In the
United States Court of Appeals
For the Seventh Circuit
No. 09-8025
P ELLA C ORPORATION AND P ELLA
W INDOWS AND D OORS, INC.,
Petitioners,
v.
L EONARD E. S ALTZMAN, K ENT
E UBANK, T HOMAS R IVA, AND W ILLIAM
AND N ANCY E HORN , INDIVIDUALLY
AND ON B EHALF OF A LL O THERS
S IMILARLY S ITUATED,
Respondents.
Petition for Leave to Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:06-cv-04481—James B. Zagel, Judge.
S UBMITTED M ARCH 12, 2010—D ECIDED M AY 20, 2010
Before P OSNER, W ILLIAMS and T INDER, Circuit Judges.
P ER C URIAM. Pella Corporation manufactures windows
for homes and sells them through its subsidiary, Pella
Windows and Doors, Inc. (collectively “Pella”). Over
2 No. 09-8025
the last 18 years, Pella has sold more than six million
aluminum-clad wood “ProLine” casement windows
nationwide. Plaintiffs, owners of structures containing
the windows in question, allege that the windows
contain a design defect that permits water to seep behind
the aluminum cladding and causes the wood to rot at
an accelerated rate. In response to the number of
windows needing replacement, Pella created the “Pella
ProLine Customer Service Enhancement Program”
to compensate affected customers. According to
Plaintiffs, Pella attempted to modify its warranty
through the program but never informed the end
consumers of the program’s existence or of the defect.
Plaintiffs brought suit against Pella, alleging that it
committed consumer fraud by not publicly declaring
the role that the purported design defect plays in allowing
rot. After the district court certified two classes of
plaintiffs, Pella sought permission to appeal the
certification pursuant to Federal Rule of Civil Procedure
23(f). We grant Pella’s Rule 23(f) petition for permission
to appeal and affirm the district court’s decision
certifying the classes.
I. BACKGROUND
The district court certified two classes of consumers
in this action. First, it certified a nationwide class under
Federal Rule of Civil Procedure 23(b)(2), consisting of
all class members who own structures containing
Pella ProLine aluminum-clad casement windows
manufactured from 1991 to the present, whose windows
No. 09-8025 3
have not yet manifested the alleged defect or whose
windows have some wood rot but have not yet been
replaced. The district court found the class met the
criteria of Rule 23(b)(2) because Pella “has acted or
refused to act on grounds that apply generally to the
class, so that final injunctive relief or corresponding
declaratory relief is appropriate respecting the class as
a whole.” Fed. R. Civ. P. 23(b)(2). If successful, these class
members would be entitled to six declarations
that together essentially declare that all ProLine windows
have a defect which results in premature rotting and
this defect requires disclosure; that Pella modified its
warranty without notice by creating the enhancement
program; that Pella must notify owners of the defect;
that the ten-year limitation in the original warranty is
removed; that Pella will reassess all prior warranty
claims related to wood rot; and that Pella, upon a class
member’s request, will pay the cost of inspection
to determine whether the wood rot is manifest, with any
coverage disputes adjudicated by a Special Master.
This class adjudication process would be followed by
an individual claims process in which class members
may file a claim with Pella for service “[i]f and when
their windows manifest wood rot due to the alleged
defect.” The district court explained that absent class
members also may bring individual suits for money
damages.
The second group of certified classes is much
narrower and consists of only those who have had a
manifest defect and whose windows already have been
replaced. The court certified six statewide liability classes
4 No. 09-8025
under Federal Rule of Civil Procedure 23(b)(3) in
California, Florida, Illinois, Michigan, New Jersey, and
New York, on the theory that Pella violated state
consumer fraud laws by failing to disclose the defect.
Certification under Rule 23(b)(3) requires that “the
questions of law or fact common to the members of the
class predominate over any questions affecting only
individual members, and that a class action is superior
to other available methods for the fair and efficient
adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3).
The district court explicitly declined to certify issues
related to causation, damages, and statute of limitations.
Pella seeks interlocutory review of these class
certifications pursuant to Federal Rule of Civil Procedure
23(f), arguing, inter alia, that consumer fraud cases as
a general matter are not amenable to class treatment,
due to problems with causation, reliance, and calculating
damages. We grant the petition in order to address
the contention that consumer fraud claims are
inappropriate for class treatment. See Blair v. Equifax
Check Servs., Inc., 181 F.3d 832, 835 (7th Cir. 1999)
(acceptance of an appeal is appropriate to “facilitate the
development of the law” governing class actions). The
parties’ arguments are clearly set forth in Pella’s Rule
23(f) petition and respondents’ opposition, and no
further briefing or argument is necessary. We affirm
the district court’s certification of the two classes.
