In re Lumber Liquidators Chinese-Manufactured Flooring Prods. Mktg.

Decision Date21 April 2017
Docket NumberMDL No. 1:15-md-2627 (AJT/TRJ)
CourtU.S. District Court — Eastern District of Virginia

(Defendant's Motion for Summary Judgment on Plaintiffs' First Amended Representative Class Action Complaint)

Presently pending before the Court is Defendant Lumber Liquidators, Inc.'s Motion for Summary Judgment on Plaintiffs' First Amended Representative Class Action Complaint [Doc. No. 999]) (the "Motion").1

Upon consideration of the Motion, the memoranda in support thereof and in opposition thereto, the arguments of counsel at the hearing held on September 13, 2016, and for the reasons set forth below, the Motion will be GRANTED as to (1) all claims filed by Laura Washington; (2) those claims filed by the Cloudens (New York plaintiffs), the Burkes (Illinois plaintiffs), and Lila Washington (California plaintiff) for fraudulent concealment (Count I); (3) all claims filed by all Plaintiffs for violations of the three California consumer protection laws (Counts II-IV), the Texas Deceptive Trade Practices Act (Count VII), and the Illinois Consumer Fraud and Deceptive Business Practices Act (Count VIII); and (4) all Plaintiffs' demands for declaratoryrelief (Count XII). The Motion is otherwise DENIED, and the following claims will remain for adjudication: (1) claims filed by the Ronquillo and Balero California Plaintiffs as well as the Florida and Texas Plaintiffs for fraudulent concealment (Count I); (2) the Brandts' (Florida plaintiffs) claims under the Florida Deceptive and Unfair Trade Practices Act (Count V); (3) the Cloudens' (New York plaintiffs) claims under New York General Business Law Section 349 (Count VI); (4) all Plaintiffs' claims for breach of implied warranty and violations of the Magnuson-Moss Warranty Act (Counts IX-X); and (5) the Brandts' (Florida plaintiffs) claims for negligent misrepresentation (Count XI).

I. Claims and Procedural History

Plaintiffs collectively have asserted the following twelve causes of action in the FAC.2

Count I: fraudulent concealment (by all Plaintiffs and all classes) (FAC ¶¶ 156-64);
Count II: violation of the California Unlawful, Unfair, or Fraudulent Business Acts and Practices Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et seq. (by the Washingtons and Ronquillos, Mr. Balero, and the California class) (id. ¶¶ 165-76);
Count III: violation of the California False Advertising Law ("FAL"), Cal. Bus. & Prof. Code § 17500, et seq. (by the Washingtons and Ronquillos, Mr. Balero, and the California class) (id. ¶¶ 177-82);
Count IV: violation of the California Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750, et seq. (by the Washingtons and Ronquillos, Mr. Balero, and the California class) (id. ¶¶ 183-93);
Count V: violation of the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201, et seq. (by the Brandts and the Florida class) (id. ¶¶ 194-202);
Count VI: violation of N.Y. Gen. Bus. Law § 349, et seq. (by the Cloudens and the New York class) (id. ¶¶ 203-16);Count VII: violation of the Texas Deceptive Trade Practices Act, Tex. Bus. & Com. Code § 17.50, et seq. (by the Parnellas and the Texas class) (id. ¶¶ 217-26);
Count VIII: violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. § 505/1, et seq. (by the Burkes and the Illinois class) (id. ¶¶ 227-38);
Count IX: breach of implied warranty (by all Plaintiffs and all classes) (id. ¶¶ 239-47);
Count X: violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. ("MMWA") (by all Plaintiffs and all classes) (id. ¶¶ 248-58);
Count XI: negligent misrepresentation (by the Brandts and the Florida class3) (id. ¶¶ 259-62); and
Count XII: declaratory relief (by all Plaintiffs and all classes) (id. ¶¶ 266-67).

On October 7, 2015, Defendant Lumber Liquidators, Inc. ("Lumber Liquidators" or "LL") filed a "Motion to Dismiss First Amended Representative Class Action Complaint and to Strike Plaintiffs' Request for Injunctive Relief Classes" [Doc. No. 597] (the "Motion to Dismiss"). On December 1, 2015, the Court held a hearing, and on December 11, 2015, it dismissed the claims for negligent misrepresentation filed in Count XI on behalf of all Plaintiffs other than Ryan and Kristin Brandt and the Florida class and otherwise denied the Motion to Dismiss.

On August 1, 2016, Defendant filed a motion for summary judgment, which is now before the Court. Briefly summarized, Lumber Liquidators seeks summary judgment on Plaintiffs' claims principally on the grounds that (1) LL did not violate the Airborne Toxic Control Measure to Reduce Formaldehyde Emissions from Composite Wood Products, and therefore did not violate any state consumer protection laws or breach any warranties, (2) Plaintiffs lack standing to sue because they did not rely on any sufficiently identifiedmisrepresentations and were not injured in any legally cognizable way as a result, and (3) Plaintiffs are not entitled to the relief sought, including declaratory or injunctive relief.


