Fifteen Twenty-One Second Avenue Condominium Association v. Viracon LLC

Opinion

5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 6 AT SEATTLE

7 NO. 2:23-cv-1999 FIFTEEN TWENTY-ONE SECOND AVENUE 8 CONDOMINIUM ASSOCIATION, a ORDER (1) GRANTING APOGEE Washington non-profit corporation, ENTERPRISES, INC.’S MOTION TO 9 Plaintiff, DISMISS AND (2) DENYING FIFTEEN TWENTY-ONE SECOND AVENUE 10 v. CONDOMINIUM ASSOCIATION’S MOTION FOR IN CAMERA REVIEW 11 VIRACON, LLC, a Minnesota limited liability company, APOGEE ENTERPRISES, INC., a 12 Minnesota corporation, QUANEX IG SYSTEMS, INC., an Ohio Corporation, 13 INSULATING GLASS CERTIFICATION COUNCIL, INC., an Illinois corporation, and 14 DOES 1-20, Defendants. 15

16 I. INTRODUCTION 17 This matter comes before the Court on (1) a Motion to Dismiss under Federal Rules 18 12(b)(2) and 12(b)(6), filed by Defendant Apogee Enterprises, Inc. (“Apogee”), Dkt. No. 69; and 19 (2) a Motion for In Camera Review, Setting of Evidentiary Hearing, and Jurisdictional Discovery, 20 filed by Plaintiff Fifteen Twenty-One Second Avenue Condominium Association (“Plaintiff”), 21 Dkt. No. 77. Apogee asks the Court to dismiss it for lack of personal jurisdiction or, in the 22 alternative, to dismiss Plaintiff’s claims against it for failure to state a claim on which relief can 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 evidentiary hearing and to review, in camera, dozens of documents marked “confidential.” 3 Having reviewed the briefs filed in support of and in opposition to Apogee’s motion, the Court 4 finds and rules as follows. 5 II. BACKGROUND1 6 This lawsuit concerns the 38-story building located at 1521 Second Avenue in Seattle, 7 Washington, which is owned by Plaintiff Fifteen Twenty-One Second Avenue Condominium 8 Association. Am. Compl., ¶¶ 12, 1. Dkt. No. 27. Plaintiff brings this lawsuit claiming that the 9 double-paned Insulated Glass Units (“IGUs”) that make up the exterior curtain wall of the 1521 10 Second Avenue building were defectively designed and constructed by Defendant Viracon LLC 11 (“Viracon”), a wholly owned subsidiary of Apogee. Id., ¶¶ 6, 7. The IGUs were made using a

12 gray sealant, manufactured by Defendant Quanex IG Systems, Inc., that Plaintiff alleges is failing. 13 Each IGU bears the stamp of Defendant Insulating Glass Certification Council, Inc. (“IGCC”), 14 which Plaintiff claims falsely certifies the IGUs’ quality. Id., ¶¶ 24, 18. By this lawsuit, Plaintiff 15 seeks recovery of damages it claims are associated with failure of the IGUs in its building. 16 III. DISCUSSION 17 A. Standard on a Motion to Dismiss Under Federal Rule 12(b)(2)2 18 When a defendant invokes Federal Rule of Civil Procedure 12(b)(2) in a motion to dismiss 19 for lack of personal jurisdiction, the plaintiff bears the burden of making a prima facie showing of 20 personal jurisdiction. Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 21

1 For a more detailed factual background, see Order Denying Quanex’s Motion to Dismiss, Dkt. No. 65. 22 2 Because the Court dismisses Apogee for lack of personal jurisdiction, it does not reach Apogee’s Federal Rule 12(b)(6) motion to dismiss Plaintiff’s claims on the merits. 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 would support the court’s exercise of jurisdiction. Id. at 1129. Although a plaintiff cannot simply 3 rest on the bare allegations in the complaint, the court must accept uncontroverted allegations in 4 the complaint as true, and conflicts between parties over statements in affidavits must be resolved 5 in the plaintiff’s favor. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 6 2004). 7 “Federal courts ordinarily follow state law in determining the bounds of their jurisdiction.” 8 Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting Daimler AG v. Bauman, 571 U.S. 9 117, 125 (2014)). The Washington Consumer Protection Act (“CPA”), under which Plaintiff 10 brings its sole cause of action against Apogee, contains its own long-arm provision, which 11 “extends the jurisdiction of Washington courts to persons outside its borders” and “is intended to

