Parsons et al v. Whirlpool Corporation and EcoWater Systems LLC a/k/a Ecodyne
Filing
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OPINION AND ORDER TRANSFERRING CASE to the Northern District of Florida. Signed by District Judge Paul D. Borman. (DPer)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JAMES PARSONS and DEBRA
PARSONS,
Case No. 17-13561
Plaintiffs,
Paul D. Borman
United States District Judge
v.
WHIRLPOOL CORPORATION and
ECOWATER SYSTEMS LLC a/k/a
ECODYNE,
Anthony P. Patti
United States Magistrate Judge
Defendants.
______________________________/
OPINION AND ORDER TRANSFERRING CASE VENUE TO THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
OF FLORIDA
This is a putative class action involving allegedly defective water filters.
Plaintiffs James and Debra Parsons allege that they suffered property damage when
their home was flooded due to a latent defect in a water filtration system designed
and manufactured by Defendant Whirlpool Corporation (“Whirlpool”) and
Defendant EcoWater Systems LLC (“EcoWater”). Plaintiffs seek to certify two
classes of plaintiffs who purchased similarly defective systems.
Defendants have moved to dismiss this action for lack of personal jurisdiction
and improper venue, and request in the alternative that this Court transfer the action
to the Northern District of Florida. Defendants have also moved to dismiss the action
for failure to state a claim on which relief may be granted.
For the reasons set forth below, the Court finds that venue for this action is
not properly laid in the Eastern District of Michigan, and that the interest of justice
requires the case to be transferred to the Northern District of Florida pursuant to 28
U.S.C. § 1406(a). The Court makes no determination regarding personal jurisdiction,
or on the legal sufficiency of Plaintiffs’ allegations.
I.
A.
BACKGROUND
Core Factual Allegations
Plaintiffs James and Debra Parsons reside in Harrogate, Tennessee, and also
own a home in Destin, Florida. (ECF No. 1, Compl. ¶ 7.) Plaintiffs allege in the
Complaint that Whirlpool is a Delaware corporation with its principal place of
business in Benton Harbor, Michigan, and that EcoWater is a foreign limited liability
corporation, at least one of the members of which is a citizen of the state of
Delaware. (Compl. ¶¶ 8-9.)
Plaintiffs allege that EcoWater “manufacturers [sic] and warrants Whirlpool
dual stage filtration systems, Whirlpool reverse osmosis systems and Whirlpool
central filtration systems under license.” (Compl. ¶¶ 16, 18.) This putative class
action specifically concerns allegedly defective water filters. The water filters at
issue include, “but [are] not limited to, Undersink Filtration Systems models (‘Class
Water Filters’), that are manufactured in a way that allows them to crack and/or
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creep, causing water to leak from the filter.” (Compl. ¶ 1.) They also allege that the
allegedly defective water filters are made of plastic which “fails to hold water
without leaking” (Compl. ¶ 21); that the leaking “is caused when the plastic changes
shape over time, which is called creep, due to environmental stress” (Compl. ¶ 22);
and that such a change “can manifest itself through excessive deformation of the
plastic or through cracking” (Compl. ¶ 23). Plaintiffs further allege that the defect
“is particularly dangerous because it causes water damage and can lead to flooding
and significant property damage,” which occurs when the defect “causes the Class
Water Filters to function improperly during the expected useful life of the water
filter, resulting in flooding.” (Compl. ¶¶ 24, 28.)
This is exactly what Plaintiffs claim happened to them. Plaintiffs allege that
in or around August 2015, they purchased a “Whirlpool three-stage reverse osmosis
water filter, Model No. WHER 2555,” for $170.00 at a Lowe’s home improvement
store in Destin, Florida. (Compl. ¶¶ 42-45.) According to the Complaint, Plaintiffs
installed the water filter on March 12, 2016, at their Florida home. Approximately
six to eight weeks later, Plaintiffs “were shocked to enter their home and see standing
water on their kitchen floor and dripping from their kitchen sink cabinet.” (Compl.
¶ 45.) They turned off the water line, soaked up the water, and the next day found a
leak in the water filter housing. (Id.) Plaintiff James Parsons contacted Whirlpool to
notify it of the leak and the damage that resulted from it, the Complaint alleges, but
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Whirlpool “ignored the damage to Mr. Parsons’ home and responded it would only
send a replacement housing, which it did.” (Compl. ¶ 46.)
