In re Hardieplank Fiber Cement Siding Litig.

• Citation: 284 F.Supp.3d 918
• Decision Date: 02 January 2018
• Docket Number: Case No. 12–md–2359,MDL No. 2359
• Parties: IN RE: HARDIEPLANK FIBER CEMENT SIDING LITIGATION This Document Relates to: Heidi Picht, Civil File No. 11–958 (MJD/LIB), the Susan S. Buchanan Personal Residence Trust, Civil File No. 12–1393 (MJD/LIB), James Dillingham, Civil File No. 12–1496 (MJD/LIB), Hugh Fenwick, Civil File No. 12–1391 (MJD/LIB), Michael Swiencki, Civil File No. 12–1392 (MJD/LIB), Mark Kostos, Civil File No. 12–1497 (MJD/LIB), Jonathan Bowers, Civil File No. 12–727 (MJD/LIB), Richard Treece, Civil File No. 12–1669 (MJD/LIB), Masoud Kavianpour, Civil File No. 12–2268 (MJD/LIB), John Brown, Civil File No. 12–2817 (MJD/LIB), Brian Bethel, Civil File No. 12–2728 (MJD/LIB), David and Sharon Angelici, Civil File No. 14–285 (MJD/LIB), John J. Hernandez, Civil File No. 14–4655 (MJD/LIB)
• Court: U.S. District Court — District of Minnesota

284 F.Supp.3d 918

IN RE: HARDIEPLANK FIBER CEMENT SIDING LITIGATION This Document Relates to: Heidi Picht, Civil File No. 11–958 (MJD/LIB), the Susan S. Buchanan Personal Residence Trust, Civil File No. 12–1393 (MJD/LIB), James Dillingham, Civil File No. 12–1496 (MJD/LIB), Hugh Fenwick, Civil File No. 12–1391 (MJD/LIB), Michael Swiencki, Civil File No. 12–1392 (MJD/LIB), Mark Kostos, Civil File No. 12–1497 (MJD/LIB), Jonathan Bowers, Civil File No. 12–727 (MJD/LIB), Richard Treece, Civil File No. 12–1669 (MJD/LIB), Masoud Kavianpour, Civil File No. 12–2268 (MJD/LIB), John Brown, Civil File No. 12–2817 (MJD/LIB), Brian Bethel, Civil File No. 12–2728 (MJD/LIB), David and Sharon Angelici, Civil File No. 14–285 (MJD/LIB), John J. Hernandez, Civil File No. 14–4655 (MJD/LIB)

Case No. 12–md–2359

MDL No. 2359

United States District Court, D. Minnesota.

Signed January 2, 2018

Robert K. Shelquist, Karen Hanson Riebel, and Scott Moriarity, Lockridge Grindal Nauen, PLLP, Plaintiffs' Lead Counsel, and Charles J. LaDuca, Cuneo Gilbert & LaDuca, LLP; Charles E. Schaffer, Levin, Fishbein, Sedran & Berman; Clayton D. Halunen, Melissa Wolchansky, Amy E. Boyle, and Christopher J. Moreland, Halunen Law; Michael McShane, Audet & Partners, LLP; Nicholas J. Drakulich, The Drakulich Firm; D. Michael Campbell, Campbell Law; Lawrence Deutsch, Shannon J. Carson, Robin Switzenbaum, and Jake Polakoff, Berger & Montague PC; and Frances Baillon and Shawn J. Wanta, Baillon Thome Jozwiak & Wanta LLP, Plaintiffs' Executive Committee.

Christopher M. Murphy, Peter B. Allport, and Daniel Campbell, McDermott Will & Emery LLP; and Aron J. Frakes and Rachna B. Sullivan, Fredrikson & Byron, PA; Counsel for Defendant James Hardie Building Products Inc.