II. ANALYSIS
While consumer fraud class actions present problems
that courts must carefully consider before granting
No. 09-8025 5
certification, there is not and should not be a rule that
they never can be certified. Pella relies on various
decisions from this circuit reversing the grant of class
certification in consumer fraud actions to draw the
broad conclusion that consumer fraud cases are
inappropriate for class treatment as a general matter.
But those cases did not opine that class certification was
never appropriate in consumer fraud cases, only that it
was inappropriate in the circumstances before it. See,
e.g, Thorogood v. Sears, Roebuck and Co., 547 F.3d 742,
748 (7th Cir. 2008) (no common issues of law because
there did not appear to be a single understanding of the
significance of labeling or advertising of the allegedly
deceptive statements); Oshana v. Coca-Cola Co., 472 F.3d
506, 514 (7th Cir. 2006) (class certification inappropriate
because the proposed class representative’s claims were
not typical of putative class); In re Bridgestone/Firestone, Inc.,
288 F.3d 1012, 1018-19 (7th Cir. 2002) (tire-defect class
action unmanageable given numerous different designs
of allegedly defective tires and varying recalls).
In Thorogood, the court noted that there are times
when class certification is “a sensible and legally
permissible alternative to remitting all the buyers to
individual suits each of which would cost orders of
magnitude more to litigate than the claims would be worth
to the plaintiffs.” 547 F.3d at 748. We reassert that
proposition here and hold that the district court properly
weighed the facts before it and exercised its discretion
to conclude that the common predominant issue of
whether the windows suffer from a single, inherent
design defect leading to wood rot is the essence of the
dispute and is better resolved by class treatment.
6 No. 09-8025
The district court reasonably determined that the
individual issues that necessarily arise in a consumer
fraud action would not prevent class treatment of the
narrow liability issues here.
Class treatment of consumer fraud cases can certainly
present difficulties, and courts should consider these
concerns before deciding to grant class certification, as
the district court did below. One concern is the risk of
error in having complex issues that have enormous
consequences decided by one trier of fact rather than
letting a consensus emerge from multiple trials. Mejdrech
v. Met-Coil Sys. Corp., 319 F.3d 910, 912 (7th Cir. 2003);
see also Thorogood, 547 F.3d at 745. This is not a case
where the issues are so complex, and Pella does not
claim that the consequences are so high, that a
decentralized process of multiple trials is necessary for
an accurate evaluation of the claims. The district court
held that the commonality requirement of Rule
23(a)(2) and the predominance requirement of Rule
23(b)(3) are both satisfied because the central questions
in the litigation are the sam e for all class
members—whether the ProLine windows suffered from
an inherent defect when they left the factory, whether and
when Pella knew of this defect, the scope of Pella’s
warranty, and the nature of the ProLine Customer
Enhancement Program and whether it amended the
warranty.
In contrast to Thorogood where there were no
common issues of law or fact and the court questioned
whether anyone besides the plaintiff shared the same
concerns with the product, here there is an economy to
No. 09-8025 7
class treatment of the question whether the ProLine
windows suffer from a basic design defect, the
resolution of which has the potential to eliminate the
need for multiple, potentially expensive expert testimony
and proof that would cost considerably more to
litigate than the claims would be worth to the plaintiffs.
See Thorogood, 547 F.3d at 748. According to class counsel,
they already have been contacted by over 350 consumers
who have experienced the same wood rot problems
set forth in the complaint. Where there are common issues
and the accuracy of the resolution of those issues
“is unlikely to be enhanced by repeated proceedings, then
it makes good sense, especially when the class is large,
to resolve those issues in one fell swoop while leaving
the remaining, claimant-specific issues to individual
follow-on proceedings.” Mejdrech, 319 F.3d at 911.
Another concern in consumer fraud cases is the issue
of proximate causation. Pella argues that too many
individual variances between class members exist,
because wood can rot for many reasons other than window
design and is affected by specific conditions such as
improper installation. Proximate cause, however, is
necessarily an individual issue and the need for
individual proof alone does not necessarily preclude
class certification. 5 William B. Rubenstein, Alba Conte and
Herbert B. Newberg, Newberg on Class Actions § 17.28,
pp. 413-14 (4th ed. 2002). A district court has the discretion
to split a case by certifying a class for some issues, but
not others, or by certifying a class for liability alone
where damages or causation may require individualized
assessments. See, e.g., Arreola v. Godinez, 546 F.3d 788, 799-
800 (7th Cir. 2008); Carnegie v. Household Int’l, Inc., 376 F.3d
8 No. 09-8025
656, 661 (7th Cir. 2004). Under the district court’s plan,
class members still must prove individual issues of
causation and damages. While it is almost inevitable
that a class will include some people who have not been
injured by the defendant’s conduct because at the outset
of the case many members may be unknown, or the facts
bearing on their claims may be unknown, this possibility
does not preclude class certification. Kohen v. Pacific
Inv. Management Co. LLC, 571 F.3d 672, 677 (7th Cir. 2009),
citing 1 Alba Conte & Herbert Newberg, Newberg on Class
Actions § 2:4, pp. 73-75 (4th ed. 2002). The narrow way
in which the district court defined the classes here
eliminates concern that the definitions are overbroad or
include a great many people who have suffered no injury.
