Rouse v. H.B. Fuller Company

Background

H.B. Fuller Company and its wholly owned subsidiary, H.B. Fuller Construction Products, Inc., sell Power Grout under the TEC brand. The defendants describe Power Grout as stain proof, color consistent, and resistant to shrinking and cracking. They also offer a Hardener that was provided to the Rouses after they complained about grout defects.

Lisa and Juston Rouse used Power Grout during a home remodel in Washington. They allege that defects continued after the grout was removed and reinstalled with the Hardener. Jenna and Nicholas Drouin used Power Grout in a New Hampshire bathroom remodel and later learned that the grout did not fully harden and could be scratched away when wet. The plaintiffs allege that the products damaged their homes and property values.

The plaintiffs asserted 25 claims on behalf of themselves and proposed nationwide, Washington, and New Hampshire classes. The claims included state consumer-protection claims, warranty claims, a claim under the Magnuson-Moss Warranty Act, negligence, strict product liability, fraud, and unjust enrichment. The defendants moved to dismiss all claims except the Washington express-warranty claim in Count XIV and the New Hampshire express-warranty claim in Count XXI. They also moved to strike class-action allegations requiring proof of reliance.

Motion to Dismiss

The court applied the Rule 12(b)(6) standard, which asks whether the complaint alleges enough facts to state a plausible claim for relief. For the standing challenge to the proposed nationwide class, the court held that deciding whether the plaintiffs could assert claims under other states’ laws was premature. It deferred that issue until class certification and denied the motion to dismiss the nationwide class claims on that basis.

The court dismissed Counts I, II, III, and IV, which asserted violations of four Minnesota statutes. The plaintiffs lived in Washington and New Hampshire, purchased the product through contractors in those states, and alleged that the damage occurred only in their homes there. The court concluded that they lacked standing to assert the Minnesota statutory claims because the plaintiffs did not show that those statutes applied outside Minnesota. The order dismissed these counts without prejudice.

The court dismissed Count VII, the plaintiffs’ class-related Magnuson-Moss Warranty Act claim, without prejudice. The court concluded that the Act’s requirement of at least 100 named plaintiffs applied even though the plaintiffs also invoked the Class Action Fairness Act. Because there were four named plaintiffs, the court held that the Act’s requirement was not satisfied for the class claim.

The court denied dismissal of the implied-warranty claims in Counts V, XIII, and XX. Although the defendants argued that the implied warranties had been disclaimed, the plaintiffs alleged that the disclaimers were unconscionable because the defendants allegedly knew the products had hidden defects. The court held that the claims could proceed beyond the pleading stage.

The court dismissed the negligence and strict product-liability claims in Counts VIII, IX, XV, XVI, XXII, and XXIII without prejudice. Applying the economic-loss doctrine, the court held that the complaint did not plausibly allege damage to property other than the grout and Hardener. The allegations that the homes and property values were damaged were stated on information and belief and were not supported by specific facts.

The court did not dismiss the fraud claims in Counts XI, XVIII, and XXV. It held that the complaint provided enough detail about the alleged misrepresentations to satisfy Rule 9(b), which requires fraud to be pleaded with particularity. The court also held that the allegations were sufficient at this stage to support an inference that the defendants knew about the alleged defects, and that whether the plaintiffs relied on the defendants’ advertising or their contractors’ statements was a factual question. The court therefore denied dismissal of the fraud claims on the grounds of inadequate pleading, insufficient knowledge, and lack of reliance.

The court dismissed the unjust-enrichment claims in Counts X, XVII, and XXIV without prejudice. Although the plaintiffs pleaded those claims as alternatives, the court held that the warranty governed the parties’ rights and supplied an adequate legal remedy, which barred unjust-enrichment claims on these allegations.

Motion to Strike

The court denied the motion to strike. It held that the defendants had not shown at this stage that class certification for the common-law fraud and negligent-misrepresentation claims was impossible. The court treated striking the allegations as an extreme remedy that was not warranted based on the current pleadings.

Disposition

The court ordered that the Motion to Dismiss was granted in part and denied in part. Counts I, II, III, IV, VII, VIII, IX, X, XV, XVI, XVII, XXII, and XXIII were dismissed without prejudice. The motion to dismiss was denied in all other respects. The Motion to Strike was denied.