Rosa v. Am. Water Heater Co.

• Decision Date: 07 April 2016
• Docket Number: CIVIL ACTION NO. H-15-1898
• Citation: 177 F.Supp.3d 1025
• Parties: Robert J. Rosa and Karen F. Posey, Individually and On Behalf of all others Similarly Situated, Plaintiffs, v. American Water Heater Company and A.O. Smith Corporation, Defendants.
• Court: U.S. District Court — Southern District of Texas

177 F.Supp.3d 1025

Robert J. Rosa and Karen F. Posey, Individually and On Behalf of all others Similarly Situated, Plaintiffs,

v.American Water Heater Company and A.O. Smith Corporation, Defendants.

CIVIL ACTION NO. H-15-1898

United States District Court, S.D. Texas, Houston Division.

Signed April 7, 2016

Trenton R. Kashima, Finkelstein & Krinsk, LLP, San Diego, CA, Willie C. Briscoe, The Briscoe Law Firm, PLLC, Dallas, TX, for Plaintiffs.

M. Christian King, Sara A. Ford, Lightfoot Franklin & White, Birmingham, AL, Michael E. Richardson, II, Beck Redden et al., Houston, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

SIM LAKE, UNITED STATES DISTRICT JUDGE

Plaintiffs Robert J. Rosa (“Rosa”) and Karen F. Posey (“Posey”) (together, “Plaintiffs”) bring this action against American Water Heater Company (“American Water Heater”) and A.O. Smith Corporation (“A.O. Smith”) (together, “Defendants”), for breach of express warranty, breach of implied warranty of merchantability, violation of the Magnuson-Moss Warranty Act (“MMWA”), and declaration relief, individually and on behalf of all others similarly situated.¹ Pending before the court are Defendants' Motion to Strike Class Allegations and Brief in Support (“Motion to Strike”) (Docket Entry No. 15), and Defendants' Motion to Dismiss First Amended Complaint and Brief in Support (“Motion to Dismiss”) (Docket Entry No. 16). For the reasons stated below, the Motion to Dismiss will be granted in part and denied in part, and the Motion to Strike will be granted.

I. Factual Allegations and Procedural History

American Water Heater manufactures, distributes, and sells residential gas water heaters.² A.O. Smith owns American Water Heater.³ Plaintiffs purchased an American Water Heater Company 50-gallon residential gas water heater (Model No. BFG6150S403NOV) (the “Heater”) in March of 2012, replacing the existing water heater in their home.⁴ The front of the Heater had a data plate label (the “Data Plate Label”), which describes the specifications of the Heater and notes in one box:

LIMITED WARRANTY

INNER TANK 6 YEAR

PARTS 6 YEAR⁵

“Plaintiffs did not receive any other documentation regarding [the limited warranty], or the owner's manual, before purchasing their water heater.”⁶ Plaintiffs had the heater professionally installed in their attic.⁷

On September 9, 2014, Plaintiffs noticed a water leak originating from their attic.⁸ Rosa investigated and found that the Heater's drain valve had failed and the contents of the Heater's tank had leaked into the attic.⁹ Rosa had to puncture his attic tent cover to allow the water to drain before he could enter the attic.¹⁰ Water continued to flow from the Heater and out of the broken drain valve until Plaintiffs were able to shut off the water supply to their home, which left them without hot water.¹¹

Rosa called a plumber to repair the drain valve, which “was found to be extremely brittle and the threads on the valve had failed.”¹² The plumber replaced the drain valve with a brass drain valve for $195.00, including costs and labor.¹³ Plaintiffs also replaced the attic tent cover for $250.00, excluding labor.¹⁴ Rosa called American Water Heater's toll-free number to complain and “seek compensation under Defendants' six (6) year limited warranty.”¹⁵ American Water Heater's customer service representative told Rosa that the company would either provide Plaintiffs with a replacement drain valve or reimburse them approximately $6.95, “Defendants' cost for a plastic replacement drain valve.”¹⁶ “Plaintiffs refused Defendants' offer, noting that it did not effectively remedy the defect and a plastic drain valve would lead to future leaks.”¹⁷

Plaintiffs filed their complaint on July 2, 2015.¹⁸ Defendants filed a motion to dismiss, a motion to strike Plaintiffs' class claims, and an answer on September 14, 2015.¹⁹ Plaintiffs amended their complaint on October 2, 2015.²⁰ Plaintiffs contend that Defendants use “plastic” drain valves that are inappropriate for water heaters because such parts are exposed to high and fluctuating temperatures that can cause plastic to become brittle and break.²¹ Plaintiffs allege that Defendants' “practice of installing materially defective drain valves on their water heaters, and failing to provide an adequate remedy for this defect, breaches Defendants' express and implied warranty and violates the [MMWA].”²² Plaintiffs seek damages and/or injunctive relief on behalf of themselves and all similarly situated purchasers²³ in a National Class of

