In re Louisiana Pacific Inner Seal Siding Lit.

• Decision Date: 13 December 2002
• Docket Number: Civil No. 95-879-JO (LEAD).
• Parties: In re LOUISIANA-PACIFIC INNERSEAL SIDING LITIGATION.
• Court: U.S. District Court — District of Oregon

234 F.Supp.2d 1170

In re LOUISIANA-PACIFIC INNERSEAL SIDING LITIGATION.

Civil No. 95-879-JO (LEAD).

United States District Court, D. Oregon.

December 13, 2002.

James Volling, Jason K. Walbourn, Faegre & Benson LLP, Minneapolis, MN, Kell M. Damsgaard, Brian W. Shaffer, Morgan Lewis & Bockius LLP, Philadelphia, PA, Jennifer K. Oetter, Hoffman Hart & Wagner LLP, Portland, OR, for Lester Building Systems.

Christopher I. Brain, Tousley Brain Stephens PLLC Seattle, WA, Co-Lead Class Counsel.

Michael H. Simon, Perkins Coie LLP, Portland, OR, James K. Langdon II, Edward B. Magarian, Dorsey & Whitney LLP, Minneapolis, MN, for Louisiana-Pacific Corporation.

OPINION, ORDER, AND PERMANENT INJUNCTION

ROBERT E. JONES, District Judge.

This case is before the court on Louisiana-Pacific's ("LP") motion (# 558) to enforce class action settlement (Minnesota). LP seeks an injunction to prevent entry of judgment against LP and in favor of Lester Building Systems and Lester's of Minnesota, Inc. (collectively, "Lester"), on a portion of a Minnesota state court jury verdict that, according to LP, awards damages encompassed by and precluded by the Order, Final Judgment and Decree this court entered on April 26, 1996, approving and implementing a nationwide class action settlement in the above-captioned case.

On December 10, 2002, I held a hearing on LP's motion. Counsel for LP and Lester appeared and argued. After arguments, I asked counsel for LP to prepare and submit a proposed statement of predicate facts for the requested relief, and took LP's motion under advisement. On December 11, 2002, the court received LP's submission, and on December 12, 2002, received Lester's objections.

After thoroughly considering the written submissions and arguments of counsel, I am convinced that the injunction LP requests is appropriate and necessary in aid of this court's jurisdiction and to effectuate the class action settlement. Accordingly, I grant LP's motion and enter an injunction enjoining the Minnesota state court from entering judgment on the portion of the jury's damages award that is encompassed in and precluded by the class action settlement agreement, as set forth below.

FACTUAL BACKGROUND

1. The Settlement Agreement and the Order, Final Judgment and Decree

On April 26, 1996, this court entered its Order, Final Judgment and Decree ("Order") approving the nationwide class action settlement in this consolidated action. Affidavit of James K. Langdon II ("Langdon Aff."), Ex. 1.

The Order defines the "Class" as "[a]ll persons who have owned, own, or subsequently acquire Property on which [LP siding] has been installed prior to January 1, 1996 * * *." Langdon Aff., Ex. 1, p. 2 n. 2. The Order states that "all members of the Class who do not file timely notices of exclusion release are barred and permanently enjoined from prosecuting `Settled Claims' * * * against L-P * * *." Ex. 1, p. 5.

The Settlement Agreement, as amended, defines "Settled Claim" to mean

any claim, * * * damage, loss or cost, action or cause of action, of every kind and description that the Releasing Party [as defined] has or may have, whether known or unknown, asserted or unasserted, latent or patent, that is, has been, could reasonably have been or in the future might reasonably be asserted by the Releasing Party either in the Action or in any other action or proceeding in this Court or any other court or forum, regardless of legal theory, and regardless of the type or amount of relief or damages claimed, against any of the Defendants, arising from or in any way relating to any defects or alleged defects of [LP siding], or any part thereof.

Langdon Aff., Ex. 2, p. 5. "Settled Claim" does not include claims arising from the installation of new siding after January 1, 1996. Langdon Aff., Ex. 2, p. 6.

The Settlement Agreement also contains a release of all claims against persons or entities, including contractors such as Lester, in the chain of distribution, installation, or finishing of LP siding. Langdon Aff., Ex. 2, p. 23.

The Settlement Agreement deals specifically with the period after January 1, 2003. Paragraph 4.9 of the Settlement Agreement provides that if at the end of the seven year period, funds are insufficient to satisfy in full all approved claims filed before January 1, 2003, then the Claims Administrator is to notify LP within 60 days. Within 60 days of notification, LP is to advise class counsel whether it will satisfy the remaining unfunded claims. If it decides to do so, LP must make additional payments into the fund "at the end of each of the next two 12-month periods or until all claims are paid in full." Langdon Aff., Ex. 2, p. 11. If LP elects to continue funding, then "all class members are bound by this Agreement for an additional 24-month period." Id. Finally, if LP should fail to make the additional payments, then all class members whose claims remain unsatisfied for a period of 90 days may then "pursue whatever legal remedies are available to them without regard to the release * * *." Id.

