Dan Aaron Polster, United States District Judge.
Presently before the Court is the Motion to Dismiss of Defendants PPG Industries, Inc., PPG Architectural Finishes, Inc., and PPG Architectural Coatings, LLC (collectively, "Defendants" or "PPG"). (
This putative class action arises from PPG's marketing and sale of Olympic®
Based on these factual allegations, Plaintiffs from nine states bring the following claims against PPG.
When determining whether Plaintiff has stated a claim upon which relief can be granted, the Court must construe the complaint in the light most favorable to the Plaintiff, accepting all factual allegations as true, and determine whether the Complaint
The Court in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), further explains the "plausibility" requirement, stating, "a claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 566, 127 S.Ct. 1955). Furthermore, "the plausibility standard is not akin to a `probability requirement', but it asks for more than a sheer possibility that a defendant acted unlawfully." Id. This determination is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. Importantly, while courts must construe pro se complaints liberally in favor of the plaintiff, they too must satisfy the "facial plausibility" standard articulated in Twombly.
The following express limited warranty at issue in Count III is written on the label appended to all cans of Rescue It! Products purchased by Plaintiffs, and provides:
(Doc #: 26-2, at 2 of 15.) The express limited warranty on PPG's website currently provides:
PPG's limited warranty on the labels has three essential features: (1) it guarantees satisfaction with the product when applied to a properly prepared surface in accordance with the label's directions, (2) it provides that PPG will refund the purchase price or provide replacement product to a dissatisfied customer upon request, and (3) it prohibits the buyer from recovering consequential (and other) damages. The limited warranty on PPG's website has two essential features: (1) it guarantees satisfaction with the product when applied to a properly prepared surface in accordance with the label's directions, and (2) it provides that PPG will refund the purchase price or provide replacement product. Notably missing from the website-warranty is a provision excluding consequential damages.
Assuming for purposes of argument that the label-warranty subsumes the websitewarranty, PPG contends that its limitation of remedies and exclusion of consequential damages complies with the Uniform Commercial Code ("UCC" or "Code") of Plaintiffs' home states. Because Plaintiffs do not allege that they were unsatisfied with the Product
Plaintiffs argue that PPG's express limitation of remedies to refund or replacement fails of its essential purpose because the Products are inherently defective, and its exclusion of consequential (and other) damages is unconscionable and unenforceable. Plaintiffs also argue that PPG has made numerous objectively measurable affirmations of fact "including resistance to water, temperature, cracking and peeling" which give rise to additional express warranties. PPG counters that those representations are nothing more than advertising puffery for which it has no liability.
The general rule is that a seller may legitimately limit the buyer's remedies to "return of the goods and repayment of the purchase price or to repair and replacement of nonconforming goods or parts." O.R.C. 1302.93(A)(1).
Whether an exclusive-remedy provision in a limited warranty has failed of its essential purpose is a question of fact. Lincoln Elec. Co. v. Technitrol, Inc., No. 1:08 CV 2346, 2010 WL 2219341, at *4 (N.D.Ohio Jun. 2, 2010) (citing Malkamaki v. Sea Ray Boats, Inc., 411 F.Supp.2d 737, 745 (N.D.Ohio 2005) and Chemtrol Adhesives, Inc. v. Am. Mfrs. Mut. Ins. Co., 42 Ohio St.3d 40, 56, 537 N.E.2d 624 (Ohio 1989)).
Standing in isolation, PPG's remedies-limitation and consequential damages-exclusion is typical of limited warranties on consumer products sold by retailers across the country, and they comply with the UCC of every state. Thus, when a consumer is unsatisfied with a product, a refund of the purchase price or replacement with a new product is a reasonable remedy.
However, where a product is inherently defective, the remedy of a replacement product that is equally defective is meaningless. See, e.g., Sutphen Towers, Inc. v. PPG Indus., Inc., 2005 WL
In the instant case, Plaintiffs from nine different states allege that, within a few months after properly applying the Rescue It! Products to their decks, the Products deteriorated prematurely, causing bubbling, cracking and peeling and damage to the underlying deck structures — corroborating their allegations with photographs of the damage. (See FAC at 27-43.) Plaintiffs claim that the Rescue It! Products failed to live up to PPG's numerous representations about the Products' performance and are inherently, latently defective; consequently, the remedy of a replacement product or a refund is illusory, leaving plaintiffs with damage to their decks and diminished home value. "[W]here an apparently fair and reasonable [remedies limitation] because of circumstances fails in its essential purpose and operates to deprive either party of the substantial value of the bargain, it must give way to the general remedy provisions of this Article." O.R.C. 1302.93 cmt. 1.
Generally speaking, a seller may legitimately limit or exclude recovery of consequential damages "unless the limitation or exclusion is unconscionable." UCC 2-719(c).
