George v. Uponor, Inc. et al
Filing
155
MEMORANDUM OPINION AND ORDER granting in part and denying in part 107 Motion to Dismiss; granting in part and denying in part 131 Motion to Dismiss for Lack of Jurisdiction (Written Opinion). Signed by Judge Ann D. Montgomery on 12/23/2013. (TLU)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Tim George, Charles and Jamie Gibbs,
William and Corie Connelly, Galen and Leslie
Satterlee, Gail Henrichsen, Dustin and Martha
Barnett, Dave and Holly Marcus, Kelly Babb,
and Gary and Elsa Overstreet, individually
and on behalf of all others similarly situated,
Plaintiffs,
MEMORANDUM OPINION
AND ORDER
Civil No. 12-249 ADM/JJK
v.
Uponor Corporation, Uponor Group,
Uponor, Inc., Wirsbo Company, and
Uponor Wirsbo Company,
Defendants.
______________________________________________________________________________
Robert K. Shelquist, Esq., Lockridge Grindal Nauen, PLLP, Minneapolis, MN; Shanon J.
Carson, Esq., and Lawrence Deutsch, Esq., Berger & Montague, PC, Philadelphia, PA; J.
Randall Jones, Esq., Kemp, Jones & Coulthard, LLP, Las Vegas, NV; Scott K. Canepa, Esq., and
Terry W. Riedy, Esq., Canepa, Riedy & Rubino, APC, Las Vegas, NV; Shawn M. Raiter, Esq.,
Larson King, LLP, St. Paul, MN; Charles J. LaDuca, Esq., Cuneo Gilbert & LaDuca, LLP,
Washington, DC; Charles E. Schaffer, Esq., Levin Fishbein Sedran & Berman, Philadelphia, PA;
Michael A. McShane, Esq., Audet & Partners, LLP, San Francisco, CA; P. Kyle Smith, Esq.,
Lynch, Hopper Salzano & Smith, LLP, Las Vegas, NV; Troy L. Isaacson, Esq., Maddox,
Isaacson & Cisneros, LLP, Las Vegas, NV; James D. Carraway, Esq., Carraway & Associates,
LLC, Las Vegas, NV; Kenneth S. Kasdan, Esq., Kasdan Simonds Weber & Vaughan LLP,
Irvine, CA; and Graham B. LippSmith, Esq., Girardi Keese, Los Angeles, CA, on behalf of
Plaintiffs.
John R. Schleiter, Esq., Howard L. Lieber, Esq., and Daniel W. Berglund, Esq., Grotefeld,
Hoffmann, Schleiter, Gordon & Ochoa, LLP, Chicago, IL, and Minneapolis, MN, on behalf of
Defendants.
______________________________________________________________________________
I. INTRODUCTION
On October 3, 2013, the undersigned United States District Judge heard oral argument on
Defendants Uponor Corporation, Uponor Group, Uponor, Inc., Wirsbo Company, and Uponor
Wirsbo Company’s Motion to Dismiss [Docket No. 107] and on Uponor Corporation’s Motion
to Dismiss for Lack of Personal Jurisdiction [Docket No. 131] (“Jurisdiction Motion”).
Plaintiffs oppose both motions. For the reasons stated herein, Defendants’ Motion to Dismiss is
granted in part, and Uponor Corporation’s motion to dismiss for lack of personal jurisdiction is
granted in part.
II. BACKGROUND
Defendant Uponor Corporation (“Uponor Corp.”) is the Finland-based parent company of
several subsidiaries in the business of designing, manufacturing, and selling plumbing systems
and other plumbing products worldwide. Defendant Uponor, Inc., one of the subsidiaries, is
organized under the laws of Illinois and has its principal place of business in Apple Valley,
Minnesota. Uponor, Inc. is the successor to Defendants Wirsbo Company and Uponor Wirsbo
Company. Am. Compl. ¶¶ 14-21 [Docket No. 103] (“Complaint”).
This putative class action relates to plumbing fittings sold by Defendants for use in
homes. In past decades, commercial and residential potable water systems largely used copper
piping. Compl. ¶ 28. Over time, plumbing product manufacturers, including Defendants, began
selling plumbing systems made with non-copper products. One copper alternative is crosslinked polyethylene, a plastic polymer known as “pex.” Defendants developed and sold pex
products under various trade names, advertising these products as being more durable and
affordable than copper products. Id. ¶¶ 32-34, 37. Specifically, Defendants sell a pex-based
plumbing system that uses brass fittings designed to conform to ATSM manufacturing standards
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F877, F1960, and F2080 (the “Components”).1 Id. ¶ 35. Brass is a metal alloy primarily made
of copper and zinc, though its exact composition may vary. In this case, Defendants made the
Components with “yellow brass,” a type of brass composed of at least 15% zinc, or which is
otherwise vulnerable to “dezincification.” Id. ¶¶ 36-39. Dezincification is a form of chemical
corrosion in which zinc leaches out of the alloy, resulting in a softer and more porous metal
structure. Oxford English Dictionary (Online ed. 2013).
Plaintiffs are a group of homeowners living in New Mexico, Arizona, and California who
own homes with plumbing systems that rely or relied on the Components sold by Defendants.
Plaintiffs allege the Components installed in their homes began exhibiting dezincification upon
exposure to water, the very liquid plumbing systems are designed to convey. Compl. ¶ 39.
Because of this defective design, Plaintiffs allege, they have suffered, or are “reasonably certain
to suffer,” corrosion of their plumbing fittings, lead leaching into their potable-water delivery
systems, plumbing blockages, reduced water flow or loss of pressure, loss of function, loss of
structural integrity, and other damage to their property, appliances, and building components. Id.
¶ 91.
Plaintiffs allege Defendants knew of the Components’ defective design. When
Defendants marketed their pex plumbing systems, Plaintiffs allege, Defendants falsely advertised
the Components’ quality and falsely represented testing the Components for reliability.
Similarly, Defendants falsely advertised the Components as comporting with the ASTM F877,
1
ASTM International, an entity formerly known as the American Society for Testing
and Materials, issues thousands of manufacturing standards for various products with the goal of
ensuring product standardization and quality. See generally ASTM International - Standards
Products, http://www.astm.org/standard/.
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F1960, and F2080 manufacturing standards. Thus, Plaintiffs allege Defendants knowingly
misled consumers, suppliers, and contractors regarding the quality and reliability of the
Components. Id. ¶¶ 48-66. Plaintiffs also allege Defendants withheld critical information from
consumers regarding the tendency of the Components to suffer dezincification due to their
yellow brass composition. Id. ¶¶ 67-73.
Plaintiffs have alleged eleven causes of action. As a putative national class, Plaintiffs
state claims for: (1) breach of implied warranties of fitness for particular purpose,
merchantability, habitability, quality, and workmanship; (2) breach of express warranties; (3)
negligence, including negligent misrepresentation, failure to warn/instruct, negligent selection,
and negligent installation; (4) strict products liability; (5) unjust enrichment; and (6) declaratory
and injunctive relief.
Plaintiffs also state several claims on behalf of putative state subclasses, for: (7) violation
of the New Mexico Unfair Practices Act; (8) violation of the Arizona Consumer Fraud Act; (9)
violation of the standards for residential construction under California Civil Code § 896(a)(15);
(10) violation of the California Consumer Legal Remedies Act; and (11) violation of the
California Unfair Competition Law.
This action represents only one part of a series of lawsuits relating to Defendants’
products. Of particular relevance, in 2009, several putative class representatives brought claims
against Defendants and related entities regarding the ASTM F1807 brass fittings in Defendants’
pex plumbing systems. Those claims were consolidated into a multi-district litigation (MDL)
assigned to this Court. Under the supervision of Magistrate Judge Jeffrey J. Keyes, the parties
reached a national settlement in 2012. See In re Uponor, Inc., F1807 Plumbing Fittings Prods.
4
Liab. Litig., 716 F.3d 1057, 1060-62 (8th Cir. 2013).
