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 DENYING DEFENDANT Washington non-profit corporation, IGCC’S MOTION TO DISMISS AND 9 Plaintiff, PLAINTIFF’S MOTION FOR IN CAMERA REVIEW 10 v.

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 filed by Defendant 18 Insulating Glass Certification Council, Inc. (“IGCC”), Dkt. No. 72; and (2) a Motion for In 19 Camera Review filed by Plaintiff Fifteen Twenty-One Second Avenue Condominium Association 20 (“Plaintiff”), Dkt. No. 79. Having reviewed the briefs filed in support of and in opposition to 21 IGCC’s and Plaintiff’s motions, the Court finds and rules as follows.1 22 1 Plaintiff did not file a reply brief in support of its Motion for In Camera Review. 23 ORDER DENYING IGCC’S 24 MOTION TO DISMISS

25 2 This lawsuit concerns the 38-story building located at 1521 Second Avenue in Seattle, 3 Washington, which is owned by Plaintiff Fifteen Twenty-One Second Avenue Condominium 4 Association. Am. Compl., ¶¶ 12, 1, Dkt. No. 27. Plaintiff brings this lawsuit claiming that the 5 double-paned Insulated Glass Units (“IGUs”) that make up the exterior curtain wall of the 1521 6 Second Avenue building were defectively designed and constructed by Defendant Viracon LLC 7 (“Viracon”). Id., ¶¶ 6, 7.2 The IGUs were made using a gray sealant, manufactured by Defendant 8 Quanex IG Systems, Inc. (“Quanex”), that Plaintiff alleges is failing. By this lawsuit, Plaintiff 9 seeks recovery of damages it claims are associated with failure of the IGUs in its building. 10 Defendant IGCC is a nonprofit trade association, incorporated in Illinois, with 11 headquarters in New York State. Kent Decl., Dkt. No. 19-1, ¶ 2. It is “a private industry-wide

12 self-regulatory group,” composed of manufacturers, sellers, and others in the IGU industry. Am. 13 Compl., ¶ 18. IGCC establishes standards for certification of the quality of IGUs, and “assesses 14 compliance with those standards.” Id.; Kent Decl., ¶ 4. 15 The metal spacer bar between panes on every IGU at Plaintiff’s building bears a stamp 16 intending to signify IGCC’s certification of quality. Plaintiff alleges that “members of the IGCC 17 rely upon the IGCC’s product certification for purposes of advertising, selling, and distributing 18 those certified products within the State of Washington.” Am. Compl., ¶ 9. In this case, Plaintiff 19 claims that the IGCC stamps on the IGUs at the 1521 Second Avenue building falsely represent 20 that those IGUs meet IGCC standards, and that “IGCC failed to ensure the validity of its own 21

22 2 The Court recently dismissed Viracon’s parent company Apogee, Inc. for lack of personal jurisdiction. See Dkt. No. 97. 23 ORDER DENYING IGCC’S 24 MOTION TO DISMISS

25 2 being used pursuant to legitimate testing.” Id., ¶¶ 18, 23, 24. 3 III. DISCUSSION 4 A. Standards on a Motion to Dismiss 5 1. Federal Rule 12(b)(2) 6 When a defendant invokes Federal Rule of Civil Procedure 12(b)(2) in a motion to dismiss 7 for lack of personal jurisdiction, the plaintiff bears the burden of making a prima facie showing of 8 personal jurisdiction. Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 9 1122, 1128–29 (9th Cir. 2003). A plaintiff builds a prima facie case by stating facts that, if true, 10 would support the court’s exercise of jurisdiction. Id. at 1129. Although a plaintiff cannot simply 11 rest on the bare allegations in the complaint, the court must accept uncontroverted allegations in

