Gonzalez v. Corning

• Decision Date: 19 March 2018
• Docket Number: No. 16-2653,16-2653
• Citation: 885 F.3d 186
• Parties: Jaime GONZALEZ; Patricia Wright; Kevin West; Gerald Boehm; Edward Maag; Diane Maag, on behalf of themselves and all others similarly situated, Appellants v. Owens CORNING; Owens Corning Sales LLC
• Court: U.S. Court of Appeals — Third Circuit

885 F.3d 186

Jaime GONZALEZ; Patricia Wright; Kevin West; Gerald Boehm; Edward Maag; Diane Maag, on behalf of themselves and all others similarly situated, Appellants

v.Owens CORNING; Owens Corning Sales LLC

No. 16-2653

United States Court of Appeals, Third Circuit.

Argued September 6, 2017

Opinion Filed: March 19, 2018

Amended April 4, 2018

Robert H. Klonoff [Argued], Jordan D. Schnitzer Professor of Law, Lewis & Clark Law School, 10015 Southwest Terwilliger Boulevard, Portland, OR 97219, Charles E. Schaffer, Levin Sedran & Berman, 510 Walnut Street, Suite 500, Philadelphia, PA 19106, Shanon J. Carson, Lawrence Deutsch, Berger & Montague, 1622 Locust Street, Philadelphia, PA 19103, Charles J. LaDuca, Cuneo Gilbert & LaDuca LLP, 8120 Woodmont Avenue, Suite 810, Bethesda, MD 20814, Michael A. McShane, Audet & Partners, 711 Van Ness Avenue, Suite 500, San Francisco, CA 94102, Robert K. Shelquist, Lockridge Grindal Nauen PLLP, 100 Washington Avenue South, Suite 2200, Minneapolis, MN 55401, Attorneys for Appellants

Carter G. Phillips [Argued], Sidley Austin, 1501 K Street, N.W., Washington, D.C. 20005, Kara L. McCall, T. Robert Scarborough, Tacy F. Flint, Elizabeth M. Chiarello, Sidley Austin LLP, One South Dearborn Street, Chicago, IL 60603, Arthur H. Stroyd, Jr., Del Sole Cavanaugh Stroyd, Three PPG Place, Suite 600, Pittsburgh, PA 15222, Attorneys for Appellees

Allan P. Ides, Simona Grossi, Loyola Law School, 919 Albany Street, Los Angeles, CA 90015, Michael J. Quirk, Williams Cuker & Berezofsky, 1515 Market Street, Suite 1300, Philadelphia, PA 19102, Attorneys for Appellants' Amici Curiae

Before: CHAGARES, JORDAN, and HARDIMAN, Circuit Judges.

OPINION OF THE COURT

HARDIMAN, Circuit Judge.

This appeal involves a putative class action brought by consumers in four states who alleged that Appellees Owens Corning and Owens Corning Sales, LLC (collectively, Owens Corning) sold defective roof shingles and misrepresented the shingles' expected useful life. Appellants challenge an order of the United States District Court for the Western District of Pennsylvania denying class certification. We will affirm.

I

In 2009, Appellants Patricia Wright and Kevin West filed suit in the District Court under Rule 23 of the Federal Rules of Civil Procedure on behalf of a proposed nationwide class of individuals who "owned, own, or acquired" structures on which certain Owens Corning-manufactured roofing shingles "are or have been installed since 1986." Gonzalez v. Owens Corning , 317 F.R.D. 443, 455 (W.D. Pa. 2016). Wright and West claimed that Oakridge shingles—an Owens Corning brand of fiberglass asphalt roofing shingles—are "plagued by design flaws that result in cracking, curling and degranulation" and "will eventually fail, causing property damage, and costing consumers substantial removal and replacement costs." Id. at 455. The District Court entered summary judgment in favor of Owens Corning, finding that Wright and West's claims had been discharged in bankruptcy by the 2006 confirmation of Owens Corning's reorganization plan. We partially reversed, concluding that the claims were not discharged. See Wright v. Owens Corning , 679 F.3d 101, 108–09 (3d Cir. 2012). After the case was remanded to the District Court, Appellants Jaime Gonzalez, Gerald Boehm, and Edward and Diane Maag (together with Wright and West, Plaintiffs) filed three similar suits in district courts in other states, which were then transferred to the Western District of Pennsylvania and consolidated with Wright and West's case.

Plaintiffs are homeowners from Pennsylvania, Illinois, Texas, and California, on whose roofs Oakridge shingles were installed prior to 2006. They allege that their shingles have not performed as promised because they were manufactured "in accordance with defective design specifications." Gonzalez , 317 F.R.D. at 450. Of the named plaintiffs, three reported property damage and two had their roofs reshingled. The shingles were all subject to warranties of 25 years or more, which Plaintiffs argue amounted to affirmative representations about the shingles' expected useful life. Plaintiffs proposed two classes in the District Court: (1) a class of property owners from their four home states (the Four-State Class), asserting various combinations of state-law causes of action against Owens Corning; and (2) a nationwide class of property owners (the Nationwide Class) seeking a ruling regarding the legal standard governing whether Owens Corning can use a bankruptcy discharge defense to shield itself from liability.

