Rouse v. H.B. Fuller Company

Background

Lisa Rouse and Juston Rouse, Washington residents, used Power Grout during a home remodel. After installation, they reported defects to their contractor and the defendants. The defendants provided Hardener, which the contractor used when removing and reinstalling the grout, but the alleged defects persisted.

Jenna Drouin and Nicholas Drouin, New Hampshire residents, used Power Grout in a bathroom renovation. They later alleged that the grout did not fully harden and could easily be scratched away when wet. Both couples alleged, on information and belief, that the product damaged their homes and property values.

The plaintiffs sued H.B. Fuller Company and H.B. Fuller Construction Products, Inc. They asserted 25 claims for proposed nationwide, Washington, and New Hampshire classes. The claims included state consumer-protection claims, implied and express warranty claims, a claim under the Magnuson-Moss Warranty Act, negligence, strict product liability, fraud, negligent misrepresentation, and unjust enrichment.

The defendants moved to dismiss all claims except the Washington and New Hampshire express-warranty claims. They also moved to strike class-action allegations requiring reliance.

Motion to Dismiss

The court applied the standard for a motion to dismiss for failure to state a claim, under which the complaint must allege enough facts to make relief plausible. It also considered the defendants’ challenges to standing, which is the requirement that a plaintiff have a sufficient connection to the asserted claim and requested relief.

National-class standing. The defendants argued that the plaintiffs lacked standing to assert claims under the laws of states where they did not reside. The court declined to decide that issue at the pleading stage and deferred it until class certification. The motion to dismiss the national-class claims on that basis was denied.

Minnesota statutory claims. The plaintiffs asserted claims under four Minnesota statutes. The court concluded that the plaintiffs lacked standing because they lived outside Minnesota, bought the Power Grout through contractors in Washington and New Hampshire, and alleged that the damage occurred only in their homes in those states. The court dismissed Counts I, II, III, and IV.

Fraud claims. The defendants argued that Counts XI, XVIII, and XXV did not provide the detail required for fraud claims. The court disagreed. It found that the complaint identified who allegedly made the misrepresentations, what was allegedly misrepresented about the Power Grout and Hardener, when the statements were made, where they were communicated, and how the information reached the plaintiffs. The motion to dismiss these fraud claims was denied.

The defendants also argued that the complaint failed to allege sufficient knowledge of falsity and reliance. The court found the allegations sufficient to support knowledge at this stage, including allegations that the defendants knew of repeated Power Grout failures and provided Hardener to address them. It also found that whether the plaintiffs relied on the defendants’ advertising or on statements from their contractors was a factual issue that could not be resolved on a motion to dismiss. The motion to dismiss the fraud claims on these grounds was denied.

Implied-warranty claims. The defendants argued that the plaintiffs’ implied warranties had been disclaimed. The court declined to dismiss Counts V, XIII, and XX because the plaintiffs alleged that the disclaimers were unconscionable—that is, unfairly one-sided or otherwise unreasonable under the circumstances—because the defendants allegedly knew the products had hidden defects. The implied-warranty claims were allowed to proceed at this stage.

Magnuson-Moss Warranty Act claim. The defendants argued that the class portion of Count VII failed because the Act requires at least 100 named plaintiffs for a class action in federal district court, while this case had four named plaintiffs. The plaintiffs argued that the Class Action Fairness Act supplied an independent basis for federal jurisdiction. The court rejected that argument, concluding that Congress’s intent to eliminate the Magnuson-Moss requirement was not clear and definite. The court dismissed Count VII without prejudice.

Tort claims and economic-loss rule. The defendants argued that Counts VIII, IX, XV, XVI, XXII, and XXIII were barred because the plaintiffs alleged only economic losses involving the Power Grout, Hardener, homes, and property values. The court concluded that the complaint did not adequately allege actual damage to the homes or property values beyond the products themselves. The allegations were described as speculative and conclusory because the plaintiffs had access to their homes and did not identify facts such as water damage or damage caused by removing the grout. The court granted dismissal of these claims.

The defendants separately argued that the fraud claims were barred by the economic-loss rule. The court rejected that argument and denied dismissal of the fraud claims on that basis.

Unjust-enrichment claims. The plaintiffs alleged that the defendants received payment for allegedly defective products and that retaining the payment was unjust because of allegedly misleading marketing. The court nevertheless concluded that Counts X, XVII, and XXIV were barred because a contract and warranty governed the parties’ rights and the plaintiffs had not properly alleged additional damages. The court granted dismissal of these claims.

Motion to Strike

The defendants asked the court to strike class-action allegations involving common-law fraud and negligent misrepresentation, arguing that class certification was clearly impossible. The court found that issue premature because it had not been established from the pleadings that certification was impossible. The motion to strike was denied.

Disposition

The court ordered that the Motion to Dismiss was GRANTED IN PART and DENIED IN PART:

- Counts I, II, III, and IV, the Minnesota statutory claims, were DISMISSED WITHOUT PREJUDICE. - Count VII, the Magnuson-Moss Warranty Act claim, was DISMISSED WITHOUT PREJUDICE. - Counts VIII, IX, XV, XVI, XXII, and XXIII, the negligence or negligent-misrepresentation and strict-product-liability claims, were DISMISSED WITHOUT PREJUDICE. - Counts X, XVII, and XXIV, the unjust-enrichment claims, were DISMISSED WITHOUT PREJUDICE. - The motion to dismiss was DENIED in all other respects.

The defendants’ Motion to Strike was DENIED. The order was signed by United States District Judge Wilhelmina M. Wright.