12 the complaint as true, and conflicts between parties over statements in affidavits must be resolved 13 in the plaintiff’s favor. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 14 2004). 15 “Federal courts ordinarily follow state law in determining the bounds of their jurisdiction.” 16 Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting Daimler AG v. Bauman, 571 U.S. 17 117, 125 (2014)). The Washington Consumer Protection Act (“CPA”), under which Plaintiff 18 brings its sole cause of action against IGCC, contains its own long-arm provision, which “extends 19 the jurisdiction of Washington courts to persons outside its borders” and “is intended to operate to 20 the fullest extent permitted by due process.” State v. LG Elecs., Inc., 185 Wn. App. 394, 410 21 (2015), aff’d, 186 Wn. 2d 169 (2016) (citation omitted). Thus, the Court’s “inquiry centers on

22 whether exercising jurisdiction comports with due process.” Picot, 780 F.3d at 1211. Due process, 23 ORDER DENYING IGCC’S 24 MOTION TO DISMISS

25 2 that the maintenance of the suit does not offend traditional notions of fair play and substantial 3 justice.’” Id. (quoting Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)); see also Mavrix Photo, 4 Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). 5 2. Federal Rules 12(b)(6) and 9(b) 6 A motion to dismiss a complaint under Rule 12(b)(6) of the Federal Rules of Civil 7 Procedure tests the legal sufficiency of the claims alleged in the complaint. See Parks Sch. of 8 Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995). Dismissal under Rule 12(b)(6) may be 9 based on either the “lack of a cognizable legal theory” or on “the absence of sufficient facts 10 alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 11 (9th Cir.1988). When evaluating such a motion, the court must accept all material allegations in

12 the complaint as true, even if doubtful, and construe them in the light most favorable to the non- 13 moving party. Twombly, 550 U.S. at 570 (“[C]onclusory allegations of law and unwarranted 14 inferences,” however, “are insufficient to defeat a motion to dismiss for failure to state a claim.”). 15 A claim alleging fraud or “grounded in fraud” “must state with particularity the 16 circumstances constituting fraud.” Fed. R. Civ. P. 9(b). A motion to dismiss a fraud or fraud- 17 based claim for failure to plead with particularity is evaluated under the same standard as one 18 brought under Federal Rule 12(b)(6). Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th 19 Cir. 2003) (“We treat a dismissal for failure to plead fraud with particularity under Rule 9(b) as a 20 dismissal for failure to state a claim upon which relief can be granted.”) (citation omitted). 21

22 23 ORDER DENYING IGCC’S 24 MOTION TO DISMISS

25 Element of “Purposeful Direction”3 2 The Ninth Circuit employs a three-part test to assess whether a party has sufficient 3 minimum contacts with the forum state to subject it to specific personal jurisdiction: (1) the non- 4 resident defendant must purposefully direct his activities or consummate some transaction with 5 the forum or resident thereof; or perform some act by which he purposefully avails himself of the 6 privilege of conducting activities in the forum, thereby invoking the benefits and protections of its 7 laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related 8 activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, 9 i.e. it must be reasonable. Picot, 780 at 1211 (quoting Schwarzenegger, 374 F.3d at 802). Plaintiff 10 has the burden of demonstrating the first two elements, after which the defendant must show 11 exercise of jurisdiction would be unreasonable. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 12 476-78 (1985). 13 1. The Calder “Effects” Test: Whether IGCC Committed an Intentional Act 14 Expressly Aimed at Washington

15 Under the test outlined above, a plaintiff asserting a claim sounding in tort must first 16 establish that the defendant “purposefully directed” its activities toward the forum state. 17 Schwarzenegger, 374 F.3d at 802. The purposeful direction requirement is analyzed under the 18 “effects” test derived from Calder v. Jones, 465 U.S. 783 (1984). The elements of the Calder 19 effects test require Plaintiff to have sufficiently alleged that IGCC: (1) committed an intentional 20 act, (2) expressly aimed at Washington, (3) that caused harm that IGCC knew was likely to be 21

