Weil Defeats Significant 20-Count Putative Class Action on Behalf of HVAC Giant

Monday, October 10, 2016 - 11:05

On September 30, 2016, Weil obtained a significant victory on behalf of client Nortek Global HVAC in the Middle District of Tennessee after U.S. District Court Judge Kevin Sharpe agreed to dismiss, with prejudice, a 20-count class action complaint.

The lawsuit against Nortek HVAC, a leading manufacturer of air conditioning and heating products, alleged that the company’s air conditioners purportedly contained defective copper coils that could result in corrosion and leaking. The suit was brought by five named plaintiffs from four different jurisdictions on behalf of a putative nationwide class and four putative state subclasses. Amongst the 20 causes of action were claims for breach of express and implied warranty, unjust enrichment, a variety of state consumer protection statutes, and equitable relief.

In the 18-page order, the court first addressed the claims of the plaintiffs located outside of Tennessee, who reside in Florida, Georgia, and Texas. The court agreed with Nortek HVAC’s arguments that since the court lacked both general and specific jurisdiction, it therefore lacked personal jurisdiction over the claims of these non-Tennessee plaintiffs. The court explained that in order to have general jurisdiction, Nortek HVAC’s affiliations with Tennessee must be so continuous and systematic as to render it at home in Tennessee. But, as Nortek HVAC had pointed out, it is neither incorporated nor maintains its principal place of business in Tennessee, which are the paradigm bases for establishing general jurisdiction. While Nortek HVAC did maintain a manufacturing and distribution facility in Tennessee, a point on which Plaintiffs heavily relied, the court reasoned that those were not sufficient contacts to warrant finding that the defendant was essentially “at home” in Tennessee. The court next agreed with Nortek HVAC that it also lacked specific jurisdiction over the claims of the non-Tennessee plaintiffs, which requires that the claims arise out of or relate to a defendant’s contacts with the forum. Since there were no allegations that the non-Tennessee plaintiffs purchased their units in Tennessee or had any dealings with Nortek HVAC in Tennessee, specific jurisdiction was lacking as the claims of those plaintiffs. The court therefore dismissed all of the claims of the non-Tennessee plaintiffs, along with the claims of the putative state classes they purported to represent.

Turning to the claims of the Tennessee plaintiffs – which included claims for breach of express and implied warranty, unjust enrichment, and equitable relief – the court agreed with Nortek HVAC that those claims were barred by Tennessee’s relevant four-year statute of limitations. Nortek HVAC had argued that, under the plain language of the statute, the statutory period began to run upon delivery of the Tennessee Plaintiffs’ unit, which had occurred more than four years prior to the filing of the lawsuit. Plaintiffs sought to invoke an exception to that rule, which provides that the statutory period is tolled until discovery of the breach if the warranty “explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance.” Plaintiffs had argued that Nortek HVAC’s warranty extended to future performance because of language in the preamble to its quality pledge (a separate document from the limited warranty), stating that Nortek is “so confident in the product performance that we back it with the NuTone Quality Pledge.” But the court rejected this argument because the NuTone Quality Pledge specifically did not apply to coils and because plaintiffs’ interpretation was contrary to the plain terms of the applicable limited warranty, which specifically contemplated repair or replacement in the event of a failure due to “defects in workmanship and materials.” Relying on Tennessee decisions cited by Nortek HVAC in its motion to dismiss, the court explained that courts are “very harsh” in finding that a warranty extends to future performance and that the type of repair or replacement language contained in Nortek’s limited warranty is not the kind that extends to future performance under the law. Accordingly, the court dismissed the claims of the Tennessee plaintiffs as time-barred. The court also held that because the claims of the Tennessee Plaintiffs had been dismissed, those claims could not be maintained on behalf of the remaining putative classes. Because the court granted the motion to dismiss with prejudice, plaintiffs will not be entitled to another opportunity to amend their complaint.

The ruling follows another significant victory that Weil obtained on behalf of Nortek HVAC in Florida federal court. In January 2016, the Southern District of Florida denied the plaintiffs’ motion for class certification in a suit based on similar factual allegations, refusing to grant plaintiffs’ request to certify a damages class, an injunctive relief class, and an issue-only class.

The Weil team was comprised of attorneys across its New York and Miami offices, including Complex Commercial Litigation practice co-chair Edward Soto, Products Liability practice chair Arvin Maskin, and associates Erica Rutner, Emily Pincow, Pravin Patel, Brian Liegel, Lorell Guerrero, and Alexis Kellert.