All entities and natural persons who, from July 2, 2011 to present, purchased an American Water Heater Company branded residential gas water heater in the United States that was equipped with a plastic drain valve.²⁴

Plaintiffs also define the following Texas Subclass of

All entities and natural persons who, from July 2, 2011 to present, purchased an American Water Heater Company branded residential gas water heater in the State of Texas that was equipped with a plastic drain valve.²⁵

II. Defendants' Motion to Dismiss

Defendants move to dismiss Plaintiffs' Amended Complaint under Federal Rules of Civil Procedure 12(b)(1), arguing that Plaintiffs lack standing to seek injunctive relief and that their claim for injunctive relief is moot, and 12(b)(6), arguing (1) the limited warranty is the express warranty between the parties, and there is no basis for the declaratory relief sought; (2) Plaintiffs cannot recover consequential damages; and (3) Plaintiffs have failed to state a claim for injunctive relief.²⁶

A. Standing to Seek Injunctive Relief

1. Standard of Review-Fed. R. Civ. P. 12(b)(1)

Federal courts are “courts of limited jurisdiction, having 'only the authority endowed by the Constitution and that conferred by Congress.”' Halmekangas v. State Farm Fire and Casualty Co., 603 F.3d 290, 292 (5th Cir.2010). “Under Rule 12(b)(1), a claim is 'properly dismissed for lack of subject-matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate' the claim.” In re FEMA Trailer Formaldehyde Products Liability Litigation, 668 F.3d 281, 286 (5th Cir.2012) (quoting Home Builders Association, Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir.1998) ). “[S]tanding and ripeness are essential components of federal subject-matter jurisdiction.” In re Jillian Morrison, L.L.C., 482 Fed.Appx. 872, 875 (5th Cir.2012).

When facing a challenge to subject matter jurisdiction and other challenges on the merits, courts must consider the Rule 12(b)(1) jurisdictional challenge before addressing the merits of the claim. Alabama – Coushatta Tribe of Texas v. United States, 757 F.3d 484, 487 (5th Cir.2014). ‘ [T] he party asserting federal subject-matter jurisdiction[ ] has the burden of proving that this requirement has been met. Id.“Subject matter jurisdiction is not defeated by the possibility that the complaint ultimately fails to state a claim.” Energytec, Inc. v. Proctor, 516 F.Supp.2d 660, 671 (N.D.Tex.2007) (citations omitted).

When evaluating jurisdiction, courts distinguish between “facial” and “factual” attacks under Rule 12(b)(1). SeePaterson v. Weinberger, 644 F.2d 521, 523 (5th Cir.1981). “[I]f the defense merely files a Rule 12(b)(1) motion, the trial court is required merely to look to the sufficiency of the allegations in the complaint because they are presumed to be true. If those jurisdictional allegations are sufficient the complaint stands. If a defendant makes a 'factual attack' upon the court's subject matter jurisdiction ... the defendant submits affidavits, testimony, or other evidentiary materials.” Id. Because Defendants' motion relies on the Limited Warranty Terms and Data Plate Label, both of which are referred to in the Amended Complaint, the motion is a facial attack, and “[t]his Court must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.” Williams v. Certain Underwriters at Lloyd's of London, 398 Fed.Appx. 44, 46 (5th Cir.2010) (quotations omitted).

Standing requires that: (1) “the plaintiff must have suffered an injury in fact-an invasion of a legally protected interest ...;” (2) “there must be a causal connection between the injury and the conduct complained of-the injury has to be fairly ... trace [able] to the challenged action of the defendant, and not ... th[e] result [of] the independent action of some third party not before the court;” and (3) “it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351 (1992) (citations and quotations omitted). “For injunctions, an additional inquiry is required, namely that Plaintiffs show that they are likely to suffer future injury by the defendant and that the sought-after relief will prevent that future injury.” James v. City of Dallas, Texas, 254 F.3d 551, 563 (5th Cir.2001). Standing is not dispensed in gross, so the court must evaluate the Plaintiffs' Article III standing for each claim. Fontenot v. McCraw, 777 F.3d 741, 746 (5th Cir.2015). Lack of standing may be found based on the complaint alone. Barrera – Montenegro v. United States, 74 F.3d 657, 659 (5th Cir.1996).

2. Analysis

Plaintiffs seek “[a]n order enjoining Defendants from further distribution and sale of the defective water heaters, and to replace the plastic drain valve with a suitable alternative.”²⁷ Defendants argue that Plaintiffs lack standing to seek injunctive relief because their alleged injury was suffered in the past and cannot be redressed by injunctive relief.²⁸ Plaintiffs respond that “courts have allowed a plaintiff that suffered a past injury to bring claims on behalf of absent putative class members that suffer risk of the same future injury.”²⁹

Standing and class certification must both be addressed on a claim-by-claim basis. James, 254 F.3d at 563. Generally, “[b]efore we reach the questions regarding the class...