When considering a plaintiff's allegations of unconscionability, the parity of bargaining power "bears some consideration" with regard to a claim of unconscionability. Zaremba, 458 F.Supp.2d at 549. "It is well settled that `findings of unconscionability in a commercial setting are rare'." Id. (citing Chemtrol, 42 Ohio St.3d at 55, 537 N.E.2d 624) (citing White & Summers, Uniform Commercial Code [1972] 385-86.). See also Graham Const. Servs., Inc. v. Hammer & Steel, Inc., 2012 WL 5438994, at *6 (E.D.Mo. Nov. 7, 2012) (citation omitted) (holding that "[d]isclaimers of consequential and incidental damages in commercial settings are generally enforceable under Missouri law.") "[W]here there is no great disparity of bargaining power between the parties, a contractual provision which excludes liability for consequential damages. ... is not unconscionable." Id. Conversely, a significant disparity between the parties to a transaction also bears consideration.
The UCC does not define "unconscionability." In applying the Code, however, courts have recognized that unconscionability has both a procedural and substantive element. The procedural element focuses on oppression and surprise, which arise, respectively, from an inequality in bargaining power resulting in the absence of a meaningful choice or hidden, unexpected terms. See, e.g., A & M Produce Co. v. FMC Corp., 135 Cal.App.3d 473, 486, 186 Cal.Rptr. 114 (1982); Oldham's Farm Sausage Co. v. Salco, Inc., 633 S.W.2d 177, 182 (Mo.Ct.App.1982); Penney v. First Nat'l Bank of Boston, 385 Mass. 715, 433 N.E.2d 901, 905 (1982); Industralease Automated & Scientific Equip. Corp. v. R.M.E. Enter., Inc., 58 A.D.2d 482, 489, 396 N.Y.S.2d 427 (N.Y.Sup.Ct.1977). The substantive element, on the other hand, turns on reasonableness. Courts have found a term to be substantively suspect if it "reallocates the risks of the bargain in a objectively unreasonable or unexpected manner." A & M Produce Co., 135 Cal. App.3d at 487, 186 Cal.Rptr. 114; Farrar & Farrar Farms v. Miller-St. Nazianz, Inc., 477 Fed.Appx. 981, 988-89 (4th Cir.2012) (applying North Carolina law and evaluating whether the term was "unreasonably favorable" to one party); Industralease Automated & Scientific Equip. Corp. 58 A.D.2d at 489, 396 N.Y.S.2d 427 (applying New York law).
Plaintiffs contend that the exclusion of consequential and other damages in PPG's limited warranty is "procedurally and substantively unconscionable and thus fails under U.C.C. § 2-302." (FAC ¶ 149). The question before the Court is whether the clause limiting consumers' remedies to a refund or replacement product and excluding consequential and other damages is unconscionable.
Courts have found as unconscionable situations where the seller failed to disclose latent defects of which it had knowledge and the buyer had no meaningful choice in determining the warranty's terms. See, e.g., Martin v. Joseph Harris Co., 767 F.2d 296, 301-02 (6th Cir.1985); In re Porsche Cars North America, Inc., 880 F.Supp.2d 801, 822 (S.D.Ohio 2012); Siriano, et al. v. Goodman Mfg. Co., et al., No. 2:14 CV 1131, Doc #: 40, at 20-22 (S.D.Ohio Aug. 8, 2015); Clark v. LG Elecs. USA, Inc., No. 13-485, 2013 WL 5816410, at *16 (S.D.Cal. Oct. 29, 2013). Courts have also found as unconscionable situations where the disparity in cost between the refund and the
The Court finds that the question of unconscionability is another fact question rendering dismissal premature.
Plaintiffs allege that the numerous representations PPG has printed on its labels, advertisements and website constitute express warranties that PPG has breached. (FAC ¶¶ 142-147). Defendants argue that these statements are "non-actionable opinions or advertising puffery" that do not create express warranties. (Motion, at 10). The UCC is clear.
O.R.C. 1302.26(A)(1).
According to PPG, the only promise it makes, pursuant to its limited warranty, is satisfaction with its Rescue It! Products when applied to properly prepared surfaces in accordance with its directions. Thus, all those representations printed on its labels and website amount to nothing more than puffery. This begs the question, what exactly is PPG guaranteeing satisfaction with? Put differently, what exactly is in those cans that PPG is selling?
A closer look at the warranty provides guidance:
What are those performance properties? Looking at the labels alone, PPG makes the following representations regarding its Products' performance:
(FAC at 14.)
According to the UCC, "
Id. (emphasis added). Moreover,
UCC 2-313 cmt. 3. Nor do Plaintiffs have to show that PPG had the specific intent to make affirmations of fact if a description of the goods is made part of the basis of the bargain. Id.