In the meantime, various homeowners filed suit against Defendants and other parties in
connection with other plumbing products, including the Components. Plaintiff Tim George filed
this action on January 31, 2012, and other plaintiffs filed similar suits both before and after
George. See In re: Uponor, Inc., F1960 Plumbing Fitting Prods. Liab. Litig., MDL No. 2393, at
1 (J.P.M.L. Sept. 27, 2012). By June 2012, at least 19 actions had been filed against Defendants
and other parties in 7 districts, and George sought to consolidate these actions into multi-district
litigation. Id. at 1, 5-6. The Judicial Panel on Multi-District Litigation (the “JPML”) held that
the various actions, though sharing factual allegations related to the F1960 fittings, did not
sufficiently overlap to make centralization efficient. In addition, the actions had progressed at
different paces, including a group of cases in the District of Nevada that had progressed further
than most of the others. Id. at 2. Thus, the JPML denied George’s request but encouraged the
parties to voluntarily coordinate litigation. Id. at 3. To that end, several plaintiffs have joined
George by either transferring their actions to this district or by filing their action in Minnesota in
the first instance.2
On June 24, 2013, Defendants moved to dismiss the Complaint under Rule 12(b) of the
Federal Rules of Civil Procedure. On August 9, 2013, Uponor Corp., the Finland-based parent
company of the other Defendants, moved separately to dismiss itself from this action due to a
lack of personal jurisdiction.
2
See Gibbs v. Uponor Corp., No. 12-2631 ADM/JJK (transferred from Southern District
of Illinois), Shons v. Wirsbo, Co., No. 12-2837 ADM/JJK (transferred the Western District of
Oklahoma), Fofi v. Uponor, Inc., No. 12-2908 ADM/JJK (transferred from Middle District of
Pennsylvania); Patel v. Uponor Corp., No. 12-1882 (alleging claims on behalf of Texas
homeowners); Overstreet v. Uponor N. Am., Inc., No. 13-323 (alleging claims on behalf of
California homeowners); Gasway v. Uponor Corp., No. 13-803 (transferred from Central District
of California).
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III. DISCUSSION
A. Uponor Corp.’s Motion to Dismiss for Lack of Jurisdiction
When a party moves to dismiss for lack of personal jurisdiction, the district court may
consider factual evidence outside of the pleadings. See, e.g., Dakota Indus., Inc. v. Dakota
Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991). The plaintiff has the burden of
establishing jurisdiction, but need not prove jurisdiction by a preponderance of the evidence until
an evidentiary hearing or trial. Id. Instead, “[t]o survive a motion to dismiss for lack of personal
jurisdiction, the plaintiff need only make a prima facie showing of personal jurisdiction over the
defendant.” Digi-Tel Holdings, Inc. v. Proteq Telecomms, 89 F.3d 519, 522 (8th Cir. 1996).
The facts offered will be viewed in the light most favorable to the plaintiff. Dakota Indus., 946
F.2d at 1387.
1. Applicable Personal Jurisdiction Law
A court has personal jurisdiction over a party only if both the forum state’s long-arm
statute and the Due Process Clause fairly allow the exercise of jurisdiction. Minnesota’s longarm statute is “coextensive with constitutional limits,” and does not require separate
consideration so long as federal due process requirements are met. Johnson v. Woodcock, 444
F.3d 953, 955 (8th Cir. 2006).
An exercise of personal jurisdiction will satisfy due process if the defendant has had
sufficient contacts with the forum state, such that it “should reasonably anticipate being haled
into court there . . . and maintenance of the suit does not offend traditional notions of fair play
and substantial justice.” Miller v. Nippon Carbon Co., Ltd., 528 F.3d 1087, 1090-91 (8th Cir.
2008) (quotation omitted). The Eighth Circuit Court of Appeals has stated a five-part test for
measuring whether these “minimum contacts” exist:
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(1) the nature and quality of the contacts with the forum state; (2) the
quantity of those contacts; (3) the relation of the cause of action to
the contacts; (4) the interest of the forum state in providing a forum
for its residents; and (5) the convenience of the parties.
Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 819 (8th Cir. 1994). “The first three factors
are of primary importance.” Id.
Whether the exercise of personal jurisdiction is “specific” or “general” turns on the third
factor. If the dispute arises from the defendant’s contacts with the forum state, the court may
exercise specific personal jurisdiction. If the dispute is unrelated to the defendant’s contacts
with the forum state, the contacts must be “continuous and systematic” to justify the application
of general personal jurisdiction. Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG,
646 F.3d 589, 595 (8th Cir. 2011) (quotation omitted). For parent corporations, the analysis does
not necessarily end there. Personal jurisdiction may apply to a nonresident corporation based on
the actions of its in-state subsidiary. See Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 64849 (8th Cir. 2003); Anderson v. Dassault Aviation, 361 F.3d 449, 452 (8th Cir. 2004).
2. Jurisdiction Over Uponor Corp.
In its motion to dismiss, Uponor Corp. argues that none of the three possible avenues to
personal jurisdiction—general, specific, or parent-subsidiary—apply in this case. Uponor Corp.
first argues that Plaintiffs cannot establish general jurisdiction, because Uponor Corp. has no
physical presence in Minnesota, let alone such a systematic and continued presence so as to
warrant being subject to jurisdiction in this forum for any claim. Next, Uponor Corp. argues
Plaintiffs have also failed to demonstrate how the corporation has had the minimum contacts
necessary to justify specific personal jurisdiction, as Uponor Corp. states it did not itself design,
manufacture, or sell the Components in Minnesota or the United States. Finally, Uponor Corp.
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argues Uponor, Inc. is not an alter ego, meaning Plaintiffs may not pierce Uponor, Inc.’s
corporate veil to establish jurisdiction over Uponor Corp.
In response, Plaintiffs largely blur their jurisdictional analyses. Plaintiffs argue that:
Uponor Corp. “played a direct role” in the operation of Uponor, Inc.’s Apple Valley, Minnesota,
facility; Uponor Corp. designed, manufactured, and sold the defective Components “through” its
subsidiary Uponor, Inc.; and that Uponor Corp. itself had “continuous and systematic business
contacts throughout the United States.” See Pls.’ Mem. Opp’n Juris. Mot. [Docket No. 140] at
14, 20-21, 28. In short, although Plaintiffs state specific and general jurisdiction are “two
different sides of the same coin,” they flip between the two without clear delineation. Id. at 26.
Throughout their arguments, however, Plaintiffs maintain a consistent position: personal
jurisdiction should exist over Uponor Corp. because of its close ties to and operation of Uponor,
Inc. To that end, Plaintiffs submit various annual report excerpts and other evidence to
demonstrate Uponor, Inc. operates as an extension of Uponor Corp.
Uponor Corp., standing alone, is not subject to general personal jurisdiction. Typically,
for general jurisdiction to apply to a corporation, the corporation must have some degree of
physical or business “presence” in the forum state. See Helicopteros Nacionales de Colombia,
S.A. v. Hall, 466 U.S. 408, 416-18 (1984) (evaluating defendant’s office and facility locations,
licensing, and business in forum state to determine existence of general jurisdiction); Goodyear
Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011) (holding court may assert
general jurisdiction when corporation has sufficient contacts to “render them essentially at home
in the forum state”). Beyond unsupported arguments, Plaintiffs have offered no evidence
indicating Uponor Corp. has facilities in Minnesota, is licensed to do business in Minnesota, or
otherwise has regular, continuous contacts with Minnesota. Absent such evidence, the Court
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declines to exercise general jurisdiction.
Similarly, Plaintiffs have not established specific personal jurisdiction over Uponor Corp.
The parties both discuss the United States Supreme Court’s decision in Goodyear in debating
whether Uponor Corp.’s placing of products into the stream of commerce may establish
jurisdiction. The Eighth Circuit has recognized a stream of commerce theory of jurisdiction
where a corporation “pours its products into a regional distributor,” expecting these products to
reach a discrete trade area. Viasystems, 646 F.3d at 597 (internal quotation omitted). In such
cases, the fora within the trade area may exercise jurisdiction over the foreign corporation. Id.
The Eighth Circuit has been “careful to note” that stream of commerce jurisdiction is “a type of
specific jurisdiction (as opposed to general jurisdiction).” Id. (quoting Barone v. Rich Bros.
Interstate Display Fireworks Co., 25 F.3d 610, 613 (8th Cir. 1994)).
