at p. 3, ¶ 9; Doc. 102 at p. 3, ¶ 10; Doc. 103 at p. 2,
¶ 10; Doc. 104 at ¶ 10. Neither those affiants nor the Smiths describe what the other Tall Pines
homeowners who received 25-year shingles were told by their NVR sales representative. An
NVR division manager avers that NVR’s practice was to review with purchasers the use of 25year shingles. Doc. 92-1 at p. 4, ¶¶ 13-14. Indeed, the Smiths’ own Pre-Construction Selection
Acknowledgment Report, which they reviewed in advance of construction, had a “handwritten
checkmark by the notation ‘roof shingles 25 year,’” which the division manager avers “reflect[s]
that the shingle was discussed by a … representative with the Smiths at the Preconstruction
Meeting held on July 8, 2016.” Id. at pp. 3-4, ¶¶ 9, 16-17; see also id. at p. 16.
The Smiths discussed cabinetry options with NVR sales representatives prior to
purchasing their home and decided to upgrade their cabinets to “Sonoma Maple Espresso.” Doc.
84-1 at 3; Doc. 84-3 at ¶¶ 8-9. The Smiths saw a sample Sonoma Maple Espresso cabinet door
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at the model home at the time they signed their contract with NVR, Doc. 92 at 15; Doc. 92-4 at
20 (71:20-24), but the parties dispute whether the sample was labeled with specifications about
its composition, Doc. 92 at 15-16; Doc. 99 at 3. NVR’s sales representative and division
manager aver that the cabinet door samples at the model home and the design center had labels
with information about the cabinets, including whether they utilized veneer or medium density
fiberboard. Doc. 92-3 at ¶¶ 9-11; Doc. 92-1 at ¶¶ 38-40; Doc. 92-2 at ¶ 7. The Smiths and their
four affiants looked at the cabinet doors at the “sales center,” which they aver were not labeled
with composition information. Doc. 84-3 at ¶ 19; Doc. 101 at p. 2, ¶ 5; Doc. 102 at p. 2, ¶ 5;
Doc. 103 at p. 2, at ¶ 5; Doc. 104 at ¶ 5. NVR’s sales representative and division manager also
aver that Specification Sheets providing information about the cabinet options were available at
the model home, Doc. 92-3 at ¶ 13; Doc. 92-1 at pp. 8-9, ¶¶ 41-42; Doc. 92-2 at ¶ 7, but the
Smiths did not see those sheets, Doc. 84-3 at ¶ 20, and three affiants report that they were not
provided with them, Doc. 102 at p. 3, ¶ 6; Doc. 103 at p. 2, ¶ 6; Doc. 104 at ¶ 6.
The cabinets the Smiths received are not made of solid wood; rather, the cabinet boxes
are particle board, the drawer boxes are fiberboard, and the shelves are particle board. Doc. 84-1
at 3; Doc. 84-3 at ¶ 9. No putative class member received solid wood cabinets. Doc. 84-1 at 3-4.
Paul Smith avers that the Smiths “would not have upgraded [their] cabinets and paid the
additional cost for upgraded cabinets if [they] had known” that they would not be solid wood.
Doc. 84-3 at ¶ 8. He acknowledges, however, that in selecting cabinets, he “had a choice of
different architectural styles, some of which appealed to some purchasers and others which
appealed to others.” Doc. 92-4 at 20 (70:3-6). NVR’s division manager avers that half of the
homebuyers chose to have painted cabinets, which use non-wood material “in order to achieve a
superior uniform finish.” Doc. 92-1 at p. 13, ¶ 60.
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The Smiths allege that NVR violated the ICFA as to the cabinets and shingles. They seek
to certify under Rule 23(b)(1) or (b)(3) an ICFA class of the “new home purchasers in Tall
Pines,” reasoning that “they all purchased new homes from [NVR] and none of them received
the wood cabinets [NVR] represented it would include as a standard feature, and without an
upgrade[, and] … thirty-five of those 74 class members did not receive the 30-year shingles
Defendant promised … .” Doc. 99 at 1.
