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Wilson v. Metals USA, Inc.

United States District Court, E.D. California

July 1, 2016

JAMES WILSON, an individual, and JACK WHITE, an individual, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
METALS USA, INC., a Delaware Corporation, and DOES 1-100, inclusive, Defendant.

          ORDER

         James Wilson and Jack White purchased roof tiles manufactured by Dura-Loc Roofing Systems Limited. They allege those tiles were defectively designed because over time, as the tiles were exposed to air and sunlight, they lost their color. Because Dura-Loc gave them a written warranty promising the tiles were “UV resistant, ” Wilson and White allege violations of California Commercial Code section 2313. They bring this action against Metals USA, Inc., the alleged successor to Dura-Loc’s liability.

         Wilson and White propose to represent a class of property owners who purchased similarly defective tiles. They move for class certification, and Metals USA opposes the motion. The court held a hearing on December 4, 2015. Gene Stonebarger and Richard Lambert appeared for the plaintiffs, and Frank Busch, Bart Dalton, and Adrian Sawyer appeared for the defendant. For the reasons described below, the motion is granted.

         I. FACTUAL BACKGROUND

         A few details about Dura-Loc and its roofing tiles help set the stage. Dura-Loc began in Ontario, Canada in 1984. Reid Decl. ¶ 15, ECF No. 81-3. Between 1985 and 2006, it manufactured part-metal, part-stone, layered roofing tiles. Id.; see also Stonebarger Decl. Ex. D, at MUSA 003923, ECF No. 81-3. The base or substrate layer is pressure-formed by galvanized steel. Stonebarger Decl. Ex. D, at MUSA 003923. The tiles’ top sides, which were the sides eventually exposed to the elements, were coated with crushed stone chips, granules of “Colorquartz Aggregate” manufactured by 3M. See Dalton Decl. Exs. B, D, ECF No. 82-2. Overall, each tile is a little more than four feet wide and about fifteen inches deep. See Stonebarger Decl. Ex. D, at MUSA 003923. When installed on a roof, each tile overlaps with adjacent tiles to protect the structure below. Id.

         This case concerns three specific types of tiles, the “Continental, ” “Shadowline, ” and “Wood Shake” product lines. All three have the same structure and composition. See, e.g., Stonebarger Decl. Exs C, E, G, H, S, T, X, ECF Nos. 81-3, 81-4; see also Harlan Rep. 3, ECF No. 81-29. The tiles were also manufactured using the same process: After a protective coating was applied to the tiles’ backsides, a layer of acrylic basecoat was applied at a thickness of between 14 and 18 thousandths of an inch. See Dalton Decl. Ex. F, at 7. A layer of colored granules was then dropped onto the basecoat, and the tiles were baked in an oven until dried. Id. at 7-8. Finally, a topcoat layer was applied, and the tiles were baked again until dry. Id. at 8.

         The tiles in each product line were available with several different colors of stone granules: “Continental” in four colors; “Shadowline” in two colors, and “Shake” or “Wood Shake” in four colors. See Dalton Decl. Ex. E, at 8, ECF No. 82-2; id. Ex. F, at 8. The granules do not block ultraviolet light completely. Their transparency to ultraviolet light varies by color; between 22 percent and 93 percent of the ultraviolet light that strikes the granules passes through them. Third Am. Compl. Ex. I, at PLS0000025, ECF No. 78-9.[1]

         Metals USA entered the picture in 2006, when it purchased Dura-Loc’s operating assets, including its manufacturing facility in Ontario, Canada. See Reid Decl. ¶¶ 14-15. According to the purchase agreement, Dura-Loc and two of its principal shareholders agreed to indemnify Metals USA for any damages incurred as a result of Dura-Loc’s warranty obligations, among many other provisions not relevant to this motion. See Stonebarger Decl. Ex. AA, ¶ 6.1, ECF No. 81-5. After the purchase, Metals USA changed the stone and basecoat Dura-Loc had been applying to the Dura-Loc tiles to match those used by a Metals USA affiliate. Obj. & Resp. Interrog. 5, ECF No. 81-6. Dura-Loc then ended operations and changed its name to “604471 Ontario, Inc.” Id. ¶ 14. Later, in 2012, it filed for bankruptcy. Id.

