Case Information
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SIMON NGUYEN, et al., Case No. 19-cv-07901-TSH Plaintiffs, ORDER RE MOTION TO STRIKE v. PORTIONS OF THE SECOND
AMENDED COMPLAINT SIMPSON STRONG-TIE COMPANY, Re: Dkt. No. 80 INC., et al., Defendants. I. INTRODUCTION
Plaintiffs brought this putative class action alleging that Defendants’ metal hurricane
straps, which are installed in or on their homes, prematurely corrode and fail, rendering them incapable of protecting Plaintiffs’ homes. Plaintiffs filed their Second Amended Class Action Complaint (“SAC”) on June 16, 2020. ECF No. 66. Defendants have moved to strike as immaterial or improper a number of allegations in the SAC. ECF No. 80. Plaintiffs have filed an Opposition to the motion, ECF No. 85, and Defendants a Reply, ECF No. 89. The Court finds this matter suitable for disposition without oral argument. See N.D. Cal. Civil L.R. 7-1(b). For the reasons set forth below, the Court GRANTS in part and DENIES in part the Motion to Strike.
II. BACKGROUND
In brief, Plaintiffs allege that Defendants Simpson Strong-Tie Company, Inc. and Simpson Manufacturing Co., Inc. (jointly “Simpson”) developed, manufactured, advertised, sold, and distributed galvanized metal hurricane straps (the “Products”) for embedment at concrete foundations edges in buildings and homes throughout the United States. SAC ¶ 1. Some of these straps are installed in Plaintiffs’ homes. Plaintiffs allege that the Products “have inherent defects that are substantially certain to result in failures during the Products’ useful life.” ¶¶ 21, 28, 35, 42, 49, 55. They allege that Simpson has actively concealed the defects from consumers. ¶ 22, 29, 36, 43, 50, 56. They assert violations of the California Consumers Legal Remedies Act, California Unfair Competition Law, and the Arizona Consumer Fraud Act, as well as claims for breach of express warranty, negligent misrepresentation, and fraud.
Simpson seeks to strike from the SAC various allegations on the grounds that the allegations either: describe settlements in prior litigation despite Federal Rule of Evidence (“FRE”) 408’s prohibitions on the use of prior settlements as evidence; reference changes Simpson made in its literature in violation of Federal Rule of Evidence 407’s prohibition on the use of evidence of subsequent remedial measures; or cite to a previously-filed expert declaration despite the fact that Federal Rule of Civil Procedure 10(c) and related caselaw preclude citations to expert declarations in a complaint. Simpson seeks an order striking these allegations or references as immaterial or improper pursuant to Federal Rule of Civil Procedure 12(f). III. LEGAL STANDARDS Rule 12(f) provides that either on a motion or on its own, a court “may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). “‘Immaterial’ matter is that which has no essential or important relationship to the claim for relief or the defenses being pleaded,” and “‘[i]mpertinent’ matter consists of statements that do not pertain, and are not necessary, to the issues in question.’”
Fantasy, Inc. v. Fogerty
,
Pursuant to Rule 12(f) Courts have struck from pleadings information that is privileged or
inadmissible under the Federal Rules of Evidence.
See, e.g.
,
Hensley v. City of Port Hueneme
, No.
IV. ANALYSIS A. References to Settlements in Prior Cases
408 and should be stricken on that basis. Simpson argues that because these references would be inadmissible under Rule 408, they are immaterial and impertinent. [1] The relevant allegations are found in paragraphs 127 and 129: Simpson argues that references in the SAC to settlements in two prior lawsuits violate FRE ¶ 127: In 2009, homeowners in the Ocean Pointe development in Hawaii filed class action lawsuits against, among other defendants, Simpson. The Ocean Pointe developer used tens of thousands of the same defective HD Strap-Tie Holdowns and MAS Mudsill Anchors at issue here in thousands of Ocean Pointe homes since at least 1999.
