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In re Atlas Roofing Corp. Chalet Shingle Products Liability Litigation

United States District Court, N.D. Georgia, Atlanta Division

June 9, 2017

IN RE ATLAS ROOFING CORPORATION CHALET SHINGLE PRODUCTS LIABILITY LITIGATION
v.
ATLAS ROOFING CORPORATION doing business as Meridian Roofing Company, Defendant. BRYAN MAKOWSKI on behalf of himself and all others similarly situated, Plaintiff, No. 1:13-md-2495-TWT Civil Action No. 1:14-CV-3034-TWT

          OPINION AND ORDER

          THOMAS W. THRASH, JR. United States District Judge.

         This is a multi-district class action arising out of the marketing and sale of allegedly defective roofing shingles. It is before the Court on the Plaintiff Bryan Makowski's Motion for Class Certification [Doc. 37]. For the reasons set forth below, the Plaintiff's Motion for Class Certification [Doc. 37] is DENIED.

         I. Background

         The Plaintiff and putative class members are purchasers of Atlas Chalet and Stratford Shingles (“Shingles”).[1] The Defendant Atlas Roofing Corporation (“Atlas”) designed, manufactured, and sold the Shingles.[2] Atlas represented and continues to represent that the Shingles are durable, reliable, free from defects, and compliant with industry standards and building codes.[3] The Plaintiff alleges that the Shingles were defective at the time of sale due to a flaw in the manufacturing process.[4] Specifically, the manufacturing process causes the Shingles to have “excessive moisture which creates gas bubbles in the Shingles when they are exposed to the sun and results in cracking, blistering, and premature deterioration of the Shingles.”[5] The Plaintiff further alleges that despite Atlas's knowledge of the defect, Atlas did nothing to correct the defective design and continued to market and warrant the Shingles as durable.[6]

         Atlas provided four different limited warranties throughout the eleven-year class period.[7] The initial limited warranty was a twenty-five-year warranty, and it provided that the Shingles were “free from manufacturing defects, which would reduce the useful life of the product.”[8] The warranty was transferrable to future property owners.[9] On January 1, 2002, Atlas began issuing thirty-year limited warranties.[10] The thirty-year warranty provided that the Shingles were “free from manufacturing defects, which results in leaks.”[11] Atlas also limited the number of transfers of the warranty. For the thirty-year warranty, the coverage could only be transferred once and the second owner had to provide Atlas notice of the transfer of coverage.[12]

         The Plaintiff Bryan Makowski, who is a resident of Florence, Kentucky, purchased his home in 2011.[13] The home was built in 2004, and the Shingles were installed on the home at the time of its construction.[14] On or about March 24, 2012, the Plaintiff experienced a roof leak, causing damage to the inside of his home.[15] After the leak, the Plaintiff hired roofers to inspect his roof.[16] According to the Plaintiff, the roofers observed blistering, cracking, and granule loss on the Shingles.[17] The Plaintiff eventually filed a warranty claim with Atlas.[18] However, Atlas denied the claim, contending that the Shingles did not suffer from any manufacturing defects.[19] On August 28, 2014, the named Plaintiff filed suit in the United States District Court for the Eastern District of Kentucky[20] on behalf of himself and others similarly situated in the state of Kentucky.[21] He seeks to bring his suit as a class action. Because similar consumer class actions were filed in other states, the Judicial Panel on Multidistrict Litigation transferred all related class actions pending in federal court to this Court for coordinated or consolidated pretrial proceedings.[22]

         After the Motion to Dismiss stage, the Plaintiff's remaining claims in this class action are for negligence (Count I), negligent misrepresentation (Count II), strict products liability (Count III), breach of express warranty (Count IV), breach of implied warranties (Count V), violation of the Kentucky Consumer Protection Act (Count VI), fraudulent misrepresentation (Count VII), and fraudulent concealment (Count VIII).[23] The Plaintiff seeks both damages and equitable relief.[24] As damages, the Plaintiff seeks the cost of replacing the Shingles. He proposes two methods for calculating the replacement costs. First, he states that a common formula that calculates replacement costs on a square foot basis could be employed, allowing class members to recover by merely showing the size of their roofs.[25] This method accounts for the fact that “each class member's damages are the cost of removing the defective shingles, the cost of the replacement shingles plus all labor costs associated with this remediation.”[26] In the alternative, he proposes that individual class members can prove their actual replacement costs through a claims process.[27]

