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George v. Omega Flex, Inc.

United States District Court, W.D. Missouri, Central Division

July 24, 2018

BONNIE GEORGE, et al., Plaintiffs,
v.
OMEGA FLEX, INC., et al, Defendants.

          ORDER

          Douglas Harpool United States District Court

         Before the Court is Defendants' Joint Motion to Dismiss Plaintiffs' First Amended Complaint. (Doc. 82). The matter is fully briefed, the Court has heard argument from the parties regarding their positions, and the matter is ripe for review.

         BACKGROUND

         This case has a lengthy procedural history. Plaintiffs originally filed a lawsuit against these and other Defendants alleging claims arising out of the sales of a flexible gas piping system known as Corrugated Stainless Steel Tubing (“CSST”). Plaintiffs' prior Complaint brought causes of action for Violation of Missouri Merchandising Practices Act (Count I); Conspiracy (Count II); and Unjust Enrichment (Count III). See George v. Powercet, et al., No. 16-cv-04056-MDH. In the prior case, Defendants filed motions to dismiss arguing that Plaintiffs' claims should be dismissed because they lacked standing to bring their claims in federal court. The Court agreed with Defendants' arguments and held that Plaintiffs had failed to establish Article III standing to invoke federal jurisdiction. As a result, the Court dismissed Plaintiffs' claims, without prejudice. See George v. Powercet, et al., No. 16-cv-04056-MDH, Doc. 126.

         Plaintiffs then filed their second lawsuit in the Circuit Court of Pulaski County, State of Missouri. Plaintiffs' lawsuit again brought causes of action for Violation of Missouri Merchandising Practices Act (Count I); Conspiracy (Count II); and Unjust Enrichment (Count III). Contrary to Defendants' prior argument, that Plaintiffs could not establish Article III standing to invoke federal jurisdiction, Defendants removed Plaintiffs' second lawsuit to federal court. Defendants argued Plaintiffs now had Article III standing to invoke federal jurisdiction, but that the claims should be dismissed for failure to state a claim upon which relief can be granted. This Court found that Plaintiffs' allegations had not substantially changed from their prior lawsuit, and therefore held that its prior ruling still applied. The Court remanded the case back to state court, finding that Plaintiffs' allegations, including their claims for loss of the benefit of the bargain, were not enough to establish standing under Article III. (Doc. 61).

         Defendants sought permission to appeal this Court's order to remand. The Eighth Circuit granted permission to appeal and reversed the Court's Order. George v. Omega Flex, Inc., 874 F.3d 1031 (8th Cir. 2017). The Eighth Circuit described Plaintiffs' lawsuit as follows:

Petitioners manufacture and sell yellow-insulated corrugated stainless steel tubing (CSST). CSST is used to distribute natural or propane gas within homes and other structures. George claims that CSST is susceptible to failure when exposed to electrical arcing from household appliances, and to indirect or direct lightning strikes. George filed a class action lawsuit in federal court alleging violations of the Missouri Merchandising Practices Act, conspiracy, and unjust enrichment. Petitioners moved to dismiss for lack of jurisdiction. The district court dismissed the claims without prejudice. George then sued in state court, again alleging MMPA violations, conspiracy, and unjust enrichment, but adding loss of benefit-of-the-bargain for the diminution in the value of the structures containing CSST.

Id.

         The Eighth Circuit stated “that Article III extends judicial power only to cases and controversies” and that Plaintiff “has the burden to establish that she ‘(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.'” Id. (internal citation omitted). The Eighth Circuit found that Plaintiffs' allegations “of paying more than CSST is worth and the consequent loss in value of the structures are economic injury sufficient to establish Article III standing.” Id., citing Kuhns v. Scottrade, Inc., 868 F.3d 711, 716 (8th Cir. 2017). The Court then reversed this Court and remanded the case for further proceedings consistent with its opinion. Id.

         Upon remand, the Court held a status conference to discuss the status of the pending pleadings and motions. Plaintiffs sought, and were granted, leave to amend their Complaint. Defendants then filed a joint motion to dismiss the Amended Complaint. Defendants now argue that while the Court has jurisdiction over Plaintiffs' claims, the Amended Complaint should be dismissed for failure to state a claim. Plaintiffs oppose the motion.

         DISCUSSION

         In order for Plaintiffs to survive the pending motion to dismiss for failure to state a claim, the Amended Complaint “must ‘alleg[e] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” Kuhns v. Scottrade, Inc., 868 F.3d 711, 717 (8th Cir. 2017) (internal citation omitted). “A claim is plausibly pleaded when its ‘factual context ... allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Id. The Court makes “this determination by considering only the materials that are ‘necessarily embraced by the pleadings and exhibits attached to the complaint.” Carlsen v. GameStop, Inc., 833 F.3d 903, 911 (8th Cir. 2016)

         “The MMPA provides a private right of action to any person who sustains ascertainable loss in connection with the purchase or lease of merchandise as a result of certain practices declared unlawful.” Kuhns v. Scottrade, Inc., 868 F.3d at 719, citing Mo. Rev. Stat. § 407.025(1). Section 407.020(1) declares unlawful the use of “any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise.” Id. “To be actionable under the MMPA, the alleged unlawful act must occur in relation to a sale of merchandise, and an ascertainable pecuniary loss must occur in relation to the plaintiff's purchase or lease of that merchandise.” Id. (internal citations omitted). “[T]he literal words” of the MMPA have been described as “cover[ing] every practice imaginable and every unfairness to whatever degree.” Lane House Constr., Inc. v. Triplett, 533 S.W.3d 801, 804 (Mo.Ct.App. 2017)(internal citations omitted) (“The statute and the regulation paint in broad strokes to prevent evasion thereof due to overly meticulous definitions.”). Under the MMPA, it is an issue of the defendant's conduct, not his intent, which determines whether defendant has violated the act. Id.

         Plaintiffs must show that they “1) purchased merchandise (which includes services) from defendants; 2) for personal, family, or household purposes; and 3) suffered ascertainable loss of money or property; 4) as a result of an act declared unlawful under section 407.020.” Edmonds v. Hough, 344 S.W.3d 219, 223 (Mo. App. E.D. 2011) (internal citation omitted). “Missouri courts apply the ‘benefit of the bargain' rule when determining if a plaintiff has suffered an ascertainable loss under the MMPA.” Polk v. KV Pharm. Co., No. 4:09-CV-00588 SNLJ, 2011 WL 6257466, at *5 (E.D. Mo. Dec. 15, 2011) (citing, Sunset Pools of St. Louis, Inc. v. Schaefer, 869 S.W.2d 883, 886 (Mo.Ct.App.1994)). ...


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