Plaintiffs have not demonstrated a stream of commerce sufficient to establish specific
jurisdiction over Uponor Corp. Plaintiffs argue Uponor Corp. has distributed plumbing products
worldwide, including in the United States and Minnesota, thereby “purposefully availing” itself
of the forum’s laws. But this argument focuses on Uponor Corp.’s use of Uponor, Inc. as an
extension of its business. Plaintiffs are not arguing Uponor Corp. should be subject to specific
jurisdiction because it is the head of a distribution network or otherwise ships or sells goods to
Minnesota. Instead, Plaintiffs argue Uponor Corp. treats Uponor, Inc. as an extension of its
business, and that Uponor, Inc. has used Uponor Corp.’s assets and designs to manufacture and
sell the Components. See, e.g., Pls.’ Mem. Opp’n Juris. Mot. at 29. The distinction is
significant. See Viasystems, 646 F.3d at 596 (stream of commerce jurisdiction “should be kept
conceptually separate” from jurisdiction through a subsidiary). Plaintiffs are not looking to
establish specific jurisdiction over Uponor Corp. because of products it makes and ships to a
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Minnesota distributor; on the contrary, Plaintiffs concede Uponor, Inc. manufactures and sells
the Components at issue. Instead, Plaintiffs argue because Uponor Corp. uses Uponor, Inc. as a
continuation of its own business, Uponor Corp. should be subject to jurisdiction through its
subsidiary. That is a separate analysis addressed immediately below. Plaintiffs have not
established specific jurisdiction over Uponor Corp.
Ultimately, whether personal jurisdiction exists over Uponor Corp. depends on its
relationship to Uponor, Inc., a subsidiary that does not dispute the Court’s jurisdiction in this
action. Uponor Corp. argues that for Plaintiffs to establish jurisdiction via this subsidiary,
Plaintiffs must demonstrate Uponor Corp. “so controlled and dominated the affairs of the
subsidiary that the latter’s corporate existence was disregarded so as to cause the residential
corporation to act as the nonresidential corporate defendant’s alter ego.” Viasystems, 646 F.3d
at 596. But Uponor Corp. overstates Viasystems’ holding. There, the Eighth Circuit held that
while a degree of “control and domination” by the parent over the subsidiary was necessary,
rigid satisfaction of the alter ego test was not. See id. at 596 (citing Anderson, 361 F.3d 449).
In evaluating whether a parent sufficiently controls a subsidiary to warrant exercising
jurisdiction, courts have considered a number of factors. In Viasystems, the court held against
finding jurisdiction in part because the parent company’s ownership interest in the subsidiary
was “confined to a two-steps-removed 28–percent interest.” Id. at 597. In Epps, the court held
the plaintiffs had failed to connect the parent to at least one of the subsidiaries at issue, and
simply claiming the debts and assets of a subsidiary in SEC 10-K filings was insufficient. Epps,
327 F.3d at 650.
Conversely, in Anderson, the parent company transported a majority of its manufactured
airplanes to its subsidiary in the forum state for final modification before distributing the planes
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worldwide. Anderson, 361 F.3d at 452. The parent corporation had a “close, synergistic
relationship” with its subsidiary that transcended “mere ownership.” Id. at 453. This was
reflected in the parent corporation’s annual reports and website, in which the parent referred to
itself interchangeably with the subsidiary and touted its presence and operations in the forum
state. Id. The court held the parent’s “symbiotic” relationship with its subsidiary, combined
with the forum state’s importance to both companies, allowed the district court’s exercise of
personal jurisdiction to satisfy due process. Id. at 455.
Here, Plaintiffs have introduced sufficient pleadings and evidence to establish at least a
prima facie showing of jurisdiction through Uponor Corp.’s subsidiary. In an affidavit submitted
by its CEO and President Jyri Luomakoski, Uponor Corp. explains that several levels of
ownership separate Uponor Corp. from Uponor, Inc. Namely, Uponor Corp. owns Uponor NA
Holdings, Inc., which owns Uponor North America, Inc., which owns Hot Water Systems North
America, Inc., which ultimately owns Uponor, Inc. See Luomakoski Decl. [Docket No. 134] ¶
10. Although three levels of subsidiaries exist between Uponor Corp. and Uponor, Inc., the
distance is not actually very great. Plaintiffs allege, and Uponor Corp. does not dispute, that
each company in the chain wholly owns the company underneath it. Thus, there is no “dilution”
in ownership between Uponor Corp. and Uponor, Inc., as the situation was in Viasystems.
Perhaps more importantly, the record as it has developed thus far indicates Uponor, Inc.
operates as an extension of Uponor Corp.’s business. As Uponor Corp.’s consolidated annual
reports demonstrate, the Uponor entities view themselves as a single enterprise divided by
geographic reporting regions, with Uponor Corp. at the head. Berglund Decl., Sept. 3, 2013
[Docket No. 143] Ex. A (excerpt from Uponor annual report); see also Froemming v. Gate City
Fed. Sav. & Loan Ass’n, 822 F.2d 723, 733-34 (8th Cir. 1987) (filing of consolidated financial
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statement a factor in finding alter ego liability). In its reports, Uponor Corp. refers to itself and
its subsidiaries as the “Uponor Group,” a single business enterprise engaged in selling plumbing
and infrastructure products worldwide. Riedy Aff., Aug. 27, 2013 [Docket No. 141] (“Riedy
Aff.”) Ex. 5, at 4.3 Accordingly, Uponor Corp. treats North America as simply one region of its
worldwide plumbing business. Id. at 5 (former Uponor Corp. CEO referring to company as a
“market leader” in North America), 7 (discussing growth of pex plumbing system development
and sales in North America); Ex. 13 (describing “Uponor North America” as part of Uponor
Corp., and Uponor Corp. as employing 3,300 employees worldwide); Ex. 14 (describing North
American operations as a division of Uponor Corp.); Ex. 19 (claiming North American business
as “regional” sales); Ex. 22 (discussing Europe and North America as two different regions of
same business).
Also, although Uponor Corp.’s website is separate from Uponor, Inc.’s website, Uponor,
Inc.’s “About Us” webpage further suggests a “symbiotic” relationship between the companies.
See Anderson, 361 F.3d at 454; Fair Isaac v. Experian Information Solutions, Inc., 650 F.3d
1139, 1150-51 (8th Cir. 2011) (noting joint operation of website as factor in alter ego analysis).
The Uponor, Inc. website states, “Uponor North America is a part of Uponor Corporation, which
also includes Uponor Nordic and Uponor Europe” and is “[l]ed by President and CEO Jyri
Luomakoski and headquartered in Vantaa, Finland.” Id. at Ex. 13.
Despite Luomakoski’s declaration to the contrary, Uponor Corp. has also repeatedly
3
Uponor Corp. attempts to shift focus away from itself by arguing the submitted
corporate materials refer to “Uponor” as a collective entity and not to “Uponor Corp.”
specifically. But the submitted annual reports, and the sole press release, clearly identify Uponor
Corp. as the issuing entity. Further, use of the unlabeled name “Uponor” only further
demonstrates how Uponor Corp. and its subsidiaries operate as a single larger enterprise as
opposed to a group of separate entities with overlapping ownership.
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touted its presence in Minnesota. Riedy Aff. Ex. 6, at 14 (claiming Wirsbo—Uponor, Inc.’s
Minnesota predecessor—was Uponor Corp.’s “best-known brand” in North America, also
discussing growth of pex plumbing sales due to removal of plumbing code restrictions in
Minnesota); Ex. 13 (describing Apple Valley facility as manufacturing center in U.S.); Ex. 18
(listing Apple Valley facility as headquarters for North American “Region management”); Ex.
19 (stating Uponor Corp. “launched a factory extension project in Apple Valley, MN”); Ex. 20
(describing consolidation of manufacturing in Uponor Corp.’s “Apple Valley, Minnesota site”);
Ex. 21 (stating “We opened a new distribution center in the USA, in Minnesota”); see also Ex.
12 (discussing Wirsbo Company’s history and establishment of North American headquarters in
Minnesota).
Uponor Corp. also appears to claim North American profits and liabilities as its own.
See Smith ex rel. VanBrunt v. Blitz U.S.A. Inc., No. 11-1771, 2012 WL 5413513, at *2 (D.