         II. Class Certification Standard

         To maintain a case as a class action, the party seeking class certification must satisfy each of the prerequisites of Rule 23(a) and at least one of the provisions of Rule 23(b).[28] Rule 23(a) sets forth the four prerequisites to maintain any claim as a class action:

One or more members of a class may sue or be sued as representative parties on behalf of all members only if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.[29]

         These prerequisites are commonly referred to as: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation.[30] Failure to establish any one of the four factors precludes certification. In addition, under Rule 23(b), the individual plaintiffs must convince the Court that: (1) prosecuting separate actions by or against individual members of the class would create a risk of prejudice to the party opposing the class or to those members of the class not parties to the subject litigation; (2) the party opposing the class has refused to act on grounds that apply generally to the class, necessitating final injunctive or declaratory relief; or (3) questions of law or fact common to the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for fair and efficient adjudication of the controversy.[31] The party seeking class certification bears the burden of proving that these requirements are satisfied.[32]

         The decision to grant or deny class certification lies within the sound discretion of the district court.[33] When considering the propriety of class certification, the court should not conduct a detailed evaluation of the merits of the suit.[34] Nevertheless, the court must perform a “rigorous analysis” of the particular facts and arguments asserted in support of class certification.[35] Frequently, that “rigorous analysis” will entail some overlap with the merits of the plaintiff's underlying claim.[36]

         III. Discussion

         A. Rule 23(b)(3) class

         1. Class Definition

         Though not explicitly stated in Rule 23, it is well accepted that “[b]efore a district court may grant a motion for class certification, a plaintiff . . . must establish that the proposed class is adequately defined and clearly ascertainable.”[37] “An identifiable class exists if its members can be ascertained by reference to objective criteria.”[38] The analysis of the objective criteria must be administratively feasible, meaning identifying class members is a “manageable process that does not require much, if any, individual inquiry.”[39] “A proponent of class certification may rely on the defendant's business records to identify prospective class members, but it is not enough to simply allege that the defendant's records will allow for identification.”[40]“[T]he plaintiff must also establish that the records are in fact useful for identification purposes.”[41]

         Here, the Plaintiff seeks certification of the following Rule 23(b)(3) class:

All those who as of the date class notice is issued: (a) own a home or other structure in the State of Kentucky on which Atlas Chalet or Stratford roofing shingles are currently installed; and/or (b) incurred unreimbursed costs to repair or replace Atlas Chalet or Stratford roofing shingles on a home or other structure in the State of Kentucky which they currently own or previously owned.[42]

         The Defendant raises two objections to the proposed class definition. First, it argues that the class definition is overly broad. By including current and former owners who incurred costs in repairing or replacing their roofs, the Defendant contends that the class definition does not require the owners to have suffered any damage due to an alleged manufacturing defect. The Defendant also argues that the class is not ascertainable. It contends that determining who qualifies as a member under the second category would require “mini-trials.”[43]