The Court concludes that the representations PPG made about the performance properties of the Rescue It! Products on its labels form the basis of the bargain and constitute express warranties. The Court rejects PPG's argument asking the Court to dismiss the express warranty claim on the basis that Plaintiffs failed to identify the precise representations upon which they relied when purchasing the Products. Plaintiffs allege, and the Court presumes, that Plaintiffs read the description of the Products printed on the labels of the cans, and relied on those representations, before purchasing them. See also Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d 405, 413 (1982) (holding that reliance should be inferred from the product's purchase where "the natural tendency of the representations made is such as to induce such purchase or use.") In any event, where the description of the goods becomes the basis of the bargain, "no particular reliance on such statements need be shown." UCC 2-313 cmt. 3.
Because the claim for breach of express warranty is riddled with questions of fact, the Motion to Dismiss this claim is denied.
In Counts VI and VII, Plaintiffs allege breach of the implied warranty of merchantability against PPG. Specifically, Plaintiffs assert that "Defendants impliedly warranted to Plaintiffs.. that the Rescue It! Products were of a certain quality, free from defects, fit for the ordinary purpose of resurfacing decks and similar structures, and suitable for providing protection to deck structures from harsh weather conditions and lasting longer than ordinary deck paints or stains." (FAC ¶¶ 155, 165.)
In Counts VI and VII, Plaintiffs assert that "Defendants impliedly warranted to Plaintiffs that the Rescue It! Products were of a certain quality, free from defects, fit for the ordinary purpose of resurfacing decks and similar structures, and fit for the particular purpose of providing protection to deck structures from harsh weather conditions and lasting longer than
In short, resurfacing decks and providing protection from harsh weather conditions and lasting longer than ordinary deck paints or stains is the ordinary purpose of Rescue It! Products.
Comment 2 to the Uniform Commercial Code's provision addressing the implied warranty of fitness for a particular purpose that has been adopted by all Plaintiffs' home states recognize that a plaintiff must identify a unique purpose that is distinct from the product's ordinary purpose:
See U.C.C. § 2-315 cmt. 2. In addition, Plaintiffs' home states have repeatedly held that a plaintiff must plead a particular purpose different from the product's ordinary purpose in order to state a claim. See, e.g., Gall v. Allegheny Cnty. Health Dep't, 521 Pa. 68, 555 A.2d 786, 790 (1989); Maeder Bros. Quality Wood Pellets, Inc. v. Hammond Drives & Equip., Inc., Docket No. 320362, 2015 WL 1650814, at *6 (Mich. Ct.App. Apr. 14, 2015); Am. Suzuki Motor Corp. v. Super. Ct., 37 Cal.App.4th 1291, 44 Cal.Rptr.2d 526, 528 n. 2 (1995); Bryant v. Adams, 116 N.C. App. 448, 448 S.E.2d 832, 842 (1994); Roshong v. Fitness Brands Inc., No. 3:10CV2656, 2012 WL 1899696, at *3 n. 2 (N.D.Ohio May 24, 2012); Rule v. Fort Dodge Animal Health, Inc., 604 F.Supp.2d 288, 297 (D.Mass.2009); Stepp v. Takeuchi Mfg. Co. (U.S.) Ltd., No. C07-5446RJB, 2008 WL 4460268, at *11 (W.D.Wash. Oct. 2, 2008); Mastrangelo v. Howmedica, 903 F.Supp. 439, 443 n. 1 (E.D.N.Y.1995). In the instant case, Plaintiffs have failed to assert a particular purpose that is distinct from the ordinary purpose of Rescue It! Products. In fact, the two purposes are substantially the same.
Moreover, the cases Plaintiffs cite in support of the claim for breach of the implied warranty of fitness for a particular purpose are unavailing. In Van Wyk v. Norden Labs., Inc., 345 N.W.2d 81, 85 (Iowa 1984), the court noted that "in some cases a buyer's particular purpose will be the same as the ordinary purpose for which a product is furnished." Nevertheless, the court declined to hold that the plaintiffs' use was "an ordinary use which [the court] should consider as a particular use for warranty purposes." Id. Furthermore, in Regina Grape Prods. Co. v. Supreme Wine Co., 357 Mass. 631, 260 N.E.2d 219, 221 (1970), the plaintiffs showed a particular purpose distinct from the ordinary purpose (i.e., the particular purpose for which the wine was to be used was in a mixture with sweet wine). Finally, Medallion Prods., Inc. v. H.C.T.V., No. 06C2597, 2007 WL 1022010 (N.D.Ill. Mar. 29, 2007), did not involve a fitness claim. For these reasons, Counts VI and VII are dismissed.
Counts IV and V assert claims for breach of the implied warranty of merchantability and, for reasons that will become apparent, will be addressed by the Court altogether.