12 operate to the fullest extent permitted by due process.” State v. LG Elecs., Inc., 185 Wn. App. 13 394, 410 (2015), aff’d, 186 Wn. 2d 169 (2016) (citation omitted). Thus, the Court’s “inquiry 14 centers on whether exercising jurisdiction comports with due process.” Picot, 780 F.3d at 1211. 15 Due process, in turn, “requires that the defendant ‘have certain minimum contacts’ with the forum 16 state ‘such that the maintenance of the suit does not offend traditional notions of fair play and 17 substantial justice.’” Id. (quoting Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)); see also 18 Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). 19 B. Specific Jurisdiction: Whether Plaintiff Has Sufficiently Stated Facts Supporting Element of “Purposeful Direction” 20 The Ninth Circuit employs a three-part test to assess whether a party has sufficient 21 minimum contacts with the forum state to subject it to specific personal jurisdiction: (1) The non- 22 resident defendant must purposefully direct his activities or consummate some transaction with 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 privilege of conducting activities in the forum, thereby invoking the benefits and protections of its 3 laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related 4 activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, 5 i.e. it must be reasonable. Picot, 780 at 1211 (quoting Schwarzenegger, 374 F.3d at 802). Plaintiff 6 has the burden of demonstrating the first two elements, after which the defendant must show 7 exercise of jurisdiction would be unreasonable. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 8 476-78 (1985). 9 1. The Calder “Effects” Test: Whether Defendant Committed an Intentional Act Expressly Aimed at Washington 10 Under the test outlined above, a plaintiff asserting a claim sounding in tort must first 11 establish that the defendant “purposefully directed” its activities toward the forum state. 12 Schwarzenegger, 374 F.3d at 802. The purposeful direction requirement is analyzed under the 13 “effects” test derived from Calder v. Jones, 465 U.S. 783 (1984). The elements of the Calder 14 effects test require Plaintiff to have sufficiently alleged that Apogee: (1) committed an intentional 15 act, (2) expressly aimed at Washington, (3) that caused harm that Apogee knew was likely to be 16 suffered in Washington. See Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). The 17 Complaint here contains allegations that fall loosely into two separate categories: (1) actions of 18 Viracon that Plaintiff suggests for jurisdictional purposes should be imputed to its parent 19 corporation Apogee, and (2) actions that Apogee itself took. After examining the allegations, the 20 Court concludes that neither category supports an inference that Apogee committed intentional 21 acts “expressly aimed” at Washington, or justifies the exercise of this Court’s jurisdiction over 22 Apogee. 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 Plaintiff first alleges that Apogee “has via its agents, subsidiaries, and co-conspirators . . . 3 conducted and continues to conduct business in the State of Washington, has entered into the 4 State of Washington for the purposes of: selling its products and services in the State of 5 Washington; investigating and secretly surveilling its products including Insulated Glass Units in 6 the State of Washington; defrauding end-users of the Insulated Glass Units; and concealing the 7 defects of said IGUs from those end-users.” Am. Compl., ¶ 7. Elsewhere in the Amended 8 Complaint, Plaintiff alleges that “Viracon, LLC, including as the agent and for the benefit of 9 Apogee Enterprises, Inc., never properly performed the IGCC testing to achieve certification.” Id., 10 ¶ 20. 11 The actions of a subsidiary cannot be imputed to its parent for jurisdictional purposes,

12 absent a showing that “in actuality, the foreign entity is not really separate from its domestic 13 affiliate.” Ranza v. Nike, Inc., 793 F.3d 1059, 1073 (9th Cir. 2015). To establish jurisdiction based 14 on this “alter ego” theory, a plaintiff must demonstrate “(1) that there is such unity of interest and 15 ownership that the separate personalities [of the two entities] no longer exist and (2) that failure to 16 disregard [their separate identities] would result in fraud or injustice.” Id. This test requires a 17 showing of “pervasive control” of the subsidiary by the parent “to such a degree as to render the 18 latter the mere instrumentality of the former” and can only be met where a parent corporation 19 “dictates every facet of the subsidiary’s business—from broad policy decisions to routine matters 20 of day-to-day operation.” Id. 21 Apogee has submitted the testimony of its general counsel, averring plainly that