Unless otherwise indicated, the following facts are undisputed or, where they are disputed, are viewed most favorably to the Plaintiffs, as the non-moving party:

A. Lumber Liquidators' Business and Applicable Regulations

Defendant Lumber Liquidators sold, supervised, and controlled the manufacturing of certain composite wood-based laminate products, including Chinese-manufactured composite wood flooring (the "Products"). Defendant's Memorandum in Support of its Motion for Summary Judgment [Doc. No. 1000] ("Def.'s Mem.") ¶ 1. After supervising the manufacturing and packaging of the Products in China, it acquired the flooring via Sequoia Floorings, Inc. ("Sequoia"), its subsidiary. Plaintiffs' Memorandum in Opposition to Defendant's Motion for Summary Judgment [Doc. No. 1017] ("Pls.' Mem. Opp'n") ¶ 3. Lumber Liquidators then distributed, marketed, and sold its Chinese-manufactured composite wood flooring in California, Florida, Illinois, New York, and Texas, where the Plaintiffs purchased the Products, as well as in other states. Def.'s Mem. ¶ 1.

The State of California, through the California Air Resources Board ("CARB"), lists formaldehyde as a toxic air contaminant with no safe level of exposure and has set comprehensive and stringent formaldehyde emission standards, which serve as a model for national standards considered by, among other regulatory entities, the United States Environmental Protection Agency. Id. No other state or federal agency regulates formaldehyde in laminate flooring or MDF cores. Def.'s Mem. ¶ 3.

In April 2007, CARB approved the Airborne Toxic Control Measure to Reduce Formaldehyde Emissions from Composite Wood Products ("ATCM"), which appears publicly as Cal. Code Regs. tit. 17, § 93120. The ATCM became effective in January 2009 and sets limits for decreasing formaldehyde levels in two phases. The second phase standard, which was in operation when the events described in this litigation took place, states that regular medium density fiberboard ("MDF") and "thin" MDF products, such as those at issue here, should emit no more than 0.11 ppm and 0.13 ppm of formaldehyde, respectively. ATCM § 93120.2. The CARB regulations also specify testing methods that may be used to determine whether products meet the CARB emissions limits. Although CARB standards only apply to products sold in California, Def.'s Mem. ¶ 3, Defendant represented nationwide, both on its website and on its packaging, that its Products met CARB standards. FAC ¶¶ 9, 13; Def.'s Answer 3-4 (not contesting the allegations). At the time of its Product sales to Plaintiffs, Lumber Liquidators' website explicitly said that there was "NO formaldehyde" in its hardwood floors. Pls.' Mem. Opp'n ¶ 12.

B. Formaldehyde Testing Results

In October 2013, CARB notified Lumber Liquidators that certain tested Products had failed CARB's emissions testing, including some Products that were eventually resold to Plaintiffs. Pls.' Mem. Opp'n ¶ 20. Defendant then retained a separate laboratory, Benchmark International, which separately confirmed that at least several of the Products exceeded CARB's standards. Nevertheless, Defendant did not remove or qualify the representation on its website that its Products contained "NO formaldehyde." Id. ¶¶ 12, 21. However, on the same day that CARB notified Lumber Liquidators of further CARB test results indicating impermissibleformaldehyde levels (May 7, 2015), Lumber Liquidators suspended all sales of its Products. Id. ¶ 22.

On March 1, 2015, the CBS television news program 60 Minutes presented a segment on Lumber Liquidators' Products, which included allegations that the Products contained dangerous levels of formaldehyde. Def.'s Mem. ¶ 5. Responding to the 60 Minutes segment, Lumber Liquidators' CEO stated in a letter dated March 2, 2015 posted on its website that its products are "100% safe" and that Lumber Liquidators "compl[ies] with applicable regulations regarding our products, including California standards for formaldehyde emissions for composite wood products . . . ." FAC ¶ 45; see Def.'s Answer 8-9 (not contesting the allegations). The parties dispute to what extent Lumber Liquidators and its leadership knew about the levels of formaldehyde in its Products prior to the 60 Minutes report. Nevertheless, the Plaintiffs have produced evidence sufficient, when viewed most favorably to them, for a fact finder to reasonably conclude that Lumber Liquidators, including its top management, were on notice that certain of its Products were not CARB compliant as advertised.4

In March 2016, following the conclusion of a CARB investigation into Lumber Liquidators' products and practices, CARB and Lumber Liquidators agreed to a settlement. See Defendant's Reply Memorandum in Support of its Motion for Summary...

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