         The Court agrees with both of the Defendant's objections. For the Defendant's first objection, the Court finds that this issue is better addressed in its predominance discussion. The Plaintiff alleges that every Shingle is defective, and so the question becomes whether the former and current owners can prove that the alleged defect caused their injuries - the replacement or repair costs of their roofs - or were they due to other causes. This causation question raises concerns regarding individualized evidence, and thus the Court will address it in the predominance section of its Order. Still, the Plaintiff has failed to demonstrate that identification of Atlas Chalet/Stratford Shingles is administratively feasible. The Defendant usually did not sell the Shingles directly to homeowners. The Plaintiff contends that there are reliable methods for determining membership, including markings on the Shingles and warranty claims.[44]But other than a list of warranty claims made in Kentucky, the Plaintiff has failed to put forth evidence demonstrating how class members can be easily ascertained.[45] The Defendant has offered evidence that most warranty claims were generated by roofers soliciting business by advertising that the Atlas Shingles were defective. And the warranty claims only represent a tiny fraction of the homes with Atlas Shingle roofs. In addition, the Plaintiff does not proffer evidence that demonstrates each Shingle contains a marking indicating it is an Atlas Chalet or Stratford Shingle. This potentially means a large number of class members' Shingles will need to be individually examined to determine whether they are Chalet/Stratford Shingles. That is exactly the kind of individual inquiry the ascertainability requirement is meant to protect against.[46] The Plaintiff also does not submit any receipts, invoices, or credit card records that demonstrate using such records is a viable option for identifying class members. Merely noting that such records could be used is insufficient to demonstrate ascertainability.[47] In sum, the Court finds that the Plaintiff fails to demonstrate an administratively feasible mechanism for identifying class members in either category of the class definition.[48] Without a clearly ascertainable class, the Court cannot grant class certification.[49] Nevertheless, because the Court's Order is subject to immediate appeal under Rule 23(f), the Court will address the requirements of Rules 23(a) and 23(b)(3) to determine whether the Plaintiff would otherwise be entitled to class certification.[50]

         2. Rule 23(a)

         a. Numerosity

         To satisfy the numerosity requirement, the Plaintiff must show that joinder of all members of the putative class would be “impractical.”[51] “Practicability of joinder depends on many factors, including, for example, the size of the class, ease of identifying its numbers and determining their addresses, facility of making service on them if joined and their geographic dispersion.”[52] “[W]hile there is no fixed numerosity rule, generally less than twenty-one is inadequate, more than forty adequate, with numbers between varying according to other factors.”[53] The Plaintiff has met its burden with regard to numerosity. He has presented evidence that at least 58 warranty claims were made by Kentucky homeowners.[54] The Plaintiff, therefore, has presented sufficient evidence that the likely number of homeowners in Kentucky who fall within the class exceeds the minimum threshold. Moreover, the large number of putative class members makes joinder impractical. Thus, the Court finds the numerosity requirement is satisfied.

         b. Commonality

         The commonality requirement is satisfied if the named plaintiff demonstrates the presence of questions of law or fact common to the entire class.[55] It is not necessary that all questions of law and fact be common.[56] Indeed, “[e]ven a single [common] question” is sufficient to satisfy the commonality requirement.[57] But the issues still must be susceptible to class-wide proof, and the plaintiff's claims must share “the same essential characteristics as the claims of the class at large.”[58]“Commonality requires the plaintiff to demonstrate that the class members ‘have suffered the same injury.'”[59] “This does not mean merely that they all suffered a violation of the same provision of law.”[60] “Their claims must depend upon a common contention . . . of such a nature that it is capable of classwide resolution - which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”[61]

         Here, the Court finds that the Plaintiff has sufficiently demonstrated commonality. The Plaintiff alleges that the Shingles suffer from a common defect due to a flaw in the manufacturing process. Thus, some common issues include: (1) whether the Shingles are defective; (2) whether the defect is caused by a flawed manufacturing process; (3) whether the defect causes the Shingles to suffer from blistering, cracking, and granule loss problems as well as premature failure; (4) whether the defect in the Shingles breached the Defendant's expressed and implied warranties; and (5) whether the Defendant knew of the defect.[62] These questions of fact are common to the Plaintiff's claims and will generate common answers.[63]Accordingly, the Plaintiff has satisfied the commonality requirement.

         c. Typicality

         The typicality requirement mandates that the claims and defenses of the representative plaintiffs are typical of the claims and defenses of the class.[64] This requirement is satisfied when “a plaintiff's injury arises from or is directly related to a wrong to a class, and that wrong includes the wrong to the plaintiff.”[65] But “[c]lass members' claims need not be identical to satisfy the typicality requirement.”[66] This is because “typicality measures whether a sufficient nexus exists between the claims of the named representatives and those of the class at large.”[67] “A sufficient nexus is established if the claims or defenses of the class and the class representative arise from the same event or pattern or practice and are based on the same legal theory.”[68]