Count IV asserts this claim on behalf of Plaintiffs residing in California, Ohio, Pennsylvania, and Washington and states
PPG is correct that California, Ohio and Washington Plaintiffs cannot state a claim for implied warranty of merchantability absent privity of contract. In California, for example, where a purchaser of a product relies on representations made by a manufacturer in labels or advertising material, recovery from the manufacturer may be allowed on a theory of express warranty without a showing of privity. Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1023 (9th Cir.2008) (citing Burr v. Sherwin Williams Co., 42 Cal.2d 682, 696, 268 P.2d 1041 (1954)). Otherwise, the only exceptions to the privity requirement for merchantability claims are those for foodstuffs, pesticides, and pharmaceuticals, or where the end user is an employee of the purchaser. Id. (citations omitted). See also McKinney v. Bayer Corp., 744 F.Supp.2d 733, 756-57 (N.D.Ohio 2010) (citing Curl v. Volkswagen of Am., Inc., 114 Ohio St.3d 266, 272-74, 871 N.E.2d 1141 (2007)); Chance v. Richards Mfg. Co., Inc., 499 F.Supp. 102, 104 (E.D.Wash.1980) (holding that Washington "has consistently required contractual privity between the plaintiff and defendant" on claims for breach of an implied warranty as it relates to economic losses).
PPG is incorrect with respect to Pennsylvania, where the cases show that privity is no longer required for breach of implied warranty of merchantability claims. See Kassab v. Central Soya, 432 Pa. 217, 246 A.2d 848, 852 (1968) (eliminating the requirement of privity in breach of implied warranty cases); Spagnol Enter., Inc. v. Digital Equip. Corp., 390 Pa.Super. 372, 568 A.2d 948, 952 (1989) (holding that Kassab was "intended to apply to all breach of warranty cases brought under the warranty provisions of the Uniform Commercial Code for all types of damages, whether they be personal injuries, damage to property, or economic loss"); Moscatiello v. Pittsburgh Contractors Equip. Co., 407 Pa.Super. 378, 595 A.2d 1198, 1203-04 (1991) ("The law in Pennsylvania is clear that, for recovery for breach of implied warranties, a party need not prove `privity of contract'").
Count V asserts the breach of the implied warranty of merchantability claim on behalf of Plaintiffs residing in New York and North Carolina, acknowledging that privity is required.
(Compl. ¶ 172). The Plaintiffs appear to argue two exceptions to the privity requirements of New York and North Carolina. Because privity is also required in California, Ohio, and Washington, Plaintiffs presumably would assert the above exceptions in these states as well. The two exceptions of "direct dealings" and third-party beneficiaries are discussed below.
Plaintiffs allege that Defendants "had direct dealings with Plaintiffs and putative class members through agents, dealer, and/or representatives," which is sufficient to support an exception to the privity requirement. (Mem. in Opp. at 15). However, the Plaintiffs' argument is flawed for several reasons. First, Plaintiffs do not sufficiently allege that Lowe's was acting as Defendant's agent. In fact, Plaintiffs allege nothing more than conclusory statements that they had "direct dealings" with the supposed agents. (See Rep. Br. at 16-17). Even if the states below recognized an agency exception to the privity requirement, Plaintiffs have failed to demonstrate facts sufficient to support such an argument.
Second, the only case Plaintiffs cite to support the "direct dealings" argument is unavailing. In Daitom, Inc. v. Pennwalt Corp., No. CIV. A. 80-2080, 1987 WL 93958, at *2 (D.Kan. Jan. 30, 1987), the court rejected an argument based on horizontal privity and held that the case involved a question of "vertical, not horizontal, privity." Id. Horizontal privity is concerned with an individual who "is not a buyer within the distribution chain but ... who consumes or uses or is affected by the goods." Id. (quoting J. White and R. Summers, Uniform Commercial Code § 11-2). The court then recognizes the agency principle in cases in which a "person who makes a contract with an agent of an undisclosed principal as if the principal himself had made the contract with him." Id. at *4 (quoting Restatement (Second) of Agency § 302) (emphasis added). Here, PPG is not an undisclosed principal, and this case is distinguishable from Daitom. Furthermore, this is a Kansas case. We must examine California, Ohio, New York, North Carolina, and Washington case law in order to determine whether the exception applies.
California courts have rejected the "direct dealings" argument as an exception to
Ohio has also rejected the "direct dealings" argument where the agency relationship between the manufacturer and the retailer is not clear. In Curl v. Volkswagen of Am., 114 Ohio St.3d 266, 871 N.E.2d 1141, 1148 (2007), the court held that the principles of agency did not create privity in regard to a motor vehicle manufacturer and distributor. The court noted that "[o]ne who receives goods from another for resale to a third person is not thereby the other's agent in the transaction: whether he is an agent for this purpose or is himself a buyer depends upon whether the parties agree that his duty is to act primarily for the benefit of the one delivering the goods to him or is to act primarily for his own benefit." Id. The Plaintiffs in the instant case do not sufficiently allege that it was the duty of Lowe's to act in such a way. Therefore, this argument fails in Ohio as well. But see Norcold, Inc. v. Gateway Supply Co., 154 Ohio App.3d 594, 798 N.E.2d 618, 628 (2003) (acknowledging that "privity will lie between a manufacturer and an ultimate consumer if either the manufacturer is so involved in the sales transaction that the distributor merely becomes the manufacturer's agent") (emphasis added).
