Caiola v. Lumber Liquidators, Inc. et al
Memorandum Opinion re: Defendant's Motion for Summary Judgment on Plaintiffs' First Amended Representative Class Action Complaint. Signed by District Judge Anthony J. Trenga 6/20/2017. Associated Cases: 1:15-md-02627-AJT-TRJ, 1:15-cv-02 628-AJT-TRJ, 1:15-cv-02630-AJT-TRJ, 1:15-cv-02631-AJT-TRJ, 1:15-cv-02634-AJT-TRJ, 1:15-cv-02635-AJT-TRJ, 1:15-cv-02637-AJT-TRJ, 1:15-cv-02638-AJT-TRJ, 1:15-cv-02643-AJT-TRJ, 1:15-cv-02644-AJT-TRJ, 1:15-cv-02645-AJT-TRJ, 1:15-cv-02647-AJT-TRJ, 1:15-cv -02648-AJT-TRJ, 1:15-cv-02649-AJT-TRJ, 1:15-cv-02652-AJT-TRJ, 1:15-cv-02653-AJT-TRJ, 1:15-cv-02654-AJT-TRJ, 1:15-cv-02657-AJT-TRJ, 1:15-cv-02658-AJT-TRJ, 1:15-cv-02660-AJT-TRJ, 1:15-cv-02661-AJT-TRJ, 1:15-cv-02663-AJT-TRJ, 1:15-cv-02664-AJT-TRJ, 1:15 -cv-02665-AJT-TRJ, 1:15-cv-02666-AJT-TRJ, 1:15-cv-02667-AJT-TRJ, 1:15-cv-02668-AJT-TRJ, 1:15-cv-02670-AJT-TRJ, 1:15-cv-02671-AJT-TRJ, 1:15-cv-02673-AJT-TRJ, 1:15-cv-02674-AJT-TRJ, 1:15-cv-02675-AJT-TRJ, 1:15-cv-02676-AJT-TRJ, 1:15-cv-02679-AJT-TRJ, 1 :15-cv-02681-AJT-TRJ, 1:15-cv-02682-AJT-TRJ, 1:15-cv-02683-AJT-TRJ, 1:15-cv-02684-AJT-TRJ, 1:15-cv-02685-AJT-TRJ, 1:15-cv-02688-AJT-TRJ, 1:15-cv-02689-AJT-TRJ, 1:15-cv-02691-AJT-TRJ, 1:15-cv-02693-AJT-TRJ, 1:15-cv-02694-AJT-TRJ, 1:15-cv-02696-AJT-TRJ , 1:15-cv-02697-AJT-TRJ, 1:15-cv-02698-AJT-TRJ, 1:15-cv-02699-AJT-TRJ, 1:15-cv-02700-AJT-TRJ, 1:15-cv-02702-AJT-TRJ, 1:15-cv-02704-AJT-TRJ, 1:15-cv-02705-AJT-TRJ, 1:15-cv-02706-AJT-TRJ, 1:15-cv-02707-AJT-TRJ, 1:15-cv-02708-AJT-TRJ, 1:15-cv-02709-AJT- TRJ, 1:15-cv-02710-AJT-TRJ, 1:15-cv-02711-AJT-TRJ, 1:15-cv-02714-AJT-TRJ, 1:15-cv-02719-AJT-TRJ, 1:15-cv-02720-AJT-TRJ, 1:15-cv-02721-AJT-TRJ, 1:15-cv-02724-AJT-TRJ, 1:15-cv-02725-AJT-TRJ, 1:15-cv-02726-AJT-TRJ, 1:15-cv-02730-AJT-TRJ, 1:15-cv-02731-A JT-TRJ, 1:15-cv-02734-AJT-TRJ, 1:15-cv-02735-AJT-TRJ, 1:15-cv-02736-AJT-TRJ, 1:15-cv-02740-AJT-TRJ, 1:15-cv-02741-AJT-TRJ, 1:15-cv-02742-AJT-TRJ, 1:15-cv-02745-AJT-TRJ, 1:15-cv-02746-AJT-TRJ, 1:15-cv-02747-AJT-TRJ, 1:15-cv-02749-AJT-TRJ, 1:15-cv-0275 0-AJT-TRJ, 1:15-cv-02751-AJT-TRJ, 1:15-cv-02752-AJT-TRJ, 1:15-cv-02756-AJT-TRJ, 1:15-cv-02757-AJT-TRJ, 1:15-cv-02759-AJT-TRJ, 1:15-cv-02761-AJT-TRJ, 1:15-cv-02762-AJT-TRJ, 1:15-cv-02763-AJT-TRJ, 1:15-cv-02765-AJT-TRJ, 1:15-cv-02766-AJT-TRJ, 1:15-cv-0 2767-AJT-TRJ, 1:15-cv-02768-AJT-TRJ, 1:15-cv-02769-AJT-TRJ, 1:15-cv-02770-AJT-TRJ, 1:16-cv-02771-AJT-TRJ, 1:16-cv-02772-AJT-TRJ, 1:16-cv-02773-AJT-TRJ, 1:16-cv-02774-AJT-TRJ, 1:16-cv-02775-AJT-TRJ, 1:16-cv-02776-AJT-TRJ, 1:16-cv-02777-AJT-TRJ, 1:16-c v-02778-AJT-TRJ, 1:16-cv-02779-AJT-TRJ, 1:16-cv-02780-AJT-TRJ, 1:16-cv-02781-AJT-TRJ, 1:16-cv-02782-AJT-TRJ, 1:16-cv-02783-AJT-TRJ, 1:16-cv-02784-AJT-TRJ, 1:16-cv-02785-AJT-TRJ, 1:16-cv-02786-AJT-TRJ, 1:16-cv-02788-AJT-TRJ, 1:16-cv-02790-AJT-TRJ, 1:1 6-cv-02791-AJT-TRJ, 1:16-cv-02792-AJT-TRJ, 1:16-cv-02793-AJT-TRJ, 1:16-cv-02794-AJT-TRJ, 1:17-cv-02795-AJT-TRJ, 1:17-cv-02797-AJT-TRJ, 1:17-cv-02798-AJT-TRJ, 1:17-cv-02800-AJT-TRJ, 1:17-cv-02801-AJT-TRJ, 1:17-cv-02802-AJT-TRJ, 1:17-cv-02803-AJT-TRJ, 1:17-cv-02804-AJT-TRJ, 1:17-cv-02805-AJT-TRJ, 1:17-cv-02806-AJT-TRJ(rban, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
IN RE: LUMBER LIQUIDATORS
PRODUCTS MARKETING, SALES
PRACTICES AND PRODUCTS LIABILITY
MDL No. 1:15-md-2627 (AJT/TRJ)
This Document Relates to ALL Cases
(Defendant’s Motion for Summary Judgment on Plaintiffs’
First Amended Representative Class Action Complaint)
Presently pending before the Court is Defendant Lumber Liquidators, Inc.’s Motion for
Summary Judgment on Plaintiffs’ First Amended Representative Class Action Complaint [Doc.
No. 999]) (the “Motion”). 1
Upon consideration of the Motion, the memoranda in support thereof and in opposition
thereto, the arguments of counsel at the hearing held on September 13, 2016, and for the reasons
set forth below, the Motion will be GRANTED as to (1) all claims filed by Laura Washington;
(2) those claims filed by the Cloudens (New York plaintiffs), the Burkes (Illinois plaintiffs), and
Lila Washington (California plaintiff) for fraudulent concealment (Count I); (3) all claims filed
by all Plaintiffs for violations of the California False Advertising Law (Count III), the California
Legal Remedies Act (Count IV), and the Illinois Consumer Fraud and Deceptive Business
Practices Act (Count VIII); and (4) all Plaintiffs’ demands for declaratory relief (Count XII).
These Plaintiff were selected by Plaintiffs’ lead counsel to be Representative Plaintiffs in the First Amended
Representative Class Action Complaint [Doc. No. 562] (the “FAC”), which was filed pursuant to Pretrial Order No.
5 [Doc. No. 528]. The FAC does not displace any of the underlying complaints that have been referred to the Court
in this MDL. However, the rulings with respect to the FAC will apply to all claims asserted in each Plaintiff’s
complaint unless a Plaintiff shows that a claim is materially different legally or factually from those considered in
the FAC. See Pretrial Order No. 1 [Doc. No. 10] at 20 (“The Court intends to decide such motions on a
representative basis and apply its decision on a representative motion to similar motions in all other cases, except to
the extent that different cases or classes of cases present materially different legal issues.”).
The Motion is otherwise DENIED, and the following claims will remain for adjudication: (1)
claims filed by Lila Washington, the Ronquillos, and Mr. Balero (California plaintiffs) and the
Florida and Texas plaintiffs for fraudulent concealment (Count I); (2) claims filed by Lila
Washington, the Ronquillos, and Mr. Balero (California plaintiffs) under the California
Unlawful, Unfair, or Fraudulent Business Acts and Practices Law (Count II); (3) the Brandts’
(Florida plaintiffs) claims under the Florida Deceptive and Unfair Trade Practices Act (Count
V); (4) the Parnellas’ (Texas plaintiffs) claims under the Texas Deceptive Trade Practices Act
(Count VII); (5) the Cloudens’ (New York plaintiffs) claims under New York General Business
Law Section 349 (Count VI); (6) all Plaintiffs’ claims for breach of implied warranty and
violations of the Magnuson-Moss Warranty Act (Counts IX-X); and (7) the Brandts’ (Florida
plaintiffs) claims for negligent misrepresentation (Count XI).
Claims and Procedural History
Plaintiffs collectively have asserted the following twelve causes of action in the FAC. 2
Count I: fraudulent concealment (by all Plaintiffs and all classes) (FAC ¶¶ 156-64);
Count II: violation of the California Unlawful, Unfair, or Fraudulent Business Acts and
Practices Law (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq. (by the Washingtons
and Ronquillos, Mr. Balero, and the California class) (id. ¶¶ 165-76);
Count III: violation of the California False Advertising Law (“FAL”), Cal. Bus. & Prof.
Code § 17500, et seq. (by the Washingtons and Ronquillos, Mr. Balero, and the
California class) (id. ¶¶ 177-82);
Count IV: violation of the California Consumer Legal Remedies Act (“CLRA”), Cal.
Civ. Code § 1750, et seq. (by the Washingtons and Ronquillos, Mr. Balero, and the
California class) (id. ¶¶ 183-93);
The Plaintiffs seek class certification with respect to each of these counts pursuant to Federal Rule of Civil
Procedure 23(b)(2) and (b)(3), which the Court will consider as to any remaining claims in accordance with the
outstanding litigation schedule. See Pretrial Order No. 8 [Doc. No. 722] at 25 (deferring consideration of Plaintiffs’
class action allegations, noting that “a definitive ruling on this issue is premature and [the Court] will defer ruling
until it takes up [P]laintiffs’ affirmative motion to certify this case as a class action, not only under Rule 23(b)(2) but
also under Rule 23(b)(3).”).
Count V: violation of the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat.