22 3 Plaintiff has not argued (nor given the allegations in the Amended Complaint could it reasonably argue) that this Court has general jurisdiction over IGCC. 23 ORDER DENYING IGCC’S 24 MOTION TO DISMISS

25 2 2. Whether Plaintiff Has Alleged Facts Sufficient Under Calder to Establish Jurisdiction 3 Plaintiff’s First Cause of Action, which is its only claim against IGCC, is for “Civil 4 Conspiracy to Violate, and Violation of, the Washington Consumer Protection Act.” Am. Compl., 5 ¶¶ 16-27. Plaintiff claims that IGCC (along with its codefendants) was part of a conspiracy 6 involving the “false and misleading certification of quality” of the IGUs at issue. Am. Compl., ¶ 7 17. Plaintiff alleges: 8 Due to the fact that an IGCC president was also simultaneously a Viracon, LLC 9 executive, IGCC failed to ensure the validity of its own IGCC certification stamp on Viracon, LLC’s IGUs by confirming that the certification stamp was being used 10 pursuant to legitimate testing. From the start of the false IGCC certification and continuing to this day, and knowing that its certifications were falsely informing 11 the end user and general public of the IGUs quality certification, the IGCC failed and continues to fail to ensure the validity of its own IGCC stamp on Viracon, 12 LLC’s IGUs.

13 Id., ¶ 23. Plaintiff further alleges that IGCC and its codefendants “are each aware of this false 14 consumer protection certification and have agreed to perpetuate the ongoing misrepresentation by 15 failing to notify consumers that the certification is false.” Id., ¶¶ 17, 26 (“IGCC failed to issue any 16 sort of consumer notice indicating that its IGCC certification was invalid.”). 17 IGCC argues that it “has neither purposely directed activities at Washington nor availed 18 itself of the privilege of conducting business in Washington,” and that Plaintiff has failed to allege 19 otherwise. The Complaint asserts, however, that “members of the IGCC rely upon the IGCC’s 20 product certification for purposes of advertising, selling, and distributing those certified products 21 within the State of Washington.” Am. Compl., ¶ 9. Plaintiff claims that IGCC “failed to ensure 22 the validity of its own IGCC certification stamp on Viracon IGUs” that were sold to and allegedly 23 ORDER DENYING IGCC’S 24 MOTION TO DISMISS

25 2 comprising the curtainwall of Plaintiff’s building bears the IGCC stamp of quality; indeed, 3 Plaintiff has alleged that “[t]he IGCC certification forms a basis of reliance that the IGUs will 4 comply with the building energy efficiency requirements necessary for LEED certification, the 5 Seattle Building Code requirements at section 502.1.5, [and] Washington State Building Codes,” 6 and explicitly alleges that it “required that the IGUs be ‘permanently marked’” with that stamp. 7 Am. Compl., ¶¶ 18, 19. From these allegations, one may reasonably infer that Plaintiff’s decision 8 to install Viracon’s IGUs on its building was dependent upon IGCC’s certification of quality. 9 Plaintiff further claims that as it turned out, that certification was false. Id., ¶ 17. This 10 claimed falsehood allegedly caused a harm that Plaintiff sufficiently alleges IGCC knew was 11 likely to be suffered in Washington. According to the Amended Complaint, IGCC knew “that its

12 certifications were falsely informing the end user,” including Plaintiff and other Washington 13 consumers, “of the IGUs quality certification,” yet allowed Viracon’s IGUs to carry the IGCC 14 stamp of quality. Am. Compl., ¶ 23. These allegations make out a prima facie case of 15 “purposeful direction” under Calder sufficient to establish this Court’s jurisdiction over IGCC in 16 this case. 17 C. Motion to Dismiss under 12(b)(6) 18 Having determined that the Court has personal jurisdiction over IGCC, the Court next 19 turns to the sufficiency of Plaintiff’s pleading. Plaintiff’s claim against IGCC is for civil 20 conspiracy, which “exists if two or more persons combine to accomplish an unlawful purpose or 21 combine to accomplish some purpose not in itself unlawful by unlawful means.” Corbit v. J.I.

