Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D.S.C.: Window maker Pella partially shuttered from fraud claims, (Dec 22, 2014)

By Greg Hammond, J.D.

Window manufacturing company, Pella Corp., successfully evaded allegations that it made affirmative misrepresentations regarding its windows. The federal district court in Charleston, South Carolina partially dismissed the consumer’s Minnesota Consumer Fraud Act (MCFA), Minnesota Uniform Deceptive Trade Practices Act (MUDTPA), and Minnesota Unlawful Trade Practices Act (MUTPA) claims, finding that she did not plead her affirmative misrepresentation claims with particularity, as required by Federal Rule of Civil Procedure 9(b) (Schwartz v. Pella Corp., December 18, 2014, Norton, D.).

Consumer Lori Schwartz purchased Pella Architect and Designer Series windows in 2004 and 2008. She alleged that the windows were defective because they allowed water to penetrate the area behind the aluminum cladding, causing condensation, wood rot, and leaks. Further, she asserted that Pella knew of the defect when it shipped the windows. Consequently, Schwartz brought 13 claims against Pella, including violations of the MCFA, MUDTPA, and MUTPA. Pella moved to dismiss the fraud based claims, arguing that Schwartz failed to plead her claims with particularity.

Preliminarily, the court determined that the Rule 9(b) standard should be applied to Schwartz’s affirmative misrepresentation claims, but that a relaxed Rule 9(b) standard should apply to the fraudulent omissions or concealment claims brought under the MCFA, MUDTPA, and MUTPA. Pursuant to the relaxed standard, a court should hesitate to dismiss a complaint if it is satisfied that: (1) the defendant was made aware of the particular circumstances for which it will have to prepare a defense at trial; and (2) the plaintiff has substantial prediscovery evidence of those facts.

The court concluded that Schwartz sufficiently pleaded her fraudulent omissions or concealment claims under the MCFA, MUDTPA, and MUTPA, because she pleaded sufficient facts that: Pella was aware of a defect; Pella concealed the defect from consumers; and Schwartz would have taken different actions had she known about the defect. The affirmative misrepresentation claims, however, were not pleaded with requisite particularity, as the complaint lacked any detail regarding: who made the alleged misrepresentations; when the misrepresentations were allegedly made; or where they were made. The motion to dismiss was therefore denied with regard to the fraudulent omissions or concealment claims, but granted to the extent the MCFA, MUDTPA, and MUTPA claims alleged affirmative misrepresentations.

The case numbers are 2:14-mn-00001-DCN and 2:14-cv-00556-DCN.

Attorneys: Scott A. George (Seeger Weiss) for Lori Schwartz. G. Mark Phillips (Nelson Mullins Riley and Scarborough) and James A. O'Neal (Faegre & Benson LLP) for Pella Corp.

Companies: Pella Corp.

Cases: StateUnfairTradePractices SouthCarolinaNews