Discussion
A court’s analysis of class certification “is not free-form, but rather has been carefully
scripted by the Federal Rules of Civil Procedure.” Chi. Teachers Union, Local No. 1. v. Bd. of
Educ. of Chicago, 797 F.3d 426, 433 (7th Cir. 2015). To be certified, a proposed class must
satisfy the four requirements of Rule 23(a): “(1) the class is so numerous that joinder of all
members is impracticable; (2) there are questions of law or fact common to the class; (3) the
claims or defenses of the representative parties are typical of the claims or defenses of the class;
and (4) the representative parties will fairly and adequately protect the interests of the class.”
Fed. R. Civ. P. 23(a); see Bell, 800 F.3d at 373. If Rule 23(a) is satisfied, the proposed class
must fall within one of the three categories in Rule 23(b), which the Seventh Circuit has
described as: “(1) a mandatory class action (either because of the risk of incompatible standards
for the party opposing the class or because of the risk that the class adjudication would, as a
practical matter, either dispose of the claims of non-parties or substantially impair their
interests), (2) an action seeking final injunctive or declaratory relief, or (3) a case in which the
common questions predominate and class treatment is superior.” Spano v. The Boeing Co., 633
F.3d 574, 583 (7th Cir. 2011); see also Bell, 800 F.3d at 373. Finally, the class must be
“identifiable as a class,” meaning that the “class definitions must be definite enough that the
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class can be ascertained.” Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006); see also
Mullins v. Direct Dig., LLC, 795 F.3d 654, 659-61 (7th Cir. 2015).
The Smiths bear the burden of showing by a preponderance of the evidence that each
class certification requirement is satisfied. See Priddy, 870 F.3d at 660; Chi. Teachers Union,
797 F.3d at 433; Messner v. Northshore Univ. HealthSys., 669 F.3d 802, 811 (7th Cir. 2012). As
the Seventh Circuit has explained, “a district court must make whatever factual and legal
inquiries are necessary to ensure that requirements for class certification are satisfied before
deciding whether a class should be certified, even if those considerations overlap the merits of
the case.” Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815 (7th Cir. 2010); see also Kartman
v. State Farm Mut. Auto. Ins. Co., 634 F.3d 883, 889-90 & n.6 (7th Cir. 2011). The Seventh
Circuit has instructed district courts to exercise “caution” before certifying a class. Thorogood v.
Sears, Roebuck & Co., 547 F.3d 742, 746 (7th Cir. 2008).
As noted, the Smiths seek to certify under Rule 23(b)(1) or (b)(3) an ICFA class of “all
persons who purchased homes from [NVR] in the Tall Pines neighborhood.” Doc. 46 at ¶ 28;
Doc. 84-1 at 1. NVR contends that Rule 23(b)(1) certification is inappropriate because the
putative class seeks damages and there is no limited fund that must be distributed ratably. Doc.
92 at 32-33. The Smiths do not respond to this argument, thereby forfeiting the point. See
Gomez v. St. Vincent Health, Inc., 649 F.3d 583, 593 (7th Cir. 2011) (holding that the plaintiff
“forfeited” an argument in support of class certification “by waiting until his motion to
reconsider the certification denial to argue it”); Livingston v. Assocs. Fin., Inc., 339 F.3d 553,
559 n.4 (7th Cir. 2003) (holding that the plaintiff forfeited an argument in support of class
certification by “fail[ing] to present [it] to the district court”); see generally Ennin v. CNH Indus.
Am., LLC, 878 F.3d 590, 595 (7th Cir. 2017) (“Failure to respond to an argument generally
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results in waiver … .”). In any event, NVR is correct that Rule 23(b)(1) certification is
inappropriate where, as here, the case is a damages actions that does not involve a limited fund.
See Crawford v. Equifax Payment Servs., Inc., 201 F.3d 877, 882 (7th Cir. 2000) (“Rule 23 itself
limits no-opt-out classes to the situations described in Rule 23(b)(1) and (2), which [the
plaintiffs] do[] not meet: all private actions [they pursue] are for damages.”); Jefferson v.
Ingersoll Int’l Inc., 195 F.3d 894, 897 (7th Cir. 1999) (“[I]n actions for money damages class
members are entitled to personal notice and an opportunity to opt out[, which occurs only under
Rule 23(b)(3)].”).