         Plaintiff James Wilson bought Dura-Loc’s “Wood Shake”-style metal roofing tiles in 2004, before Metals USA purchased Dura-Loc’s assets, to install on his home in Roseville, California. Wilson Decl. ¶ 2, ECF No. 81-10. Wilson chose Dura-Loc’s tiles because they came with a written warranty guaranteeing, as he understood it, that the tiles were resistant to ultraviolet light and would not deteriorate for at least twenty-five years after installation. Id. In about June 2011, however, Wilson noticed the tiles installed on his roof had begun to deteriorate: they had lost some of their stone coating and granular texture. Id. ¶ 4. He contacted a division of Metals USA, whose customer service department responded with a letter explaining Metals USA did not manufacture or sell Dura-Loc tiles and that any warranty claims were the responsibility of 604471 Ontario. Id.; see also Id. Ex. C, ECF No. 81-13. Wilson contacted 604471 Ontario, who required the refundable $400 “service fee” before it would begin investigating his claim. See Id. ¶ 4; see also Id. Ex. D, ECF No. 81-14. It does not appear Wilson paid the $400 fee. See Wilson Dep. 42-44, ECF No. 82-2. His Dura-Loc tiles continue to deteriorate, and have now lost most of their original color and texture. Id. ¶ 5.

         A copy of Wilson’s warranty is on file. See Wilson Decl. Ex. A, ECF No. 81-11. Its specific terms are relevant and worth reviewing in some detail:

● The warranty applies to all three product lines, “Continental, ” “Shadowline, ” and “Wood Shake, ” both panels and trim.
● Dura-Loc guaranteed that “for a period of 25 years following proper installation, the surface coating of the Dura-Loc product shall be UV resistant* and will not deteriorate as a result of a manufacturing defect to the extent that the appearance of the roof is substantially affected.” The asterisk after the words “UV resistant” refers to a note that “[a]t the date of installation, the coating will meet or exceed industry standards when tested to ASTM 4214-89 standards given the service life of the roof”
● If the purchaser files a claim, “taking all circumstances into account, Dura-Loc will, at is sole option, either repair or replace the affected Product or apply its then current colour coordinated acrylic thereto.”
● Dura-Loc’s total liability is limited to the actual purchase price paid by the original purchaser for the first fifteen years after installation and “thereafter a declining balance of such amount reduced on a pro rata basis of the remaining 10 year period.”
● The warranty covers only purchasers who register their purchase by mail within ninety days of installation. If the warranty is not properly registered, it lasts only two years.
● If the tiles are installed and the property is sold, the warranty applies to the subsequent purchaser only if he or she gives written notice of the sale within ninety days and pays a registration fee of $25.
● The purchaser must give written notice of any claim under the warranty within thirty days of discovering a defect.
● To make a claim, the purchaser must send a copy of the limited warranty, proof of the date of purchase and installation, and a refundable service fee of $400, “the estimated cost of investigating each complaint.” “Failure to comply with [this] notification requirement will invalidate the Limited Warranty.”
● “Any objection, complaint, suit, legal proceeding or action” arising from the warranty must be brought within one year of the date Dura-Loc takes corrective measures or communicates its denial of a claim, and “claimant hereby waives all statutory and common law periods of limitation in excess of [the one-year period].”

         Jack White, the second plaintiff named in the caption, tells a story similar to Wilson’s. White bought Dura-Loc’s “Wood Shake” tiles in June 2004 and installed them on his home in Orangevale, California. White Decl. ¶ 2, ECF No. 81-16. He also relied on Dura-Loc’s guaranty that its tiles were resistant to ultraviolet radiation and would not deteriorate for at least twenty-five years. Id. Like Wilson, he noticed in June 2011 that his tiles had begun to deteriorate. Id. ¶ 4. And like Wilson’s tiles, White’s tiles have lost most of their original color and texture. Id. ¶ 5. Unlike Wilson, however, White does not explain whether he filed a warranty claim or contacted Metals USA or 604471 Ontario. See generally id It appears he did not. See White Dep. 16-17, ECF No. 82-2. The record does not include a copy of his warranty.