Pella also argues that certification under Rule 23(b)(2)
was inappropriate because this is really a case about
money, and the class does not seek final injunctive relief
as the rule requires, but only as a stop on the way to
damages which individuals must then pursue. Rather
than simplifying the litigation, Pella objects that the
proposed declarations considered by the district court
as injunctive relief are really illusory and will multiply,
and even require, individual litigation. However, Pella
mischaracterizes the effect of the six declarations
contemplated by the district court. It is not necessarily
the case that individual litigation would be required.
The court split the purchasers of windows into two groups:
those who have replaced their windows, and those
who have not. Those who have replaced their windows are
properly members of the (b)(3) class because they
require the award of damages to make them whole.
Those who have not replaced their windows but might in
No. 09-8025 9
the future because of the purported design flaw are
properly members of a (b)(2) class. Such purchasers would
want declarations that there is an inherent design flaw,
that the warranty extends to them and specific
performance of the warranty to replace the windows
when they manifest the defect, or final equitable relief.
Cf. Allen v. Int’l Truck & Engine Corp., 358 F.3d 469, 471
(7th Cir. 2004) (suggesting class treatment of the equitable
relief to be followed by individual damage proceedings
where the equitable relief sought is the same for all
class members).
If the district court finds in favor of the class and
enters all six declarations, the cumulative effect will be an
entitlement to have their windows replaced, and the (b)(2)
class will benefit uniformly from the declarations.
The contemplated process in which members may file a
claim with Pella for service does not appear to be any
different than the process by which an owner would file
a claim with Pella under a warranty. Having to adjudicate
coverage issues with a Special Master is necessary only
if there is a dispute; it would not be required for every
class member as Pella suggests. Morever, the district court
specifically provided that “[t]here is no side-by-side
recovery here.” It explained that class members whose
defect has not yet manifested are not included in the
damages class; only once the windows experience any
manifest defect, if ever, will the class members be able
to submit a claim to Pella for repair.
Finally, Pella suggests that the manner in which the
district court proposes to proceed will violate its
Seventh Amendment rights because facts found by the
10 No. 09-8025
class jury would necessarily be reviewed by the individual
juries. Pella argues that the first jury must decide
how much the design of the windows, as opposed to
other factors, contributed to rot and that the individual
juries must then consider the same issue later, but
proximate cause is an individual issue and will not be
addressed by the class jury. The class jury will be asked
to decide only if there was an inherent design defect
present in the windows when they left the factory,
whether Pella had a duty to disclose the defect, and
whether Pella attempted to modify its warranty. Issues
of causation and damages issues, such as whether that
defect caused the damage to a particular window and
how much the design contributed to the rot, will
be handled individually. “Thus a class proceeding for
equitable relief vindicates the seventh amendment as
fully as do individual trials, is no more complex than
individual trials, yet produces benefits compared with
the one-person-at-a-time paradigm.” Allen, 358 F.3d at 472.
Pella raises other minor concerns that relate primarily
to the manageability of the class, but none of these
demonstrate that the district court abused its discretion.
Under Rule 23, district courts are permitted to “devise
imaginative solutions to problems created by the
presence in a class action litigation of individual
damages issues.” Carnegie, 376 F.3d at 661; see also Lemon
v. Int’l Union of Oper. Engineers, 216 F.3d 577, 582 (7th Cir.
2000). In making the decision to certify the classes, the
district judge had before him hundreds of pages of
legal briefing, as well as hundreds of pages of documents,
deposition transcripts, and expert reports. Plaintiffs
point out that they submitted a sample trial plan with a
No. 09-8025 11
comparative legal analysis of each subclass state,
suggestions of how the case could be tried in phases, and a
statement of class structure and remedies. Even the
certification of the six state subclasses demonstrates that
the district court carefully considered how the case would
proceed, explicitly finding that the consumer protection
acts of these six states have nearly identical elements
and declining to certify a seventh state subclass that would
have required a subjective analysis.
III. CONCLUSION
The district court’s decision to certify the two classes
in this case did not contradict circuit precedent. While
consumer fraud class actions present challenges that
a district court must carefully consider, there are
circumstances where certification is appropriate. We
conclude that this case is one of those circumstances. We
G RANT Pella’s Rule 23(f) petition for permission to
appeal and A FFIRM the decision of the district court
certifying the classes.
5-20-10