A

Plaintiffs proffer the Four-State Class as either a money damages class under Rule 23(b)(3) or an issue class under Rule 23(c)(4). Plaintiffs define the class as follows: "all individuals and entities that own a building or structure physically located in the states of California, Illinois, Pennsylvania, or Texas on which Owens Corning's Oakridge-brand shingles were installed from 1992 through 2012, and where those shingles manifested any cracking, degranulation, fragmentation, or deterioration during the warranty coverage period." 317 F.R.D. at 453.

During the proposed 20-year class period, Owens Corning manufactured at least 23 kinds of Oakridge shingles at 13 different plants around the country using more than 500 design specifications. Plaintiffs did not dispute that all of these specifications met the applicable industry standard (ASTM D3462), which prescribes minimum measurements for newly manufactured shingles, such as "tear strength, net mass, mat mass, asphalt mass, and mineral matter mass." Id. at 465. Plaintiffs contended that in lieu of industry standards, defectiveness should be judged by the expected useful life of the shingles as represented by the applicable warranty period. According to Plaintiffs, compliance with ASTM D3462 did not consistently yield shingles that would last until the applicable warranty expired. In Plaintiffs' view, Owens Corning's design specifications sometimes yielded shingles vulnerable to "premature deterioration so that they ... will actually only last 15 to 20 years." App. 247–48.

Plaintiffs claimed that Oakridge shingles had a propensity to fail before their warranties expired because of one or more of the following design flaws: insufficient asphalt quantity or quality, and insufficient mat mass and tear strength. Based on testing he conducted on 298 shingles, Plaintiffs' expert Dean Rutila opined that "about half" of the Oakridge shingles produced during the proposed 20-year class period fell on the "low end" of Owens Corning's specifications, which meant they were manufactured at or near the ASTM minimums. Id. at 514, 523, 528. Owens Corning challenged the admissibility of Rutila's opinions under Daubert v. Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). The District Court ruled that all testimony based on Rutila's testing was inadmissible, but that he could testify to the general effect of various measurements on shingle performance based on his review of Owens Corning's internal documents, including design specifications and internal communications. For example, Rutila could testify that Oakridge design specifications produced shingles with a significant range of measurements, with only the "high-end" shingles capable of lasting for more than 20 years. Gonzalez , 317 F.R.D. at 499. Rutila acknowledged, however, that the "appropriateness of design specification measurements can only be judged in relationship to each other," id. at 485, and that "a shingle would have to be individually inspected to determine whether it is a nondefective or defective shingle," id. at 514. As a result, Plaintiffs could not point to "any particular measurement or set of measurements for the individual elements of a shingle that constitute a design defect." Id.

B

Plaintiffs propose that the Nationwide Class proceed under Rule 23(b)(1)(B) or Rule 23(b)(2), and that it include "all individuals and entities that own a building or structure physically located in the United States on which Owens Corning's Oakridge-brand shingles are currently installed, where those shingles were purchased on or before September 26, 2006." Id. at 453. Through the Nationwide Class, Plaintiffs seek to mitigate what they perceive is a risk of inconsistent judgments resulting from the procedural history of this case prior to the consolidation of Wright and West's action with those brought by the other named plaintiffs.

On September 26, 2006 (the cutoff date for the proposed class), the United States Bankruptcy Court for the District of Delaware confirmed a reorganization plan for Owens Corning after nearly six years of bankruptcy proceedings. Pursuant to the order confirming the plan and 11 U.S.C. § 1141, all claims that existed against Owens Corning as of that date were discharged. After Wright and West brought suit but before Plaintiffs' actions were consolidated, Owens Corning moved for summary judgment, arguing that the claims belonging to Wright and West existed prior to September 26, 2006, and were thus discharged when the reorganization plan was confirmed. The District Court granted summary judgment in favor of Owens Corning, citing this Court's decision in JELD-WEN, Inc. v. Van Brunt (In re Grossman's Inc. ), 607 F.3d 114 (3d Cir. 2010) (en banc) (" Grossman's "). In that case, we held that for purposes of determining whether a claim is dischargeable in bankruptcy, the claim arises when the claimant is exposed to the debtor's product or conduct, regardless of when an injury is discovered. Grossman's , 607 F.3d at 125. For Wright and West, this meant that their claim arose when they purchased their shingles. Since that was before Owens Corning's reorganization plan was confirmed, the District Court concluded that Wright and West's claims were discharged.

On appeal to this Court, we declined to apply the Grossman's rule retroactively, citing due process concerns. See Wright , 679 F.3d at 108–09 (3d...