Similarly, New York courts have required "cognizable proof of an agency relationship" in order to establish an exception to the privity requirement. Lexow & Jenkins, P.C. v. Hertz Commercial Leasing Corp., 122 A.D.2d 25, 26, 504 N.Y.S.2d 192 (N.Y.App.Div.1986); see also Leonard v. Tollycraft Corp., No. 88-CV-5809, 1989 WL 1128247, at *4-5 (S.D.N.Y. Oct. 19, 1989) (holding that in "the absence of privity of contract, a purchaser can recover from a remote manufacturer only for personal injury, not for economic loss" and rejecting an agency argument where the consumer had little interaction with the manufacturer).
Like California, Ohio, and New York, North Carolina courts have continually declined to recognize privity of contract between a consumer and manufacturer.
Washington case law does not recognize a "direct dealings" or agency exception to the privity requirement in regard to claims for breach of the implied warranty of merchantability. While Washington recognizes a third-party beneficiary exception to the privity requirement,
Alternatively, Plaintiffs assert that they are the known end users of the Rescue It! Products and, therefore, the intended third-party beneficiaries of any implied warranties. This, Plaintiffs claim, acts as an exception to the privity requirement. (FAC ¶ 172). Nevertheless, Plaintiffs argue that the inquiry into third-party beneficiary status is fact-sensitive and not ripe for resolution at the pleading stage. (Mem. in Opp. at 16). Thus, Plaintiffs argue, the breach of the implied warranty of merchantability counts should not be dismissed. However, Plaintiffs' reliance on Sec'y of State for Def. v. Trimble Navigation Ltd., 484 F.3d 700 (4th Cir.2007), is misplaced. In Sec'y of State for Def., the court proceeded with the inquiry into third-party beneficiary status at the motion-to-dismiss stage, citing an exception to
However, in Dunkin' Donuts Franchised Rests., LLC v. Claudia I, Civil Action No. 12-2010 LLC, 2013 WL 3716525, at *5 (E.D.Pa. July 15, 2013), the court refused to decide the third-party beneficiary argument because it involved "factual questions of intent." See also Kofa Ltd. v. JC Horizon Ltd., No. 98 CV 1324 JBW, 1999 WL 438474, at *2 (E.D.N.Y. May 20, 1999) ("The question of whether an individual is the intended beneficiary of a contract requires a factual inquiry") (citing Zucker v. Kid Gloves, Inc., 234 A.D.2d 598, 652 N.Y.S.2d 614 (N.Y.App.Div.1996)).
That said, the Court will review case law from the remaining states to determine whether those states recognize a third-party beneficiary exception to the privity requirement.
On this issue, California case law is somewhat inconsistent. Courts have held that the privity requirement does not bar a consumer from asserting an implied warranty claim against a manufacturer when the consumer can show that he or she is a third-party beneficiary. See Gilbert Financial Corp. v. Steelform Contracting Co., 82 Cal.App.3d 65, 69, 145 Cal.Rptr. 448 (1978); see also Roberts v. Electrolux Home Prod., Inc., No. CV 12-1644 CAS, 2013 WL 7753579, at *9-10 (C.D.Cal. Mar. 4, 2013); Cartwright v. Viking Industries, Inc., 249 F.R.D. 351, 356 (E.D.Cal.2008). In these cases, courts held that where a plaintiff pleads that he or she is a third-party beneficiary to a contract that gives rise to the implied warranty of merchantability, he or she may assert a claim for the implied warranty's breach. In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices, and Prod. Liab. Litig., 754 F.Supp.2d 1145, 1184-86 (C.D.Cal.2010); see also In re MyFord Touch Consumer Litig., 46 F.Supp.3d 936, 984 (N.D.Cal.2014).
Other California cases, however, have held that a third-party beneficiary argument is not an exception to the privity requirement. Xavier v. Philip Morris USA, Inc., 787 F.Supp.2d 1075, 1083 (N.D.Cal.2011) (holding that categorical exceptions to the privity requirement — while perhaps "wise policy" — do not exist in California jurisprudence). In Xavier, the court went so far as to note that "[n]o reported California decision has held that the purchaser of a consumer product may dodge the privity rule by asserting that he or she is a third-party beneficiary of the distribution agreements linking the manufacturer to the retailer who ultimately made the sale." Id. at 1083. Ultimately, the applicability of the third-party beneficiary exception has varied among California courts and on a factual basis.