§ 501.201, et seq. (by the Brandts and the Florida class) (id. ¶¶ 194-202);
Count VI: violation of N.Y. Gen. Bus. Law § 349, et seq. (by the Cloudens and the New
York class) (id. ¶¶ 203-16);
Count VII: violation of the Texas Deceptive Trade Practices Act, Tex. Bus. & Com. Code
§ 17.50, et seq. (by the Parnellas and the Texas class) (id. ¶¶ 217-26);
Count VIII: violation of the Illinois Consumer Fraud and Deceptive Business Practices
Act, 815 Ill. Comp. Stat. § 505/1, et seq. (by the Burkes and the Illinois class) (id. ¶¶ 22738);
Count IX: breach of implied warranty (by all Plaintiffs and all classes) (id. ¶¶ 239-47);
Count X: violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq.
(“MMWA”) (by all Plaintiffs and all classes) (id. ¶¶ 248-58);
Count XI: negligent misrepresentation (by the Brandts and the Florida class 3) (id. ¶¶ 25962); and
Count XII: declaratory relief (by all Plaintiffs and all classes) (id. ¶¶ 266-67).
On October 7, 2015, Defendant Lumber Liquidators, Inc. (“Lumber Liquidators” or
“LL”) filed a “Motion to Dismiss First Amended Representative Class Action Complaint and to
Strike Plaintiffs’ Request for Injunctive Relief Classes” [Doc. No. 597] (the “Motion to
Dismiss”). On December 1, 2015, the Court held a hearing, and on December 11, 2015, it
dismissed the claims for negligent misrepresentation filed in Count XI on behalf of all Plaintiffs
other than Ryan and Kristin Brandt and the Florida class and otherwise denied the Motion to
On August 1, 2016, Defendant filed a motion for summary judgment, which is now
before the Court. Briefly summarized, Lumber Liquidators seeks summary judgment on
Plaintiffs’ claims principally on the grounds that (1) LL did not violate the Airborne Toxic
Control Measure to Reduce Formaldehyde Emissions from Composite Wood Products
Count XI was initially asserted on behalf of all Plaintiffs and all classes, but the Court dismissed the claims for
negligent misrepresentation (Count XI) on behalf of all Plaintiffs other than the Brandts and the Florida class.
(“ATCM”), and therefore did not violate any state consumer protection laws or breach any
warranties, (2) Plaintiffs lack standing to sue because they did not rely on any sufficiently
identified misrepresentations and were not injured in any legally cognizable way as a result, and
(3) Plaintiffs are not entitled to the relief sought, including declaratory or injunctive relief.
Unless otherwise indicated, the following facts are undisputed or, where they are
disputed, viewed most favorably to the Plaintiffs, as the non-moving party:
Lumber Liquidators’ Business and Applicable Regulations
Defendant Lumber Liquidators is a retail seller of certain composite wood-based laminate
products, including the Chinese-manufactured composite wood flooring that is the subject of this
litigation (the “Products”), which it distributed, marketed, and sold in California, Florida,
Illinois, New York, and Texas, where the representative Plaintiffs purchased the Products, as
well as in other states. Defendant’s Memorandum in Support of its Motion for Summary
Judgment [Doc. No. 1000] (“Def.’s Mem.”) ¶ 1.
The State of California has established the California Air Resources Board (“CARB”).
CARB lists formaldehyde as a toxic air contaminant with no safe level of exposure and has set
comprehensive and stringent formaldehyde emission standards, which serve as a model for
national standards considered by, among other regulatory entities, the United States
Environmental Protection Agency. Id. No other state or federal agency regulates formaldehyde
in laminate flooring or MDF cores. Def.’s Mem. ¶ 3.
In April 2007, CARB approved the ATCM, which appears publicly as Cal. Code Regs.
tit. 17, § 93120. The ATCM became effective in January 2009 and sets limits for decreasing
formaldehyde levels in two phases. The second phase standard, which was in operation when
the events described in this litigation took place, states that regular medium density fiberboard
(“MDF”) and “thin” MDF products, such as those at issue here, should emit no more than 0.11
ppm and 0.13 ppm of formaldehyde, respectively. ATCM § 93120.2. The CARB regulations
also specify testing methods that may be used to determine whether products meet the CARB
emissions limits. Although CARB standards only apply to products sold in California, Def.’s
Mem. ¶ 3, Defendant represented nationwide, both on its website and on its packaging, that its
Products met CARB standards. FAC ¶¶ 9, 13; Defendant’s Answer [Doc. No. 599] (“Def.’s
Answer”) 3-4 (not contesting the allegations).
Formaldehyde Testing Results
In October 2013, CARB notified Lumber Liquidators that certain tested Products had
failed CARB’s emissions testing, including some Products that were eventually resold to
Plaintiffs. Plaintiffs’ Memorandum in Opposition to Defendant’s Motion for Summary
Judgment [Doc. No. 1017] (“Pls.’ Mem. Opp’n”) ¶ 20. Defendant then retained a separate
laboratory, Benchmark International, which separately confirmed that at least several of the
Products exceeded CARB’s standards. Nevertheless, Defendant did not modify its website
following CARB’s and Benchmark’s findings. Id. ¶ 21. However, on the same day that CARB
notified Lumber Liquidators of further CARB test results indicating impermissible formaldehyde
levels (May 7, 2015), Lumber Liquidators suspended all sales of its Products. Id. ¶ 22.
On March 1, 2015, the CBS television news program 60 Minutes presented a segment on
Lumber Liquidators’ Products, which included allegations that the Products contained dangerous
levels of formaldehyde. Def.’s Mem. ¶ 5. Responding to the 60 Minutes segment, Lumber
Liquidators’ CEO stated in a letter dated March 2, 2015 posted on its website that its products
are “100% safe” and that Lumber Liquidators “compl[ies] with applicable regulations regarding
our products, including California standards for formaldehyde emissions for composite wood
products . . . .” FAC ¶ 45; see Def.’s Answer 8-9 (not contesting the allegations). The parties
dispute to what extent Lumber Liquidators and its leadership knew about the levels of
formaldehyde in its Products prior to the 60 Minutes report. Nevertheless, the Plaintiffs have
produced evidence sufficient, when viewed most favorably to them, for a fact finder to
reasonably conclude that Lumber Liquidators, including its top management, were on notice that
certain of its Products were not CARB compliant as advertised. 4
In March 2016, following the conclusion of a CARB investigation into Lumber
Liquidators’ products and practices, CARB and Lumber Liquidators agreed to a settlement. See
Defendant’s Reply Memorandum in Support of its Motion for Summary Judgment [Doc. No.
1028] (“Def.’s Reply”) 3, Pls.’ Mem. Opp’n ¶ 23. Although Lumber Liquidators admitted no
liability or wrongdoing, CARB stated in its announcement of the settlement that “ARB testing
showed exceeded state formaldehyde limits, and . . . Lumber Liquidators failed to take
reasonable prudent precautions to ensure those products met such limits designed to protect
public health.” Pls.’ Mem. Opp’n ¶ 23. 5
The party seeking summary judgment has the initial burden to show the absence of a
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). A genuine issue of material
fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving
For example, on March 12, 2015, CBS News published a story on its website reporting that then-CEO Robert
Lynch, on a conference call with investors, admitted that CARB tests on Lumber Liquidators’ samples had revealed
“high levels of formaldehyde” prior to the 60 Minutes broadcast. FAC ¶ 49; see Def.’s Answer 9 (not contesting the
The Consumer Product Safety Commission (“CPSC”) separately found, based on studies done by the Centers for
Disease Control (“CDC”), that the Chinese laminates could contribute between six and thirty cases of cancer per
year for every 100,000 people exposed. The CPSC did not demand a recall, but Defendant agreed to forego selling
all of the Chinese laminates, as previously described. Pls.’ Mem. Opp’n ¶¶ 25-26.
party.” Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1984). Once a motion for summary
judgment is properly made and supported, the opposing party has the burden of showing that a
genuine dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87
(1986). To defeat a properly supported motion for summary judgment, the non-moving party
“must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S.
at 247-48 (“[T]he mere existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment; the requirement is that
there be no genuine issue of material fact.”). Whether a fact is considered “material” is
determined by the substantive law, and “[o]nly disputes over facts that might affect the outcome
of the suit under the governing law will properly preclude the entry of summary judgment.” Id.
at 248. The facts shall be viewed, and all reasonable inferences drawn, in the light most
favorable to the non-moving party. Id. at 255; see also Lettieri v. Equant Inc., 478 F.3d 640, 642
(4th Cir. 2007).
ANALYSIS OF ISSUES APPLICABLE TO MULTIPLE CLAIMS
Defendant seeks dismissal of many of the Plaintiffs’ claims in the First Amended
Complaint based on the following issues:
Defendant challenges the Plaintiffs’ standing to assert their claims principally on the
grounds that they have not sustained sufficient injury in fact. More specifically, Defendant
contends that Plaintiffs’ theory of injury and damages, the “price distortion theory” or “price
inflation theory,” is not a constitutionally sufficient theory of injury that can establish Article III
standing and that, in any event, Plaintiffs have failed to present evidence sufficient to establish
damages even under that theory. For the reasons stated below, the Court concludes that
Plaintiffs have standing under the price distortion theory and that, because discovery as to
Plaintiffs’ individualized damages has been stayed pending the Court’s ruling on Defendant’s
summary judgment motion and class certification issues, 6 Defendant may not obtain summary
judgment at this point based on a failure to present evidence sufficient to establish a specific
amount of damages under the price distortion theory.
At the summary judgment stage, in order to establish standing, the plaintiff must set forth
specific facts to demonstrate that (1) he or she has “suffered an ‘injury in fact’ . . . which is (a)
concrete and particularized . . . and (b) ‘actual or imminent, not conjectural or hypothetical”; (2)
there exists “a causal connection between the injury and the conduct complaint of”; and (3) “it
must be ‘likely,’ as opposed to merely ‘speculative,’ that the injury will be ‘redressed by a
favorable decision.’” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (citations
Plaintiffs’ price distortion theory of injury is based on the claim that “if Defendant had
told the truth about its Chinese-made laminates, it could not have sustained the prices it
charged.” Pls.’ Mem. Opp’n 21. Under that theory, Plaintiffs are entitled to recover for the
difference in value between the Products as represented and what they actually received. As to
the measure of damages, Plaintiffs assert that “[o]nce the truth came out about the dubious
reliability of the CARB certifications, the products’ value plummeted to zero, as it was pulled
from the market, never to be sold again.” 7 Pls.’ Mem. Opp’n 22. Thus, the essence of their
claim is that they overpaid for the flooring they purchased based on Defendant’s
misrepresentations and that, had LL not provided the various assurances concerning the
See Doc. No. 592.
Although particular counts of Plaintiffs’ complaint also reference “consequential damages” such as the cost to
remove the Products and install new flooring, see, e.g., FAC ¶¶ 247, 258, Plaintiffs have not raised those potential
damages on summary judgment and, therefore, appear to have abandoned that theory of damages.
formaldehyde content of the flooring, it could not have obtained the prices it was charging. In
other words, the Products would have had to have been priced lower and Plaintiffs would have,
in turn, paid a lower price than they did.