As to certification under Rule 23(b)(3), NVR contends that the proposed class fails to
satisfy the predominance requirement. Doc. 92 at 27-30. A proposed class satisfies the
predominance requirement if “the questions of law or fact common to class members
predominate over any questions affecting only individual members … .” Fed. R. Civ. P.
23(b)(3). While similar to commonality, predominance is “far more demanding.” Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 624 (1997). Predominance is not satisfied where liability
determinations are individual and fact-intensive, see Kartman, 634 F.3d at 891, and “[m]ere
assertion by class counsel that common issues predominate is not enough,” Parko v. Shell Oil
Co., 739 F.3d 1083, 1085 (7th Cir. 2014) (emphasis omitted). Predominance fails where
“affirmative defenses will require a person-by-person evaluation of conduct to determine
whether [a defense] precludes individual recovery.” Clark v. Experian Info., Inc., 233 F.R.D.
508, 512 (N.D. Ill. 2005), aff’d, 256 F. App’x 818 (7th Cir. 2007); see also Myers v. Hertz Corp.,
624 F.3d 537, 551 (2d Cir. 2010) (“[W]hile it is well established that the existence of a defense
potentially implicating different class members differently does not necessarily defeat class
certification, it is equally well established that courts must consider potential defenses in
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assessing the predominance requirement.”) (emphasis and citations omitted). And while “not
every issue must be amenable to common resolution” for Rule 23(b)(3) to be satisfied, “the
district court must consider [the common issues’] relative importance.” Beaton v. SpeedyPC
Software, 907 F.3d 1018, 1029 (7th Cir. 2018).
“Analysis of predominance under Rule 23(b)(3) ‘begins … with the elements of the
underlying cause of action.’” Messner, 669 F.3d at 815 (quoting Erica P. John Fund, Inc. v.
Halliburton Co., 563 U.S. 804, 809 (2011)). To prevail on their ICFA claims, the Smiths must
show that they were deceived by NVR’s misrepresentations regarding the cabinets and shingles
and that the misrepresentations proximately caused their damages. See Haywood v. Massage
Envy Franchising, LLC, 887 F.3d 329, 333 (7th Cir. 2018) (holding that the elements of an ICFA
claim are: “(1) a deceptive act or promise by [the defendant]; (2) [the defendant’s] intent that [the
plaintiffs] rely on the deceptive act; (3) the deceptive act occurred during a course of conduct
involving trade or commerce; and (4) actual damage as a result of the deceptive act”); Siegel v.
Shell Oil Co., 612 F.3d 932, 935 (7th Cir. 2010) (“[T]o prevail under ICFA, a plaintiff must
demonstrate that the defendant’s conduct is the proximate cause of the injury.”). As the Seventh
Circuit has cautioned, although fraud claims “do not automatically fail the predominance test,”
they are often a poor fit for class certification “because they can involve so many individualized
issues.” Beaton, 907 F.3d at 1029.
The Smiths submit that the predominance requirement is satisfied because they “would
not have upgraded the cabinets or paid the price they did for the new home” but for NVR’s
misrepresentations, and because “there is ample evidence in the record that [NVR] intended for
all new home purchasers to rely on the Included Features sales sheet and that new home
purchasers in Tall Pines were deceived by the Included Features sales sheet to their detriment.”
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Doc. 99 at 13-14. NVR disagrees, maintaining that “[t]here is no evidence of any class-wide
misleading or deceptive conduct,” particularly because even Paul Smith avers only that “some”
of his neighbors received the Included Features document and because NVR discussed
construction with each purchaser separately. Doc. 92 at 8, 28 (emphasis omitted).