22 “Apogee’s subsidiaries,” including Viracon, “are separately incorporated, operated, and 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 “pervasive control” standard sets. It relies exclusively on two SEC filings, in which Apogee has 3 stated, for example, “[w]e generate revenue from the design, engineering and fabrication of 4 architectural glass, curtainwall, window, storefront and entrance systems, and from installing 5 those products on non-residential buildings.” Apogee Enterprises, Inc.’s Securities and Exchange 6 Commission Form 10-K Annual Report, April 26, 2024, Ex. A to Req. for Jud. Not., Dkt. No. 82 7 at 30. This evidence—Apogee’s use of “we” in referencing the activities of its subsidiaries—is 8 insufficient to raise a dispute of fact regarding Plaintiff’s alter-ego theory of jurisdiction. See 9 Chien v. Bumble Inc., 641 F. Supp. 3d 913, 926 (S.D. Cal. 2022) (“Although Bumble’s SEC 10 filings suggest that it likes to hold itself out to the public ‘as a single operating segment,’ (see, 11 e.g., Bumble Inc. Form 10-K at 116), such assertions fall short of suggesting that Bumble Trading

12 is a mere instrumentality of Bumble Inc.”) (citing Ranza, 793 F.3d at 1073-74). None of 13 Plaintiff’s allegations comes close to supporting an inference that Viracon is a “mere 14 instrumentality” of Apogee, or that Apogee “dictates every facet” of Viracon’s business. 15 Accordingly, Viracon’s actions cannot be attributed to Apogee for purposes of determining 16 jurisdiction. 17 3. Whether Apogee’s Intentional Acts Were Expressly Aimed at Washington 18 In the second category—alleged actions not of Viracon to be imputed to Apogee, but 19 apparently of Apogee itself—Plaintiff alleges that Apogee “agreed to perpetuate the false IGCC 20 certification to Washington consumers and suppress and conceal the truth as confidential.” Am. 21 Comp., ¶ 25. It further avers that Apogee, along with the other Defendants, “met and agreed in

22 writing to conceal from consumers,” including Plaintiff, “the known seal failure defects” in the 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 The allegations concerning Apogee’s alleged participation in the purported conspiracy to 3 conceal the false IGCC certification and IGU defects from consumers are inadequate in several 4 respects. First, Washington courts have “rejected the conspiracy theory of long-arm jurisdiction, 5 finding that the theory violates due process principles.” Silver Valley Partners, LLC v. De Motte, 6 400 F. Supp. 2d 1262, 1268 (W.D. Wash. 2005) (citing Hewitt v. Hewitt, 78 Wn. App. 447, 454– 7 55 (1995)) (“If an out-of-state defendant’s activities do not meet the test for imposition of either 8 general jurisdiction or specific jurisdiction, traditional notions of ‘fair play and substantial justice’ 9 would be abused by hailing that defendant into a local court on the mere claim that the defendant 10 was a co-conspirator with a defendant whose activities do meet the test.”). Furthermore, to meet 11 the “purposefully directed” standards, intentional actions must be “expressly aimed at the forum

12 state.” Calder, 465 U.S. at 789. Thus, it is not enough that a defendant commits actions that 13 foreseeably have an impact in the forum state. Id. (“The mere fact that [defendant] can ‘foresee’ 14 that [its actions will] have an effect in [the forum state] is not sufficient for an assertion of 15 jurisdiction.”). Here, Apogee’s alleged participation in the conspiracy was not “expressly aimed” 16 at Washington consumers; at most, taking Plaintiff’s allegations as true, Apogee’s participation in 17 the conspiracy happened to have an impact on those consumers among, allegedly, many others. 18 The circumstances of this analysis are materially distinct from those presented in the 19 Court’s Order Denying Defendant Quanex’s Motion to Dismiss for lack of personal jurisdiction, 20 on which Plaintiff’s opposition heavily relies. See Dkt. No. 65 (“Quanex Order”). In the Quanex 21 Order, the Court concluded “that in alleging that Quanex’s actions knowingly and deliberately

22 targeted a “large volume” of actual (rather than hypothetical) Washington consumers who held 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 deliberately established a connection to the forum state of Washington.” Id., at 8. There is (and 3 could be) no allegation here that Washington consumers hold warranties on which Apogee could 4 be liable, meaning no such “connection” between Apogee and Washington consumers was 5 “deliberately established.” Moreover, the Court found that Quanex’s alleged participation in an 6 agreement to conceal the IGUs’ defects from consumers was the “something more” needed to tip 7 the balance in favor of the exercise of jurisdiction—“more” meaning in addition to the fact that 8 Quanex manufactured the gray sealant that Plaintiff alleges caused the IGUs to fail. Id., citing 9 Walden v. Fiore, 571 U.S. 277, 278 (2014). (“The allegations in this case comprise a deliberate 10 act by Quanex, expressly aimed at a known and substantial group of Washington consumers, who 11 had already purchased IGUs made with Quanex’s product and whose warranty rights, Plaintiff