Defendant challenges the price distortion theory, and Plaintiffs’ standing based on it, on
the grounds that there is no causal link between Defendant’s actions and any injury they allege.
More specifically, Defendant contends that in the absence of reliance on the alleged
misrepresentations, Plaintiffs’ price distortion theory is not sufficiently anchored in an injury in
fact to confer standing. 8 In short, Defendant essentially conflates the issue of reliance with
Article III standing.
The price distortion theory has various articulations, but it appears in substance to be
simply a benefit-of-the-bargain theory and measure of damages that is not materially different
from a generally accepted breach of warranty measure of damages. See Carriuolo v. Gen.
Motors Co., 823 F.3d 977, 986-87 (11th Cir. 2016); U.C.C. § 2-714 (“The measure of damages
for breach of warranty is the difference at the time and place of acceptance between the value of
the goods accepted and the value they would have had if they had been as warranted, unless
special circumstances show proximate damages of a different amount.”). Neither the U.S.
Supreme Court nor the Fourth Circuit has ruled on whether the price distortion theory is
constitutionally sufficient to confer standing. The case law is otherwise mixed: while some of
the cases Defendant cites support its position,9 others it cites either support Plaintiffs’ position or
Reliance as an element of the Plaintiffs’ various claims is dealt with infa in Section III(B), while the Court deals in
this section with the more generalized notion that Plaintiffs have not shown sufficient particularized injury to confer
See In re Activated Carbon-Based Hunting Clothing Mktg. and Sales Prices Litig., No. 09-md-2059, 2010 WL
3893807, at *2 (D. Minn. Sept. 29, 2010) (Although “plaintiffs might be able to bring a class action in state court
without such evidence, they were nevertheless required to show that each class member was injured by the
defendant’s conduct—that is, relied upon the defendant’s misrepresentations—in order to have Article III standing
in federal court.”); Williams v. Purdue Pharma Co., 297 F. Supp. 2d 171, 177 (D.D.C. 2003) (finding plaintiffs
do not relate precisely to the issue. 10 The one circuit court that has dealt with the price distortion
theory has found it sufficient to confer standing.
In Carriuolo, the Eleventh Circuit affirmed the district court’s grant of class certification
under the Florida Deceptive and Unfair Trade Practices Act where the plaintiffs alleged that they
had overpaid for cars based on the defendant’s misrepresentations about the cars’ safety through
a sticker affixed to the cars. 823 F.3d at 986-87. Even though many of the named plaintiffs had
not relied on this misrepresentation, the Court nevertheless concluded that they had Article III
standing. The Court reasoned:
As the district court recognized here, a manufacturer’s misrepresentation
may allow it to command a price premium and to overcharge customers
systematically. Even if an individual class member subjectively valued the
vehicle equally with or without the accurate [safety label], she could have
suffered a loss in negotiating leverage if a vehicle with perfect safety ratings is
worth more on the open market. As long as a reasonable customer will pay more
for a vehicle with perfect safety ratings, the dealer can hold out for a higher price
than he would otherwise accept for a vehicle with no safety ratings. Thus, for
example, a dealer would likely not discount a pickup truck with superior towing
capacity for a customer with only a suburban commute, since most customers
willingly pay more for that feature. Nor would a dealer be likely to lower the
price for a hearing impaired customer who demands to pay less for a vehicle
equipped with satellite radio, even though she might value it equally to a vehicle
equipped with no audio capabilities. Obviously, prices are determined in
substantial measure according to market demand. Thus, because a vehicle with
three perfect safety ratings may be able to attract greater market demand than a
vehicle with no safety ratings, the misleading sticker arguably was the direct
cause of actual damages for the certified class even if members individually value
safety ratings differently.
lacked standing where complaint “assert[ed] that defendants engaged in false and misleading advertising, [but did]
not plead that the [plaintiffs] were in any way deceived—or even saw—any of that advertising”).
See, e.g., Campbell ex rel. Equity Units Holders v. Am. Int’l Grp., Inc., 86 F. Supp. 3d 464, 469-470 (E.D. Va.
2015) (Brinkema, J.) (holding that a plaintiff did not have standing to sue but not discussing the validity for standing
purposes of price distortion theory or benefit-of-the-bargain theory); Estrada v. Johnson & Johnson, No. 2:14-cv01051-TLN-EFB, 2015 WL 1440466, at *3 (E.D. Cal. Mar. 27, 2015) (“‘Overpaying for goods or purchasing goods
a person otherwise would not have purchased based upon alleged misrepresentations by the manufacturer would
satisfy the injury-in-fact and causation requirements for Article III standing.’ . . . Article III standing may also be
satisfied by allegations that a plaintiff would not have purchased the product had she known about the misbranding.”
Id. at 987. In other words, “[a product] that the manufacturer knows to be safe is more valuable
than a vehicle that the manufacturer perhaps anticipates will later be declared safe.” Id.
Here, the evidence is sufficient for a fact finder to conclude that Lumber Liquidators
knowingly misrepresented throughout a nationwide marketplace that its flooring was CARB
compliant. Plaintiff’s theory of injury is that these misrepresentations allowed LL to charge a
higher price for its Product than the Plaintiffs would have otherwise had to pay. As other courts
have found, if Plaintiffs can present facts and expert opinion to adequately support that claim,
Plaintiffs have Article III standing for the purposes of their federal claims and for the Brandts’
claims under the FDUTPA, regardless of whether any particular Plaintiff relied on the
misrepresentation, though reliance remains an element or is otherwise material to many of
Plaintiffs’ specific causes of action.
Many, but not all, of Plaintiffs’ claims require that they actually relied on Lumber
Liquidators’ alleged misrepresentations or that they would have known about allegedly omitted
information that LL was required to disclose, had Lumber Liquidators, in fact, disclosed it.
Although the FAC alleges reliance in some fashion by each of the named Plaintiffs, 11 Defendant
contends that Plaintiffs cannot recover under any claim that requires any form of reliance since
“the evidence shows that no Plaintiff relied on the CARB-compliance label.” Def.’s Mem. 1.
There are some variations in the definitions of reliance as between state and federal law
and among the states themselves. 12 In any event, for the most part, the record is clear concerning
See generally ¶¶ 69-80 (Lila and Laura Washington); ¶¶ 81-90 (Maria and Romualdo Ronquillo); ¶¶ 91-99
(Joseph Balero); ¶¶ 100-15 (Kristin and Ryan Brandt); ¶¶ 116-27 (Sarah and Devin Clouden); ¶¶ 128-36 (Kevin and
Julie Parnella); ¶¶ 137-43 (Tanya and Shawn Burke).
To the extent any state differences or rebuttable presumptions concerning reliance may affect the Court’s ruling
on the various claims that Plaintiffs allege, the Court will consider those differences within the context of specific
claims, discussed infra.
whether the Plaintiffs actually relied on the alleged misrepresentations. In that regard, with the
exception of the Brandts (FL), 13 none of the Plaintiffs saw or heard any statements concerning
formaldehyde or CARB compliance on Defendant’s product packaging, website, or anywhere
else before he or she purchased it. See generally Def.’s Mem. ¶¶ 7-37. Many Plaintiffs did not
know what CARB or the ATCM were, either at the time of purchase or when deposed. Some,
such as Plaintiffs Lila Washington (CA), the Ronquillos (CA), Joseph Balero (CA), and the
Parnellas (TX), have never claimed they relied on any of Lumber Liquidators’ representations.
Some have testified explicitly that they did not rely on any representations concerning
formaldehyde or CARB compliance at the times of their purchases. See id. ¶¶ 27-28, 35
(pertaining to at least one of the Cloudens (NY) and Burkes (IL)); Dep. Tr. for Pl. Sarah Cloud at
81:10-13; Dep. Tr. for Pl. Devin Cloud at 128:9-12; Dep. Tr. for Pl. Shawn Burke at 151:7-16,
290:7-14. All Plaintiffs also agreed that their floors have functioned successfully as floors, and
none claims that he or she was made ill as a result of the Products or suffered any form of
As to the Brandts, there is substantial evidence that they also did not actually rely on the
alleged misrepresentations. Kristin Brandt did not see the CARB label on the box before
purchasing the flooring and did not research the flooring’s CARB compliance. She did not know
what CARB meant when she bought the flooring and only heard about it when she watched 60
Minutes. She had not heard of the ATCM at the time of her deposition and does not try to
purchase products that comply with California standards. On their plaintiff fact sheets, the
The Brandts’ fact sheets, which they swore to under penalty of perjury, made no mention of formaldehyde, safety,
or state-law compliance being seen or discussed in any manner. Def.’s Mem. ¶ 23. When deposed, however, each
of the Brandts contradicted his or her previous responses and indicated that product safety did factor into the
decision to purchase Lumber Liquidators’ flooring and that they were pleased to know that Defendant’s product
complied with safe formaldehyde levels. Id. ¶ 24.
Brandts made no reference to being aware in any way of formaldehyde, safety, or state-law
compliance. Likewise, Ryan Brandt knew nothing about CARB at the time of his purchase and
only learned about CARB and the ATCM when he became involved in this litigation. He did not
remember seeing any Lumber Liquidators advertisements and as a matter of practice or routine,
did not research whether products comply with regulatory standards before he buys them and did
not do so with regards to his flooring purchase, even though he knew that flooring generally
On the other hand, when deposed, Kristin Brandt said that she researched product safety
before purchasing her flooring because she was pregnant at the time and was preparing a nursery
for their child and, during that search, saw something on Lumber Liquidators’ website that
satisfied her that the Products complied with California safety laws. Ryan Brandt testified that a
Lumber Liquidators sales associate told them the flooring complied with all state laws and was
safe before they purchased it. Because there is some evidence that the Brandts relied on the
alleged misrepresentation, there exists a genuine issue of material fact in that regard, which is
centrally bound up with credibility determinations for the fact finder.
For the above reasons, the evidence is insufficient as a matter of law to establish that any
Plaintiff except the Brandts (FL) actually relied on the alleged misrepresentations.
Some of Plaintiffs’ claims require them to demonstrate that the misrepresentations or
omissions they allege Lumber Liquidators made were material. In that regard, Defendant claims
that its alleged nondisclosure was not material as to any Plaintiff and that CARB non-compliance
could not possibly be material to any consumer outside of California. Def.’s Mem. 20.
Last term, the United States Supreme Court clarified that the “materiality requirement
descends from ‘common law antecedents.’” Universal Health Servs., Inc. v. United States ex rel.
Escobar, 136 S. Ct. 1989, 2002 (2016) (quoting Kungys v. United States, 485 U.S. 759, 769
(1988)). The Court explained:
Under any understanding of the concept, materiality “look[s] to the effect on the
likely or actual behavior of the recipient of the alleged misrepresentation.” 26 R.
