Hill v. AQ Textiles LLC

• Decision Date: 27 January 2022
• Docket Number: 1:19CV983
• Citation: 582 F.Supp.3d 297
• Parties: Amy HILL, et al., Plaintiffs, v. AQ TEXTILES LLC, and Creative Textile Mills Pvt. Ltd., Defendants.
• Court: U.S. District Court — Middle District of North Carolina

582 F.Supp.3d 297

Amy HILL, et al., Plaintiffs,

v.AQ TEXTILES LLC, and Creative Textile Mills Pvt. Ltd., Defendants.

1:19CV983

United States District Court, M.D. North Carolina.

Signed January 27, 2022

Charles E. Schaffer, Levin Sedran & Berman, LLP, Philadelphia, PA, Michael A. McShane, S. Clinton Woods, Audet & Partners, LLP, San Francisco, CA, Scott C. Harris, Milberg Coleman Bryson Phillips Grossman, PLLC, Raleigh, NC, for Plaintiff Dominique Morrison.

Charles E. Schaffer, Levin Sedran & Berman, LLP, Philadelphia, PA, Scott C. Harris, Milberg Coleman Bryson Phillips Grossman, PLLC, Raleigh, NC, for Plaintiffs Sara Hawes, Cassandra Chiaraluce, Jonathan Fontaine.

Jennifer K. Van Zant, Andrew L. Rodenbough, Brooks Pierce McLendon Humphrey & Leonard, LLP, Greensboro, NC, Ryan C. Fairchild, Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, Wilmington, NC, for Defendant AQ Textiles LLC.

MEMORANDUM OPINION AND ORDER

LORETTA C. BIGGS, District Judge.

Before the Court is a Motion to Amend First Amended Complaint filed by Plaintiffs. (ECF No. 36.) Plaintiffs seek relief from the Court's March 17, 2021, Order, (ECF No. 35), and leave to amend their First Amended Complaint pursuant to Rules 15(a) and 60(b) of the Federal Rules of Civil Procedure. (ECF Nos. 36; 37.) Defendants oppose the motion, arguing that (1) Plaintiffs have not met the requirements of Rule 60(b)(6), and (2) Plaintiffs’ proposed Second Amended Complaint ("PSAC") suffers from undue delay, prejudices Defendants, and is futile. (ECF No. 39.) For the reasons stated herein, Plaintiff's motion will be granted in part and denied in part.

I. BACKGROUND

Plaintiffs filed this class action on September 23, 2019, (ECF No. 1), and filed a First Amended Complaint ("FAC") on December 12, 2019, (ECF No. 15). According to the FAC, Plaintiffs Dominique Morrison, Sara Hawes, Cassandra Chiaraluce, and Jonathan Fontaine purchased bed linens labeled as having thread counts of 800 or more from retail stores in Missouri, California, New Hampshire, and Massachusetts.¹ (Id. ¶¶ 33, 37, 41, 45.) The sheets were manufactured by Defendant Creative Textile Mills Pvt. Ltd. ("Creative"), an Indian company, and imported and distributed by AQ Textiles LLC ("AQ"), a North Carolina corporation. (Id. ¶¶ 48, 50, 90) Plaintiffs alleged that Defendants represented the sheets to have higher thread counts than they actually had. (Id. ¶ 90.) More specifically, they claimed that Defendants ignored the "long-standing industry standards for calculating thread counts," (id. ¶ 84) and doubled or tripled "the true thread count" by counting plied yarns not as a single thread, but as the number of intertwined strands from which they are comprised, (Id. ¶ 76).

Plaintiffs sued on behalf of themselves and six classes to include consumers in California, Massachusetts, Missouri, New Hampshire, North Carolina, and the nation as a whole who purchased sheets that had lower thread counts than Defendants stated on the products’ labels. (Id. ¶ 98.) The FAC alleged thirteen causes of action arising under the Magnuson Moss Warranty Act ("MMWA") (Count I); the Implied Warranty of Merchantability (Count II); an Express Warranty (Count III); common law Negligent Misrepresentation (Count IV); Missouri's Merchandising Practices Act (Count V); the North Carolina Unfair and Deceptive Trade Practices Act ("NCUDTPA") (Count VI); the California Consumer Legal Remedies Act (Count VII); the California Unfair Competition Law (Counts VIII, IX, & X); the Massachusetts Consumer Protection Law (Count XI); the New Hampshire Consumer Protection Act (Count XII); and common law Unjust Enrichment (Count XIII). (Id. at 24–52.)

Defendants moved to dismiss Plaintiffs’ FAC for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) on January 9, 2020. (ECF No. 18.) On September 25, 2020, Defendants additionally moved to dismiss the FAC for lack of subject-matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1). (ECF No. 29.)

On March 17, 2021, the Court dismissed Plaintiffs’ claims. Hill v. AQ Textiles LLC , No. 1:19CV983, 2021 WL 1026740, at *3 (M.D.N.C. Mar. 17, 2021). The Court found sua sponte that Named Plaintiffs had not sufficiently alleged a concrete and particularized injury and, therefore, the Court lacked subject matter jurisdiction. Id. at *2–3.