         Wilson and White have filed declarations from about sixty others who purchased Dura-Loc roofing tiles. See Class Member Declarations, ECF Nos. 81-17 to -28. These customers’ tiles also degraded within a few years of installation. See generally id Many of these customers’ declarations are accompanied by copies of warranty agreements whose terms are similar or identical to those of Wilson’s warranty, with two exceptions. First, it appears Dura-Loc did not include the $400 service fee in its warranties until in or about 2003 or 2004. Compare, e.g., Class Member Decl. No. 36 (Heep), Ex. A, ECF No. 81-24 (no service fee; dated April 1, 2003), with, e.g., Wilson Decl. Ex. A (service fee; dated Sept. 1, 2004). Second, warranties issued before in or about 2003 or 2004 appear not to impose a registration requirement on original purchasers, and likewise allow no alternative two-year warranty period. Compare, e.g., Heep Decl. Ex. A, with, e.g., Wilson Decl. Ex. A. Aside from these differences, the parties agree the warranties’ terms remained the same between 1996 and 2006.

         To investigate what caused the tiles’ degradation, White and Wilson engaged Harold Harlan, a chemist. Harlan analyzed the exterior coating of several unused Dura-Loc tiles manufactured between 1999 and 2006. See Harlan Rep. at 1. He also tested three used tiles that had been installed on Jack White’s roof; two tiles from the north side and one from the south side. See Id. He subjected these tiles to Fourier transform infrared spectroscopy (FTIR), a test used to determine the chemical composition of a given material based on the spectrum of infrared light it absorbs. See Id. at 2. Harlan concluded the exterior coating of all the tiles he tested was “similar, if not identical, ” and consisted of a mixture of three acrylic polymers and quartz silica sand. Id. at 3. As for the three used tiles, he reported that the south-side tile and one of the north-side tiles emitted light in a spectrum that indicated their acrylic polymers had broken down after exposure to ultraviolet light and air. Id. at 3-4. One of the north-side tiles did not. Id. at 4. In addition, only the south-side tile displayed visual degradation. See Id. at 3-4. Mr. Harlan expected, given the similar composition of all the tiles he tested, that if all had been exposed to the same light and air as the south-side sample tile had been, all would have exhibited the same visual and chemical degradation. Id. at 4.

         Given Harlan’s test results and their own observations, Wilson and White allege that when Dura-Loc’s tiles are exposed to a few years of sunlight and air, the layer of resin between the tiles’ steel base and the colored stone granules is compromised, and the granules fall off. They argue that because the tiles at issue were all manufactured by the same process and to the same specifications, the defect is in the tiles’ design and is common to every tile.

         Metals USA disagrees. It engaged another chemist, Richard Cechner, to analyze roof tiles from Wilson’s and White’s homes. See Cechner Rep. 1, ECF No. 82-3. Cechner reviewed Dura-Loc’s technical and quality control manuals, visited Wilson’s and White’s homes, and examined samples of their roof tiles, both used and unused. See generally Id. He estimated that when dried, the layer of acrylic between the tiles’ metal base and the colored granules should have been about 6 to 9 thousandths of an inch thick, if it had been applied as specified in Dura-Loc’s quality control manual. See Id. at 2. He then examined cross-sections of the sample tiles from Wilson’s and White’s roofs, and found that in many instances the dried layer of acrylic was less than 6 thousandths of an inch thick. Id. at 3-4. In other instances, he found no evidence to show a topcoat layer was ever applied, and sometimes granules were not seated well in the dried basecoat. Id. Based on this investigation, he concluded that the longevity of the bond between the metal base and the colored granules depended on both how thickly and evenly the acrylic basecoat was applied and whether a topcoat was applied. Id. at 4. He also concluded the sample tiles he tested did not comply with the specifications in Dura-Loc’s quality control manuals. Id. It is therefore Metals USA’s theory that the plaintiffs’ tiles did not suffer from a design defect, but a manufacturing defect. See Opp’n 14-15, 27-28.