22 Case Co., 70 Wn. 2d 522, 424 P.2d 290, 295 (1967). A plaintiff “must show that the alleged 23 ORDER DENYING IGCC’S 24 MOTION TO DISMISS

25 2 IGCC seeks dismissal of this claim for failure to plead with particularity, required under 3 Federal Rule 9(b), which Plaintiff does not dispute applies. Under that rule, “[a]verments of fraud 4 must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” 5 Vess, 317 F.3d at 1106 (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). “Rule 9(b) 6 serves three purposes: (1) to provide defendants with adequate notice to allow them to defend the 7 charge and deter plaintiffs from the filing of complaints ‘as a pretext for the discovery of 8 unknown wrongs’; (2) to protect those whose reputation would be harmed as a result of being 9 subject to fraud charges; and (3) to ‘prohibit [ ] plaintiff[s] from unilaterally imposing upon the 10 court, the parties and society enormous social and economic costs absent some factual basis.’” 11 Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009) (quoting In re Stac Elecs. Sec.

12 Litig., 89 F.3d 1399, 1405 (9th Cir. 1996) (internal quotations omitted, brackets in original)). 13 The Court concludes that Plaintiff’s allegations outline the “who, what, when, where, and 14 how” of the alleged misconduct, sufficient to put IGCC on adequate notice of its claim and 15 withstand IGCC’s motion to dismiss. Plaintiff avers that IGCC, acting through its president, a 16 Viracon engineer, was aware of the falsity of the IGCC certification stamped on Viracon IGUs.4 17 Am. Compl., ¶ 17 (“Each IGU on the Fifteen Twenty-One Second Avenue building is stamped 18 with a false and misleading certification of quality, allegedly from an independent third party, 19 namely defendant IGCC. . . . [Defendants, including] IGCC are each aware of this false consumer 20

21 4 IGCC objects that Plaintiff fails to allege that the Viracon engineer was at relevant times acting in his capacity as the IGCC president. As Plaintiff points out, however, “[k]nowledge of officers and employees of a corporation 22 relative to the subject matter of litigation is imputed to the corporation.” Pl.’s Opp. at 11 (citing Diaz v. Wash. State Migrant Council, 165 Wn. App. 59, 80 (2011)). 23 ORDER DENYING IGCC’S 24 MOTION TO DISMISS

25 1 || protection certification.”). Plaintiff further alleges that IGCC, along with its codefendants, 2 || ‘agreed to perpetuate the ongoing misrepresentation by failing to notify consumers that the 3 || certification is false.” /d., § 17. In sum, Plaintiff alleges that IGCC set certain standards of quality, 4 || failed to ensure that IGUs bearing IGCC’s stamp met those standards, knew in particular here that 5 || the certification of quality stamped on Viracon’s IGUs was false and, along with other Defendants 6 || party to the alleged conspiracy, failed to inform consumers of this falsity. IGCC is correct that 7 || Plaintiff has not stated facts supporting the “when” or “where” of this failure, but it would be 8 || illogical to require Plaintiff to allege the “when” or “where” of a non-event. While Plaintiff will 9 || ultimately bear the burden of presenting evidence demonstrating that the alleged “coconspirators 10 || entered into an [a]greement to accomplish the object of the conspiracy,” it has at this point 11 || provided enough detail to put IGCC on notice of its claim. 12 IV. CONCLUSION 13 For the foregoing reasons, Defendant IGCC’s Motion to Dismiss is DENIED. Plaintiff's 14 || Motion for Jn Camera Review is also DENIED as moot. 15 DATED this 7th day of October, 2024. 16 4 Kisus ei, Barbara Jacobs Rothstein 18 U.S. District Court Judge 19 20 21 22 23 ORDER DENYING IGCC’S 24 MOTION TO DISMISS

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