In re Zurn Pex Plumbing Products Liab. Litigationdenise Cox

• Decision Date: 16 September 2011
• Docket Number: No. 10–2267.,10–2267.
• Citation: 79 Fed.R.Serv.3d 1296,644 F.3d 604
• Parties: In re ZURN PEX PLUMBING PRODUCTS LIABILITY LITIGATIONDenise Cox; Terry Cox; Kevin Haugen; Christa Haugen; Robert Hvezda; Carrie Hvezda; Jody Minnerath; Brian Minnerath; Michelle Oelfke, on behalf of themselves and all others similarly situated, Plaintiffs–Appellees,v.Zurn Pex, Inc.; Zurn Industries, Inc., Defendants–Appellants.American Association for Justice, Amicus Curiae.
• Court: U.S. Court of Appeals — Eighth Circuit

644 F.3d 604

79 Fed.R.Serv.3d 1296

In re ZURN PEX PLUMBING PRODUCTS LIABILITY LITIGATIONDenise Cox; Terry Cox; Kevin Haugen; Christa Haugen; Robert Hvezda; Carrie Hvezda; Jody Minnerath; Brian Minnerath; Michelle Oelfke, on behalf of themselves and all others similarly situated, Plaintiffs–Appellees,

v.Zurn Pex, Inc.; Zurn Industries, Inc., Defendants–Appellants.American Association for Justice, Amicus Curiae.

No. 10–2267.

United States Court of Appeals, Eighth Circuit.

Submitted: March 16, 2011.Filed: July 6, 2011.Rehearing and Rehearing En Banc Denied Sept. 16, 2011.*

James A. O'Neal, argued, Minneapolis, MN, John P. Borger, Daniel J. Connolly, Amy R. Fiterman, David A. Snieg, Minneapolis, MN, Robert C. Carlson, Jay M. Bulger, San Diego, CA, and Richard B. Goetz, Carlos M. Lazatin, Los Angeles, CA, on the brief, for appellants.Eric John Magnuson, argued, Minneapolis, MN, Diane B. Bratvold, Robert K. Shelquist, J. Gordon Rudd, Jr., Minneapolis, MN, Shawn Michael Raiter, St. Paul, MN, Charles J. LaDuca, Gary E. Mason, Washington, DC, Michael A. McShane, San Francisco, CA, on the brief, for appellees.Before WOLLMAN, MURPHY, and GRUENDER, Circuit Judges.MURPHY, Circuit Judge.

Minnesota homeowners brought this action ¹ against Zurn Pex, Inc. and Zurn Industries, Inc. (Zurn) alleging that brass fittings used in the company's cross linked polyethylene (PEX) plumbing systems are inherently defective. In pretrial motions the homeowners sought class certification for their consumer protection, warranty, and negligence claims, and Zurn moved to strike the testimony of two of the homeowners' experts. After denying Zurn's motion to strike the expert testimony, the district court ² granted the homeowner requests for class certification for their warranty and negligence claims, but denied it for their consumer protection claims. Zurn appeals from the district court's certification order. We affirm.

I.

Zurn manufactures and markets a home plumbing system that uses PEX tubing, an alternative to traditional copper water pipes. PEX tubing systems are marketed as easier to install, cheaper, and longer lasting than copper plumbing systems. The Zurn PEX systems have been installed in homes throughout the United States. Zurn has sold its PEX systems with a 25 year limited warranty.

In the plumbing systems at issue in this case, PEX tubes are joined together using a brass fitting and crimp. A tube is placed around a fitting, the crimp is tightened around the outside of the tube, and the resulting pressure creates a seal between the tube and the fitting. The homeowners allege that the brass fittings used in these systems are “doomed to leak within warranty” because of their susceptibility to stress corrosion cracking (SCC) which results from a combination of pressure and corrosion. The homeowners argue that SCC inevitably begins to affect Zurn's brass fittings upon their installation and exposure to water. The SCC increases over time and the fitting eventually begins to leak, causing costly water damage to homes. Zurn argues that SCC is not an inherent defect and that it is instead caused by a variety of factors which include improper installation and overly corrosive water. Some of the homeowner plumbing systems have leaked, but others have not.

The parties disagreed about pretrial discovery. The homeowners sought a single phase discovery plan, but Zurn suggested bifurcated discovery. The district court adopted Zurn's approach and ordered that the first phase of discovery address the limited question of class certification. At the close of the first phase of discovery, the homeowners moved for class certification. Zurn opposed it and moved to strike testimony from two of the homeowners' experts, Dr. Roger W. Staehle and Dr. Wallace R. Blischke.