Minn. Nov. 6, 2012) (considering, as factor supporting alter ego liability, whether “finances
overlap”). Luomakoski avers Uponor Corp. conducts no business in the United States, and
further states Uponor Corp. is a holding corporation that does not engage in any design,
development, or sales activity whatsoever. Luomakoski Decl. ¶¶ 4, 12-26. But in 1999, Uponor
Corp. claimed a full fifth of its sales and 13% of its staff were in the United States. Riedy Aff.,
Aug. 27, 2013 at Ex. 5 (Uponor 1999 financial report); Ex. 21 (discussing increase in Uponor’s
North American profits in “both dollars and euro”). In January 2009, Uponor Corp. announced
it was setting aside 14.5 million euros exclusively for “the costs of residential plumbing
replacements” in the United States. Id. at Ex. 9 (Stock exchange release issued by Uponor
Corp.). And, in Uponor Corp.’s 2012 annual report, Luomakoski himself described Uponor
Corp.’s “ambitious R&D,” its “significant market share” in the United States, and how it “stayed
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committed and stayed put” in the United States through a difficult market period. Id. at Ex. 23.
Uponor Corp.’s annual reports also state all research and developments costs jointly for
worldwide operations. Berglund Decl., Sept. 3, 2013 at Ex. A.
Plaintiffs have established a prima facie showing of jurisdiction over Uponor Corp.,
because Uponor Corp. exercises a sufficient degree of control and domination over Uponor, Inc.
to satisfy due process. Taken individually, no one of the above factors or items of evidence
would warrant exercising jurisdiction. Cumulatively, however, Plaintiffs’ allegations and the
evidence suggest Uponor Corp.’s relationship with Uponor, Inc. goes beyond “mere ownership,”
and more closely resembles the sort of “symbiotic” relationship discussed in Anderson. See
Anderson, 361 F.3d at 455. Throughout the Uponor companies’ various statements, Uponor,
Inc. appears to serve as Uponor Corp.’s base of operations in the United States. Uponor, Inc.’s
Apple Valley, Minnesota, location is repeatedly claimed as critical to Uponor Corp.’s North
American operations for everything from manufacturing to sales and training. Thus, exercising
jurisdiction over Uponor Corp. will not offend traditional notions of fair play and substantial
justice. See Scott v. Mego Int’l, Inc., 519 F. Supp. 1118, 1126 (D. Minn. 1981) (exercising
jurisdiction over parent company in part because subsidiary appeared to be incorporated “for the
purpose of continuing in one venture the business and management” of the parent); see also
Gorton v. Nordlund, No. A04-2516, 2005 WL 3289426, at *7 (Minn. Ct. App. Dec. 6, 2005)
(upholding jurisdiction in part because of interrelationship between parent and subsidiary in
production and sale of product at issue, and because parent operated subsidiary as a “major
division” of company and coordinated its business).
Plaintiffs have established a prima facie showing of jurisdiction sufficient to defeat
Uponor Corp.’s dismissal motion. However, the burden remains on Plaintiffs to demonstrate
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jurisdiction over Uponor Corp. by a preponderance of the evidence at trial.
3. Res Judicata and Collateral Estoppel
Plaintiffs also argue the Court should exercise personal jurisdiction over Uponor Corp.
because the United States District Court for the District of Nevada has already done so. Uponor
Corp. raises several valid problems with applying issue preclusion in this case, including that the
District of Nevada has not necessarily reached a final decision on the matter, and that the court
there applied a materially different standard of law. Because the Court finds an exercise of
jurisdiction of Uponor Corp. independently appropriate, it declines to reach Plaintiffs’ issue
preclusion arguments.
4. Uponor Group
As a corollary to the above arguments, Uponor Corp. argues “Uponor Group” should be
dismissed from this action because it is not an actual entity, but rather a term the Uponor
companies use to refer to their larger enterprise. In a footnote in its response, Plaintiffs state
they do not oppose dismissal of Uponor Group. Pls.’ Mem. Opp’n Jurisdiction Mot. at 1 n.1. As
a result, Uponor Group is dismissed.
B. Motion to Dismiss for Failure to State a Claim
Rule 12(b)(6) of the Federal Rules of Civil Procedure states that a party may move to
dismiss a complaint for failure to state a claim upon which relief can be granted. In evaluating
such a motion, the court construes the pleadings in the light most favorable to the nonmoving
party, and the facts alleged in the complaint must be taken as true. Hamm v. Groose, 15 F.3d
110, 112 (8th Cir. 1994) (citation omitted). Unlike a motion to dismiss for lack of jurisdiction,
the court may not consider matters outside the pleadings in connection with a Rule 12(b)(6)
motion. But, “documents necessarily embraced by the complaint are not matters outside the
15
pleading[s].” Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012) (citation
omitted).
1. Breach of Implied Warranty, Breach of Express Warranty (Counts 1, 2)
a. Standing
As an initial matter, Defendants argue all claims in the Complaint should be dismissed
because Plaintiffs lack standing to bring suit. Standing, at its core, is a jurisdictional threshold.
A failure to demonstrate standing means the plaintiff has failed to demonstrate a case or
controversy as required by Article III of the Constitution. See Lujan v. Defenders of Wildlife,
504 U.S. 555, 559-60 (1992). To establish standing, a plaintiff must demonstrate: (1) an “injury
in fact,” which is concrete and particularized, and which is “actual or imminent, not conjectural
or hypothetical”; (2) a causal connection between the injury and the complained-of conduct; and
(3) it is “likely,” and not “merely speculative” that a favorable decision will redress the injury.
Id. (internal quotations omitted).
For warranty claims stated under Minnesota law, a plaintiff may not simply allege that a
product line contains a defect. Rather, the plaintiff must plausibly allege her purchased product
“actually exhibited the alleged defect.”4 In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d
604, 616 (8th Cir. 2011). In Zurn, the Eighth Circuit reviewed the plaintiffs’ standing to bring
warranty claims for defective pipe fittings manufactured by Zurn Pex, Inc. The plaintiffs
alleged—and later introduced evidence demonstrating—that all pipe fittings in the product line
developed stress corrosion cracking (“SCC”) upon exposure to water. Id. at 617. The court held
4
In this case, the parties agree the Components are covered by an express warranty that
adopts Minnesota law. See Pls.’ Mem. Opp’n Mot. Dismiss [Docket No. 129] at 15. To the
extent the parties contend a different state’s laws should apply, it is discussed in Section B.2.a.,
below.
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such cracking sufficiently exhibited the alleged defect to confer standing. Id.
In addition, the plaintiffs did not need to demonstrate any “external damage” to have
standing, meaning even “dry plaintiffs” who had not yet suffered leaking pipes could pursue
breach of warranty claims. The rationale was the plaintiffs had established stress corrosion
cracking as a “universal inherent defect” occurring after any normal use, meaning all plaintiffs
owning these products necessarily had standing to pursue a breach of warranty claim. This
differed from plaintiffs whose products only had a chance of developing a defect in the future.
Id.; cf. Thunander v. Uponor, Inc., 887 F. Supp. 2d 850, 862 (D. Minn. 2012). The district court
in Thunander found a lack of standing in part by applying Zurn. There, the plaintiffs alleged
owning pipe fittings “at risk” for a defect, but offered no plausible facts suggesting the defect
actually existed in their home. Thunander, 887 F. Supp. 2d at 862. Had plaintiffs alleged testing
their pipes and finding the defect, the court suggested, the plaintiffs might have survived
dismissal. Id.
Here, Defendants argue the putative class representatives have failed to allege plausible
facts showing a defect in their Components. In the Complaint, Defendants argue, Plaintiffs have
broadly alleged the Components are vulnerable to dezincification and thus likely to fail at some
point in the future; Plaintiffs have failed to allege owning actually defective products. If
Plaintiffs intended to state a claim for threatened injury, they needed to allege a “certainly
impending” injury, which they have not done. See Harrison v. Leviton Mfg. Co., Inc., No. 05cv-0491-CVE-FHM, 2006 WL 2990524, at *2 (N.D. Okla. Oct. 19, 2006) (quoting Nova Health
Sys. v. Gandy, 416 F.3d 1149, 1155 (10th Cir. 2005)). In addition, Defendants argue
dezincification by itself does not qualify as a manifestation of a defect under Zurn because
Plaintiffs’ plumbing systems could continue functioning normally for years or even decades into
17
the future.
