United States District Court, D. Kansas
JIMMY and REGINA HULL, individually and on behalf of those similarly situated, et. al., Plaintiffs,
VIEGA, INC., et al., Defendants.
MEMORANDUM AND ORDER
JULIE A. ROBINSON, District Judge.
This putative class action arises out of the installation of allegedly defective high-zinc-content "yellow brass" plumbing fittings in residences throughout the United States. This matter is before the Court on Defendants' renewed Motion to Dismiss and Strike Pursuant to Fed.R.Civ.P. 12(b)(1), (b)(6), (f) and 23 (Doc. 52), and Plaintiffs' Motion for Leave to Substitute Plaintiff and Amend Complaint (Doc. 60). In their response to Defendants' numerous grounds for dismissal, Plaintiffs, who are residents of Nevada, move to substitute a replacement named plaintiff and proposed class representative from Arizona, who will pursue claims only on behalf of Arizona residents, as set forth in the attached proposed Amended Complaint. Such amendment, Plaintiffs contend, will cure the majority, if not all, of Defendants' concerns regarding dismissal and certification. Defendants raise numerous objections to the request for leave to amend in their reply (Doc. 62), and the Court directed Plaintiffs to file a surreply to Defendants' objection to their request for leave to amend complaint. The matter is now fully briefed and the Court is prepared to rule. For the reasons explained in detail below, the Court denies Defendants' Motion to Dismiss for lack of subject matter jurisdiction and grants Plaintiffs leave to amend.
I. Procedural and Factual Background
Plaintiffs Jimmy and Regina Hull, Gilbert Meyer, Dorothy O'Brien, and Daniel Tessier, all residents of Nevada and owners of residential property in Las Vegas, filed this Rule 23 class action, individually and on behalf of over one thousand (1000) similarly situated owners of homes and buildings in the United States with plumbing systems utilizing Defendants' brass ASTM F877 and/or F1807 fittings (collectively "Fittings"), as well as any person or entity who paid for repairs or damage cause by the failure of the allegedly defective Fittings. Plaintiffs seek damages pursuant to the Kansas and Nevada Deceptive Trade Practices Act ("NDTPA") and similar statutes in other states, and Chapter 40 of the Nevada Revised Statutes ("NRS"),  based upon damage and potential future damage to class members' homes arising out of the failure or potential failure of "yellow brass" plumbing fittings and components manufactured by Defendants.
Plaintiffs name the following Defendants: (1) Vanguard Piping Systems, Inc., a Kansas corporation, which was succeeded by and merged with Viega, LLC; (2) Viega, Inc., a Delaware corporation that is the successor-in-interest by merger to Vanguard Industries, Inc. and Vanguard Piping Systems, Inc.; (3) Viega, LLC, a Delaware limited liability company that is the successor-in-interest by merger to Vanguard Piping Systems, Inc.; (4) VG Pipe, LLC, a Delaware corporation; (5) Vanguard Industries, Inc., the parent of Vanguard Piping Systems, Inc. before it was merged with and sold to Viega, Inc.; (6) Viega International GMBH, a German company that is the parent company of Viega, Inc.; and (7) Viega GMBH & Co. KG, a German company.
The Complaint lists seven causes of action: (1) Breach of Implied Warranties of Fitness for Particular Purpose, Merchantability, Habitability, Quality and Workmanship; (2) Breach of Express Warranties; (3) Negligence, Negligent Misrepresentation, Failure to Warn/Instruct, Negligent Selection and Negligent Installation; (4) Strict Products Liability; (5) Declaratory and Equitable Relief; (6) Violation of NDTPA; and (7) Alter Ego.