Plaintiffs claim that the alleged defect exists “because Defendants failed to
adequately design, manufacture, and test the Class Water Filters” (Compl. ¶ 25), and
that the defect, “which is undetectable to the consumer, is manifest in the water filter
when the water filter leaves Defendants’ possession [such that it] creates an
immediate safety risk to consumers.” (Compl. ¶ 26.) Plaintiffs then allege that
despite a large number of consumer complaints, “Defendants continue to conceal the
existence of the Defect from current customers and potential customers alike.
Defendants have not warned consumers at the point of sale.” (Compl. ¶¶ 31-38.)
Plaintiffs bring this lawsuit as a proposed class action under Federal Rule of
Civil Procedure 23 on behalf of themselves and two proposed plaintiff classes: one
nationwide class, and one class consisting of Florida residents only. Each class is
comprised of persons or entities “who purchased or otherwise acquired the Class
Water Filter, designed and/or manufactured by Defendants primarily for personal,
family, or household purposes and not for resale.” (Compl. ¶¶ 49-51.) The nine
causes of action asserted in the Complaint include claims for declaratory judgment
and unjust enrichment pled on behalf of the nationwide class, and the Florida class
in the alternative (Compl. ¶¶ 64-79); claims for negligence, breach of implied
warranty, and breach of express warranty pled on behalf of the nationwide class only
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(Compl. ¶¶ 80-122); a claim for injunctive relief pled on behalf of both classes
(Compl. ¶¶ 123-29); and three Florida statutory tort claims pled on behalf of the
Florida class only (Compl. ¶¶ 130-80).
B.
Facts Relevant to Venue
The sole evidentiary exhibit to the parties’ briefing on Defendants’ Motion to
Dismiss Class Action Complaint for Lack of Personal Jurisdiction under Fed. R. Civ.
P. 12(b)(2) and Improper Venue under Fed. R. Civ. P. 12(b)(3) is the Declaration of
Mohammed Bayati, who attests that he is the current President of EcoWater Systems
LLC. (ECF No. 17, Defs.’ Mot. Ex. 1, Declaration of Mohammed Bayati.)
Bayati makes the following factual averments based on personal knowledge.
EcoWater is a limited liability company formed under the laws of Delaware; its
principal place of business is in Woodbury, Minnesota, and Bayati’s office is located
there. (Bayati Decl. ¶ 3.) EcoWater also does business under the trade name
“Ecodyne Water Systems.” (Bayati Decl. ¶ 4.) Both EcoWater and its affiliate KX
Technologies LLC (“KXT”) are “responsible for the design, manufacture, assembly
and sale of certain water treatment systems including reverse osmosis water filtration
systems.” (Bayati Decl. ¶¶ 5, 7.) Bayati avers that depending on the date that
Plaintiffs’ allegedly defective reverse osmosis water filtration system (which he
refers to as an “RO System”) was manufactured, either EcoWater or KXT: (1)
designed the RO System in Woodbury, Minnesota; (2) manufactured the RO System
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at a facility in either Iuka, Mississippi or Ripley, Mississippi; and (3) sold the RO
System to Lowe’s. (Bayati Decl. ¶¶ 8-10.) After the RO System was assembled in
one of the Mississippi facilities mentioned above, Lowe’s would have taken
possession of it from that facility, and subsequently distribute it to a Lowe’s retail
location. (Bayati Decl. ¶ 10.) In the instant case, that retail location was in Destin,
Florida. (Compl. ¶ 42.)
C.
Procedural History
Plaintiffs filed this action on October 31, 2017 (ECF No. 1, Compl.), invoking
this Court’s diversity jurisdiction pursuant to 28 U.S.C. § 1332(d) (Compl. ¶ 10). On
January 19, 2018, Defendants timely filed the two motions to dismiss that are
presently before this Court.
The first of Defendants’ two motions was a Motion to Dismiss Class Action
Complaint for Lack of Personal Jurisdiction under Fed. R. Civ. P. 12(b)(2) and
Improper Venue under Fed. R. Civ. P. 12(b)(3). (ECF No. 17, Defs.’ Mot.)