Ohio, and this Court in particular, has rejected the argument regarding third-party beneficiaries. In Savett v. Whirlpool Corp., No. 12 CV 310, 2012 WL 3780451, at *10 (N.D.Ohio Aug. 31, 2012), this Court rejected a Home Depot customer's claim that he was a third-party beneficiary and therefore in privity with Whirlpool, the product manufacturer. The Court noted that "longstanding Ohio jurisprudence provides that purchasers ... may assert a contract
The statement in Savett is strikingly similar to the Plaintiffs' allegations in this case. Plaintiffs claim that "Plaintiffs and class members are intended third-party beneficiaries of contracts" between Defendants and their dealers. (FAC ¶ 172). They make no other specific allegations supporting this contention. Absent some additional allegation, Plaintiffs' purchase of Rescue It! Products from Lowe's was a mere "downstream consumer transaction." Savett, 2012 WL 3780451, at *10.
New York recognizes an exception to the privity requirement for third-party beneficiaries in particular cases. See Kofa, 1999 WL 438474, at *2; Zucker, 234 A.D.2d at 599, 652 N.Y.S.2d 614. Moreover, Uniform Commercial Code § 2-318, as adopted by New York, provides as follows:
Thus, a third-party beneficiary argument is tenable where it is reasonable for the manufacturer to expect that a consumer would use or be affected by the goods. However, New York courts have interpreted this provision to apply only to personal injury cases. Cf. Hole, 83 A.D.2d at 716, 442 N.Y.S.2d 638. In Hole, the court reasoned that to "to permit recovery for economic loss would impair traditional rights of parties to make their own contract and discard the principle that a buyer should pick his seller with care and recover any economic loss from that seller." Id. Therefore, because this case does not involve personal injuries, the third-party beneficiary argument is likely untenable under New York law.
It is well established that North Carolina recognizes a third-party beneficiary exception to the privity requirement. See, e.g., Coastal Leasing Corp. v. O'Neal, 103 N.C. App. 230, 405 S.E.2d 208, 212 (1991) ("If the third party is an intended beneficiary, the law implies privity of contract"); In re MyFord, 46 F.Supp.3d at 985 (holding the third-party beneficiary exception "valid under North Carolina law"). However, a case is subject to dismissal under North Carolina law if the plaintiff fails "to allege sufficient facts to support at least one of the required elements of a third-party beneficiary claim in [the] complaint." Metric Constr., Inc. v. Industrial Risk Insurers, 102 N.C. App. 59, 401 S.E.2d 126, 128 (1991). A plaintiff bringing suit on a third-party beneficiary theory states enough to survive dismissal when the allegations in his complaint show (1) the existence of a contract between two other persons; (2) the contract was valid and enforceable; and (3) the contract was entered into for his direct, and not incidental, benefit. Raritan River Steel Co. v. Cherry, Bekaert, & Holland, 79 N.C. App. 81, 339 S.E.2d 62, 65 (1986). It is questionable as to whether the Plaintiffs in this case have met the Raritan standard. The
The Supreme Court of Washington has carved out a third-party beneficiary exception to the general rule that a vertical non-privity plaintiff cannot recover from a remote manufacturer for breach of implied warranty. Touchet Valley Grain Growers, Inc. v. Opp & Seibold Gen. Const. Inc., 119 Wn.2d 334, 831 P.2d 724 (1992); Kadiak Fisheries Co. v. Murphy Diesel Co., 70 Wn.2d 153, 422 P.2d 496 (1967). This exception allows a plaintiff-consumer to recover from a defendant-manufacturer as the intended end user of the product. Id. Washington courts' decisions to allow this exception rely on "the sum of interaction and expectations between the purchaser and the manufacturer." Kadiak, 422 P.2d at 503-04. In Kadiak, for instance, the court ruled that the exception applied because the "manufacturer knew the identity, purpose, and requirements of the purchaser's specifications" and shipped the product directly to the purchaser. Id.
Here, the Plaintiffs have not alleged that PPG knew the identity, purpose, or requirements of their specifications. In addition, the Rescue It! Products were purchased at Lowe's retailers, not shipped directly to the Plaintiffs on behalf of the Defendant-Manufacturer. Therefore, the Washington cases are distinguishable. In Touchet, the defendant knew the plaintiff's identity, purpose, and requirements for the grain storage building at issue. Touchet, 831 P.2d at 730. Moreover, "[a]s it was its business practice," the defendant delivered components directly to the plaintiff's construction site. Id.
In addition, the case of Urban Dev. v. Evergreen Bldg. Prods., 114 Wn.App. 639, 59 P.3d 112 (2002), does not supports Plaintiffs' position. In Urban Dev., the court declined to apply the third-party beneficiary exception, holding that the Kadiak "sum of the interactions" test was not satisfied. Id. at 117-18. Because the plaintiff had "no direct interactions" with the defendant-manufacturer, the court held that the exception was not applicable. Id. at 118. The same is true in the instant case. Plaintiffs have alleged no "direct interactions" with the Defendants in this case prior to the sale of the Rescue It! Products. Therefore, the third-party beneficiary exception does not apply under Washington case law.
