Antitrust Law Daily Wrap Up, ADVERTISING—D. Minn.: Siding manufacturer may be liable for falsely advertising the quality of its products, (Jul 17, 2013)

By Jody Coultas, J.D.

In an action against James Hardie Building Products Inc. for allegedly misrepresenting the quality of its siding products, the federal district court in Minneapolis has allowed some purchasers’ consumer protection law claims to proceed, while rejecting others (In re: Hardieplank Fiber Cement Siding Litigation, July 15, 2013, Davis, M.).

JHBP advertised that its fiber-cement siding product HardiePlank had a 50-year transferable warranty, required low or no maintenance, and was designed and engineered to tolerate extreme weather. Purchasers alleged that the siding warped, cracked, flaked, shrank, and discolored. The siding also came loose or fell off the building altogether, potentially exposing the substructure to moisture and other damage.

Ohio resident’s claim. The Ohio purchaser’s Ohio Consumer Sales Practices Act (OCSPA) claim was not time barred based on sufficient grounds to toll the statute of limitations, according to the court. JHBP claimed that because the OCSPA claim was based on alleged misrepresentations and the operation of a warranty, the statute of limitations began to run upon the delivery of the siding, and the discovery rule did not apply. However, the purchaser asserted that JHBP knew its siding was defective, yet concealed that information and continued to state that the siding was durable and long lasting. Despite their due diligence, the purchaser could not have discovered the latent defects in the siding. The OCSPA claims also met the heightened pleading standard of Federal Rule of Civil Procedure 9(b). The purchaser pled sufficient facts to put JHBP on notice of the basis for the fraud claims against it and to allow JHBP to craft a specific response.

The court dismissed the class action claims under the OCSPA. A consumer may assert a class action claim under the OCSPA only if the alleged violation is substantially similar to an act or practice previously declared to be deceptive by one of the methods identified. The complaint failed to identify a previous declaration in the form of a decision of the Ohio Attorney General or an Ohio court that was publicly available at the time of the alleged violation of the OCSPA.

Minnesota claims. The court’s reasoning above applied to deny the motion to dismiss the Minnesota consumer protection claims.

Illinois claims. Because the Illinois purchasers failed to plead reliance on the alleged misrepresentations, the court dismissed the Illinois Consumer Fraud Act (ICFA) claims. The Illinois purchasers alleged that the siding was not as represented and that the warranties were “unconscionable.” The ICFA required the purchasers to plead reliance on the misrepresentations, which they failed to do.

Virginia claims. The court declined to dismiss Virginia Consumer Protection Act (VCPA) claims. JHBP argued that the VCPA did not allow private class action suits and that the statute of limitations barred the claims. The court found that although the VCPA does not expressly forbid or permit class actions, the absence of a class action right under the VCPA was the default position under Virginia law, rather than a provision of the VCPA itself. Also, there was sufficient evidence to toll the statute of limitations.

California claims. Because JHBP’s principal place of business was in California and the advertising likely emanated from California, the court declined to dismiss the California consumer protection law claims. California and non-California purchasers filed Unfair Competition Law and Consumers Legal Remedies Act claims against JHBP. It was plausible that California law would apply to non-California purchasers, and a choice-of-law analysis would be conducted at a later stage of the proceedings.

The case is No. 12-md-2359.

Attorneys: Robert K. Shelquist (Lockridge Grindal Nauen, PLLP) for plaintiffs. Christopher M. Murphy (McDermott Will & Emery LLP) for James Hardie Building Products Inc.

Companies: James Hardie Building Products Inc.

Cases: Advertising StateUnfairTradePractices MinnesotaNews