Dr. Staehle is the former Dean of the University of Minnesota Institute of Technology. He has been researching and publishing articles on SCC for over 40 years. Dr. Staehle examined Zurn brass fittings, including some which had leaked as well as some which were new. He conducted a battery of tests on the fittings. His tests included scanning electron microscopy, electron dispersive spectroscopy, auger electron dispersive spectroscopy, microhardness testing, materials analysis, water chemistry analysis, and static load testing. He also performed a “U-bend” experiment where metal samples from the fittings were bent into a U shape and then tested to determine their susceptibility to SCC. Dr. Staehle subjected these samples to strain, immersed them in different water solutions, and then checked them after two, four, and six months. He concluded that his experiments showed that “rapid SCC would occur” in Zurn's brass fittings.

Based on his knowledge about SCC and his numerous tests, Dr. Staehle concluded that “[t]he failure process in Zurn fittings starts as soon as they are exposed to domestic water,” “[s]ignificant numbers of leak-causing failures appear to occur in as little as a single year,” and “[t]here is no evidence ... that the Zurn fittings can perform reliably for 25 years ... nor are there any bases for a much longer design life of about 40 years.” Dr. Staehle attributed the poor performance of the fittings to choice of materials and to poor manufacturing. He rejected the theory that the SCC in Zurn's fittings was caused by unusually corrosive water or improper installations.

Dr. Blischke is a statistician and Professor Emeritus at the University of Southern California. He has written a number of books on product reliability and warranties. Dr. Blischke undertook a study of Zurn PEX plumbing systems and analyzed the failure rate of those systems with Zurn's brass fittings. He grounded his analysis on the available warranty data obtained from Zurn. Since he found that data incomplete, he was required to make assumptions about the “mean time to failure” experienced by the brass fittings.

Based on witness testimony and documents indicating that Zurn considered 40 years to be the average lifetime of its PEX systems, Dr. Blischke assumed a mean time to failure of 40 years. Using that figure and assuming that the average household installation contained 50 brass fittings, he calculated that 99% of homes would experience a leak in at least one of the fittings within 25 years. Dr. Blischke also conducted the same analysis based on alternate mean time to failure figures of 50, 60, and 100 years. The system failure rates remained high even when the longer mean time to failure figures were projected.

The parties disagreed about the appropriate application of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), at the class certification stage. The homeowners urged that expert testimony should only be excluded at this stage if it were “so flawed it cannot provide any information as to whether the requisites of class certification have been met.” Zurn argued, however, that the district court should conduct a full and conclusive Daubert inquiry before certifying a class.

The district court charted a middle course between the positions urged by the parties. After reviewing the evidence that had been produced, the court concluded that a full and conclusive Daubert inquiry would not be necessary or productive at this stage of the litigation, particularly since the expert opinions could change during continued discovery. The court instead conducted a focused Daubert inquiry to assess whether the opinions of Dr. Staehle and Dr. Blischke, based on their areas of expertise and the reliability of their analyses of the available evidence, should be considered in deciding the issues relating to class certification.

After conducting its focused Daubert inquiry, the district court denied Zurn's motions to strike the testimony of the experts. The court made clear, however, that its rulings were not final and that its view of the issues might change as discovery continued and additional evidence was produced.

The district court then turned to the question of class certification under Fed.R.Civ.P. 23. The homeowner claims fell into three broad categories: consumer protection, breach of warranty, and negligence. For each claim, the homeowners moved to certify the following class:

All persons and entities that own a structure located within the State of Minnesota that contains a Zurn Pex plumbing system with Zurn ³ brass crimp fittings. The proposed class includes, without limitation, all such persons or entities who contacted Zurn or its representatives about their Zurn Pex plumbing system and were denied or partially denied warranty coverage for failure of the Zurn Pex plumbing system based on a claim that “corrosion” was not covered by the warranty or that other alleged warranty limitations applied.

This definition was used by the district court to analyze the Rule 23 class certification requirements with respect to the three categories of homeowner claims. It focused on what it termed the “core dispute between the parties” which arose out of Rule 23(b)(3)'s requirement that questions of law or fact common to the class predominate over individual questions. The court first determined that the issue of individual reliance in respect to the consumer protection claims was not amenable to class wide resolution. It refused to certify a class for those claims, and no one has appealed that decision. The court next addressed the warranty claims, determined that common questions predominate as to them, and certified a class of warranty claimants. Finally, the court certified a limited class for the negligence claims. It limited the scope of that class to those members who had already “suffered damage to their property,” that is those who already had suffered an injury recognized in tort.

Zurn brings this Rule 23(f) interlocutory appeal of the order issued by the district court certifying the warranty and negligence classes. Zurn argues that the...