For all these reasons, the merchantability claims of Plaintiffs residing in Washington are dismissed with prejudice; and the merchantability claims of Plaintiffs residing in California, Ohio New York and North Carolina are dismissed without prejudice.
PPG asks the Court to dismiss the Magnuson-Moss Warranty Act ("MMWA") claim asserted in Count I. In general, the MMWA provides a federal cause of action for state warranty claims. 15 U.S.C. § 2301 et seq. To the extent the state-law express and implied warranty claims survive dismissal, so does the MMWA claim asserted in Count I.
In Count II, Plaintiffs bring a claim seeking declaratory, injunctive and equitable relief. The Declaratory Judgment Act states that "[i]n a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201. "However, the declaratory judgment statute `is an enabling Act, which confers a discretion on the courts
Where a plaintiff has claims cognizable under state statutes and case law which afford him complete relief, "the extraordinary award of a declaratory judgment will not be useful in clarifying nor settling the legal relations" between the parties. Zaremba, 458 F.Supp.2d at 552. Since the Court, in a diversity action, is bound to interpret and apply state law in the construction and validity of state-law claims, declaratory relief is not necessary to eliminate any uncertainty, insecurity or controversy facing the parties. panoply Id. at 552-53. In addition, the claims alleged provide for a full panoply of relief. In the absence of any factor necessitating imminent declaratory relief, the Court, in its discretion, declines to entertain this count, which is hereby dismissed.
In Count VIII, Plaintiffs assert a claim for unjust enrichment. PPG seeks to dismiss the claim on several bases. Because this is pled as an alternative theory to Plaintiffs' express warranty claim, the Court declines to dismiss the unjust enrichment claim at this time.
In Count IX, Plaintiffs residing in Ohio allege a claim for violation of the Ohio Consumer Sales Practices Act ("OCSPA"), Ohio Revised Code § 1345.01 et seq. Ohio Plaintiffs assert that PPG knowingly misrepresented that the Rescue It! Products were chip-, peel-, and crack-resistant, were suitable for providing protection to decks from harsh weather conditions, and lasted longer than ordinary deck paints and stains. This alleged deception, if proven true, would violate O.R.C. 1345.02, which prohibits "suppliers" from committing "an unfair or deceptive act or practice in connection with a consumer transaction."
PPG asks the Court to dismiss this claim because, it contends, the Ohio Products Liability Act ("OPLA"), §§ 2307.71 et seq., preempts OCSPA claims. Ohio Plaintiffs concede that OPLA abrogates OCSPA claims that are "primarily rooted in product-liability claims," but contend that the OCSPA claim is not a product liability claim as defined in the OPLA.
A point of distinction involves damages. Under the OPLA, plaintiffs asserting "product liability claims" may recover compensatory damages due to "harm." Harm includes physical damage to property other than the product. It does not include "economic loss." Plaintiffs assert they are only seeking economic loss. Compare O.R.C. 2307.71(A)(2) (defining "economic loss"), (A)(7) (defining "harm"), and (A)(13) (defining "product liability claim").
There are numerous Ohio cases holding that the OPLA preempts OCSPA claims,
The Court is inclined to deny the motion to dismiss the OCSPA claim at this time for two reasons. One, this claim sets forth an alternative theory of recovery. Two, in Delahunt v. Cytodyne Technologies, Southern District Judge Marbley noted that a cause of action accrues under the OCSPA as soon as the allegedly unfair or deceptive transaction occurs. 241 F.Supp.2d 827, 835 (S.D.Ohio 2003) (citing Sproles v. Simpson Fence Co., 99 Ohio App.3d 72, 649 N.E.2d 1297 (1994) (noting that the allegedly deceptive transaction, not the injury that results from the transaction, starts the statute of limitations running)). Furthermore, "[t]he plain language of section 1345.09, which indicates that plaintiffs must choose between the remedies of rescission and damages, indicates that it is the financial harm resulting from the unfair or deceptive transaction
Accordingly, the Court denies the motion to dismiss this claim at this time.
PPG contends that the North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA") claim asserted in Count XI is subject to dismissal under North Carolina's economic loss rule. In support, it cites Bussian v. DaimlerChrysler Corp., 411 F.Supp.2d 614, 625 (M.D.N.C.2006), Moore v. Coachmen Indus., Inc., 129 N.C. App. 389, 401-02, 499 S.E.2d 772 (1998), and Gregory v. Atrium Door and Window Co., 106 N.C. App. 142, 415 S.E.2d 574, 575 (1992). North Carolina Plaintiffs argue that "the North Carolina courts have not decided whether the economic loss rule applies to UDTPA claims," quoting Martin v. Bimbo Foods Bakeries Distrib., LLC, No. 5:15-CV-96-BR, 2015 WL 1884994, at *7 (E.D.N.C. Apr. 24, 2015), in turn citing Ellis v. Louisiana-Pacific Corp., 699 F.3d 778, 787 n. 5 (4th Cir.2012). Plaintiffs also contend that North Carolina's economic loss rule does not bar damages caused to property other than the defective product itself.