         II. PROCEDURAL HISTORY

         That brings us to this case. Wilson and White filed a complaint in this court in March 2012 against 604471 Ontario, Inc. and Allan Reid, allegedly a former Dura-Loc executive. Compl., ECF No. 1. Essentially, they allege that contrary to Dura-Loc’s warranty, the roofing tiles were not “UV resistant” and degraded over time by shedding their layer of stone granules. In their first complaint, they alleged three claims: fraudulent concealment or non-disclosure, Cal. Civ. Code §§ 1709, 1710(3); violations of the California Consumer Legal Remedies Act (CLRA), Cal. Civ. Code §§ 1750 et seq.; and violations of the California Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200 et seq. Id. They later amended the complaint to substitute Metals USA as a defendant in place of 604471 Ontario and to add claims for breaches of express warranties under California Commercial Code section 2313 and 15 U.S.C. § 2301. See First Am. Compl., ECF No. 11.

         Reid moved to dismiss the claim against him for lack of personal jurisdiction, ECF No. 22, and the court dismissed the complaint with leave to amend, ECF No. 34. Plaintiffs filed a second amended complaint, omitting Reid as a defendant and advancing only claims for breach of written warranties and violations of the CLRA and UCL. See Second Am. Compl., ECF No. 49. Metals USA moved to dismiss, arguing the complaint lacked sufficient factual allegations to make out a plausible claim for its liability under a theory of successor liability. ECF No. 50. The court denied the motion, ECF No. 57, and Metals USA answered, ECF No. 59.

         Plaintiffs filed a third amended complaint by stipulation, ECF Nos. 76, 77, and that pleading remains operative, see Third Am. Compl., ECF No. 78. The case now proceeds on two claims for breach of express warranty, California Civil Code sections 1790 et seq. and Commercial Code section 2313, and on the previously asserted claims for violations of the CLRA and UCL. Metals USA is the only remaining defendant.

         On September 4, 2015, plaintiffs moved for class certification of only one claim: breach of express warranty under Commercial Code section 2313. See Mot. Class Cert., ECF No. 81; Mem. P. & A. at 14, ECF No. 81-1; Reply 1 & n.1, ECF No. 83. Metals USA opposed the motion, Opp’n, ECF No. 82, and the plaintiffs replied, Reply, ECF No. 83. Wilson and White propose the following class definition:

All individuals and entities that own homes or other structures located in the State of California on which Dura-Loc Roofing Systems Limited’s Continental, Shadow line, or Wood Shake stone coated steel roof shingles were installed during the period of time beginning July 1, 1996 through May 12, 2006.

Mem. at 10.

         Following the court’s hearing on December 4, 2015, plaintiffs submitted an unsolicited supplemental brief addressing a California Civil Code section discussed at hearing, California Civil Code § 1797.94, and whether it applies to this case. ECF No. 86. In general, section 1797.94 concerns whether home roof warranties are enforceable by one who is not the original purchaser. Metals USA filed a supplemental brief opposing the plaintiffs’ interpretation of that section. ECF No. 87. Because no objections to these briefs were filed, and each party has had an opportunity to express its views, the court considers their merits here.

         III. LEGAL STANDARD

         Litigation by class action is “an exception to the usual rule” that only the individual named parties bring and conduct lawsuits. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348 (2011) (citation and internal quotation marks omitted). Only when a class action would promote the “efficiency and economy of litigation” should a motion for certification be granted. Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 349 (1983). Class certification is governed by Federal Rule of Civil Procedure 23. To be certified, a putative class must meet the threshold requirements of Rule 23(a) and the more specific requirements of one of three classes defined in Rule 23(b). Leyva v. Medline Industries Inc., 716 F.3d 510, 512 (9th Cir. 2013).

         Rule 23(a) imposes four requirements on every class. First, the class must be “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). Second, questions of law or fact must be common to the class. Id. R. 23(a)(2). Third, the named representatives’ claims or defenses must be typical of those of the class. Id. R. 23(a)(3). And fourth, the representatives must “fairly and adequately protect the interests of the class.” Id. R. 23(a)(4).

         Here, the plaintiffs seek certification under Rule 23(b)(3), which imposes two additional requirements: first, “that the questions of law or fact common to class members predominate over any questions affecting only individual members, ” and second, “that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” The test of Rule 23(b)(3) is “far more demanding, ” than that of Rule 23(a). Wolin v. ...


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