Plaintiffs respond that their allegations have sufficiently demonstrated a manifestation of
the defect. Plaintiffs compare their allegations to those stated in Zurn: the Components’ yellow
brass composition makes them universally susceptible to dezincification, which in turn is
“substantially certain” to lead to “corrosion, plumbing blockages,” leaks, cracks, and property
damage. Compl. ¶ 46. Like the class representatives in Zurn, Plaintiffs argue that because they
have not yet suffered leaks or other property damage does not mean they have failed to
demonstrate a manifestation of the alleged defect. Instead, the inherent nature of the
Components’ defect means all Plaintiffs have already experienced a product failure sufficient to
establish standing.
In making their arguments, the parties confuse the difference between standing and the
economic loss doctrine (also referred to as the “economic loss rule”). Standing is a threshold
jurisdictional issue, requiring a plaintiff to establish an actual injury suffered as the result of the
defendant’s conduct. In contrast, the economic loss rule is a court-made doctrine barring
recovery for a tort claim where the plaintiff suffers a purely economic loss; it is an attempt to
prevent contract law from “drown[ing] in a sea of tort.” E. River S.S. Corp. v. Transamerica
Delaval, Inc., 476 U.S. 858, 866 (1986). The economic loss rule prevents a plaintiff from
bringing a tort claim where the damages sought consist only of damages to the product itself, or
of some other loss in only the product’s value.5 See, e.g., Minn. Stat. § 604.101. Thus, the
economic loss rule bars certain claims even where a plaintiff has indisputably stated an actual,
economic injury.
5
Often, such claims are better brought as contract claims, as the parties have already
bargained for economic risk through their transaction. See Transamerica Delaval, 476 U.S. at
872-73.
18
In this case, Defendants argue Plaintiffs have failed to allege any actual injury (a matter
of standing) and also that Plaintiffs have failed to allege any recoverable damages resulting from
their alleged injury (a matter relevant to the economic loss doctrine). As discussed, Eighth
Circuit law requires only the manifestation of a defect to bring a warranty claim; the law does
not require suffering “external damage.” Zurn, 644 F.3d at 617. Plaintiffs’ standing to bring a
warranty claim is evaluated here. Whether the economic loss doctrine bars Plaintiffs’ remaining
claims—related to their other damages from dezincification—is discussed separately below.
Plaintiffs’ allegations regarding their experiences with dezincification are frustratingly
imprecise. Throughout the Complaint, Plaintiffs refer to themselves as a nameless group,
without ever identifying which specific injuries, if any, each Plaintiff suffered. It appears some
Plaintiffs have not actually experienced any dezincification or corrosion in their homes, as the
Complaint frequently alludes to Plaintiffs with Components that are “in the process of
failing”—but that have not yet failed, and Plaintiffs who are “reasonably certain” to suffer
injury—but have not yet suffered such injury. See, e.g., Compl. ¶¶ 46, 88. The Complaint is
also vague regarding the propensity of the yellow brass Components to manifest defects.
Plaintiffs refer to the Components as “susceptible to premature failure,” “substantially certain to
fail,” having a “tendency” to fail, having a “propensity” to crack, and being “prone” to premature
degradation. Id. ¶¶ 40, 45, 68, 69, 70, 79.
Even viewed in the light most favorable to Plaintiffs, the only logical conclusion is that
not all Plaintiffs have suffered a manifestation of the alleged defect. The majority of Plaintiffs
rely on vague, deliberately obtuse allegations relating to the likelihood of their Components to
exhibit dezincification in the future. At no point in the Complaint do the majority of Plaintiffs
specifically allege that they personally have experienced dezincification or any other
19
manifestation of a defect. Similarly, Plaintiffs have not alleged that all Components made by
Defendants inevitably manifest defects upon any normal use. Although Plaintiffs allege
suffering damages in a conclusory manner, their factual allegations regarding dezincification are
stated as “propensities” and “susceptibilities.” Standing requires “actual” injury, not “likely”
injury. Had Plaintiffs alleged plausible facts indicating that every Component made by
Defendants will manifest the defect, they might all have established standing to proceed.6
At this time, only Plaintiffs George and Charles and Jamie Gibbs have actually alleged
suffering dezincification and other manifestations of the defect, and thus have standing for their
warranty claims. The remaining Plaintiffs have not plausibly alleged suffering any actual
manifestation of the defect, meaning they lack standing to pursue not only their warranty claims
but all other claims in this action. Put in its simplest terms, without suffering from
dezincification, these Plaintiffs cannot pursue damages for leaky pipes or other harms caused by
dezincification. Plaintiffs William and Corie Connelly, Galen and Leslie Satterlee, Gail
Henrichsen, Dustin and Martha Barnett, Dave and Holly Marcus, Kelly Babb, and Gary and Elsa
Overstreet are dismissed without prejudice from this action. Unless otherwise stated, the
remainder of this Order addresses only the remaining Plaintiffs.
b. Pre-Suit Notice
Defendants argue that even if Plaintiffs establish standing for their warranty claims,
Plaintiffs fail to allege providing Defendants with pre-suit notice of the claimed defects.
Minnesota Statute § 336.2-607(3)(a), an adoption of the Uniform Commercial Code (UCC),
6
Plaintiffs do allege testing “[f]ittings from Plaintiffs’ homes” and confirming the effects
of dezincification. But Plaintiffs fail to allege which homes, and Plaintiffs do not allege that
based on this testing they concluded that all of the Components made by Defendants will exhibit
defects. See Compl. ¶¶ 75, 80.
20
states “[w]here a tender has been accepted . . . the buyer must within a reasonable time after the
buyer discovers or should have discovered any breach notify the seller of breach or be barred
from any remedy.” Thus, for a plaintiff to bring a warranty claim for a product governed by the
UCC, the plaintiff must first provide notice to the seller of the claimed breach. See Christian v.
Sony Corp. of Am., 152 F. Supp. 2d 1184, 1187-88 (D. Minn. 2001).
The notice requirement serves three purposes. “First, notice provides the seller a chance
to correct any defect. Second, notice affords the seller an opportunity to prepare for negotiation
and litigation. Third, notice provides the seller a safeguard against stale claims being asserted
after it is too late for the manufacturer or seller to investigate them.” Church of the Nativity of
Our Lord v. WatPro, Inc., 491 N.W.2d 1, 5 (Minn. Ct. App. 1992), overruled on other grounds,
Ly v. Nystrom, 615 N.W.2d 302 (Minn. 2000). Minnesota courts have held sufficiency of the
notice requirement for a breach of warranty claim “is a jury question.” Id. Further, the
requirement “is designed to defeat commercial bad faith, not to deprive a good faith consumer of
his remedy.” Id. (quotation omitted).
Defendants argue Plaintiffs failed to allege sending proper notice before the start of this
litigation, meaning their warranty claims should fail. Plaintiffs respond by submitting a letter
dated January 26, 2012, in which George’s counsel notified Uponor, Inc. of his warranty claim.
Shelquist Aff., Aug. 5, 2013 [Docket No. 130] Ex. 1. Plaintiffs also argue that while Minn. Stat.
§ 336.2-607(3)(a) requires pre-suit notice, it does not require plaintiffs to plead such notice in
their complaint. Defendants respond that even if this notice is considered, George provided it
only five days before filing suit: too short of a time to achieve the purposes of advance notice.
Arguably, George’s notice letter is a document embraced by the Complaint because it
pertains directly to Plaintiffs’ warranty claims. As such, this letter may be considered under the
21
Rule 12 motion standard.7 Ashanti, 666 F.3d at 1150-51. The larger issue is whether George’s
notice suffices under Minn. Stat. § 336.2-607(3)(a), and it does. By itself, the statute requires a
buyer to provide notice “within a reasonable time after the buyer discovers or should have
discovered” any breach.8 Id. (emphasis added). It does not require the buyer to provide the
notice a reasonable time before filing suit. Although George’s letter provided Defendants with a
limited opportunity to negotiate or prepare for suit, the letter at least preserved this purpose. To
bar Plaintiffs’ warranty claim due to a last minute notice would defeat another purpose of the
statute: allowing good faith consumers to pursue relief in court. WatPro, Inc., 491 N.W.2d at 5.