MEMORANDUM OF LAW & ORDER

Michael J. Davis, United States District Court

I. INTRODUCTION

This matter is before the Court on Defendant's Motion for Summary Judgment (Swiencki) [Docket No. 306]; Defendant's Motion for Summary Judgment (Kavianpour) [Docket No. 311]; Defendant's Motion for Summary Judgment (Susan S. Buchanan Personal Residence Trust) [Docket No. 316]; Defendant's Motion for Summary Judgment (Dillingham) [Docket No. 320]; Defendant's Motion for Summary Judgment (Fenwick) [Docket No. 324]; Defendant's Motion for Summary Judgment (Brown, Kostos, Treece) [Docket No. 328]; Defendant's Motion for Summary Judgment (Bethel) [Docket No. 333]; Defendant's Motion for Summary Judgment (Bowers) [Docket No. 337]; Defendant's Motion for Summary Judgment (Hernandez) [Docket No. 341]; and Defendant's Motion for Summary Judgment (Angelicis) [Docket No. 346]. The Court heard oral argument on December 15 and 16, 2016. Also before the Court is Defendant's Combined Motion for Summary Judgment and to Dismiss under Rule 9(b) (Picht) [Civil File No. 11–958 Docket No. 25].

II. BACKGROUND

A. Factual Background

1. Overview of the Hardieplank Product

Defendant James Hardie Building Products Inc. ("Hardie") originated in Australia in 1888, but now sells fiber-cement products around the world. ( [Docket No. 260] Moriarity Decl., Ex. B, Exponent Report at 6.) Fiber-cement is a composite material made of sand, cement, and cellulose fibers. (Id. ) Hardie first began selling its exterior fiber-cement siding, Hardieplank, in the United States in 1987. (Id. ) Since that time, Hardie has made at least seven major changes to Hardieplank, including changing formula additives, design changes (such as altering the shape of the planks to improve water shedding), and manufacturing method improvements. (Id. 18–20.) Some Hardieplank versions are sold with Hardie's factory-coated paints, while other versions are sold as primed-only products, which can be painted either in a factory or in the field. (Id. at 14–16.)

2. The Hardieplank Warranty

Until 2009, Hardie provided a 50–year prorated limited warranty with Hardieplank ("Limited Warranty"). (Exponent Report at 6; [Docket No. 273] Allport Decl., Ex. 4, Limited Warranty.) The Limited Warranty warrants that Hardieplank complies with ASTM C1186, the American Society for Testing and Materials standard, when manufactured and "is free from defects in material and manufacture." (Limited Warranty § 1.) With regard to freeze-thaw resistance in exterior fiber-cement products, ASTM C1186 provides:

The specimens, when tested in accordance with Test Method C1185 [ ], for 50 [freeze-thaw] cycles, shall not show visible cracks or structural alteration such as to affect their performance in use. The ratio of retained strength as calculated from the [flexural strength] test results shall be at least 80%.

( [Docket No. 273] Allport Decl., Ex. 6, ASTM C1186 § S.7.)

The Limited Warranty also states that, when "properly installed and maintained according to Hardie's published installation instructions, the Product for a period of 50 years from the date of purchase ... will not crack, rot or delaminate." (Limited Warranty § 1.)

The Limited Warranty extends to the first retail purchaser of the siding, the first owner of the structure to which the siding is applied, and the first transferee of the structure. (Limited Warranty § 1.) The Limited Warranty excludes coverage for performance of any third-party paints, stains, or coatings applied to Hardieplank. (Limited Warranty § 3.) The Limited Warranty also excludes from coverage damage or defects resulting from "any cause other than manufacturing defects attributable to Hardie." (Id. )

As for a remedy, the Limited Warranty provides:

If during the Warranty period, any Product proves to be defective, Hardie, in its sole discretion, shall replace the defective Product before it is installed, or, during the first year, reimburse the covered person for resulting losses up to twice the retail cost of the defective portion of the Product. During the 2nd through the 50th year, the warranty payment shall be reduced by 2% each year such that after the 50th year no warranty shall be applicable. If the original retail cost cannot be established by the covered person, the cost shall be determined by Hardie in its sole and reasonable discretion. Hardie's replacement of the defective Product or granting of a refund pursuant to Section 1 of this Warranty SHALL BE THE SOLE EXCLUSIVE REMEDY available to the covered person with respect to any defect. Hardie will not refund or pay any costs in connection with labor or accessory materials.