Defendants moved to dismiss the complaint on multiple grounds, and also moved to strike Plaintiffs' class allegations on the grounds that it is evident from the face of the Complaint that, as a matter of law, Plaintiffs are unable to satisfy the requirements for certification under Rule 23. In their response, Plaintiffs acknowledged that Plaintiffs Meyer, O'Brien and Tessier are class members in a separate case filed in the District of Nevada, brought on these same claims against these same Defendants, and by the same Plaintiffs' counsel: Waterfall Homeowners Ass'n v. Viega, Inc., et al., No. 11-cv-01498-RCJ-GWF (" Waterfall "). In that case, the plaintiffs are Nevada homeowners associations that represent their own 998 members directly, and seek to represent up to 10, 000 homeowners associations representing up to 250, 000 similarly situated homeowner members throughout the Las Vegas area via that class action.
On July 10, 2012, after Plaintiffs filed their response but before Defendants filed their reply, the Waterfall court issued an order adjudicating motions to dismiss and strike class action allegations filed by Defendants (the " Waterfall Order"). Defendants attached a copy of the Order to their response, and incorporate it into their arguments. Defendants urged this Court to follow the favorable rulings in the Waterfall Order, to disregard the unfavorable rulings, and dismiss Plaintiffs Meyer, O'Brien and Tessier, whose presence in this suit allegedly violates the anti-claim splitting rule. Plaintiffs did not seek leave to file a surreply.
On February 27, 2013, this Court denied Defendants' motions without prejudice to renew. In so ruling, the Court summarized the court's holdings in Waterfall and expressed concern regarding several problems with Plaintiffs' Complaint, including whether the action could ever meet the certification requirements of Fed.R.Civ.P. 23(b)(3), whether manageability concerns were posed by choice of law problems, whether Plaintiffs could extrapolate the Hulls' Chapter 40 Notice to the class homes in Nevada and nationwide, whether the class was acertainable, and whether Plaintiffs had engaged in claim-splitting, noting that many of the objections appeared to be curable by amendment. Defendants renewed their motion to dismiss. In response, Plaintiffs moved to amend their complaint to substitute a replacement named plaintiff and proposed class representative from Arizona, who will pursue claims only on behalf of Arizona residents, dropping the Nevada claims and plaintiffs as well as any potential nationwide class, which purportedly cures or renders moot Defendants' grounds for dismissal.
On October 29, 2013, this Court entered an Order Staying Case pending the December 2, 2013 Fairness Hearing on a national class settlement in Verdejo v. Vanguard Piping Sys. Inc., et al., Case No. BC448383 (L.A. Super.). The parties subsequently notified the Court that the Verdejo national class settlement is "dead, " and accordingly, the stay was lifted.
II. Standing and Leave to Amend
As a general rule, the court first addresses a motion for leave to amend because if leave is granted, the motion to dismiss the complaint is moot. Indeed, Plaintiffs have tacitly conceded most of Defendants' objections by filing a proposed amended complaint that cures or renders moot any deficiencies. In requesting leave to amend in their response to the motion to dismiss, Plaintiffs dispute that they lack standing, but admit that "[m]uch of Defendants' argument related to an alleged lack of standing' is also cured by allowing substitution of the named plaintiff." Defendants contend that because Plaintiffs have no standing to prosecute this action, they also lack standing to request leave to amend.
In class actions, where a named plaintiff's individual claims fail or become moot for a reason that does not affect the viability of the class claims, courts regularly allow or order plaintiff's counsel to substitute a new representative plaintiff. However, while Rule 15(a) is to be liberally applied, it does not extend to cases where plaintiff's only reason for seeking amendment is to cure a standing defect. If Plaintiffs are without standing, then amendment would not be allowed, as a plaintiff "may not create jurisdiction by amendment when none exists." Where the only named plaintiff in a putative class action lacks standing from the outset of the case, and a class is yet to be certified, the proper course is dismissal.
In this case, Plaintiffs' proposed amendment is offered to cure numerous objections raised in Defendants' Motion to Dismiss, ranging from standing to bars to class certification to failure to state a plausible claim. Accordingly, the Court will first address the standing issue raised in Defendants' Rule 12(b)(1) motion, as the ...