12 alleges, were directly affected. The Court concludes that these allegations constitute the 13 “something more” required under Walden.”) (emphasis added). Here, participation in the alleged 14 conspiracy is not “something more” tying Apogee to Washington, as there are no underlying 15 actions by Apogee to begin with. According to the only competent evidence before the Court, 16 Apogee, unlike Quanex, has not manufactured, sold, or otherwise participated in the distribution 17 of the IGUs to Washington consumers. Elliot Decl., ¶ 6 (“Apogee does not manufacture, 18 distribute, sell, or offer any product or service in Washington or in any other state.”). Plaintiff’s 19 attempt to apply the reasoning in the Quanex Order to Apogee’s jurisdictional analysis is 20 unsupported and unavailing.3 This Court lacks specific personal jurisdiction over Apogee. 21

3 The jurisdiction-related allegations in Plaintiff’s Complaint with regard to Apogee are materially identical to 22 allegations that the plaintiff Village of Schaumburg made in a very similar lawsuit against these same defendants, filed in the Northern District of Illinois, in which that court dismissed Apogee for lack of personal jurisdiction. 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 Plaintiff also asserts that this Court may exercise general jurisdiction over Apogee. A state 3 court has general jurisdiction over a defendant that is “essentially at home” in the forum. See Ford 4 Motor Co. v. Montana Eighth Judicial District Court, ___ U.S. ___, 141 S. Ct. 1017, 1024 (2021) 5 (quoting Goodyear Dunlop Tires Operations, SA v. Brown, 564 U.S. 915, 919 (2011)). Generally, 6 a corporation is at home only in its place of incorporation and its principal place of business; only 7 in an “exceptional case” will a corporation also be “at home” elsewhere. Ford, 141 S. Ct. at 1024; 8 Daimler, 571 U.S. at 137. There is no dispute that Minnesota is both Apogee’s state of 9 incorporation and its principal place of business. Elliot Decl., ¶ 2; Am. Compl., ¶ 7 (Apogee “is a 10 Minnesota corporation with its headquarters in Minnesota.”). Even taking Plaintiff’s disputed 11 allegations as true, Plaintiff has alleged, at most, that Apogee has “a national presence throughout

12 the United States” and “was doing business” in Washington. Am. Compl., ¶¶ 7. This falls short of 13 alleging that Washington is Apogee’s principal place of business, and the caselaw is clear that 14 merely “doing business” in the forum is insufficient to establish general jurisdiction. See Daimler, 15 571 U.S. at 158 (Sotomayor, J., concurring) (rejecting plaintiffs’ arguments that a foreign 16 manufacturer was at home in California due to its “multiple offices, continuous operations, and 17 billions of dollars’ worth of sales” in the forum). Nor has Plaintiff argued or alleged facts that 18 would support a conclusion (or even an inference) that this is an “exceptional case” justifying an 19 Village of Schaumburg v. Viracon Inc., et al., Case No. 22-CV-60 (N.D. Ill. 2022); see Dkt. No. 91, August 21, 2023 20 Mem. Op. at 29-32. In Schaumburg, the plaintiff’s jurisdictional allegations included that Apogee’s general counsel was “directly involved in claims arising out of Viracon’s use of gray JS-780 primary sealant,” and that Apogee was 21 a party to a joint defense agreement with Viracon and Quanex concerning warranty claims based on the defective IGUs (likely, the same “written agreement” to which Plaintiff refers in this case). The court found that the facts alleged there did not support piercing the corporate veil, and concluded “[t]his court does not have personal 22 jurisdiction over Apogee.” Id. at 32. Plaintiff here has not acknowledged, let alone distinguished, the holding in Schaumburg, which given its nearly identical facts and circumstances related to Apogee’s jurisdiction is persuasive. 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 is subject to the general jurisdiction of courts in Washington. 3 D. Plaintiff’s Motion for Jurisdictional Discovery 4 Plaintiff has filed a motion, concurrently with its opposition to Apogee’s Motion to 5 Dismiss, requesting: (1) leave to conduct limited jurisdictional discovery; (2) in camera review 6 of dozens of documents in Plaintiff’s possession (including entire deposition transcripts), some of 7 which were subject to a protective order and have been marked “confidential” by Viracon and 8 Quanex; and (3) an evidentiary hearing for purposes of presenting evidence that Plaintiff claims 9 “requires oral testimony to contextually explain the conspiratorial conduct by Apogee,” including 10 “testimony and cross-examination of [five] current or former employees or agents of Apogee and 11 Viracon.” Dkt. No. 77 at 2.