To the extent Defendants maintain their challenge regarding whether notice was sufficient in this
case, further factfinding, and perhaps trial, will answer the question definitively.
c. Timeliness
Finally, Defendants argue Plaintiffs have not stated timely warranty claims, as the fouryear statute of limitations has passed since Plaintiffs received the Components. Minn. Stat. §
336.2-725(2). In support, Defendants cite the Complaint, in which Plaintiffs Gary and Elsa
Overstreet allege purchasing their home in 2003. Compl. ¶ 13. Defendants also cite public
records to demonstrate other Plaintiffs purchased their homes between 2002 to 2007. See
Berglund Decl., June 24, 2013 [Docket No. 110] Exs. E-I.
7
Even if it were not so embraced, because Plaintiffs will receive leave to file an
amended complaint, they have the opportunity to include further allegations regarding pre-suit
notice.
8
Plaintiffs also argue that where a Plaintiff has given notice on the defect at issue, the
other Plaintiffs need not similarly establish providing notice. The Court agrees. See Daigle v.
Ford Motor Co., 713 F. Supp. 2d 822, 827 (D. Minn. 2010) (allowing class certification where
not all plaintiffs provided pre-suit notice); WatPro, 491 N.W.2d at 5 (“Where the record
discloses prior knowledge of similar complaints, the defendant will already have investigated the
possible causes and therefore cannot argue that it is prejudiced by any delay in receiving notice
of the specific complaint.”).
22
As Defendants’ own arguments demonstrate, the issue of whether Plaintiffs have stated
timely warranty claims cannot be resolved on the present allegations alone. The dates when
Plaintiffs purchased their homes are not necessarily the times when Defendants tendered the
Components. Plaintiff George alleges owning a home built in 1999, but installing Defendants’
plumbing system in 2009, a time within the statute of limitations. Compl. ¶ 10. Whether the
Gibbs have stated timely claims may similarly depend on when Defendants tendered delivery of
the Components. The issue cannot be resolved in the Rule 12 context.
In addition, Plaintiffs argue the warranty’s terms extend coverage to future performance
of the Components. Minn. Stat. § 336.2-725(2) states:
[a] breach of warranty occurs when tender of delivery is made, except
that where a warranty explicitly extends to future performance of the
goods and discovery of the breach must await the time of such
performance the cause of action accrues when the breach is or should
have been discovered.
Plaintiffs submit a copy of an express warranty available from Uponor, Inc.’s website, which
they contend “explicitly extends” warranty coverage 25 years into the future from the date of
installation. Shelquist Aff., Aug. 5, 2013 at Ex. 2.
Plaintiffs’ arguments, like those of Defendants, stray beyond the scope of Rule 12. An
express warranty would likely qualify as a document embraced by the pleadings where a plaintiff
has alleged a breach of a specific warranty. Here, however, Plaintiffs have not alleged the online
warranty is the specific warranty applying to the Components installed in their homes. Instead,
Plaintiffs argue in their response memorandum that they found a warranty online by searching
Uponor, Inc.’s website. According to Plaintiffs, because this online warranty has a 2006
copyright date, its terms must have been in force over all Components for at least the past seven
years. See id. The Court declines to apply the full force of warranty terms found on the internet
23
based on the assumption they probably apply to the parties at issue. Also, if Defendants tendered
delivery of any of the Components prior to 2006, it is impossible to determine what terms
applied at that time.9 For the purposes of the present motion, the Complaint plausibly alleges the
existence of express and implied warranties, and that these warranties cover alleged defects in
the Components. Taking these allegations as true, Plaintiff George and Plaintiffs the Gibbs’
warranty claims shall survive Rule 12 dismissal.
2. Negligence and Strict Liability (Counts 3, 4)
In addition to their warranty claims, Plaintiffs allege two tort claims. First, Plaintiffs
allege one claim for several types of negligence, including general negligence, negligent
misrepresentation, failure to warn, negligent selection, and negligent installation.10 Plaintiffs
allege a second claim for strict product liability. As discussed above, only Plaintiffs George and
Charles and Jamie Gibbs have standing to pursue these claims.
a. Economic Loss Doctrine
In addition to arguing Plaintiffs have failed to allege any actual injury, Defendants argue
Plaintiffs have failed to sufficiently allege suffering any damages beyond purely economic loss.
In other words, even if Plaintiffs have plausibly alleged experiencing dezincification, Plaintiffs
have failed to allege suffering from leaky pipes or any other kind of “external damage” resulting
9
It is for this reason that Defendants’ argument regarding the express warranty’s
disclaiming of implied warranties also fails. In addition, Defendants argue that assuming the
online warranty applies, it compelled Plaintiffs to conduct arbitration. Even assuming the online
warranty applied, it explicitly states all class claims will be brought in the state or federal courts
of Minnesota. Shelquist Aff., Aug. 5, 2013 at Ex. 2.
10
Plaintiffs’ tactic of grouping several disparate claims together under one count of
negligence has added unneeded complexity to this litigation. See Fed. R. Civ. P. 10(b)
(encouraging use of separate counts to promote clarity). The Court agrees with Defendants that
Minnesota law does not recognize a claim for “negligent selection” in this context, and so
dismisses this “subcount” of the Complaint with prejudice.
24
from dezincification. See Zurn, 644 F.3d at 617. As a result, Defendants argue, the economic
loss doctrine operates to bar Plaintiffs’ tort claims.
Plaintiffs argue they have alleged more than economic loss. Plaintiffs cite allegations in
the Complaint which suggest Plaintiffs have suffered from leaking or restricted-flow pipes, lead
contamination, and other property damage as the result of owning the Components. Plaintiffs
also argue New Mexico and Arizona law allow tort claims for economic loss in this case, though
Plaintiffs are silent as to California law.
Before addressing whether the economic law doctrine applies to Plaintiffs’ tort claims, it
must first be determined whether Minnesota law applies. For the tort claims at issue, both
parties cite primarily to Minnesota law. See, e.g., Defs.’ Mem. Supp. Mot. Dismiss [Docket No.
109] 17-19. And Plaintiffs agree in their memorandum, “for the purposes of this motion,”
Minnesota law applies to their nationwide claims. Pls.’ Mem. Opp’n Mot. Dismiss at 15.
However, in addition to making tort arguments under Minnesota law, the parties also offer brief
parallel arguments under Arizona and New Mexico law. At oral argument, the parties conceded
a choice of law analysis may be necessary. But neither party offered such analysis, and neither
party argued for any law other than Minnesota law to apply. See Mot. Hr’g Tr. [Docket No.
153].
Because the parties do not object, at least at this stage of the litigation, to the application
of Minnesota law, Minnesota law shall tentatively apply. See Superior Edge, Inc. v. Monsanto,
Co., --- F. Supp. 2d ----, 2013 WL 4050790, at *9 (D. Minn. 2013) (holding where parties have
acquiesced to a particular state’s law, court need not engage in sua sponte choice of law
analysis); In re Korean Air Lines Disaster of Sept. 1, 1983, 932 F.2d 1475, 1495 (8th Cir. 1991)
(same); see also GBJ Corp. v. E. Ohio Paving Co., 139 F.3d 1080, 1085 (6th Cir. 1998).
25
However, because Plaintiffs’ tort claims are ultimately dismissed without prejudice—as opposed
to with prejudice—in this ruling, the parties will have the opportunity to fully address choice of
law issues in subsequent motion practice. If the parties contend another state’s laws should
apply to any of Plaintiffs’ nationwide claims, they should brief the issue in future memoranda,
and certainly no later than as part of any motion for class certification.
Under Minnesota law, the economic loss doctrine bars Plaintiffs’ tort claims. Minnesota
has codified its version of the economic loss doctrine in Minn. Stat. § 604.101. Under this
statute, a buyer of allegedly defective or misrepresented goods may not bring a tort claim “unless
the goods sold . . . caused harm to the buyer’s tangible personal property other than the goods or
to the buyer’s real property.” Id. § 604.101, subd. 3. Thus, a buyer may only recover for losses
related to: (1) “other tangible personal property or real property,” including reasonable costs to
repair or replace such property; (2) “business interruption losses,” and (3) other family, personal,
or household expenses incurred during the “period of restoration.” Id.
Although Plaintiffs George and the Gibbs have alleged suffering economic losses, they
have not plausibly alleged actually suffering from any losses or damage to their “other” tangible
property or to their real property. The remaining three Plaintiffs allege discovering corrosion in
the pipe-fittings of their pex plumbing systems due to dezincification, which is sufficient to
establish standing for their breach of warranty claims, but not to survive the economic loss rule.