Lord, Williston on Contracts § 69:12, p. 549 (4th ed. 2003) (Williston). In tort
law, . . . a “matter is material” in only two circumstances: (1) “[if] a reasonable
man would attach importance to [it] in determining his choice of action in the
transaction”; or (2) if the defendant knew or had reason to know that the recipient
of the representation attaches importance to the specific matter “in determining
his choice of action,” even though a reasonable person would not. Restatement
(Second) of Torts § 538, at 80.
Universal Health Servs., Inc., 136 S. Ct. at 2002-03. In elaborating on “materiality,” the Court
cited with approval a treatise that appears to incorporate into materiality essentially a “but for”
element 14 and a state court decision that viewed materiality in terms of whether a
misrepresentation “went to the very essence of the bargain.” 15 Whether a reasonable consumer
would find information to be material is often viewed as a question of fact, reserved for the trier
of fact, and the omitted information need not be the sole or even decisive reason for the
transaction. See In re Tobacco II Cases, 207 P.3d 20, 39-40 (Cal. 2009). But see United States
ex rel. Berge v. Board of Trustees of the Univ. of Ala., 104 F.3d 1453, 1460 (4th Cir. 1997)
(finding that, “in the context of the civil False Claims Act the determination of materiality,
although partaking of the character of a mixed question of fact and law, is one for the court”).
Plaintiffs claim that “the true content of formaldehyde” constitutes material information
because it “directly impact[s] the safety of the flooring products. . . . Whether composite flooring
See Universal Health Servs., Inc., 136 S. Ct. at 2003 n.5 (“[A] misrepresentation is material if, had it not been
made, the party complaining of fraud would not have taken the action alleged to have been induced by the
misrepresentation.” (quoting Williston § 69:12 at 550)).
Universal Health Servs., Inc., 136 S. Ct. at 2003 n.5 (quoting Junius Constr. Co. v. Cohen, 178 N.E. 672, 674
(N.Y. 1931) (internal quotation marks omitted)).
was manufactured with levels of formaldehyde that can pose significant health risks is a material
safety concern.” FAC ¶ 159. On the one hand, Plaintiffs argue that because Defendant so
prominently advertised its compliance with CARB’s standards—even outside of California—
Defendant surely believed it to be a material consideration for consumers. Plaintiffs point to
Defendant’s decision to destroy its entire supply of Products because of reports of excessive
formaldehyde emissions as further confirmation of materiality. In response, Defendant contends
that “[i]f people who ultimately chose to sue based on CARB compliance were unconcerned with
CARB compliance when they shopped for flooring, then ordinary citizens (especially outside of
California) do not commonly consider such information important to their purchasing decisions.”
Def.’s Mem. 22.
While certainly related, “materiality” and “reliance” are separate concepts. 16 Even
though a Plaintiff may not have actually relied on Defendant’s misrepresentation, he or she may
still have attached significance to the formaldehyde levels in the Products and, in fact, Plaintiffs’
depositions indicate that most of them did. In that regard, Lumber Liquidators specifically
advertised that its Products complied with CARB, and its CEO repeated this safety assurance in a
letter posted prominently on the company’s website following the 60 Minutes special. The
CARB label itself serves as an indication in every place where the Products were marketed that
they contained no more than a set amount of formaldehyde. That Lumber Liquidators itself
recognized that consumers would likely be influenced by assurances concerning the levels of
formaldehyde is reflected in its explicit disclosure on the label that its solid hardwood products
(as opposed to its laminates like those at issue in this litigation) contained “NO formaldehyde.”
The Court recognizes in this regard that the factual basis for any required demonstration of “reasonable reliance”
or “inferred reliance” and materiality are often indistinguishable. See also note 24, infra.
For all of these reasons, Plaintiffs have therefore presented sufficient evidence to satisfy any
materiality requirement within Plaintiffs’ claims.
Whether Lumber Liquidators’ Products Exceeded ATCM Formaldehyde
Lumber Liquidators claims that there is insufficient evidence to establish that the
Products exceeded ATCM formaldehyde emissions limits because (1) only CARB can determine
if a product violates the ATCM, and it has not done so with respect to most of the Plaintiffs’
Products; and (2) even if ATCM non-compliance can be established through privately retained
third party testing, Plaintiffs have failed to sufficiently demonstrate through reliable testing that
Plaintiffs’ Products exceeded allowable levels of emissions under the ATCM.
Whether CARB Has the Exclusive Ability to Determine an ATCM
Throughout this litigation, Defendant has claimed that only CARB—not third party
certifiers and not a jury—can determine whether Lumber Liquidators’ Products contained
formaldehyde emissions in excess of those permitted under the ATCM. Defendant contends in
that regard that because CARB utilizes an undisclosed “uncertainty factor” in assessing whether
emissions levels exceed permissible ATCM limits, no one other than CARB can determine
whether those limits have been exceeded. Based on these premises, Defendant argues that since
there is no evidence that CARB ever tested the specific wood products in most of the Plaintiffs’
homes and that, in the two homes where it did (the Cloudens’ and the Ronquillos’), CARB never
declared an ATCM violation, Plaintiffs have failed to establish a genuine issue of material fact as
to whether the Plaintiffs’ particular products violated the ATCM. Def.’s Mem. 12-13.
The Court concludes that a Plaintiff is not required to establish excessive formaldehyde
emissions either through CARB-conducted testing or a CARB-declared violation. First, there is
nothing in the ATCM that confers on CARB the exclusive ability to determine whether a product
emits excessive formaldehyde, although only CARB can declare a violation of the ATCM for the
purposes of administrative sanctions. See Cal. Health & Safety Code § 43024 (2010). Rather, as
the Court explained in Pretrial Order No. 8, under ATCM Section 93120.2(a)(4), a product “does
not comply” with applicable emission standards if “[a] finished good contains any composite
wood product which does not comply with the applicable emission standards in Table 1, based
on the criteria set forth in . . . [ATCM Section 93120.2(a)(3)].” ATCM Section 93120.2(a)(3), in
turn, states that an emissions violation occurs if “[a] composite wood product produced by a
manufacturer is tested at any time after it is manufactured, using either the compliance test
method specified in section 93120.9(a) or the enforcement test method specified in section
93120.9(b), and is found to exceed the applicable emissions standard specified in Table 1 . . . .”
(Emphasis added). Even if a marginal level of formaldehyde emissions above the published
limits were necessary to establish an ATCM violation of CARB limits in order to account for
testing inaccuracies, as CARB apparently requires through its use of the undisclosed “uncertainty
factor,” Defendant implicitly concedes that levels substantially in excess of the ATCM limits
would exceed any necessary “uncertainty factor,” as evidenced by its resolution of the
investigation by the CPSC even though the CPSC’s findings were based on CDC studies – not on
CARB testing results. In sum, none of Plaintiffs’ various causes of action requires that CARB
itself test the Products or officially declare an ATCM violation; 17 and Plaintiffs’ testing
Even were CARB testing required to some degree, the evidence in this record, viewed most favorably to the
Plaintiffs, is sufficient to find that any such requirement is satisfied. At least in part, CARB testing played a role in
causing Defendant to remove all of its Products from the market. In that regard, Defendant itself treated its Chinesemade laminate Products as a single grouping and did not distinguish between vendors or past CARB inspections
when it removed the Products from the market in May 2015. Similarly, Lumber Liquidators’ resolution with the
CPSC included a promise to never sell any of its Products again – not just Products from particular suppliers.
Finally, in support of its Motion, Defendant has not produced any evidence of a material difference as to
formaldehyde level in the Products based on suppliers.
evidence, if admissible, is therefore probative of whether, as a matter of fact, Lumber
Liquidators’ Products contained more formaldehyde than Defendant publicly represented. 18
Whether Plaintiffs Have Qualifying Evidence of an ATCM Violation
Lumber Liquidators contends that even if a violation of ATCM Section 93120.2(a) can be
demonstrated through third party testing, Plaintiffs have failed to present evidence of excessive
emissions levels through an appropriate and reliable testing method. Plaintiffs claim that their
testing, as well as testing conducted by CARB and Defendant itself, establishes that their
personal flooring had formaldehyde emission levels in excess of those allowed under the ATCM.
Plaintiffs contend that Defendant also violated its obligation under ATCM Section 93120.8(b) to
“take reasonable prudent precautions to ensure that the composite wood products and composite
wood products contained in finished goods . . . comply with the emission standards specified in
For the purposes of establishing that the Products’ emission levels exceeded ATCM
limits, Plaintiffs have used the ASTM D6007 compliance test method, referenced in ATCM
Section 93120.9(a), with test samples prepared in accordance with CARB’s Standard Operating
Procedure for Finished Good Test Specimen Preparation Prior to Analysis of Formaldehyde
Emissions from Composite Wood Products (the “CARB SOP”). The CARB SOP deals with
how an MDF core sample should be extracted for testing from a finished product. For that
reason, it has been referred to as “deconstructive testing,” even though its only purpose is to
obtain a sample core for testing.
Defendant filed a Motion to Exclude Expert Reports and Testimony of Francis J. Offermann, Steven A. Verhey,
and David E. Jacobs as Related to Deconstructive Testing [Doc. No. 1005], and Plaintiff filed Rule 72 objections
[Doc. No. 1016] to the Court’s order issued by Magistrate Judge Thomas Rawles Jones, Jr. granting Defendant’s
motion to strike certain portions of Steven A. Verhey’s expert report and for Rule 37 sanctions [Doc. No. 1015].
The Court denied Defendant’s motion [Doc. No. 1093] and sustained in part and overruled in part Plaintiffs’ Rule 72
Objections [Doc. No. 1092].
Defendant attacks Plaintiffs’ testing on two grounds: (1) that the CARB SOP applies only
to the preparation of the samples to be tested by CARB according to the enforcement test method
for finished goods set forth in ATCM Section 93120.9(c) and not to the compliance test method
under ATCM Section 93120.9(a); and (2) that the CARB SOP does not produce a sample core
that can accurately or reliably measure formaldehyde emission levels as they existed when the
core was incorporated into the finished product, the critical point in time for the purpose of
measuring ATCM compliance.
Under ATCM Section 93120.9(a), authorizing the compliance test method, “[c]ompliance
with the emission standards for . . . MDF in section 93120.2(a) . . . shall be demonstrated by
conducting product emissions tests, verified by third party certification as specified in section
93120.4.” (Emphasis added). ATCM Section 93120.1(41) defines a “third party certifier” as “an
organization or entity approved by the [ARB] Executive Officer that: (A) verifies the accuracy of
the emission test procedures and facilities used by manufacturers to conduct formaldehyde
emission tests, (B) monitors manufacturer quality assurance programs, and (C) provides
independent audits and inspections.” ATCM Section 93120.4, titled “Third Party Certifiers,” (1)
provides that “[a]ll third party certifiers must be approved in writing by the ARB,” ATCM
§ 93120.4(a)); (2) sets forth the approval process for third party certifiers, id. § 93120.4(b); and
(3) references the requirements for third party certifiers set forth in Section 93120.12, Appendix
3, id. § 93120.4(c). Section 93120.12, Appendix 3, in turn, requires, inter alia, that a third party
certifier “[u]se laboratories and primary or secondary methods for conducting testing that are
certified by an accreditation body that is a signatory to the International Laboratory
Accreditation Cooperation Mutual Recognition Arrangement (ILAC, 2000)” and that the
“formaldehyde test methods used by the laboratory shall appear in its scope of accreditation.”