The Court has reviewed the cases and declines to hold that the economic loss rule bars Plaintiffs' UDTPA claim. First, the economic loss rule "prohibits the purchaser of a defective product from using tort law to recover purely economic losses." Bussian, 411 F.Supp.2d at 625. The rationale is that the sale of goods is accomplished by contract, and "the parties are free to include, or exclude, provisions as to their respective rights and remedies, should the product prove to be defective." Id. However, it is well settled among North Carolina courts that when "a defective product causes damage to property other than the product itself, losses attributable to the defective product are recoverable in tort rather than contract." Id. (citing Moore, 129 N.C.App. at 402, 499 S.E.2d 772); see also Reece v. Homette Corp., 110 N.C. App. 462, 466, 429 S.E.2d 768 (1993) (distinguishing recovery in tort for damage to the defective product from "a claim arising from a factual situation where the manufactured product causes physical injury to a person or to property other than the manufactured product itself") (emphasis added).
In the instant case, Plaintiffs have alleged damage to property other than the Rescue It! Products themselves — namely, damage to decks, porches and other tangible property or real property.
Counts X through XIX allege violations of the following state consumer protection, false advertising, and deceptive business practices statutes.
According to PPG, the Court should dismiss all these claims because they have not been pled with particularity under Fed. R. Civ. P. 9(B), Plaintiffs failed to plead essential elements of these claims, and because PPG's numerous representations amount to nothing more than advertising puffery.
Taking the last matter first, the Court has previously rejected PPG's "advertising puffery" arguments for the reasons explained, supra at 13-15. The Court held that the numerous representations PPG made on the Rescue It! Products' labels alone constituted affirmations of fact or promises about the Products' performance properties which described the goods, formed the basis of the bargain, and constituted express warranties. In other words, those representations were not mere advertising puffery.
The Court also denies PPG's request to dismiss these state-law claims because Plaintiffs have failed to sufficiently allege fraudulent or deceptive conduct under Rule 9(b). Rule 9(b)'s purpose is to ensure fair notice to the defendant, not to test a claim's factual allegations. Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 176 F.3d 315, 322 (6th Cir.1999). Plaintiffs are required, at a minimum, to identify the "who, what, when, where, and how" of the alleged fraud. Sanderson v. HCA-The Healthcare Co., 447 F.3d 873, 877 (6th Cir.2006) (citation omitted). Additionally, "Rule 9(b)'s particularity requirement may be relaxed when certain information is solely within the defendant's knowledge." U.S. Securities and Exchange Comm'n v. Blackwell, 291 F.Supp.2d 673, 691 (S.D.Ohio 2003) (citing Michaels Bldg. Co. v. Ameritrust Co., 848 F.2d 674, 680-81 (6th Cir.1988)) ("We will not demand clairvoyance from pleaders.")
PPG is the "who." The "what" are the numerous representations PPG made on the product labels regarding the Products' performance properties. The "when" are the dates the individual Plaintiffs purchased their Rescue It! Products — which are, presumably, shortly before they applied
The Court also rejects PPG's arguments that Plaintiffs have insufficiently alleged reliance on PPG's alleged misrepresentations, PPG's knowledge of those misrepresentations, and causation. The complaint alleges, and the Court presumes, that Plaintiffs read the many descriptions of the Products which PPG printed on the labels of the cans, and relied on those representations, before purchasing them. See also Bernick, 293 S.E.2d at 413 (holding that reliance should be inferred from the product's purchase where "the natural tendency of the representations made is such as to induce such purchase or use."); Elias v. Ungar's Food Prods., Inc., 252 F.R.D. 233, 329 (D.N.J.2008) (holding the same). With regard to knowledge, Rule 9(b) expressly states that knowledge and other conditions of a person's mind may be alleged generally, and may be relaxed when certain information is solely within the defendant's province. Here, Plaintiffs allege that PPG was aware of these problems via customer complaints and direct customer service contact, and were plainly aware about the chipping problems as that was evidenced by its own website. Finally, Plaintiffs have sufficiently alleged causation, as they make clear that the Products deteriorated within months of application causing, among other things, damage to the deck structures and the diminution of home values. In any event, proximate cause is typically a question of fact, and is not amenable to resolution at this time.
Accordingly, the Court denies the Motion to Dismiss these statutory claims.
Based on the foregoing, the Court
The Motion to Dismiss is