Compl. ¶10; see, e.g., Daigle, 713 F. Supp. 2d at 829-30; McGregor v. Uponor, Inc., No. 091136, 2010 WL 55985, at *6-7 (D. Minn. Jan. 4 2010). Even if all three Plaintiffs had alleged,
which they have not, that they had to replace all of the Components in their homes, they still
would not have stated anything beyond economic losses. Replacement costs alone for the goods
at issue are economic losses, and thus barred by the doctrine. Minn. Stat. § 604.101, subd. 3; see
26
also Thunander, 887 F. Supp. 2d at 871-72.
The broader allegations in the Complaint regarding damage to “other” property fail for
the same reasons the majority of Plaintiffs could not establish standing. Neither George, the
Gibbs, nor any other Plaintiff actually alleges suffering damage to their property from
dezincification. Instead, as before, Plaintiffs state their damage allegations in broad, elusive
terms. For example, Plaintiffs allege they “own, have installed, or have paid for damages”
caused by the Components, and thus “have suffered or are reasonably certain to suffer” injuries,
including, “without limitation,” leaky pipes, restricted water flow, lead leaching into potable
water, appliances breaking due to scaling and deposits, and other harms. Compl. ¶¶ 88-89. But
not once, in the entire Complaint, does a Plaintiff allege actually finding a leaking or clogged
pipe, or testing her water and finding lead contamination, or having to replace an appliance after
finding buildup or residue. The distinction is between what “might” have happened or will
“probably” happen and what has actually happened. Only allegations plausibly asserting the
latter will state a viable claim. See, e.g., Thunander, 887 F. Supp. 2d at 865 (“Sweeping
allegations of harm must be supported by enough facts to render them plausible and this
Complaint fails to include such facts.”); cf. Whitmore v. Arkansas, 495 U.S. 149, 150 (1990)
(holding “allegations of possible future injury” insufficient to establish standing). Because the
Complaint lacks such specific allegations, they have failed to demonstrate any losses beyond the
purely economic.
b. Particularity
Defendants also argue Plaintiffs failed to plead negligence with particularity under Rule
9(b). Plaintiffs respond that only their claims of misrepresentation must be pled with
particularity, and that these claims are properly detailed.
27
Because Plaintiffs have failed to demonstrate anything beyond economic losses,
Plaintiffs’ negligent misrepresentation claims need not be addressed.11 However, should
Plaintiffs file a second amended complaint that includes allegations of loss or damage to “other”
property, negligent misrepresentation claims need not state every exacting detail. See
Commercial Prop. Invs., Inc. v. Quality Inns Int’l, Inc., 61 F.3d 639, 644 (8th Cir. 1995). In this
case, Plaintiff George has alleged reliance on at least some specific representations made by
Defendants, and Plaintiffs have also identified several examples of Defendants’ alleged
misrepresentations, though the time frame for these misrepresentations is somewhat unclear and
should be clarified in any amended complaint.
c. Strict Liability and Exception for Lead
Plaintiffs argue their claim for strict product liability falls within a “toxic substance”
exception to the economic loss doctrine. See 80 S. Eighth St. Ltd. P’ship v. Carey-Canada, Inc.,
486 N.W.2d 393 (Minn. 1992). In 80 S. Eighth, the Minnesota Supreme Court held a claim
related to a building contaminated with asbestos “is not one for economic loss” due to the
specific way in which asbestos’ toxic effects defeated bargained-for expectations. Id. at 397.
Even assuming 80 S. Eighth created a general exception for toxic chemicals—which is far from
established—Plaintiffs have failed to allege actually suffering from such harm. As such, this
argument does not succeed.
11
Plaintiffs briefly argue Minn. Stat. § 604.10(e) makes an exception for fraud and
intentional misrepresentation claims, meaning the economic loss rule should not bar their
negligent misrepresentation claim, which sounds in fraud. But Plaintiffs rely on the wrong
statute. Minn. Stat. § 604.101, the general economic loss doctrine statute enacted and effective
on August 1, 2000, bars misrepresentation claims unless they allege the “misrepresentation was
made intentionally or recklessly.” Plaintiffs make no such allegations here, and so their claim
for negligent misrepresentation is also barred. See Valspar Refinish, Inc. v. Gaylord’s, Inc., 764
N.W.2d 359, 369-71 (Minn. 2009); Smith v. Genetic Depot, Inc., No. 11-cv-273, 2013 WL
627065, at *10 (D. Minn. Feb. 20, 2013).
28
3. Equitable Relief Claims (Counts 5, 6)
a. Pleaded in Alternative
Along with the other claims for damages, Plaintiffs allege equitable claims for unjust
enrichment and for declaratory and injunctive relief. Defendants primarily argue these claims
should be dismissed because Plaintiffs have adequate remedies at law available to them. See
United States v. Bame, 721 F.3d 1025, 1030 (8th Cir. 2013) (holding “[a] party may not have
equitable relief where there is an adequate remedy at law available”) (quotation omitted). While
that is true, plaintiffs may pursue equitable relief in the alternative, as Plaintiffs argue for here.
See, e.g., In re Levaquin Prods. Liab. Litig., 752 F. Supp. 2d 1071, 1081 (D. Minn. 2010);
Daigle, 713 F. Supp. 2d at 828. As a result, Plaintiffs’ claims for equitable relief will not be
dismissed at this stage.
b. Particularity
Defendants also argue Plaintiffs have failed to plead unjust enrichment with particularity.
It is true that where a plaintiff alleges unjust enrichment based on misrepresentations, including
negligent misrepresentations, the claim must be pled with particularity. See Chin v. Gen. Mills,
Inc., No. 12-2150, 2013 WL 2420455, at *8 (D. Minn. June 3, 2013). As discussed above,
Plaintiffs have alleged negligent misrepresentation with sufficient particularity. Thus, the unjust
enrichment claim based on negligent misrepresentation will be allowed to proceed.
4. New Mexico Subclass Claim - New Mexico Unfair Practices Act (Count 7)
Plaintiff George brings a putative subclass claim for New Mexico residents under the
New Mexico Unfair Practices Act. See generally N.M. Stat. Ann. § 57-12-1, et seq. (the
“NMUPA”). Defendants primarily argue the NMUPA requires claimants to plead with
particularity, and Plaintiffs have failed to plead knowledge or actual injury with particularity in
29
this case. See Two Old Hippies, LLC v. Catch the Bus, LLC, 784 F. Supp. 2d 1200, 1209
(D.N.M. 2011) (applying Rule 9(b) pleading requirements to NMUPA claim).
It appears the majority of New Mexico courts have not required plaintiffs to plead
NMUPA claims with particularity under Rule 9(b). See New Mexico v. Capital One Bank
(USA) N.A., --- F. Supp. 2d. ----, 2013 WL 5874318, at *2 (D.N.M. Oct. 29, 2013) (citing Tenth
Circuit law in expressly declining to apply Rule 9(b) to NMUPA claim); Woodard v. Fidelity
Nat. Title Ins. Co., No. CIV 06-1170 RB/WDS, 2007 WL 5173415, at *6 (D.N.M. Dec. 4, 2007)
(same); Carl Kelley Const. LLC v. Danco Techs., 656 F. Supp. 2d 1323, 1347-48 (D.N.M. 2009)
(considering NMUPA claim without applying Rule 9(b) and finding plaintiff had “sketch[ed] out
a claim” under NMUPA). Although Defendants cite Two Old Hippies, the court in that decision
applied Rule 9(b) without analysis, grouping a NMUPA claim into a larger holding regarding
misrepresentation claims. Two Old Hippies, 784 F. Supp. 2d at 1209-10. This Court finds New
Mexico v. Capital One and Woodard to more persuasively state the NMUPA pleading standard,
as these cases specifically addressed the issue.
Under Rule 12(b)(6) standards, Plaintiff George has stated a viable NMUPA claim.
Under the NMUPA, a plaintiff must allege four elements:
(1) Defendant[ ] made an oral or written statement that was false or
misleading; (2) the false or misleading statement was knowingly
made in connection with the [sale of goods or services]; (3) the
representation occurred in the regular course of the representor’s
trade or commerce; and (4) the representation may, tends to, or does,
deceive or mislead any person.