         Here, the Plaintiff's claims arise from the same allegations of wrongful conduct as the claims of the putative class members. Specifically, all the claims are based on the sale of Shingles which allegedly suffer from the same defect. Moreover, the Plaintiff's claims arise from the same legal theories, including breach of express and implied warranties. In response, the Defendant argues that, based on the experiences of the named Plaintiff, there is no typical plaintiff, and that individualized defenses render the Plaintiff's claims atypical. To be sure, the named Plaintiff experienced different weather conditions, installation, and maintenance of his roof than the putative class members. In addition, the named Plaintiff's warranties are not necessarily typical of the class as a whole. Nevertheless, “the showing required for typicality is not demanding.”[69] Varying experiences and unique defenses do not necessarily defeat typicality.[70] If a “sufficient nexus” exists - as the Court found above - then the typicality requirement is met. Thus, the Court concludes that the Plaintiff has satisfied Rule 23(a)'s typicality requirement.

         d. Adequacy of Representation

         To prove adequacy of representation, a plaintiff must demonstrate that the class representatives “fairly and adequately protect the interests of the class.”[71] This requirement serves to uncover conflicts of interest between named parties and the class they seek to represent.[72] A determination of adequacy “encompasses two separate inquiries: (1) whether any substantial conflicts of interest exist between the representatives and the class; and (2) whether the representatives will adequately prosecute the action.”[73] The Court finds that the named Plaintiff and his counsel adequately represent the class. First, there is no evidence of any conflicts of interest between the named Plaintiff and the class. As noted above, the named Plaintiff and the putative class members seek to recover from the same alleged unlawful conduct - a defect in the Defendant's Shingles. Second, there is no evidence that the named Plaintiff will not vigorously and adequately pursue the asserted claims on behalf of the class members. Third, there is no evidence of any potential conflicts with class counsel. Moreover, the Plaintiff has presented evidence that proposed class counsel have extensive experience with class actions and are qualified to conduct this litigation.[74] Thus, the Plaintiff has satisfied Rule 23(a)(4).

         3. Rule 23(b)(3)

         a. Predominance

         The Plaintiff seeks class certification under Rule 23(b)(3). To certify a Rule 23(b)(3) class, the Plaintiff must demonstrate two prerequisites: predominance and superiority.[75] To meet the predominance requirement, “the issues in the class action that are subject to generalized proof and thus applicable to the class as a whole, must predominate over those issues that are subject to individualized proof.”[76] “Common issues of fact and law predominate if they ha[ve] a direct impact on every class member's effort to establish liability and on every class member's entitlement to injunctive and monetary relief.”[77] Importantly, “[w]hether an issue predominates can only be determined after considering what value the resolution of the class-wide issue will have in each class member's underlying cause of action.”[78] But if the “plaintiffs must still introduce a great deal of individualized proof or argue a number of individualized legal points to establish most or all of the elements of their individual claims, ” then predominance does not exist.[79]

         In Brown v. Electrolux Home Products, Inc., the Eleventh Circuit provided a three-step approach for evaluating predominance: (1) identify the parties' claims and defenses and their elements; (2) determine whether these issues are common questions or individual questions by analyzing how each party will prove them at trial; and (3) determine whether the common questions predominate.[80] In addition, the Eleventh Circuit noted that “[d]istrict courts should assess predominance with its overarching purpose in mind - namely, ensuring that ‘a class action would achieve economies of time, effort, expense, and promote . . . uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results.'”[81]