Id. § 93120.12, App. 3(b)(F). ATCM Section 93120.9(a), authorizing the compliance test
method used by Plaintiffs, does not otherwise impose any specific testing requirements or
methods, and neither the compliance test method specified under ATCM Section 93120.9(a) nor
the CARB SOP, by its terms, appears to prohibit the use of an MDF core sample in accordance
with the CARB SOP. Rather, the compliance test method in effect delegates to third party
certifiers the ability to determine compliance with ATCM emission standards based on
recognized testing methods that appear in its accreditation. 19 For these reasons, the Court rejects
Defendant’s contention that formaldehyde emission levels may not be determined through the
compliance method using an MDF core sample obtained from a finished product in accordance
with the CARB SOP. As reflected in the Court’s ruling on Defendant’s motion to exclude
Plaintiffs’ expert testimony, the Court also rejects the argument that use of the CARB SOP
interjects into the compliance test method a level of unreliability that precludes the admissibility
of those test results under the Daubert analysis. [Doc. No. 1093.]
Based on the above rulings, Plaintiffs’ testing evidence is sufficient for a fact finder to
reasonably conclude that each of the Products Plaintiffs purchased contained a level of
formaldehyde above the permitted limits prescribed by CARB and the ATCM. Each Plaintiff
had his or her own flooring tested by various third party certifiers, both before and during
discovery, and each Plaintiff’s flooring exceeded the 0.11 ppm limit established by the ATCM,
including some that were 300% of that limit, such as the Burkes (IL). Pls.’ Mem. Opp’n 25.
Moreover, the laboratory that Defendant itself hired, Benchmark International, found that some
of LL’s Products exceeded CARB standards 20 and also failed CARB’s testing in October 2013,
including testing on some of the same laminates as those sold to the Plaintiffs. Additionally, as
Defendant has not challenged Plaintiffs’ testing on the grounds that the third party certifiers’ accreditation was
insufficient for the purposes of using the CARB SOP in connection with the compliance test method.
See Pls.’ Mem. Opp’n, Ex. 44 at 7-8.
stated in CARB’s announcement in March 2016, CARB determined that “ARB testing showed
[Lumber Liquidators’ Products] exceeded state formaldehyde limits.”
There is also evidence sufficient to establish that Defendant failed to comply with its
obligation under the ATCM to “take reasonable prudent precautions to ensure that the composite
wood products and composite wood products contained in finished goods that [it] purchase[s]
comply with the emission standard specified in section 93120.2(a),” ATCM § 93120.8(b),
thereby establishing a separate basis for an ATCM violation. Again, in its March 2016
announcement, CARB made a finding that “Lumber Liquidators failed to take reasonable
prudent precautions,” and Plaintiffs have provided other evidence sufficient for a fact finder to
reasonably reach that conclusion. That evidence includes Lumber Liquidators’ failure to
properly instruct and supervise its Chinese suppliers concerning formaldehyde levels and to
terminate its relationship with vendors who Defendant had reason to believe were involved in
supplying products that misrepresented their formaldehyde content.
For the above reasons, the Court concludes that there exists a genuine issue of material
fact as to whether Lumber Liquidators sold Chinese-manufactured composite wood flooring that
did not comply with the ATCM.
ANALYSIS OF SPECIFIC CLAIMS
Applying the above rulings to the various counts of the FAC, the Court concludes as
Plaintiff Laura Washington’s Standing
Plaintiff Laura Washington concedes that she lacks standing. See Hr’g Tr. 39:11-14.
Defendant’s motion as to Plaintiff Laura Washington is therefore GRANTED as to all claims
involving Laura Washington, and those claims are DISMISSED.
Alleged Breach of Implied Warranty (Count IX) (Asserted by All Plaintiffs)
As this Court previously stated, “[a]n ‘implied warranty’ means ‘an implied warranty
arising under state law . . . in connection with the sale by a supplier of a consumer product.’”
Pretrial Order No. 8 at 20 (citing 15 U.S.C. § 2301(7)). The specific prima facie showing
necessary for an implied warranty claim varies among states. See Cal. Civ. Code § 1790 et seq.;
Fla. Stat. § 672.314; 810 Ill. Comp. Stat. 5/2-314; N.Y. U.C.C. Law § 2-314; Tex. Bus. & Com.
Code § 2.314. However, the required substantive showing is essentially the same, and the parties
all rely on the Uniform Commercial Code. Of particular relevance are the requirements that, to
be merchantable, goods “must be at least such as . . . pass without objection in the trade under
the contract description; and . . . are fit for the ordinary purposes for which such goods are used;
and . . . conform to the promises or affirmations of fact made on the container or label if any.”
U.C.C. §§ 2-314(2)(a), (c), (f).
Defendant argues that all of its flooring functioned as flooring and that all Plaintiffs
agreed in that regard in their depositions. Def.’s Mem. 25. No Plaintiff claims personal injury
damages, and Defendant contends that “Plaintiffs have no evidence of unsafety to such a degree
that all states at issue would penalize its sale.” Id. As to the issue of container labeling, LL
claims that Plaintiffs have abandoned their written warranty claim and that in any event, “[t]he
logic by which courts have excluded product descriptions from the . . . definition of a written
warranty applies with equal force [to an implied warranty].” Def.’s Reply 17.
Under a breach of implied warranty claim, the central issue is whether a product is, in
fact, as it is represented to be on its packaging and whether it conforms to any promises made by
that packaging. The issue is not whether there is “evidence of unsafety to such a degree that all
states at issue would penalize its sale,” as Lumber Liquidators has suggested. Def.’s Mem. 25.
Plaintiffs contend that the Products’ label at the point of sale in every state made the
demonstrably false claim that the Products were CARB compliant. Pls.’ Mem. Opp’n 29.
However, Plaintiffs have not presented any other evidence to support the claim that the Products
could not “pass without objection in the trade under the contract description” or were “unfit for
ordinary use,” as they have alleged. See FAC ¶ 243. Whether or not Plaintiffs’ claim for breach
of implied warranty survives Defendant’s Motion for Summary Judgment therefore depends on
whether LL’s Product “conform[ed] to the promises or affirmations of fact made on the container
The Court has already determined that there is sufficient evidence to support the claim
that Defendant’s Products were not CARB compliant because they failed to comply with the
ATCM. Although the ATCM applies only to products sold in California, Lumber Liquidators
represented in all states that the Products complied with the ATCM, and the existence vel non of
an implied warranty may properly be based on that representation. The Court also concludes that
the Defendant is not entitled to summary judgment on this claim based on its other grounds.
First, contrary to Defendant’s contention, product labeling such as that used by Lumber
Liquidators is not excluded from the applicable U.C.C. definition of “implied warranty.” See,
e.g., Native Am. Arts, Inc. v. Bundy-Howard, Inc., 2002 WL 1488861, at *2 (N.D. Ill. July 11,
2002) (permitting breach of implied warranty claim against sellers based on label suggesting
products were made by Native Americans and finding that fitness of product for ordinary use
was irrelevant). 21 Furthermore, because express warranty and implied warranty claims are
The Court’s conclusion in this regard is further supported by the following U.C.C. comment on an implied
[W]herever there is a label or container on which representations are made, even though the
original contract, either by express terms or usage of trade, may not have required either the
labelling or the representation. This follows from the general obligation of good faith which
requires that a buyer should not be placed in the position of reselling or using goods delivered
under false representations appearing on the package or container.
distinct, Plaintiffs’ abandonment of their written warranty claims does not foreclose their implied
Finally, Defendant asserts a disclaimer defense to the implied warranty claims. It argues
that “like all plaintiffs, Lila Washington’s invoice included a warranty disclaimer,” 22 which
states as follows: “All other warranties are disclaimed, except to the extent such warranties
cannot be validly disclaimed under applicable law.” Def.’s Mem. 5; id. Ex. 6. But, as Plaintiffs
correctly contend, this language cannot disclaim the implied warranty of merchantability because
the language fails to specifically mention the implied warranty of merchantability by name,
which is required under the U.C.C. See U.C.C. § 2-316(2) (“[T]o exclude or modify the implied
warranty of merchantability or any part of it the language must mention merchantability. . . .”). 23
Thus, as a matter of law, Lumber Liquidators cannot validly disclaim the implied warranty of
merchantability in the manner in which it attempted to do so as to Plaintiff Lila Washington.
Furthermore, because Defendant has not presented any evidence as to any of the other Plaintiffs’
warranties contained on their invoices, there remains a genuine issue of material fact concerning
whether any warranty disclosure that accompanied the other sales validly disclaimed the implied
warranty of merchantability.
For the above reasons, Plaintiffs have presented facts sufficient for a jury to reasonably
find that Defendant’s Products did not conform to promises on their labeling, and the record is
insufficient to conclude as a matter of law that Defendant is entitled to judgment based on its
disclaimer defense. Defendant’s Motion is therefore DENIED as to Plaintiffs’ claims for breach
of implied warranty (Count IX).
U.C.C. § 2-314, cmt. 10.
The summary judgment warranty record contains only the disclaimer that accompanied the sale of Products to
Plaintiff Lila Washington.
All of the relevant states also follow this rule.
Alleged Violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et
seq. (“MMWA”) (Count X) (Asserted by All Plaintiffs)
The MMWA provides a federal cause of action for state law express and implied
warranty claims. Carlson v. Gen. Motors Corp., 883 F.2d 287, 291-92 (4th Cir. 1989).
Specifically, a consumer may bring suit if he or she is “damaged by the failure of a supplier,
warrantor, or service contractor to comply with any obligation under this chapter, or under a
written warranty, implied warranty, or service contract.” 15 U.S.C. § 2310(d)(1).
An “implied warranty” under the MMWA means “an implied warranty arising under
State law . . . in connection with the sale by a supplier of a consumer product.” 15 U.S.C.
§ 2301(7). Plaintiffs do not base their MMWA claim on a breach of a written warranty. See
Pls.’ Mem. Opp’n 28 (“Plaintiffs are not advancing a claim premised upon a written warranty for
the reasons noted by Defendant.”). The only issue that remains is whether there is evidence
sufficient to sustain claims for breach of an implied warranty. MMWA claims are “subject to the
same pleading requirements and defenses as . . . state law warranty claims,” Bussian v.
DaimlerChrysler Corp., 411 F. Supp. 2d 614, 624 (M.D.N.C. 2005). Therefore, the
requirements for Plaintiffs’ claim under Count X parallel those for Count IX pertaining to
implied warranty claims within the Plaintiffs’ states and include the elements of notice, reliance,
breach, and damages (and, hence, the viability of Plaintiffs’ price distortion theory of damages).