The Smiths have not met their burden of showing by a preponderance of the evidence
that questions common to the class predominate over individual questions. To begin, the Smiths
fail to show that nearly all or even the majority of the putative class: (1) saw the Included
Features document; (2) were not told by NVR or its sales representatives about the composition
of their cabinets or which shingles they would receive; or (3) did not see in the NVR showroom
the labels or Specification Sheets identifying the composition of the cabinets. Doc. 92-1 at pp. 45, 8-9, at ¶¶ 18, 38-42; Doc. 92-2 at ¶ 7; Doc. 92-3 at ¶¶ 11, 13, 16-19; Doc. 101 at pp. 2-3, ¶¶ 56, 9; Doc. 102 at pp. 2-3, ¶¶ 5-7, 10; Doc. 103 at p. 2, ¶¶ 5-7, 10; Doc. 104 at ¶¶ 5-7, 10. Given
that the Smiths have not shown that nearly all or even the majority of the putative class received
anything close to uniform representations from NVR regarding the cabinets and shingles, they
cannot demonstrate predominance on their ICFA claims. See Szabo v. Bridgeport Machs., Inc.,
249 F.3d 672, 674 (7th Cir. 2001) (recognizing that differences in the representations made to
members of the putative class would defeat commonality, which necessarily would defeat
predominance); In re Sears, Roebuck & Co. Tools Mktg. & Sales Practices Litig., 2007 WL
4287511, at *9 (N.D. Ill. Dec. 4, 2007) (holding that individual issues predominated because
“each plaintiff will have been exposed to a different representation or mix of representations”).
Even if the Smiths could show that nearly all or even the majority of the putative class
members received similar misrepresentations regarding cabinet composition and shingle type,
there remains the question of proximate cause. The Smiths contend that “they would not have
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upgraded the cabinets or paid the price they did for the new home” but for NVR’s deception.
Doc. 99 at 14. But none of their four affiant neighbors aver as much. And while the Smiths
contend that “a reasonable person purchasing a new home would not … pay extra for upgraded
cabinets” if she were told that they “would be constructed of artificial non-wood materials,” Doc.
99 at 9-10, that prediction is questionable at best. Half of the Tall Pines purchasers selected
painted cabinets, which use non-wood materials, Doc. 92-1 at p. 13, ¶ 60, and as Paul Smith
testified, “some purchasers” prefer one architectural cabinet style while “others” prefer other
styles, Doc. 92-4 at 20 (70:3-6). Given this, it is entirely speculative for the Smiths to submit
that a purchaser would decline to pay extra for her preferred architectural style in her preferred
finish if her cabinets were composed of something other than solid wood. On this record, then,
the Smiths have failed to show by a preponderance of the evidence that proximate cause could be
proved on a classwide basis. See Thorogood, 547 F.3d at 746-48 (holding that common issues
did not predominate where each class member’s recovery turned on the extent to which she was
damaged by the defendant’s allegedly deceptive advertising); Oshana, 472 F.3d at 514
(affirming the denial of class certification of an ICFA claim where the proposed class included
many members who could not prove that they suffered damages proximately caused by the
defendant’s alleged deception); In re Sears, Roebuck & Co. Tools Mktg. & Sales Practices Litig.,
2007 WL 4287511, at *5 (denying class certification of an ICFA claim where “[t]he instant
putative class would include people who (1) bought Craftsman tools but never saw any
Craftsman advertising; (2) bought Craftsman tools but never saw advertising representing that
the tools were made in the United States; and (3) bought Craftsman tools with the knowledge
that those tools were not made in the United States”).
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In sum, the Smiths have not shown that the principal elements of their ICFA claims—
whether the putative class members received misrepresentations and, of so, whether they
suffered damages proximately caused by those misrepresentations—are susceptible to class
resolution. It follows that the Smiths have failed to show the predominance necessary for
certification under Rule 23(b)(3). See Clark, 256 F. App’x at 823 (“Because the ICFA requires
individualized proof of proximate cause, the district court did not abuse its discretion in finding
that class issues did not predominate … .”); Lipton v. Chattem, Inc., 289 F.R.D. 456, 462 (N.D.
Ill. 2013) (“The proposed class includes individuals who: (1) were unaware of the presence of
hexavalent chromium in Dexatrim and who would not have purchased the product had they been
so aware; (2) were unaware of the presence of hexavalent chromium but may have still
purchased the product had they been so aware; and (3) were aware of the presence of hexavalent
chromium and purchased the product anyway. These differences among the proposed class
require that the key liability issues—whether a given class member was deceived by [the
defendant’s] labeling of Dexatrim and whether she suffered damages as a result—can be
resolved only on an individual basis.”).
Conclusion
The Smiths’ class certification motion is denied. This case will proceed on the Smiths’
individual ICFA and contract claims.
December 16, 2019
___________________________________
United States District Judge
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