         (i) Breach of Express and Implied Warranties

         In Counts IV and V of his Complaint, the Plaintiff alleges that the Defendant breached its express and implied warranties. Under Kentucky law, to prevail on a breach of warranty claim, a plaintiff must demonstrate the following elements: “(1) the seller makes an affirmation of fact or promise; (2) that relates to the goods; and (3) becomes part of the basis of the bargain between the parties.”[82] To prove a breach of implied warranty of merchantability claim, “Plaintiffs must show that the [product] they purchased w[as] unmerchantable.”[83] Products are merchantable if they “are fit for the ordinary purposes for which goods of that description are used.”[84] For breach of implied warranty of fitness for a particular purpose, the Plaintiff must establish that the seller knew at the time of the contract that the buyer had intended a particular purpose for the goods, and that the buyer relied on the skill or judgment of the seller to supply the appropriate goods.[85] In addition, to prove either breach of implied warranty claim, “privity of contract must exist between the parties.”[86] And, of course, the Plaintiff must prove causation and damages for all of his warranty claims.[87]

         Here, the Court finds that - even if the Plaintiff could prove a uniform defect - individual issues going to causation, notice, coverage, privity and statute of limitations predominate over any common questions in this case. To begin, there are numerous reasons a roof may fail, including commonplace events and ordinary wear and tear.[88] There are also numerous reasons a shingle may blister, crack, or suffer from granule loss.[89] Thus, it is likely that the Defendant will bring at least one causation challenge against most - if not all - putative class members. Because the causation determination for most putative class members will involve individualized evidence, these individual causation questions will predominate at any trial.[90] In response, the Plaintiff argues that if the jury agrees with his argument that a defect existed in every Shingle at the time it was sold, then Atlas's arguments regarding alternative causation will be negated. Not so. Because the Plaintiff seeks the replacement costs of all class members' roofs, the alleged defect in the Shingles must have caused a class member's injuries in order for that class member to recover.[91] All roofs will fail eventually. If an Atlas Shingle roof survives to the end of normal roof life expectancy, the homeowner-class member has not been damaged by the alleged manufacturing defect. If the roof fails due to hail or wind damage or improper installation, the homeowner-class member has not been damaged. This is unlike a products liability case where the plaintiffs claim an economic injury by seeking the diminution in the intrinsic value of the product.[92] In such cases, the plaintiffs typically only need to prove that the defect existed at the time of purchase to prove the defect caused their economic injury.[93]Here, even if the Plaintiff proves a common defect existed in the Shingles, each class member cannot recover damages based on that fact alone. They also must prove that the alleged defect caused their roof to prematurely fail. For the class members who have already had their roofs replaced or repaired, this will be an especially fact-intensive inquiry.

         The Plaintiff cites two cases - Sanchez-Knutsen v. Ford Motor Co. and Brooks v. GAF Materials Corp. - which he contends support his argument. However, the Court finds that these cases do not help the Plaintiff. In Sanchez-Knutsen, the court dismissed the need for individual inquiries into causation, concluding that the evidence did not justify the defendant's concerns.[94] At issue was whether Ford's Explorer vehicle suffered from a defect at the time of purchase that permitted exhaust 2:14-mn-00001-DCN, 2:14-cv-03465-DCN, 2016 WL 3125473, at *11 (D.S.C. June 3, 2016) (holding that complex causation issues existed because the “plaintiff's claim focuses on Pella's failure to repair and replace the Windows, not the initial purchase of the Windows”). and other gases to enter the passenger compartment of the vehicle.[95] The court in Sanchez-Knutsen framed the plaintiffs' damages as the diminution in the intrinsic value of their Explorers, not the repair costs.[96] Thus, the court did not face the same causation issues presented in this instant case. Here, each class member will need to prove that the alleged defect caused his or her Shingles to prematurely fail, not just that the defect exists. This will likely create substantial causation inquiries when deciding the class members' claims.

         Brooks is also distinguishable. There, homeowners sued GAF Materials Corp. (“GAF”), which manufactures roofing materials, over allegedly defective roof shingles.[97] Specifically, the named plaintiffs sought to represent a class of individuals whose shingles allegedly prematurely cracked.[98] In certifying the proposed class, the court discounted the need for individual causation inquiries, stating that the “Plaintiffs seek to establish causation on a large scale - that GAF knowingly sold shingles that contained an inherent manufacturing defect that will inevitably cause the shingles to crack, split, or tear.”[99] While the Plaintiff, here, presents a similar causation argument, the Court believes that evidence in this case demonstrates that other specific causation issues - such as improper installation, inadequate ventilation, or environmental factors - will be significant in deciding the putative class members' cases. Moreover, the class in Brooks was limited to persons whose shingles had already cracked, split, or torn.[100] Here, the breadth of the Plaintiff's proposed class is much larger - it includes owners whose roofs may have been repaired or replaced for reasons other than the alleged premature failure. As a result, the Plaintiff's proposed class presents more individualized causation questions.