MacKenzie v. Chrysler Corp., 607 F.2d 1162, 1166 (5th Cir. 1979). The Court therefore
DENIES Defendant’s Motion as it relates to Plaintiffs’ MMWA claim (Count X) for the same
reasons set forth above as to Plaintiffs’ implied warranty claims in Count IX.
Alleged Violations of the California Consumer Protection Statutes (Counts
II, III, and IV) (Asserted by California Plaintiffs Lila Washington,
Ronquillo, and Balero)
California Plaintiffs Lila Washington, Ronquillo, and Balero allege that Defendant
violated three different California consumer protection statutes: the Unlawful, Unfair, or
Fraudulent Business Practices Law (“UCL”) (Count II), the False Advertising Law (“FAL”)
(Count III), and the Consumer Legal Remedies Act (“CLRA”) (Count IV). See FAC ¶¶ 165-93.
FAL Claim (Count III)
The California False Advertising Law makes unlawful any “unfair, deceptive, untrue, or
misleading advertising.” Cal. Bus. & Prof. Code § 17500. It prohibits “advertising which[,]
although true, is either actually misleading or which has a capacity, likelihood or tendency to
deceive or confuse the public.” Kasky v. Nike, Inc., 45 P.3d 243, 250 (Cal. 2002) (alteration in
original) (citation omitted) (internal quotation marks omitted). In order to prove a violation of
the FAL, a plaintiff must show that the “statement . . . [is] untrue or misleading” and that the
defendant “knew, or by the exercise of reasonable care should have known, that the statements
were [un]true or misleading.” People ex rel. Mosk v. Lynam, 253 Cal. App. 2d 959, 965 (Cal. Ct.
App. 1967). As discussed above, these Plaintiffs here have presented evidence sufficient to
establish these two elements.
A plaintiff bringing suit under the FAL must also prove reliance. True v. Am. Honda
Motor Co., Inc., 520 F. Supp. 2d 1175, 1182 (C.D. Cal. 2007) (“[M]ost courts that have
confronted this issue . . . have concluded that [California law] impose[s] a requirement that a
UCL/FAL plaintiff actually was exposed to and relied on the misleading advertisements.”).
However, courts have also held that “FAL plaintiffs may avail themselves of the inferred
reliance principle where the misrepresentation is ‘material.’” Id. (citation omitted). Therefore,
under the inferred reliance principle, if a misrepresentation is material, “a plaintiff satisfies the
reliance element with an allegation that a false or deceptive advertisement ‘induced the plaintiff
to alter his position to his detriment.’” 24 True, 520 F. Supp. 2d at 1183 (citing Caro v. Procter &
Gamble Co., 22 Cal. Rptr. 2d 419 (Cal. Ct. App. 4th 1993)). Other federal courts have adopted
this position as well. See, e.g., In re Milo’s Dog Treats Consol. Cases, 9 F. Supp. 3d 523, 534
(W.D. Pa. 2014) (stating that with regard to a claim under, inter alia, the California FAL, “[a]
misrepresentation of fact is material if it induced the plaintiff to alter his position to his
detriment. Stated in terms of reliance, materiality means that without the misrepresentation, the
plaintiff would not have acted as he did.”).
Based on the summary judgment record before the Court, and as Plaintiffs’ counsel
effectively conceded during the hearing the Court held on September 13, 2016, see Hr’g Tr.
39:18-19, the evidence is insufficient as a matter of law for a reasonable fact finder to conclude
that any of the California Plaintiffs altered his or her position in any way due to the
misrepresentations that Defendant allegedly made. Any presumption of reliance that may arise
from the materiality of the alleged misrepresentation, see Section III(C), supra, is refuted by the
record. Accordingly, Defendant’s Motion is GRANTED as to Count III.
UCL Claim (Count II)
As the Court has already explained in Pretrial Order No. 8,
[t]he California UCL prohibits “unlawful, unfair or fraudulent business act[s] or
practice[s] and unfair, deceptive, untrue or misleading advertising.” Cal. Bus. &
Prof. Code § 17200. It requires that a plaintiff’s economic injury come ‘as a
result of’ the allegedly unfair competition. Id. § 17204. California courts have
concluded that the UCL imposes an “actual reliance” requirement on private
citizens prosecuting a claim under the “unfair” and “fraud” prongs of the UCL,
The Court recognizes that California courts have relied on the definition of materiality in determining whether a
plaintiff was induced to alter his or her position and to that extent have conflated reliance and materiality.
Nevertheless, the record in this case clearly demonstrates that the California Plaintiffs did not rely on any alleged
misrepresentation, irrespective of the materiality of that misrepresentation.
and also under the ‘unlawful’ prong to the extent that the substance of the
unlawful conduct is a misrepresentation claim. Hale v. Sharp Healthcare, [108
Cal. Rptr. 3d 669, 678-79 (Cal. Ct. App. 2010)] (citing In re Tobacco II Cases,
[207 P.3d 20, 39 (Cal. 2009)].
Pretrial Order No. 8 at 13-14 (emphasis added).
Consistent with this Court’s prior order, Defendant concedes that “a presumption of
reliance arises where a claim rests on a material misrepresentation” but claims that it has
successfully rebutted this presumption given the California Plaintiffs’ admission that they did not
rely on Lumber Liquidators’ alleged misrepresentations. Def.’s Mem. 14-15. Plaintiffs contend
that their testimony was equivocal concerning their lack of reliance and that a jury should
determine whether Plaintiffs would not have purchased Defendant’s Products, had Defendant
disclosed the truth about the amount of formaldehyde the Products contained. Pls.’ Mem. Opp’n
20-21. See Khoday v. Symantec Corp., 93 F. Supp. 3d 1067, 1088-1090 (rejecting summary
judgment on UCL and CLRA claims, finding the plaintiff’s equivocal answers on whether the
defendant’s conduct impacted her purchase decision “best determined by a jury”). 25
Defendant Lila Washington never claimed that she relied on any representations made by
Lumber Liquidators concerning formaldehyde content or CARB compliance. Nor does she
specifically claim that she would not have bought the product had she known the truth. Rather,
she claims that she relied generally on Lumber Liquidators to comply with the laws of the State
of California. No California court appears to have ever recognized as adequate this form of
As this Court previously observed, “[a] California federal court has recently concluded in an unreported opinion
that ‘a plaintiff need not demonstrate individualized reliance on specific misrepresentations to satisfy the reliance
requirement.’” Id. at 14 (quoting Gold v. Lumber Liquidators, Inc., No. 14-CV-05373-TEH, 2015 WL 7888906, at
*8 (N.D. Cal. Nov. 30, 2015)). Thus, “the UCL has arguably created a ‘conclusive presumption that when a
defendant puts out tainted bait and a person sees it and bites, the defendant has caused an injury. . . .’” Id. at 14-15
(quoting Gold, 2015 WL 7888906, at *9). Furthermore, for a private individual to prosecute a claim under the UCL,
that individual must show that he or she “has suffered injury in fact and has lost money or property as a result of the
unfair competition.” Cal. Bus. & Prof. Code § 17204. For purposes of analyzing Defendant’s Motion on the UCL
count, the Court will assume, without deciding, that Plaintiffs have suffered an injury in fact as is required under the
reliance, and the Court concludes that she has failed to present facts sufficient for a reasonable
fact finder to find that she relied on any alleged misrepresentations, as required for the purposes
of establishing liability under the “unfair” and “fraud” prongs of the UCL. The Court has also
already concluded that California Plaintiffs Ronquillo and Balero have not demonstrated actual
reliance. Therefore, all California Plaintiffs have failed to make a claim under those prongs.
However, as the Court previously stated, the “unlawful” prong is to be considered
“separate and apart from any alleged misrepresentations” Defendant may have made, Pretrial
Order No. 8 at 16; and no form of reliance is required to state a claim under the “unlawful” prong
of the UCL when the underlying violation on which the alleged UCL violation is predicated does
not require reliance. Furthermore, under California law, “‘[v]irtually any law or regulation—
federal or state, statutory or common law—can serve as [a] predicate for a [UCL] “unlawful”
violation.’ . . . Thus, examples of UCL claims properly alleging “unlawful” conduct, while not
boundless, are seemingly so.’” Paulus v. Bob Lynch Ford, Inc., 43 Cal. Rptr. 3d 148, 165 (Cal.
Ct. App. 2006) (citation omitted). The Supreme Court of California has explained that “[b]y
proscribing ‘any unlawful’ business practice, ‘section 17200 “borrows” violations of other laws
and treats them as unlawful practices’ that the unfair competition law makes independently
actionable.” Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 973 P.2d 527, 539-40
(Cal. 1999) (quoting State Farm Fire & Casualty Co. v. Superior Court, 45 Cal. Rptr. 2d 229,
234 (Cal. Ct. App. 1996). The Supreme Court of California has similarly clarified that, “whether
a private right of action should be implied under this statute . . . is immaterial since any unlawful
business practice . . . may be redressed by a private action charging unfair competition in
violation of Business and Professions Code sections 17200 and 17203.” Comm. on Children’s
Television, Inc. v. Gen. Foods Corp., 673 P.2d 660, 668 (Cal. 1983) (in bank). 26
The sole issue for this Court to determine under the “unlawful” prong of the UCL is
therefore whether there is sufficient evidence to establish that Lumber Liquidators violated “any
law or regulation,” Paulus, 43 Cal. Rptr. 3d at 165, which would, in turn, serve as a predicate for
a UCL “unlawful” violation. The Court has already determined that, viewed in a light most
favorable to the Plaintiffs, the Plaintiffs have provided sufficient evidence to demonstrate that LL
violated the ATCM. See Section III(D), supra. The ATCM violation therefore serves as the
predicate violation for the UCL “unlawful” prong, and Defendant’s Motion is DENIED as to
CLRA Claim (Count IV)
Similar to the UCL, California’s CLRA prohibits “unfair methods of competition and
unfair or deceptive acts or practices.” Such practices include “[r]epresenting that goods are of a
particular standard, quality, or grade . . . if they are of another.” Cal. Civ. Code § 1770(a). The
California Plaintiffs allege in the FAC that Lumber Liquidators represented that its Chinesemanufactured laminate flooring was compliant with the relevant CARB emission standards when
it was not. FAC ¶¶ 183-93.
Only consumers who have suffered injury “as a result of” allegedly unlawful conduct
may bring suit. Id. The California Supreme Court has determined that this requirement is the
Until 2004, the UCL contained a provision that expressly conferred standing to sue upon “any person acting for
the interests of . . . the general public” without requiring a showing of actual injury. That provision was in effect
when this case was decided. Proposition 64, passed in 2004, provided that only those private persons “‘who [have]
suffered injury in fact and [have] lost money or property’ (§§ 17204, 17535) may sue to enforce the unfair
competition and false advertising laws. Uninjured persons may not sue (§§ 17204, 17535), and private persons may
no longer sue on behalf of the general public (Prop. 64, § 1, subd. (f)).” Branick v. Downey Sav.& Loan Ass’n, 138
P.3d 214, 240 (Cal. 2006). This Court has already determined above that the Plaintiffs in this litigation have
presented evidence sufficient to establish injury-in-fact.
same as that under the UCL. 27 Kwikset Corp. v. Superior Court, 246 P.3d 877, 887-88 (Cal.