(Limited Warranty § 1.)

3. Alleged Defects in Hardieplank Siding

Hardieplank is manufactured using the Hatschek process, in which a roller applies multiple fiber-cement layers or "laminas." (Exponent Report at 7–8.) When the laminas in the substrate separate, the board "delaminates."

Plaintiffs claim that Hardieplank has a common design defect of low interlaminar bond ("ILB") strength, which makes it easier for moisture to invade the substrate and push the laminas apart, causing delamination

and coating adhesion problems. They further claim that Hardieplank has design defects causing gapping, warping, cracking, and fading or discoloration. They assert that Hardieplank fails prematurely before its expected life.

4. Warranty Claims

From 2001 through 2015, Hardie sold billions of square feet of Hardieplank in the United States and received warranty claims on a very small percentage of the siding sold. ( [Docket No. 273] Allport Decl., Ex. 8, Sealed Priest Report at 20.)

Plaintiffs' experts opined that, based on warranty claims, delamination

was the primary cause of Hardieplank failure and that such failures occurred more often in cold, wet conditions. (Exponent Report at 48, 57; Moriarity Decl., Ex. 13, Steffey Dep. 71.)

5. Hardie's Advertising

In 2000, Hardie was reaching 32 million consumers through its advertising. (Moriarity Decl., Ex. 23, 2000 HardiAdvantage Alliance Training Manual at 649.) In 2000 and 2002, Hardie advertised in several major home-living magazines, in newspapers, on the radio, and on television; it also conducted one-on-one presentations with marketing and management teams for dealers and builders throughout the United States. (Id.; Moriarity Decl., Ex. 24, 2002 Sweet's Catalog Hardie Advertisement at 95.) Hardie's marketing strategy used intermediaries to transmit its representations about Hardieplank to consumers through cooperative marketing. (See Moriarity Decl., Ex. 27, 2004 Hardie Factory Build Housing Handbook at 790–91.)

A 1997 Hardie advertisement stated that Hardieplank is "low maintenance," "resists moisture damage," "won't crack, rot or delaminate," and "offer[s] a lifetime of low maintenance backed by a 50–year product warranty" (Moriarity Decl., Ex. 28, 1997 Hardiplank Hardipanel Brochure at 514–15.) In 2000–2004, it advertised that Hardieplank was "backed with a 50–year limited transferable warranty" and asserted that Hardieplank is "low maintenance," "resists moisture damage," "won't crack, rot or delaminate," or other similar statements. (See, e.g., Moriarity Decl., Ex. 29, 2000 Hardie Siding Brochure; Moriarity Decl., Ex. 30, 2001 Hardie Advertisement; Moriarity Decl., Ex. 31, 2001 Hardie Brochure; Moriarity Decl., Ex. 32, 2002 Hardie Brochure; Moriarity Decl., Ex. 34, 2003 Sweets Catalog Hardie Advertisement; Moriarity Decl., Ex. 35, 2004 Sweets Catalog Hardie Advertisement.) A 2008 brochure stated: "James Hardie siding is tough. Remarkably so. And to prove it, most of our products come with a 50–year transferable warranty. Rain. Hail. Impact. Wind. Fire. Fluctuations in humidity. Even hurricanes. None of its stands a chance against James Hardie." (Moriarity Decl., Ex. 39, 2008 Hardie "A Siding for All Seasons" at 549.)

Plaintiffs point to a 1993 article from the Journal of Consumer Research, in which the authors note the theory that manufacturers might use the warranty as a "signal" of the durability of their goods, and attempt to test whether consumers do view the length of a warranty as a signal of durability. (Moriarity Decl., Ex. 43, William Boulding and Amna Kirmani, A Consumer–Side Experimental Examination of Signaling Theory:...