Defendants also filed a Motion to Dismiss Class Action Complaint for Failure to
State a Claim under Fed. R. Civ. P. 12(b)(6). (ECF No. 18.)
The Court held a hearing on Defendants’ Motion to Dismiss Class Action
Complaint for Lack of Personal Jurisdiction under Fed. R. Civ. P. 12(b)(2), and for
Improper Venue under Fed. R. Civ. P. 12(b)(3) (hereinafter “Rule 12(b)(2)-(3)
Motion”) on Friday, April 27, 2018.
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II.
LEGAL STANDARDS
“The requirements for venue are set by statute, as are the remedies available
for improper and inconvenient venue.” Kerobo v. Sw. Clean Fuels, Corp., 285 F.3d
531, 538 (6th Cir. 2002). For federal civil actions, venue is proper in
(1) a judicial district in which any defendant resides, if all defendants
are residents of the State in which the district is located;
(2) a judicial district in which a substantial part of the events or
omissions giving rise to the claim occurred, or a substantial part of
property that is the subject of the action is situated; or
(3) if there is no district in which an action may otherwise be brought
as provided in this section, any judicial district in which any defendant
is subject to the court's personal jurisdiction with respect to such action.
28 U.S.C. § 1391(b).
The same statute defines “residency” for venue purposes. As relevant to this
action, the statute provides that
an entity with the capacity to sue and be sued in its common name under
applicable law, whether or not incorporated, shall be deemed to reside,
if a defendant, in any judicial district in which such defendant is subject
to the court's personal jurisdiction with respect to the civil action in
question.
Id. § 1391(c)(2). The venue statute further provides:
For purposes of venue under this chapter, in a State which has more
than one judicial district and in which a defendant that is a corporation
is subject to personal jurisdiction at the time an action is commenced,
such corporation shall be deemed to reside in any district in that State
within which its contacts would be sufficient to subject it to personal
jurisdiction if that district were a separate State, and, if there is no such
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district, the corporation shall be deemed to reside in the district within
which it has the most significant contacts.
Id. § 1391(d).
As to the remedies available for improper and inconvenient venue, 28 U.S.C.
§ 1404(a) authorizes a district court, “[f]or the convenience of parties and witnesses,
in the interest of justice, [to] transfer any civil action to any other district or division
where it might have been brought or to any district or division to which all parties
have consented.” Separately, 28 U.S.C. § 1406(a) provides that “[t]he district court
of a district in which is filed a case laying venue in the wrong division or district
shall dismiss, or if it be in the interest of justice, transfer such case to any district or
division in which it could have been brought.”
Although § 1404(a) and § 1406(a) both authorize the transfer of actions for
venue purposes, they differ as to whether the transferor court must assume personal
jurisdiction over the defendants in the action before effectuating the transfer. “The
purpose of [§ 1404(a)] is to transfer actions brought in a permissible yet inconvenient
forum. ‘[A] transfer under section 1404(a) may not be granted when the district court
does not have personal jurisdiction over the defendants.’” Jackson v. L & F Martin
Landscape, 421 F. App’x 482, 483 (6th Cir. 2009) (alteration in original) (internal
citations omitted) (quoting Pittock v. Otis Elevator Co., 8 F.3d 325, 329 (6th Cir.
1993)). By contrast, “section 1406 applies to actions that are brought in an
impermissible forum; the district court need not have personal jurisdiction over
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defendants before transferring pursuant to this section.” Id. (citing Martin v. Stokes,
623 F.2d 469, 474 (6th Cir. 1980)).
III.
DISCUSSION
For the reasons discussed below, the Court finds that venue for this action is
not properly laid in the Eastern District of Michigan. Further, the Court finds that
transfer of this action to the Northern District of Florida is “in the interest of justice,”
because the Northern District of Florida is a “district or division in which [the action]
could have been brought.” 28 U.S.C. § 1406(a). Further, because it is clear that the
Eastern District of Michigan is not an appropriate venue for this action, and equally
clear that the Northern District of Florida is, there is no need to reach the other
threshold issue of whether this Court may exercise personal jurisdiction over the
parties in this action. See Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549
U.S. 422, 431 (2007) (“[A] federal court has leeway ‘to choose among threshold
grounds for denying audience to a case on the merits.’”) (quoting Ruhrgas AG v.