The Order further provides:

[T]he Court shall retain exclusive and continuing jurisdiction over the Actions and Parties, including all members of the Class, the administration and enforcement of the settlement, and the benefits to the Class, including for such purposes as supervising and implementation, enforcement, construction, and interpretation of the Settlement Agreement.

Langdon Aff., Ex. 1, p. 6. Similarly, the Settlement Agreement provides that "[t]he Court shall retain exclusive and continuing jurisdiction of the Action, all Parties and Settlement Class members, to interpret and enforce the terms, conditions, and obligations of this release." Langdon Aff., Ex. 2, p. 22.

2. Lester's Minnesota Claims

On May 11, 2000, Lester filed a complaint in the McLeod County District Court for the State of Minnesota, styled Lester Building Systems and Lester's of Minnesota, Inc. v. Louisiana-Pacific Corporation and Canton Lumber Company, Case No. 43-C6-00-000335 (McLeod County, MN District Court). Langdon Aff., Ex. 3.

As relevant to the present motion, in an amended complaint ("Complaint") filed in August 2002, Lester alleges that it purchased LP siding from 1991 to 1996. Langdon Aff., Ex. 4, ¶ 15. "During the same time period, [Lester] sold directly to end users the [siding] as part of the insulwall panels and otherwise in the building systems." Id. Lester sold products made with LP siding for use in approximately 2600 buildings. Langdon Aff., Ex. 4, ¶ 34.

Lester stopped purchasing LP siding in 1996. Langdon Aff., Ex. 4, ¶ 27. Lester worked with LP to resolve customer complaints concerning failed siding from 1996 until September 1998. Langdon Aff., Ex. 4, ¶¶ 29, 32. Lester alleged that it "has received and will continue to receive hundreds of complaints * * * which must be administered and resolved in order to avoid further losses * * *." Langdon Aff., Ex. 4, ¶¶ 63 (misrepresentation claim), 136 (indemnity claim).

Under Count XIV, Lester sought declaratory relief concerning the class action settlement, specifically, a declaration that

in order to avoid further loss to Plaintiffs, L-P is obligated and required: (i) to pay, reimburse, and indemnify Plaintiffs for all monies they pay and expenses they reasonably incur in properly satisfying the claims of their dealers and customers arising from defects in and failure of L-P's [siding]; * * *.

Langdon Aff., Ex. 4, ¶ 153.

In the prayer, Lester sought, as relevant, damages "in an amount to be determined at trial," and "an affirmative injunction requiring L-P to resume honoring its warranties and other legal obligations, including, but not limited to reimbursing Plaintiffs for satisfying the claims of Plaintiffs' dealers and customers * * *." Langdon Aff., Ex. 4, p. 34.

LP moved for partial summary judgment shortly before trial, seeking dismissal of all claims against LP for known, unresolved Inner-Seal® claims and all claims for future, unknown Inner-Seal® claims related to hog barns built during the period 1991-1995. In the alternative, LP moved to exclude testimony about such claims at trial. The judge denied both motions. Langdon Aff., Ex. 6, pp. 1-4.

3. The State Court Trial

Trial in Minnesota state court was held from September 24, 2002 through October 14, 2002. Langdon Aff., Ex. 12. During trial, a witness, Vance Thomas, testified that based on a comparison of the list of opt-outs and a list of Lester barn purchasers, no barn purchasers had opted out of the nationwide class action settlement. Langdon Aff., Ex. 5, pp. 4-5.

Lester presented testimony from its damages expert Donald Gorowsky that it would cost $13.2 million to repair the LP siding on all of the buildings that Lester built from 1991 through 1996. According to Gorowsky, Lester paid $3.4 million for the siding purchased during that time period. Langdon Aff., Ex. 8, pp. 2-3, 10. Gorowsky testified that

[a]ll of the buildings that were built from 1991 through 1996 that were sold into the hog industry or hog market and a few others that have been sold in this area, like for horses and dairy that have Inner-Seal on them, * * * the amount it will take to repair them less the ones that were sold without a warranty on the Inner-Seal and determined that it will take thirteen point two million dollars to repair those about 2600 remaining buildings.

Langdon Aff., Ex. 8, p. 3. Gorowsky explained that

[w]e did a verification test to be satisfied with the quantity of Inner-Seal, the square footage that was contained on those 2632 buildings; how much of that is on there and the cost that it will take to repair and replace those buildings.

Id., p. 4. Continuing to explain how he calculated the cost to repair, Gorowsky stated:

For the building repairs that were made it's just under $200,000.00 or point two million. For the building repairs known to be needed it's estimated at one point five million and for the building repairs...