         Individual issues will also predominate with respect to two requirements in Atlas's express warranty: transferability and notice. Transferability presents individual questions because the 2002 limited warranty specifically requires a second owner to notify Atlas in writing within thirty days of the real estate transfer for any coverage to be transferred.[101] The third-owner class members are not even eligible to recover under the 2002 limited warranty.[102] As a result, the class members who purchased a home with Atlas Shingles already installed on it will have to prove that the warranty properly transferred to them. Proving compliance with Atlas's notice requirement will require even more individualized evidence. The 1999 limited warranty requires each warrantee to provide notice of the alleged defect to Atlas within five days of discovering it, and the 2002 limited warranty requires notice within thirty days of discovery.[103] Each class member will then need to demonstrate that his or her notice to Atlas was for the alleged defect and not for an unrelated issue. Finally, each class member will need to demonstrate that he or she provided Atlas an opportunity to cure the alleged defect. There are, therefore, numerous individualized issues that will predominate the issues of notice and transferability.

         In response, the Plaintiff first argues that evidence of numerous consumer complaints regarding the alleged defect may be used to satisfy the notice requirement. He cites several cases where courts have found that widespread consumer complaints are sufficient to establish constructive notice.[104] But the Kentucky courts have yet to recognize constructive notice in this context. As a result, the Court is unwilling to hold that constructive notice is sufficient to satisfy the notice requirement. The Plaintiff then argues that, through common evidence, he will demonstrate the Defendant waived the notice requirement. According to the Plaintiff, the Defendant never asked the warranty claimants whether they were filing their claims within thirty days of discovering the alleged defect. Nor did the Defendant enforce the requirement when it knew the claimants were late. The Plaintiff cites RHL Properties LLC v. Neese[105]in support of his contention. There, the Georgia Court of Appeals stated that courts “will readily find a waiver of strict compliance with a notice provision based on the conduct of the parties in order to avoid a forfeiture of substantive contractual rights.”[106] Thus, the Plaintiff argues that by routinely failing to insist on compliance with the notice requirement, the Defendant waived the requirement. The Court disagrees. The Neese case concerned whether the defendant waived its notice requirement with respect to one party.[107] The Plaintiff has failed to cite any case law that states a defendant may waive the notice requirement with respect to all of its warranty claimants if it does not enforce the requirement for each past claimant. Consequently, the Court finds that the notice and opportunity to cure requirements are individual issues that cannot be resolved through common evidence.

         For the Plaintiff's breach of implied warranty claims, the class members will also need to prove they are in privity with Atlas.[108] As the Defendant correctly points out, most class members did not purchase their Shingles directly from the Defendant. “The Chalet/Stratford shingles at issue were sold by Atlas to independent wholesale building product distributors, who, in turn, sold them to roofing subcontractors or builders, who, in turn installed them on roofs, which were, in turn, sold to an original owner as part of a house or building . . . .”[109] Thus, many class members will have a difficult time demonstrating privity. Moreover, individualized evidence will be necessary for each class member.

         Atlas is also likely to employ affirmative defenses against many class members, with the most likely defense being the statute of limitations. Under Kentucky law, warranty claims must be brought within four years “after the cause of action has accrued.”[110]

A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.[111]

         As the Defendant correctly pointed out during the class certification hearing, based on Atlas's sales data, only 5% of the Shingles were sold in the last four years.[112] Thus, it is likely a large percentage of the class members' warranty claims will be barred by the statute of limitations.

