First Circuit Declines Review of Class Certification Denial in Common Defect Case

Earlier this month, the First Circuit denied Plaintiffs’ motion for leave to appeal a Massachusetts District Court’s refusal to certify a putative class alleging a common defect in their Oasis brand decks.  In doing so, the First Circuit emphasized that the requirements for interlocutory review of class action determinations are “stringent” and had not been met.  The District Court’s decision, which was issued back in September, highlights a number of potential arguments that defense attorneys should consider in defending against class certification motions pursuant to Federal Rule 23.

The putative class sued Mastic Home Exteriors, Inc. and Deceuninck North America, LLC (“DNA”).  DNA designed and manufactured the Oasis decks, and Mastic was the exclusive distributor.  DNA had licensed a patented composite formula and manufacturing process from Strandex, who recommended that DNA use a particular brand of a composite mixture.  DNA, however, used a different formula than what was recommended, which allegedly affected the performance of the boards, resulting in increased water absorption.  As a result, Plaintiffs alleged that Oasis suffered from the common defect of excessive water absorption that resulted in swelling and cracking of the product.  Plaintiffs attempted to certify a class of all owners of homes or buildings in a number of states where Oasis was installed.  Specifically, Plaintiffs asserted claims for breach of warranty, unjust enrichment, as well as violations of state consumer protection laws.

After addressing a number of Daubert motions, the Court assessed Rule 23’s  requirements for class certification.  Although finding ascertainability and numerosity met, the Court concluded that the commonality requirement was not satisfied.  The Court emphasized that to satisfy commonality, Plaintiffs must show that the proposed common questions will lead to answers “apt to drive the resolution of the litigation,” meaning that they “will resolve an issue that is central to the validity of each one of the claims in one stroke.”

As to the express warranty claims, Plaintiffs alleged two theories of liability.  First, that Mastic breached an express warranty arising out of statements made in the course of marketing the product’s durability, and second, that Mastic breached the limited warranty it offered by suggesting that Oasis decks would last for ten to twenty-five years.  The Court concluded that Plaintiffs failed to offer a common question that would drive the resolution of the litigation with respect to either theory.  Specifically, the Court emphasized that determining which, if any, representations became the basis of the bargain between Mastic and an individual Plaintiff would be driven by individualized proof, especially since Mastic did not sell directly to homeowners.  In addition, the Court found that even if it could establish which representations made to intermediaries, contractors, or consumers were part of the basis of the bargain, whether the goods conformed to these representations was still subject to individualized proof, defeating the commonality requirement under Rule 23.

The Court concluded that commonality was similarly not satisfied with respect to the implied warranty claims because some consumers had no performance problems with their Oasis decks.  Thus, the Court found that the question of whether a particular deck failed ordinary expectations was not a common question susceptible to class wide proof.  Likewise, to resolve Plaintiffs’ unjust enrichment claims, individual Plaintiffs would need to show that due to the condition of their decks, and notwithstanding any warranty payments offered, Plaintiffs conveyed a benefit on Defendants that would be unjust for Defendants to retain.  Finally, with respect to Plaintiffs’ consumer protection claims, the Court found that questions of injury and causation were not suitable to common resolution because the record raised individualized questions of proof as to whether an Oasis owner actually suffered an injury, whether that injury was already remedied by the Oasis warranty program, and whether a particular representation or action by Defendants caused that owner’s damages.

The Court then analyzed the typicality requirement, concluding that Plaintiffs were not typical of the class.  First, because Plaintiffs presented a replacement cost theory of damages, the Court found that owners of decks that did not require replacement because they performed consistent with their warranties did not suffer a common injury with those owners who had allegedly damaged decks.  In addition, the Court concluded that the named Plaintiffs were atypical of the class because they did not accept the warranty payments offered to them, whereas most class members who submitted claims did.  Those class members who did accept warranty payments received redress for their injuries and therefore, did not suffer the same injury as the named Plaintiffs.  Lastly, the Court noted that the breadth of the proposed class presented further problems for plaintiffs because, for example, it included transferee owners who purchased a building that already had Oasis installed.  The named Plaintiffs were all direct purchasers and their theory of liability would clearly differ from those transferee owners who did not view any representations by Mastic about Oasis decks.

We will continue to monitor and report on decisions that highlight potential arguments for companies defending against putative class actions.