12 The Court denies Plaintiff’s requests for in camera review of documents in Plaintiff’s 13 possession and for an evidentiary hearing. First, while many of the documents that Plaintiff is 14 asking the Court to review are marked confidential, Plaintiff fails to explain why it did not submit 15 with its opposition to Apogee’s Motion to Dismiss those non-confidential documents it is asking 16 the Court to review. Second, although Plaintiff may have good reason not to file confidential 17 documents in this proceeding,4 there is no valid reason it did not include in its pleading (or at the 18 very least in its response to Apogee’s Motion to Dismiss) any allegations, presumably supported 19 by those documents, that might have established this Court’s jurisdiction. It bore the burden of 20 doing so. See CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1073 (9th Cir. 2011) (“In 21

22 4 Apogee also suggests that Plaintiff could have filed the confidential documents under seal. Apogee Opp. at 2. Plaintiff has not explained why it did not avail itself of this option either. 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 2 burden of establishing that jurisdiction is proper.”). Even now, Plaintiff simply fails to articulate 3 what jurisdictional facts related to Apogee might be established by the evidence it is asking the 4 Court to review. It appears that many, if not all, of the documents are related not to Apogee, but to 5 Viracon and Quanex (e.g., “Viracon-Quanex Meeting Notes” and emails between Quanex and 6 Viracon), and were produced in proceedings in which Apogee was not even a party. Plaintiff 7 repeatedly states that the documents and anticipated testimony would reveal information that is 8 “critical” to establishing jurisdiction over Apogee, but apart from conclusory generalizations (see, 9 e.g., Pl.’s Mot. at 9, stating evidence would show “co-defendants herein directed their joint-efforts 10 towards Washington consumers”), it does not state what that information is. In the absence of 11 such explanation, the Court declines to authorize or participate in Plaintiff’s proposed fishing

12 expedition. 13 The Court also denies Plaintiff’s request for leave to conduct jurisdictional discovery. As 14 Plaintiff itself argues, such discovery may be warranted under Federal Rule 7(b) “where pertinent 15 facts bearing on the question of jurisdiction are controverted or where a more satisfactory 16 showing of the facts is necessary.” Pl.’s Mot. at 8 (citing Boschetto v. Hansing, 539 F.3d 1011, 17 1020 (9th Cir. 2008)). But Plaintiff has failed to articulate what material facts are controverted, or 18 what allegations it believes it can (and must) support with additional evidence. “Where a 19 plaintiff’s claim of personal jurisdiction appears to be both attenuated and based on bare 20 allegations in the face of specific denials made by defendants,” as is the case here, “the Court 21 need not permit even limited discovery.” Terracom v. Valley Nat’l Bank, 49 F.3d 555, 562 (9th

22 Cir. 1995) (citations omitted). 23 ORDER GRANTING APPOGEE’S 24 MOTION TO DISMISS AND DENYING PLAINTIFF’S MOTION FOR IN CAMERA REVIEW

25 ] As detailed above, the critical undisputed facts here establish first, that Apogee is not an 2 ego of Viracon; the Court therefore cannot assert jurisdiction over the former based upon 3 || intentional acts of the latter. Second, even if Apogee was itself a party to a written agreement as 4 || part of a conspiracy to conceal IGU defects from consumers nationwide, that participation does 5 amount to an express aiming at Washington. Plaintiff has not described what additional 6 || evidence it hopes to discover that might alter these facts and conclusions and establish 7 jurisdiction. Jurisdictional discovery is therefore not appropriate. Terracom, 49 F.3d at 560, 562. 8 || (Plaintiff not entitled to jurisdictional discovery because it “failed to demonstrate how further 9 || discovery would allow it to contradict” the specific denials made by the defendants that weighed 10 || against a finding of personal jurisdiction.). 11 Finally, the Court denies Plaintiffs request for leave to amend its Complaint. Plaintiff has 12 identified any additional allegations that might cure the deficiencies in its pleading, despite 13 || having thousands of pages of documents and deposition testimony in its possession. Moreover, in 14 response to an earlier wave of motions to dismiss, Plaintiff has already amended its complaint 15 || once. Leave to amend is denied. 16 IV. CONCLUSION 17 For the foregoing reasons, Defendant Apogee’s Motion to Dismiss is GRANTED, and 18 || Apogee is DISMISSED from this lawsuit. Plaintiff's Motion for Jn Camera Review is DENIED. 19 DATED this 24th day of September, 2024. 20 1 Kisus ei, Barbara Jacobs Rothstein 22 US. District Court Judge 23 ORDER GRANTING APPOGEF’S 24 MOTION FOR INCAMERAREVIEW 25 || -12