2011). Therefore, for the same reasons as described above in the Court’s discussion of reliance
under the UCL claim (Count II), the Court GRANTS Defendant’s Motion as to all of the
California Plaintiffs with respect to Count IV.
Alleged Violations of the Florida Deceptive and Unfair Trade Practices Act
(“FDUTPA”), Fla. Stat. § 501.201, et seq. (Count V) (Asserted by Florida
The FDUTPA prohibits “unfair or deceptive acts or practices in the conduct of any trade
or commerce.” Fla. Stat. § 501.204(1). The statute does not define the elements of an action but,
instead, requires that Florida courts give “due consideration and great weight” to Federal Trade
Commission and federal court interpretations of section 5(a)(1) of the Federal Trade Commission
Act, 15 U.S.C. § 45(a)(1). See Fla. Stat. § 501.204(2). Florida courts have, in turn, interpreted
the DUTPA to mean that “a deceptive practice is one that is ‘likely to mislead’ consumers.”
Davis v. Powertel, Inc., 776 So.2d 971, 974 (Fla. Dist. Ct. App. 2000) (citation omitted). “The
plaintiff need not prove the elements of fraud to sustain an action under the statute,” and “the
question is not whether the plaintiff actually relied on the alleged deceptive trade practice, but
whether the practice was likely to deceive a consumer acting reasonably in the same
circumstances.” Id. Furthermore, a price distortion theory of damages is cognizable under the
DUTPA. “[T]he FDUTPA ‘benefit of the bargain’ model provides a standardized class-wide
damages figure because the plaintiff’s out-of-pocket payment is immaterial.” Carriulolo, 823
F.3d at 986; see also Collins v. DaimlerChrysler Corp., 894 So.2d 988, 991 (Fla. Dist. Ct. App.
2004) (“This case turns on a relatively simple question, at least as to damages-Is a car with
Plaintiffs claim that actual reliance is not essential for a successful CLRA claim. Pls.’ Mem. Opp’n 16. As with
a UCL claim, actual reliance is not required only to the extent that the claim is based on an omission and not on a
defective seatbelt buckles worth less than a car with operational seatbelt buckles? Common
sense indicates that it is . . . .”).
Here, the record is sufficient for a reasonable fact finder to find that Defendant made
misrepresentations concerning the formaldehyde content of the Products and, specifically, the
Products’ compliance with CARB and that these misrepresentations constituted a deceptive
marketing practice likely to deceive a customer acting reasonably when buying flooring.
Plaintiffs have also sufficiently demonstrated that the Brandts suffered an injury as a result of
that deceptive marketing practice. Defendant’s Motion is therefore DENIED as to the claim of
the Brandts under Count V.
Alleged Violations of N.Y. Gen. Bus. Law § 349, et seq. (Count VI) (Asserted
by New York Plaintiffs Clouden)
New York General Business Law Section 349(a) (“Section 349”) prohibits “[d]eceptive
acts or practices in the conduct of any business, trade or commerce or in the furnishing of any
service.” “[A]ny person who has been injured by reason of any violation of this section may
bring an action in his own name to enjoin such unlawful act or practice, an action to recover his
actual damages or fifty dollars, whichever is greater, or both such actions.” Id. § 349(h).
Additionally, courts may award treble damages up to $1,000 and/or attorney’s fees. Id. Like the
Florida DUPTA, Section 349 does not specify any particular elements. Nevertheless, New York
courts have required a plaintiff to show “first, that the challenged act or practice was consumeroriented; second, that it was misleading in a material way; and third, that the plaintiff suffered
injury as a result of the deceptive act.” Stutman v. Chem. Bank, 731 N.E.2d 608, 611 (N.Y.
2000). Reliance is not required. Id. at 612 (“[A]s we have repeatedly stated, reliance is not an
element of a section 349 claim.”). Section 349 also allows for the price distortion theory of
damages that Plaintiffs advance in this litigation. See, e.g., Ebin v. Kangadis Food Inc., 297
F.R.D. 561, 568-69 (S.D.N.Y. 2014) (finding damages were satisfied by “the injury incurred
from buying an overpriced product alleging to be olive oil, which was actually pomace oil”).
Here, for the reasons described above, the first and second elements are clearly met.
A closer question is whether or not Plaintiffs were actually injured. New York courts
have permitted recovery for Section 349 claims under Plaintiffs’ price distortion theory so long
as a plaintiff proves “actual” injury, though not necessarily pecuniary harm. Id. at 569. In
analyzing whether a consumer suffered an “actual injury” for the purposes of Section 349, the
Court of Appeals of New York rejected the argument that “consumers who buy a product that
they would not have purchased, absent a manufacturer’s deceptive commercial practices, have
suffered an injury under General Business Law § 349.” Small v. Lorillard Tobacco Co., Inc.,
720 N.Y.S.2d 615, 620-21 (N.Y. 1999). Nevertheless, the court recognized in dicta that it
“m[ight] be right that a plaintiff might have a claim for the higher price the consumer paid for the
product as a result of the misrepresentation in that circumstance [where the cost of the product
was affected by the alleged misrepresentation].” Id. n.5. Based on the current state of New York
law and considering the facts in a light most favorable to the Plaintiffs, the Court finds that the
Cloudens have demonstrated a genuine issue of material fact as to whether they suffered injury
under New York law, and Defendant’s Motion on Count VI is therefore DENIED.
Alleged Violations of the Texas Deceptive Trade Practices Act (“DTPA”),
Tex. Bus. & Com. Code § 17.50, et seq. (Count VII) (Asserted by Texas
Plaintiffs Parnella bring suit under section 17.50(a)(2), which provides a cause of action
where a consumer suffers “economic damages or damages for mental anguish” produced by
“breach of an express or implied warranty.” Tex. Bus. & Com. Code § 17.50(a)(2). DTPA
section 17.50 does not create any warranty but rather provides a cause of action for breaches of
warranty arising under statutory or common law.
The Court has already denied Defendant’s motion for summary judgment as to Plaintiffs’
implied warranty claim (Count IX), finding that Plaintiffs have presented sufficient evidence to
show that a genuine issue of material fact exits as to whether Lumber Liquidators breached an
implied warranty resulting in economic damage to Plaintiffs. Unlike claims arising under other
sections of the DTPA, section 17.50(a)(2) claims do not require that Plaintiffs demonstrate that
they relied on any sort of a promise or representation by Defendant. See Deburro v. Apple, Inc.,
No. A-13-CA-784-SS, 2013 WL 5917665, at *5 n.6 (W.D. Tex. Oct. 31, 2013) (stating in dicta
that “[t]here are additional DTPA causes of action which do not require reliance such as ‘breach
of an express or implied warranty.’”); Garza v. Garza, No. 04-11-00310-CV, 2013 WL 749727,
at *7 (Tex. App. Feb. 27, 2013) (“To recover on a claim for breach of warranty under the DTPA,
the plaintiff must establish that he was a consumer, that the warranty was made, that the warranty
was breached, and that as a result of the breach, an injury resulted.”). Courts have also
specifically recognized that claims arising under the general Texas Business and Commerce
Code provision on implied warranties, section 2.314, do not require any form of reliance. See,
e.g., Khan v. Velsicol Chem. Corp., 711 S.W.2d 310, 319 (Tex. App. 1986) (“[R]eliance on a
representation is not an element of a claim for breach of implied warranty.”); cf. McManus v.
Fleetwood Enters., Inc., 320 F.3d 545, 550-51 (5th Cir. 2003) (certifying class action based on
implied warranty claims, in part, because they do not require reliance under Texas law, unlike
express warranty claims, for which the court denied class certification).
The Court therefore concludes that the Parnellas’ failure to demonstrate any form of
reliance does not defeat their claim under the DTPA. Accordingly, Defendant’s Motion is
DENIED as to Count VII.
Alleged Violations of the Illinois Consumer Fraud and Deceptive Business
Practices Act (“ICFA”), 815 Ill. Comp. Stat. § 505/1, et seq. (Count VIII)
(Asserted by Illinois Plaintiffs Burke)
The ICFA sets out an extremely broad set of protections for consumers. It reads:
Unfair methods of competition and unfair or deceptive acts or practices, including
but not limited to the use or employment of any deception, fraud, false pretense,
false promise, misrepresentation or the concealment, suppression or omission of
any material fact, with intent that others rely upon the concealment, suppression
or omission of such material fact, or the use or employment of any practice
described in Section 2 of the “Uniform Deceptive Trade Practices Act”, approved
August 5, 1965, [footnote omitted] in the conduct of any trade or commerce are
hereby declared unlawful whether any person has in fact been misled, deceived or
815 ILCS 505/2. Actual reliance is not essential to establish a claim. See Tyla v. Gerber Prods.
Co., 178 F.R.D. 493, 499 (N.D. Ill. 1998) (“[P]roof of actual reliance on the part of each plaintiff
is not required under the [Illinois Consumer Fraud Act].”). Nevertheless, a plaintiff must have
sustained an injury, and the Supreme Court of Illinois has determined that “to properly plead the
element of proximate causation in a private cause of action for deceptive advertising brought
under the Act, a plaintiff must allege that he was, in some manner, deceived.” Oliveira v. Amoco
Oil Co., 776 N.E.2d 151, 164 (Ill. 2002). In that case, the Supreme Court of Illinois affirmed the
dismissal of a case analogous to this one in which the plaintiffs there claimed that “defendant’s
allegedly deceptive advertising scheme increased demand for defendant’s premium gasolines.
Because of this increase in demand, defendant ‘was able to command an inflated and otherwise
unsustainable price for its premium gasolines.’” Id. at 155 (citation omitted). Plaintiffs concede
that their price distortion theory cannot support damages under the ICFA. See Pls.’ Mem. Opp’n
22 n.95. Plaintiffs’ price distortion theory of damages is therefore insufficient to make out a
valid claim under the ICFA. Because the Illinois Plaintiffs have not shown that they were
directly deceived in any way, Defendant’s Motion is GRANTED as to the ICFA claim (Count
Alleged Fraudulent Concealment (Count I) (Asserted by All Plaintiffs) and
Alleged Negligent Misrepresentation (Count XI) (Asserted by Florida
Plaintiffs Brandt 28)
Fraudulent Concealment (Count I)
Plaintiffs contend that Lumber Liquidators “concealed and suppressed material facts
concerning the content of formaldehyde” in its Products. FAC ¶ 158. The generally recognized
elements of a fraudulent concealment cause of action are: (1) misrepresentation or omission of a
material fact, (2) a duty to disclose, (3) intent to induce reliance and/or defraud, (4) some form of
reliance, and (5) resulting damages. 29 All of the relevant states have adopted these elements with
the exception of Texas, which does not require reliance when the fraud claim is based on failure
to disclose a material fact, 30 and California, which only requires that the plaintiff would have
acted differently had that plaintiff been aware of the suppressed fact. 31
As described in Section III(C) above, Plaintiffs have sufficiently demonstrated that LL’s
alleged misrepresentations were material. Regarding the second element—duty to disclose—
Defendant argues that Lumber Liquidators had no special duty to the non-California Plaintiffs to
disclose whether its laminate flooring complied with CARB. Def.’s Mem. 22. While there are
This claim was initially asserted on behalf of all Plaintiffs and all classes, but this Court dismissed the claims for
negligent misrepresentation (Count XI) on behalf of all Plaintiffs other than the Brandts.
See Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 76 Cal. Rptr. 3d 325, 332 (Cal. Ct. App. 2008); R.J.
Reynolds Tobacco Co. v. Martin, 53 So. 3d 1060, 1068 (Fla. Dist. Ct. App. 2010); Soules v. General Motors Corp.,
402 N.E.2d 599, 601 (Ill. 1980); Mandarin Trading Ltd. v. Wildenstein, 944 N.E.2d 1104, 1108 (N.Y. 2011);
Bradford v. Vento, 48 S.W.3d 749, 754-55 (Tex. 2001).
Bradford, 48 S.W.3d at 754-55; see also Hoffman v. AmericaHomeKey, Inc., 23 F.Supp.3d 734, 744 (N.D. Tex.
See Blickman Turkus, 76 Cal. Rptr. 3d at 332 (Cal. Ct. App. 2008) (“[T]he plaintiff must have been unaware of
the fact and would not have acted as he did if he had known of the concealed or suppressed fact.”). Contrary to
Defendant’s contention that every state’s fraudulent concealment cause of action “includes the same five minimum
elements,” see Def.’s Mem. 20, as relevant here, only the states of Florida, Illinois, and New York require actual
some differences among the states concerning when a party has a duty to disclose, the states
relevant to the pending Motion all recognize a duty to disclose in at least one of the two
following circumstances: (1) when one party voluntarily discloses information, the whole truth
must be disclosed or (2) when one party possesses superior information to the other and knows
or should have known that the other is acting on the basis of mistaken information. 32 Viewing
the evidence most favorably to the Plaintiffs, the record contains sufficient facts to support a duty
to disclose under both recognized circumstances: (1) LL voluntarily represented in all states that
its Products were CARB compliant without disclosing other information calling into question the
accuracy or completeness of those voluntary disclosures; and (2) LL possessed superior
information and knew that consumers were likely acting based on false, incomplete, or
The Court concludes that the Plaintiffs have presented evidence that, when viewed most
favorably to them, is sufficient to establish the requisite intent of Defendant, the third element.
However, none of the Plaintiffs other than the Brands have presented sufficient evidence with
respect to the fourth element, actual reliance. Nevertheless, because reliance is not required in
Texas, and California only requires that a plaintiff would have acted differently had that plaintiff
been aware of the suppressed fact, this element does not preclude the fraudulent concealment
claims of the Parnellas (TX), the Ronquillos (CA), or Mr. Balero (CA), who, as the Court has
See, e.g., Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993) (finding that, “New York recognizes a
duty by a party to a business transaction to speak . . . where the party has made a partial or ambiguous statement . . .
[or] where one party possesses superior knowledge, not readily available to the other, and knows that the other is
acting on the basis of mistaken knowledge”); Matthews v. Am. Honda Motor Co., No. 12-60630-CIV, 2012 WL
2520675, at *3 (S.D. Fla. June 6, 2012) (finding a Florida consumer protection law claim exists where “the
defendant knowingly fails to disclose a material defect that diminishes a product’s value”); Smith v. Ford Motor Co.,
749 F. Supp. 2d 980, 987 (N.D. Cal. 2010) (recognizing duty to disclose under California consumer protection laws
when the defendant had exclusive knowledge of material facts and actively concealed those facts or made a partial
misrepresentation); Connick v. Suzuki Motor Co., Ltd., 675 N.E.2d 584, 593 (Ill. 1996) (“[A] duty to disclose
material facts may arise out of a situation where plaintiff places trust and confidence in defendant, thereby placing
defendant in a position of influence and superiority over plaintiff.”); Playboy Enters., Inc. v. Editorial Caballero,
S.A. de C.V., 202 S.W.3d 250, 260 (Tex. App. 1997) (“[A] duty to [disclose] may arise . . . when one makes a partial
already discussed, presented adequate evidence that they would have acted differently had they
known about the Products’ formaldehyde levels.
Regarding the fifth element of damages, Defendant claims Plaintiffs were not damaged
by the alleged nondisclosure. Def.’s Mem. 23. Plaintiffs claim harm in the form of overpayment
for the flooring. Pls.’ Mem. Opp’n 21 (“[I]f Defendant had told the truth about its Chinese-made
laminates, it could not have sustained the prices it charged.”). Defendant argues that economic
harm alone does not constitute harm sufficient for fraud.
The Court has already concluded that the five states relevant to the Motion—California,
New York, Illinois, Texas, and Florida—do not apply the economic loss rule to bar claims for
fraudulent concealment. Pretrial Order No. 8 at 19. Therefore, as long as the Plaintiffs allege a
cognizable form of economic loss, their claims are not barred. Whether they have suffered
legally cognizable forms of economic loss, however, depends on whether each of the respective
states allows recovery for fraud-based loss based on the price distortion theory. In that regard, as
discussed previously, the Court concludes that the Florida, 33 Texas 34, and California Plaintiffs
other than the Washingtons, 35 have, for the purposes of avoiding summary judgment, sufficiently
demonstrated a basis for claiming cognizable forms of fraud-based loss in those respective states.
By way of summary, because the Cloudens (NY), the Burkes (IL), and Washington (CA)
have not presented sufficient evidence of reliance, as required under New York, Illinois, and
As described above, the Brandts have demonstrated a material fact as to whether they relied on LL’s alleged
omissions and would not have purchased the product if they had been aware of the information which LL allegedly
omitted. As such, they do not rely on the price distortion theory of damages, and their damages claim is therefore
cognizable under Florida common law.
The Court concludes that the Supreme Court of Texas would recognize a price distortion theory of damages. See
Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 682 (Tex. 2000) (“[I]f there is evidence of the bargain that
would have been struck had the defrauded party known the truth, there can be a recovery for benefit-of-the-bargain
The Court concludes that the Supreme Court of California would recognize a price distortion theory of damages.
Cf. Lazar v. Superior Court, 909 F.2d 981, 990 (Cal. 1996) (“In pursuing a valid fraud action, a plaintiff advances
the public interest in punishing intentional misrepresentations and in deterring such misrepresentations in the future.
. . . Because of the extra measure of blameworthiness inhering in fraud, . . . fraud plaintiffs may recover ‘out-ofpocket’ damages in addition to benefit-of-the-bargain damages.”).
California state law for fraudulent concealment claims, Defendant’s Motion is GRANTED as to
their claims on Count I, and the Motion is DENIED as to the other Plaintiffs’ claims on Count I.
Negligent Misrepresentation (Count XI)
Only the Brandts’ claim for fraudulent representation remains pending before the Court.
In Florida, negligent misrepresentation requires (1) that the defendant made a statement
concerning a material fact that it believed to be true but which was in fact false; (2) negligence in
making the statement because the defendant should have known that the statement was false; (3)
intent to induce reliance; (4) justifiable reliance; and (5) resulting loss, injury, or damage. In re
Standard Jury Instructions in Civil Cases—Report No. 12-01, 130 So. 3d 596, 610 (Fla. 2013)
(per curiam). 36 For the reasons already discussed, the Brandts have presented sufficient evidence
to establish each of these elements, including reliance on Defendant’s alleged
misrepresentations. Defendant’s motion is therefore DENIED as to Plaintiffs Brandts’ claim of
negligent misrepresentation (Count XI).
Whether All Plaintiffs Are Entitled to Declaratory Relief (Count XII)
Plaintiffs seek a judicial finding and declaration that Defendant’s policies and practices of
labeling, advertising, selling, and distributing the Products violate the CARB standards as set
forth in the ATCM. FAC ¶¶ 266-67.
“[D]istrict courts have great latitude in determining whether to assert jurisdiction over
declaratory judgment actions.” Aetna Cas. & Sur. Co. v. Ind-Com Elec. Co., 139 F.3d 419, 422
(4th Cir. 1998). A Court may grant declaratory relief where the result of the declaration will
affect the public interest or serve a “useful” or “helpful” purpose with respect to rights and
obligations relating to an issue. Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 325 (4th Cir.
On December 11, 2015, this Court granted Lumber Liquidators’ Motion to Dismiss with respect to the negligent
misrepresentation claims of all Plaintiffs except the Brandts and the Florida class. Pretrial Order No. 8 at 26. Thus,
the claim of the Brandts and the Florida class of Plaintiffs is the only one presently before the Court.
1937). As the Court has previously observed, a declaratory judgment “is only appropriate when
it would ‘serve a useful purpose in clarifying and settling the legal relations in issue’ to guide the
parties in the future” and that it is “‘not an appropriate remedy’” to adjudicate only “‘past
misconduct.’” Beazer Homes Corp. v. VMIF/Anden Southbridge Venture, 235 F. Supp. 2d 485,
494 (E.D. Va. 2002) (citations omitted).
Given that Defendant’s Products have been removed from sale, Def.’s Mem. 29 n.6, and
that the parties’ rights and obligations will be fully adjudicated in the context of their specific
claims and defenses, it would be neither “helpful” nor “useful” to provide declaratory relief so
that “each of the parties [to] know their respective rights and duties and act accordingly.” 37 FAC
¶ 268. Accordingly, Defendant’s Motion is GRANTED with respect to Count XII.
For the reasons stated above, Defendant’s Motion is:
1. GRANTED as to all claims filed by Plaintiff Laura Washington;
2. GRANTED as to those claims filed by the New York Plaintiffs Clouden, the Illinois
Plaintiffs Burke, and the California Plaintiffs Washington from the California class
for fraudulent concealment (Count I);
3. GRANTED as to all claims for violations of the California False Advertising Law
and the California Legal Remedies Protection Act (Counts III-IV);
4. GRANTED as to all claims for violation of the Illinois Consumer Fraud and
Deceptive Business Practices Act (Count VIII);
5. GRANTED as to all claims for declaratory relief (Count XII); and
In its opposition brief, Plaintiff seems to concede that the point is moot. See Pls.’ Mem. Opp’n 28 (“The
declaratory relief may also be moot as Defendant has agreed not [sic] sell the Chinese laminate. . . . Nevertheless,
Defendant has not shown they [sic] are entitled to summary judgment on Count XII.”).
6. DENIED as to all other claims.
Accordingly, Counts III, IV, VTII and XII are DISMISSED. The proceedings will
continue as to Counts I, II, V, VI, VII, IX, X, and XI.
The Court will issue an appropriate order.
The Clerk is directed to forward a copy of this Memorandum Opinion to aU counsel of
June 20, 2017