Plaintiffs filed the present motion on March 29, 2021, seeking relief from the Court's Order and leave to again amend their complaint. (ECF No. 36.) In their attached proposed Second Amended Complaint ("PSAC") (ECF No. 36-1), Plaintiffs do not allege any new causes of action but do allege additional facts and limit their proposed classes to include only those consumers who purchased bedding sheets (rather than those who purchased either "bedding or linen"). (Compare ECF Nos. 36-1 ¶ 115 with 15 ¶ 98.) The factual allegations in Plaintiffs’ PSAC include the following:

Plaintiff Fontaine is a resident of Massachusetts. (ECF No. 36-1 ¶ 57.) He purchased Fairfield Square Essex Stay Fit brand queen-size sheets in or around October 2017 from a Macy's retail store in Massachusetts for $84.99 ($79.99 plus tax). (Id. ¶¶ 58, 60.) The sheets were manufactured by Defendant Creative and labeled and distributed by Defendant AQ. (Id. ¶ 58.) The sheets were labeled "1200 Thread Count." (Id. )

Plaintiff Hawes is a resident of California. (Id. ¶ 48.) She purchased a Somerset Collection brand queen-size sheet set from a Macy's retail store in California in or around May 2017 for $76.11 ($69.99 plus tax). (Id. ¶¶ 49, 52.) The sheets were manufactured by Defendant Creative and labeled and distributed by Defendant AQ. (Id. ¶ 49.) The sheets were labeled "900 Thread Count." (Id. )

Plaintiff Morrison is a resident of Missouri. (Id. ¶ 35.) She purchased Grande Estate 800TC Luxurious Sateen Weave sheets from a Ross store in Missouri. (Id. ¶ 36.) Plaintiffs estimate that she purchased the sheets for $40.00 in the fall of 2016 or early winter of 2017. (Id. ¶¶ 36, 37.) The sheets were manufactured by Defendant Creative and labeled and distributed by Defendant AQ. (Id. ¶ 38.) The sheets were represented to have 800 thread count. (Id. ¶¶ 39–41.)

Plaintiff Chiaraluce is a resident of Massachusetts. (Id. ¶ 53.) She purchased a Bradford Stay Fit brand queen-size sheet set from a Macy's retail store in New Hampshire in or around October 2017 for $69.99. (Id. ¶¶ 54, 56.) The sheets were manufactured by Defendant Creative and labeled and distributed by Defendant AQ. (Id. ¶ 54.) The sheets were labeled "800 Thread Count." (Id. )

After receiving complaints about sheets distributed by AQ, the Texas Department of Agriculture had the thread counts of three AQ products tested in November and December of 2017. (Id. ¶ 7.) These tests showed that the Fairfield Square Essex Stay Fit 1200 thread count sheets, the same brand purchased by Plaintiff Fontaine, had an actual thread count of 363 according to industry standards.² (Id. ) Similar AQ sheets advertised at 1200 and 800 thread counts had actual counts of 441 and 293, respectively. (Id. )

Plaintiffs Hawes and Morrison then had their sheets independently tested. (Id. ¶¶ 12, 13.) Hawes's sheets, which were labeled "900 Thread Count," had an actual thread count of approximately 227 according to industry standards. (Id. ¶ 12.) Morrison's sheets, which were labeled "800 Thread Count," had an actual thread count of approximately 224 according to industry standards. (Id. ¶ 13.) Plaintiffs allege that they would not have purchased the sheets had they known that the sheets’ thread counts were so much lower than represented. (Id. ¶¶ 21, 42, 113, 200.)

II. LEGAL STANDARD

Plaintiffs bring their motion pursuant to Rules 60 and 15 of the Federal Rules of Civil Procedure "for relief from the Court's Order and for leave to amend their First Amended Complaint." (ECF No. 36 at 1 (internal citations omitted).)

A. Rule 60(b)

Rule 60(b) of the Federal Rules of Civil Procedure provides that a court "may relieve a party ... from a final judgment, order, or proceeding" in limited circumstances. Fed. R. Civ. P. 60(b)(1)–(6). In the Fourth Circuit, a dismissal without prejudice is not considered a final order or judgment if "the plaintiff could save his action by merely amending his complaint." Young v. Nickols , 413 F.3d 416, 418 (4th Cir. 2005) (quoting Domino Sugar Corp. v. Sugar Workers Local Union 392 , 10 F.3d 1064, 1066–67 (4th Cir. 1993) ); see Hui Kun Li v. Shuman , No. 5:14-CV-00030, 2015 WL 4274167, at *2 (W.D. Va. July 14, 2015) (finding that, for purposes of Rule 60(b) analysis, the court's dismissal without prejudice of ten counts did "not operate as a final judgment or order from which relief can be granted" where plaintiffs were permitted to amend their complaint). Such a dismissal is not a final order "unless the grounds for dismissal clearly indicate that ‘no amendment [in the complaint] could cure the defects in the plaintiff's case.’ " Domino Sugar , 10 F.3d at 1067 (quoting Coniston Corp. v. Village of Hoffman Estates , 844 F.2d 461, 463 (7th Cir. 1988) ).

Here, the Court's March 17, 2021, Order made no finding or determination that an amendment could not cure the defects in the FAC. On the contrary, the Court found that Plaintiffs failed to set forth specific facts demonstrating a concrete and particularized injury, such as facts establishing that Defendants sheets were of lower quality, higher prices, or lower thread count. Hill , 2021 WL 1026740, at *2–3. Accordingly, the Court dismissed Plaintiffs’ claims for lack of standing—a dismissal that "must be one without prejudice, because a court that lacks jurisdiction has no power to adjudicate and dispose of a claim on the merits." S. Walk at Broadlands Homeowner's Ass'n, Inc. v. OpenBand at Broadlands, LLC , 713 F.3d 175, 185 (4th Cir. 2013). The Court's Order did not by its terms terminate the action or enter a judgment dismissing the action. Therefore, the Court finds that its previous Order was not a final judgment or order pursuant to ...