Marathon Oil Co., 526 U.S. 574, 585 (1999)); see also Jackson, 421 F. App’x at 483
(explaining that “the district court need not have personal jurisdiction over
defendants before transferring pursuant to [28 U.S.C. § 1406(a)]”).
A.
Venue is not proper in the Eastern District of Michigan.
Defendants have evidenced that either EcoWater (a Delaware limited liability
company with its principal place of business in Minnesota), or its affiliate KXT,
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designed the water filtration system at issue in Minnesota, manufactured it in
Mississippi, and sold it to Lowe’s for pickup in Mississippi for distribution to a
Lowe’s retail location: in this case, Destin, Florida. Meanwhile, Plaintiffs (who
reside in Tennessee) have alleged that they purchased the system in Florida, that it
failed after it was installed in their residential property in Florida, and that it therefore
caused them damages in Florida as well. In their Response to Defendants’ Rule
12(b)(2)-(3) Motion, Plaintiffs identify three connections between their claims and
the state of Michigan: (1) the trademark licensing agreement between EcoWater and
Whirlpool; (2) the fact that EcoWater placed its products in the national stream of
commerce; and (3) the fact that EcoWater maintains an interactive website that is
accessible to Michigan residents. (See ECF No. 22, Pls.’ Resp. at 9, Pg ID 603.)
Only the first of these three asserted factors—EcoWater’s trademark licensing
agreement with Whirlpool—is particular to Michigan. It is undisputed that
Whirlpool’s principal place of business is in Benton Harbor, Michigan. (See Compl.
¶ 8; Defs.’ Mot. at 2, Pg ID 253.) Benton Harbor is located in Berrien County,
Michigan, see Mich. Comp. Laws § 4.2001a, and Berrien County is within the
Southern Division of the Western District of Michigan, see 28 U.S.C. § 102(b)(1).
Thus, the only Michigan-specific connection that Plaintiffs have shown or alleged is
to a location outside of the Eastern District of Michigan.
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Regardless of whether personal jurisdiction could be exercised over EcoWater
by the courts of Michigan (and therefore by the federal courts that sit in Michigan)
in this action, venue is not proper in the Eastern District of Michigan.
B.
This action “could have been brought,” and should have been brought,
in the Northern District of Florida under 28 U.S.C. § 1406(a).
Pursuant to 28 U.S.C. § 1406(a), “[t]he district court of a district in which is
filed a case laying venue in the wrong division or district shall dismiss, or if it be in
the interest of justice, transfer such case to any district or division in which it could
have been brought.” Here, having found that the Eastern District of Michigan is not
a proper venue for this case, the Court further finds that this case could have been
brought in the Northern District of Florida, and will therefore transfer the matter to
that District in the interest of justice under § 1406(a).
Both the Lowe’s retail establishment at which Plaintiffs allege they purchased
the water filtration system at issue, and the site at which they allege it failed, are in
Destin, Florida. Destin is located in Okaloosa County, Florida, see Fla. Stat. Ann. §
7.46, and Okaloosa County sits within the Northern District of Florida, see 28
U.S.C. § 89(a). Thus, the Northern District of Florida is not only a district in which
an injury or loss alleged in the lawsuit occurred—it is where the only injury or loss
alleged in the lawsuit occurred, as well as the district in which Plaintiffs purchased
the product that they allege was the cause of that injury or loss. The Court finds that
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because all events relevant to this lawsuit that involved Plaintiffs themselves took
place in the Northern District of Florida, there is little doubt that “a substantial part
of the events or omissions giving rise to the claim occurred” in that District. Venue
is therefore proper in the Northern District of Florida under 28 U.S.C. § 1391(b)(2).
IV.
CONCLUSION
For the reasons stated above, pursuant to 28 U.S.C. § 1406(a) and in the
interest of justice, the Court hereby GRANTS Defendants’ motion to transfer venue
to the Northern District of Florida.
IT IS SO ORDERED.
Dated: May 21, 2018
s/Paul D. Borman
Paul D. Borman
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing order was served upon
each attorney or party of record herein by electronic means or first class U.S. mail
on May 21, 2018.
s/D. Tofil
Deborah Tofil, Case Manager
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