In re Lumber Liquidators Chinese-Manufactured Flooring Prods. Mktg.
| Decision Date | 20 June 2017 |
| Docket Number | MDL No. 1:15-md-2627 (AJT/TRJ) |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | IN RE: LUMBER LIQUIDATORS CHINESE-MANUFACTURED FLOORING PRODUCTS MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION This Document Relates to ALL Cases |
(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 California False Advertising Law (Count III), the California Legal Remedies Act (Count IV), and the Illinois Consumer Fraud and Deceptive Business Practices Act (Count VIII); and (4) all Plaintiffs' demands for declaratory relief (Count XII).The Motion is otherwise DENIED, and the following claims will remain for adjudication: (1) claims filed by Lila Washington, the Ronquillos, and Mr. Balero (California plaintiffs) and the Florida and Texas plaintiffs for fraudulent concealment (Count I); (2) claims filed by Lila Washington, the Ronquillos, and Mr. Balero (California plaintiffs) under the California Unlawful, Unfair, or Fraudulent Business Acts and Practices Law (Count II); (3) the Brandts' (Florida plaintiffs) claims under the Florida Deceptive and Unfair Trade Practices Act (Count V); (4) the Parnellas' (Texas plaintiffs) claims under the Texas Deceptive Trade Practices Act (Count VII); (5) the Cloudens' (New York plaintiffs) claims under New York General Business Law Section 349 (Count VI); (6) all Plaintiffs' claims for breach of implied warranty and violations of the Magnuson-Moss Warranty Act (Counts IX-X); and (7) the Brandts' (Florida plaintiffs) claims for negligent misrepresentation (Count XI).
Plaintiffs collectively have asserted the following twelve causes of action in the FAC.2
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("ATCM"), 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 identified misrepresentations 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, viewed most favorably to the Plaintiffs, as the non-moving party:
A. Lumber Liquidators' Business and Applicable Regulations
Defendant Lumber Liquidators is a retail seller of certain composite wood-based laminate products, including the Chinese-manufactured composite wood flooring that is the subject of this litigation (the "Products"), which it distributed, marketed, and sold in California, Florida, Illinois, New York, and Texas, where the representative Plaintiffs purchased the Products, as well as in other states. Defendant's Memorandum in Support of its Motion for Summary Judgment [Doc. No. 1000] ("Def.'s Mem.") ¶ 1.
The State of California has established the California Air Resources Board ("CARB"). 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 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 whenthe 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; Defendant's Answer [Doc. No. 599] ("Def.'s Answer") 3-4 (not contesting the allegations).
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. Plaintiffs' Memorandum in Opposition to Defendant's Motion for Summary Judgment [Doc. No. 1017] (" ") ¶ 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 modify its website following CARB's and Benchmark's findings. Id. ¶ 21. However, on the same day that CARB notified Lumber Liquidators of further CARB test results indicating impermissible formaldehyde 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 regardingour 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 Judgment [Doc. No. 1028] ("Def.'s Reply") 3, Pls.' Mem. Opp'n ¶ 23. Although Lumber Liquidators admitted no liability or wrongdoing, CARB stated in its announcement of the settlement that "ARB testing...
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