         The Plaintiff counters with the general rule that individual affirmative defenses usually do not defeat predominance.[113] Thus, he contends that the statute of limitations issue, along with other potential affirmative defenses, can be handled in the second phase of the case after a liability trial. It is accurate that “courts traditionally have been reluctant to deny class action status under Rule 23(b)(3) simply because affirmative defenses may be available against individual members.”[114] But as the Eleventh Circuit recently confirmed in Brown v. Electrolux Home Products, Inc., affirmative defenses are nevertheless relevant when determining the question of predominance.[115]Specifically, the Eleventh Circuit noted that affirmative defenses that are coupled with several other individual questions could defeat predominance.[116] Such is the case here. The statute of limitations defense coupled with the other individual issues discussed above outweigh any common questions raised by the class's warranty claims.

         (ii) Fraudulent Misrepresentation/Concealment

         In Counts Count VII and VIII of his Complaint, the Plaintiff asserts claims for both fraudulent misrepresentation and fraudulent concealment.

Fraud through misrepresentation requires proof that: (1) the defendant made a material representation to the plaintiff; (2) the representation was false; (3) the defendant knew the representation to be false or made it with reckless disregard for its truth or falsity; (4) the defendant intended to induce the plaintiff to act upon the misrepresentation; (5) the plaintiff reasonably relied upon the misrepresentation; and (6) the misrepresentation caused injury to the plaintiff.[117]

         To demonstrate a fraudulent concealment claim, “a plaintiff must prove: (1) the defendant had a duty to disclose the material fact at issue; (2) the defendant failed to disclose the fact; (3) the defendant's failure to disclose the material fact induced the plaintiff to act; and (4) the plaintiff suffered actual damages as a consequence.”[118]

         Thus, the class members will need to prove they relied on the alleged misrepresentation or omission when purchasing the Shingles. The Defendant contends that, in the instant case, reliance is an individual issue that cannot be proven through common evidence. The Plaintiff counters that “under well-established Eleventh Circuit precedent, the simple fact that reliance is an element in a cause of action is not an absolute bar to class certification.”[119] He then goes one step further and states that the class members will be able to use circumstantial evidence when demonstrating reliance. He points to Klay v. Humana, Inc. in support of his contention. In Klay, a putative class action was brought by a group of doctors who submitted claims for reimbursement to HMOs but were systematically underpaid.[120] The court concluded that class certification was appropriate for the plaintiffs' RICO claim for two reasons. First, common issues of fact, which included the existence of a national conspiracy, a pattern of racketeering activity, and a Managed Care Enterprise, predominated “over all but the most complex individualized issues.”[121] Second, the court found “that, based on the nature of the misrepresentations at issue, the circumstantial evidence that can be used to show reliance is common to the whole class.”[122] In clarifying the nature of the misrepresentations, the Eleventh Circuit stated:

The alleged misrepresentations in the instant case are simply that the defendants repeatedly claimed they would reimburse the plaintiffs for medically necessary services they provide to the defendants' insureds, and sent the plaintiffs various EOB forms claiming that they had actually paid the plaintiffs the proper amounts. While the EOB forms may raise substantial individualized issues of reliance, the antecedent representations about the defendants' reimbursement practices do not. It does not strain credulity to conclude that each plaintiff, in entering into contracts with the defendants, relied upon the defendants' representations and assumed they would be paid the amounts they were due. A jury could quite reasonably infer that guarantees concerning physician pay - the very consideration upon which those agreements are based - go to the heart of these agreements, and that doctors based their assent upon them.[123]

         The Plaintiff contends that the misrepresentations in Klay are similar to the misrepresentations by Atlas in that no class member would purchase Shingles that are going to prematurely fail. Therefore, all the class members relied on Atlas's alleged omission and misrepresentations regarding the durability of the Shingles when they purchased the Shingles.