Woodard, 2007 5173415, at *6 (edits in original). Here, Plaintiffs allege Defendants made
statements, including through promotional materials, advertisements, and product markings,
regarding the quality of the Components. See, e.g., Compl. ¶¶ 57-66. Plaintiffs further allege
30
Defendants knew or should have known the Components were vulnerable to dezincification due
to their yellow brass composition. Id. ¶¶ 53, 60, 65-66. Defendants allegedly made such
representations as part of their normal course of business in selling plumbing systems, and these
representations misled consumers as to the Components’ reliability. In particular, George
alleges relying on these representations through his contractor when installing Defendants’ pex
plumbing system in his home. Id. ¶ 56. Such allegations are sufficient for George to state a
plausible claim under the NMUPA. In addition, the NMUPA allows a plaintiff to seek damages
for economic loss. See, e.g., Mulford v. Altria Grp., Inc., 242 F.R.D. 615, 626 (D.N.M. 2007).
As discussed, George has alleged suffering from corrosion in the Components of his home due to
dezincification.
5. Arizona Subclass Claim - Arizona Consumer Fraud Act (Count 8)
As the only remaining Arizona Plaintiffs in this action, the burden falls on the Gibbs to
allege a viable claim under the Arizona Consumer Fraud Act. Ariz. Rev. Stat. § 44-1521, et seq.
(“ACFA”); see also Roby v. St. Louis Sw. Ry. Co., 775 F.2d 959, 961 (8th Cir. 1985) (“A
fundamental requirement of representatives in a class action is that they must be members of the
subclasses they seek to represent.”). To state a claim under the ACFA, a plaintiff must show “a
false promise or misrepresentation made in connection with the sale or advertisement of
merchandise and consequent and proximate injury resulting from the promise.” Kuehn v.
Stanley, 91 P.3d 346, 351 (Ariz. Ct. App. 2004). “A plaintiff must also allege reliance—though
it need not be reasonable—on the misrepresentations.” Bergdale v. Countrywide Bank FSB, No.
cv-12-8057-PCT-GMS, 2013 WL 105295, at *3 (D. Ariz. Jan. 9, 2013). And, the plaintiff must
plead an ACFA claim with particularity. Silving v. Wells Fargo Bank, NA, 800 F. Supp. 2d
1055, 1075 (D. Ariz. 2011).
31
Plaintiffs have failed to allege a viable ACFA claim. As with Plaintiff George, Plaintiffs
Charles and Jamie Gibbs have alleged suffering from dezincification and the related corrosion of
the Components in their home. Plaintiffs as a group have also alleged Defendants made
misrepresentations regarding the quality of the Components, and subsequent economic loss,
which is a viable harm under the ACFA. Shaw v. CTVT Motors, Inc., 300 P.3d 907, 909-10
(Ariz. Ct. App. 2013). However, unlike George, the Gibbs never allege with particularity relying
on any of Defendants’ representations. Chronic to the Complaint is Plaintiffs’ tendency to make
allegations in vague, generalized terms. Thus, Plaintiffs allege, “Plaintiff [presumably, Plaintiff
George] his representatives, and other consumers relied on these misrepresentations.” Compl. ¶
56. Neither the Gibbs nor any other Arizona Plaintiff specifically alleges relying on any of
Defendants’ representations, even unreasonably. Nor do they allege with particularity some
knowledge or other belief indicating they were mislead by Defendants. As a result, the ACFA
claim is dismissed.
6. California Subclass Claims (Counts 9, 10, 11)
Plaintiffs Gary and Elsa Overstreet, the only California residents in this action, failed to
establish standing. Without standing, the Overstreets cannot pursue their stated California law
claims, and so these claims are dismissed. See Thunander, 887 F. Supp. 2d at 863 (“A class
representative must have standing to assert claims on his or her own behalf in order to have
standing to assert claims as a class representative.”).
Unlike the New Mexico and Arizona Plaintiffs, Defendants argue even if the Overstreets
had stated cognizable claims, the claims should be dismissed due to a parallel action pending in
the State of California. The same law firm that represented the Overstreets individually, and
have now joined Plaintiffs’ counsel group, also represent the plaintiffs in Sweidan v. Wirsbo
32
Company, No. RIC0014789 (Cal. Superior Ct. 2010). See Berglund Decl., June 24, 2013 at Ex.
A (Complaint in Sweidan). In that action, the plaintiffs have stated allegations relating to yellow
brass pipe fittings similar to those stated by Plaintiffs in this case. Also, the Sweidan plaintiffs
seek class certification for a claim under Cal. Civ. Code § 896(a)(15), just as the Overstreets do
on behalf of the same California residents in this action. See id., see also id. at Ex. C (Plaintiffs’
motion for class certification in Sweidan). Based on the parties’ representations, it does not
appear the court in Sweidan has yet ruled on class certification.
Defendants argue Sweidan necessitates the dismissal of the California subclass claims in
this action. First, Defendants argue the subclass claims should be dismissed to avoid claim
splitting. Second, Defendants argue, under the “first to file” rule, Sweidan takes precedence over
this action. Finally, Defendants argue the Colorado River abstention doctrine warrants at least a
stay in this case. See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800
(1976).
Defendants’ arguments are premature. The claim splitting doctrine, the first to file rule,
and the Colorado River abstention doctrine are all premised on the notion that the same parties
are addressing the same controversy in more than one lawsuit. See Imation Corp. v. Sterling
Diagnostic Imaging Inc., No. 97-2475, 1998 WL 574164, at *2 (D. Minn. Apr. 21, 1998) (first to
file rule preserves judicial economy with respect to same controversy); Charboneau v. Am.
Family Ins. Co., 481 N.W.2d 19, 21 (Minn. 1992) (one party may not split its causes of action);
Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994, 997 (8th Cir. 2005) (Colorado River
abstention does not apply unless suits are parallel, and suits are parallel only if “substantially the
same parties” litigate in both suits). These judicially-made doctrines suggest the dismissal or
stay of duplicative lawsuits in an effort to promote judicial economy and avoid conflicting
33
rulings.
Here, however, the Overstreets are not plaintiffs in Sweidan. Also, the Sweidan court has
not yet certified any class, meaning the Overstreets are not class members whose interests are
already represented in Sweidan, and thus the Overstreets have not pursued identical or similar
claims in more than one action. Precluding the Overstreets’ claims based on the actions of the
Sweidan plaintiffs would deprive the Overstreets of due process.12 When and if the court in
Sweidan certifies a class, the Overstreets’ position may change. In the meantime, the California
subclass claims are dismissed without prejudice.
IV. CONCLUSION
Based upon all the files, records, and proceedings herein, IT IS HEREBY
ORDERED:
1.
Defendants’ Motion to Dismiss [Docket No. 107] is GRANTED in part and
DENIED in part, as follows:
a.
b.
2.
Plaintiffs William and Corie Connelly, Galen and Leslie Satterlee,
Gail Henrichsen, Dustin and Martha Barnett, Dave and Holly
Marcus, Kelly Babb, and Gary and Elsa Overstreet are
DISMISSED WITHOUT PREJUDICE; and
Counts 3, 4, 8, 9, 10, and 11 are DISMISSED WITHOUT
PREJUDICE.
Defendant Uponor Corporation’s Motion to Dismiss for Lack of Personal
Jurisdiction [131] is GRANTED in part and DENIED in part, as follows:
Defendant Uponor Group is DISMISSED WITH PREJUDICE.
12
Defendants cite American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), for the
proposition that the Overstreets are “passive beneficiaries” of the proposed Sweidan class, and
thus restricted by that action. See id. at 552. But the Court in that case held that proposed class
members were only “passive beneficiaries” for the purpose of tolling the statute of limitations.
The holding did not prevent a party from filing a separate suit before certification so long as their
claim is independently timely. See, e.g., Stutz v. Minn. Mining Mfg. Co., 947 F. Supp. 399, 404
(S.D. Ind. 1996) (noting existence of individual suit parallel to class action); Rahr v. Grant
Thornton LLP, 142 F. Supp. 2d 793, 799-800 (N.D. Tex. 2000) (same).
34
3.
Plaintiffs may move for leave to amend the Amended Complaint [Docket No.
103] within 30 days of this Order. The parties shall conduct any such motion
practice in accordance with the Local Rules.
BY THE COURT:
s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: December 23, 2013.
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