Jonathan Bilyk Jan. 14, 2016, 3:12pm

A federal judge has given the green light to a class action against the makers of Rustoleum, saying, to this point, the plaintiffs in the nationwide warranty and consumer fraud litigation over “latent defects” in the Restore deck restoration product have produced enough evidence and legal precedent to move forward with their case.

On Jan. 7, U.S. District Judge Amy J. St. Eve ruled in Chicago to reject most of the arguments raised by Rustoleum in support of the company’s motion to dismiss the multi-district consolidated class action litigation brought against the company over its so-called “Restore” products, sold under the “Restore 10X” and “Deck & Concrete Restore” labels, saying most of the company's arguments were at this point premature, at best.

The action arose in the months prior to February 2015, when the U.S. Judicial Panel on Multidistrict Litigation transferred to Chicago’s federal courts the claims of plaintiffs from 27 states, including Illinois, who had asserted Rustoleum’s Restore products contained “latent defects" that caused the product to prematurely chip, blister and peel, and otherwise damage their decks and patios.

The plaintiffs introduced a consolidated class action complaint in April, including 40 named plaintiffs, who claimed to have purchased and used the Restore products between 2010-2015. They collectively asserted “Rustoleum knew or should have known that Restore would not live up to those promises” made in the company’s marketing and advertising for the products.

The 10-count class action, which alleged breach of warranties and violations of consumer fraud and false advertising statutes throughout the U.S., among other allegations, asked the court to award damages to a class including everyone who purchased Restore anywhere in the U.S. and its territories.

Rustoleum has manufactured and sold Restore products since 2012, the court documents said.

Rustoleum responded with a motion to dismiss, arguing the complaint’s warranty breach and consumer fraud claims weren’t watertight.

St. Eve sided with Rustoleum on some of its contentions concerning the breach of warranty claims, noting plaintiffs failed to demonstrate Rustoleum’s warranties were not featured prominently enough in the printed instructions for Restore or on its packaging. The judge also agreed plaintiffs’ claims confused the “ordinary purpose” of Restore – specifically, its use as a deck resurfacing stain or paint – with the “particular purpose” plaintiffs may have desired the product to fulfill – typically, the protection of their deck and patio structures against “harsh weather.”

And the judge also dismissed some of the state law fraudulent concealment claims - which alleged Rustoleum knew of the products’ defects, but chose not to tell its customers – while allowing those of others to stand, depending on the laws of the state in which the plaintiff brought the original action.

The judge, however, said plaintiffs, at this point in the proceedings, during which judges must “take all reasonable inferences” in favor of the plaintiffs, have met the standards needed to move forward with the bulk of their warranty and consumer fraud claims against Rustoleum.

St. Eve brushed aside Rustoleum’s contentions provisions in its warranties, such as those should exclude plaintiffs’ claims.

Rustoleum, for instance, said the court should toss the plaintiffs’ warranty violation claims because the products’ written warranties limit the amount an “unsatisfied Restore customer to ‘either a refund of the original purchase price or replacement with a product of equal value.’” Rustoleum claimed it offered such refunds to about two dozen of the plaintiffs.

St. Eve, however, said the substance of how those written warranties apply to the plaintiffs’ claims should merely be the subject of further proceedings in the case.

“Indeed, factual inquiries – such as whether Restore had any latent defects present – will not be adequately determined absent discovery, and underlie the determination of whether an express warranty failed of its essential purpose,” St. Eve wrote in her opinion.

Rustoleum also argued the warranties exclude awards for “recovery of consequential damages such as the costs of applying or removing any product or replacing any structure.”

But St. Eve questioned just how “consequential,” rather than direct, was the damage Restore products allegedly caused to the plaintiffs’ property.

“Plaintiffs have alleged that the express warranty promised that Rust-Oleum ‘guarantees product performance for the product in this can only as long as you own or reside in your home when our product was applied according to the label directions,’” the judge wrote. “Plaintiffs have also alleged that Plaintiffs and many of those authoring consumer complaints applied Restore ‘in accordance with the instructions provided by Defendant.’”

To this point, she said, plaintiffs “have alleged factual support for a finding that the damages resulting from application of Restore to surfaces following the instructions, constitute direct damages which were bargained for as expressly embodied in Rust-Oleum’s own warranty provision.”

The judge further refused to dismiss the claims brought by the plaintiffs concerning Rustoleum’s alleged breach of its express warranty and alleged violations of state consumer fraud laws.

To satisfy the requirements to proceed with their fraud claims, the plaintiffs have answered the important “who, what, where, when and how” questions needed to establish fraud claims.

And she said, to this point, plaintiffs have sufficiently alleged they relied Rustoleum’s assertions, as expressed in its direct consumer marketing, concerning “Restore’s intended use, superiority, and durability” when purchasing and applying the deck restoration product.

Rustoleum is defended in the action by attorneys with the firms of Mayer Brown, of Chicago; Millberg, Gordon and Stewart, of Raleigh, N.C.; and Hangley Aronchick Segal and Pudlin, of Philadelphia.

Plaintiffs are represented by attorneys with the firms of Audet & Partners, of San Francisco; Lite Depalma Greenberg, with offices in Chicago and Newark, N.J.; Bloom and Bloom, of New Windsor, N.Y.; the Law Office of Lewis Adler, of Woodbury, N.J.; Quantum Legal, of St. Louis; Wexler Wallace, of Chicago; Levin, Fishbein, Sedran & Berman, of Philadelphia; the Law Office of Jean Sutton Martin, of Wilmington, N.C.; Rhine Martin Law Firm, of Wilmington, N.C.; Chimicles & Tikellis, of Haverford, Pa.; Lockridge Grindal Nauen & Holstein, of Minneapolis; Saiber LLC, of Florham Park, N.J.; Cuneo Gilbert & LaDuca, of Washington, D.C.; and attorney Robert N. Isseks, of Middletown, N.Y.

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Organizations in this Story

Wexler Wallace LLP
55 West Monroe Street
Chicago, IL 60603

Mayer Brown LLP
71 S. Wacker Dr.
Chicago, IL 60606

Milberg Gordon Stewart PLLC
1101 Haynes Street
Raleigh, NC 27604

Hangley Aronchick Segal and Pudlin
One Logan Square
Philadelphia, PA 19103

Audet & Partners LLP
711 Van Ness Avenue
San Francisco, CA 94102

Lite DePalma Greenberg LLP
211 West Upper Wacker Drive
Chicago, IL 60606

Bloom & Bloom PC
530 Blooming Grove Turnpike
New Windsor, NY 12553

Law Office of Lewis Adler
26 Newton Avenue
Woodbury, NJ 08096

Quantum Legal LLC
513 Central Ave
Highland Park, IL 60035

Levin, Fishbein, Sedran & Berman
510 Walnut Street
Philadelphia, PA 19106

Law Office of Jean Sutton Martin
Suite 225 2018 Eastwood Road
Wilmington, NC 28403

Rhine Law Firm
# 1000 314 Walnut Street
Wilmington, NC 28401

Chimicles & Tikellis LLP
361 Lancaster Avenue
Haverford, PA 19041

Lockridge Grindal Nauen PLLP
100 South Washington Avenue
Minneapolis, MN 55401

Saiber LLC
200 18 Columbia Turnpike
Florham Park, NJ 07932

Cuneo Gilbert & LaDuca
8120 Woodmont Avenue
Bethesda, MD 20814

Isseks and Smith
6 North Street
Middletown, NY 10940

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