         The Plaintiff's analogy is misplaced. “[A] fraud case may be unsuited for treatment as a class action if there was material variation in the representations made or in the kinds of degrees of reliance by the persons to whom they were addressed.”[124]When presented with such cases, “the Eleventh Circuit has repeatedly found class certification inappropriate.”[125] In this case, there are both material variation in the representations and kinds of degrees of reliance by the class members. For the alleged misrepresentations, each class member would need to establish what particular marketing material or industry standard he or she observed and relied upon. This is further complicated by third party wholesalers, retailers, and contractors who made the purchase decisions for the vast majority of the Shingle purchases. Indeed, there is no evidence that Atlas engaged in a uniform marketing scheme. Thus, the class members cannot use common evidence to prove they relied on Atlas's statements regarding the durability of the Shingles. For the alleged fraudulent omission, the class members made their own assessment when deciding to purchase the Shingles or homes with the Shingles installed on the roof. As an example, some class members may have been on notice of blistering, cracking, and granule loss on the Shingles, but decided to purchase the property despite the conditions. Such class members would not have relied on the alleged omission. Unlike in Klay, the class will need to prove reliance through individual evidence. Thus, the Court finds that common issues do not predominate with regard to the Plaintiff's fraudulent inducement claim.[126]

         (iii) Negligence/ Negligent Misrepresentation

         The Plaintiff alleges that the Defendant knowingly conveyed false information to class members when it stated the Shingles would perform up to industry standards.[127] In Kentucky, to prevail on a negligent misrepresentation claim, a plaintiff must prove that:

(1) the transaction at issue is one in which the defendant had a pecuniary interest; (2) the defendant supplied false information; (3) the information was supplied for others' guidance in their business transactions; (4) the defendant failed to exercise reasonable care in communicating the information; (5) the plaintiff acted in reliance thereon; (6) the false information caused injury.[128]

         Like the Plaintiff's fraud claims, the individual issues surrounding the element of reliance will predominate the negligent misrepresentation claim. For example, many class members purchased their Shingles through roofers. Thus, whether a class member relied on false information from Atlas when purchasing his or her Shingles from a roofer will require an individualized inquiry. And as the Court discussed above, the issues of causation and damages will also demand individualized evidence. As a result, the Court declines to certify the Plaintiff's negligence and negligent misrepresentation claims.

         (iv) Kentucky Consumer Protection Act

         The KCPA prohibits “[u]fair, false, misleading, or deceptive acts or practices in the conduct of any trade or commerce.”[129] Under the KCPA, a consumer who purchases a good as a result of unlawful trade practices can sue the seller for damages.[130] However, that consumer must have purchased the goods or services “primarily for personal, family or household purposes.”[131] Here, the Shingles were installed on various structures for various uses. Indeed, some of the class members may be businesses that purchased the Shingles for use on a commercial property. Moreover, many class members did not purchase the Shingles directly from Atlas. Because of these varied circumstances, individual inquiries into each class member's primary reason for purchasing the Shingles will be necessary. Such individual inquiries into the state of mind of the class members will predominate over any common issues of fact or law.[132]

         (v) Strict Products Liability

         Under Kentucky law, to prevail in a strict products liability action, a plaintiff must show: (1) that there is a product, which is (2) in a defective condition unreasonably dangerous to the user or consumer or his property, and (3) which reaches the user or consumer without substantial change in the condition in which it is sold; (4) that the product is sold by one who is engaged in the business of selling such a product which (5) results in physical harm to the ultimate user or consumer or his property.[133]

         Like the Plaintiff's warranty claims, the Plaintiff's strict products liability claim will be predominated by individualized causation questions. The individual class members will need to prove that the alleged damage, whether to the Shingles or other property, was caused by the alleged defective condition.[134] As the Court discussed in detail above, this inquiry will mandate individual evidence. In addition, the issues of damages and statute of limitations will need to be determined on an individualized basis. Thus, the Court finds that individual issues will predominate the Plaintiff's strict products liability claim.

         b. Superiority

         To meet the superiority requirement, the Court must conclude “that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”[135] The factors relevant in determining superiority include:

(A) the class members' interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.[136]

         Class certification “cannot be denied because the number of potential class members makes the proceeding complex or difficult.”[137] But the difficulties in managing a class are important “if they make the class action a less fair and efficient method of adjudication than other available techniques.”[138] Thus, the focus should be “on the relative advantages of a class ...


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