The Ocean Pointe lawsuits concerned the same defects, same mechanism of failure, and same kinds of failures in Simpson HD Strap-Tie Holdowns and MAS Mudsill Anchors at issue here. Simpson vigorously participated in the Ocean Pointe litigation, attending inspections and enlisting experts to analyze the HD Strap- Tie Holdown and MAS Mudsill Anchor corrosion and failures. Ultimately, the Ocean Pointe case resolved for tens of millions of dollars, most of which funded a repair program to install new anchor bolt holdown systems to replace tens of thousands of defective and corroding HD Strap-Tie Holdowns and MAS Mudsill Anchors embedded in 1,628 Ocean Pointe homes. Simpson representatives were aware of and monitoring the HD Strap-Tie Holdown and MAS Mudsill Anchor failures in Ocean Pointe years before those homeowners filed their class actions in 2009. ¶ 129: In 2011, homeowners in the Ewa by Gentry development in Hawaii filed a class action lawsuit against, among other defendants, Simpson. The Ewa by Gentry developer also used tens of thousands of the same defective HD Strap-Tie Holdowns and MAS Mudsill Anchors at issue here in thousands of Ewa by Gentry homes since at least 2001. The Ewa by Gentry lawsuit concerned the same defects, same mechanism of failure, and same kinds of failures in Simpson HD Strap-Tie Holdowns and MAS Mudsill Anchors at issue here. Simpson vigorously participated in the litigation, attending inspections and analyzing the HD Strap-Tie Holdown and MAS Mudsill Anchor corrosion and failures. Ultimately, the Ewa by Gentry case resolved for tens of millions of dollars, most of which funded a repair program to install new anchor bolt holdown systems to replace tens of thousands of defective and corroding HD Strap-Tie Holdowns and MAS Mudsill Anchors embedded in 2,136 Ewa by
Gentry homes. Simpson representatives were aware of and monitoring the HD Strap-Tie Holdown and MAS Mudsill Anchor failures in Ewa by Gentry years before those homeowners filed their class action in 2011[.] On March 7, 2011, Simpson published that it had “become aware of problems regarding concrete spalling and corrosion of embedded products around the perimeter of some homes in Oahu, Hawai’i.” Exhibit 5, March 7, 2011 Simpson Memorandum re Concrete Embedded Products in Hawai’i. Plaintiffs do not know exactly to whom this information was addressed and the extent to which it was disseminated. However, at some point after the March 7, 2011 Memorandum was published, Simpson placed a near identical warning on its website which was still found on the website. . . .
(emphasis added). Plaintiffs’ sole argument vis-à-vis the allegations in these paragraphs is that
they are necessary for Plaintiffs to plead Simpson’s knowledge of the specific defect in the
embedded Products.
See
Opp’n at 5-8. Plaintiffs note that FRE 408(b) provides that courts may
admit settlement evidence for purposes other than to prove or disprove the validity of a claim,
including “to show Simpson’s state of mind, prior knowledge, fraud, and intent, all of which are
required for the claims here.” at 6 (citing
Bradbury v. Phillips Petroleum Co.
,
in thousands of homes, Simpson materially changed its Interior Dry Service definition in the 2019-2020 to [sic] provide for the first time that (1) “dry-service environment may contain airborne salts;” and (2) “Exposure Condition 2 reflects the presence of airborne salt in a dry-service environment and corrosion hazard to exposed metal surfaces. . . . None of Simpson’s prior definitions for Interior Dry Service ever warned that its Interior Dry Service environment could contain any salt, nor did any of Simpson’s Interior Dry Service definitions advise construction professionals to evaluate that possibility.
SAC ¶ 134 (underlining added); see also, id. ¶ 135 (“Although Simpson’s 2019-2020 catalog has belatedly acknowledged and warned that its Interior Dry Service environment could still contain airborne salt . . . .”), ¶ 161 (“Simpson modified the Interior Dry Service definition in the new 2019-2020 definition when it for the first time indicated that atmospheric salt could be present in an Interior Dry Service environment. However, this modification was still not enough . . . .”).
Simpson argues that these allegations are impermissible because they relate to subsequent remedial measures. Under Federal Rule of Evidence 407, “[w]hen measures are taken that would have made an earlier injury or harm less likely to occur, evidence of the subsequent measures is not admissible to prove: negligence; culpable conduct; a defect in a product or its design; or a need for a warning or instruction.” FRE 407. Simpson argues that Plaintiffs’ only purpose for including these allegations “is to prove that there was a need to change the definition,” i.e., a defect in its products, “and that Simpson is culpable for its prior recommendations regarding ‘Interior Dry Service.’” Mot. at 7. Plaintiffs counter that these allegations are not remedial at all, “that all of Simpson’s specifications and statements, including its 2018-20 specifications and statements, are inadequate and integral to its ongoing concealment of known defects in the embedded Products in a so-called Interior Dry Service environment.” Opp’n at 8. They contend that “Simpson’s 2018-20 inadequate specifications and warnings apply to claims for and defenses against class members who own the Products purchased during that period.” Id. Thus, they argue, Rule 407 doesn’t apply to the 2018-2020 warnings and “Interior Dry Service” definition. Alternatively, Plaintiffs argue that even if the “Interior Dry Service” definition in the later catalogues count as subsequent remedial measures, such evidence could be admissible for the other purposes allowed by Rule 407, “including but not limited to impeaching Simpson witnesses and demonstrating the feasibility of precautionary measures.” Opp’n at 9; see FRE 407.
It is possible that Plaintiffs would use evidence related to the “Interior Dry Service” definition in ways that wouldn’t run afoul of Rule 407. “The range of permissible uses of evidence of remedial measures is much broader than the scope of the exclusionary rule.” 5 C. Wright & A. Miller, Federal Practice and Procedure § 5285 (2d ed.). But at this point it is too early to tell, so striking the allegations is not necessary or appropriate. Now, they’re still just allegations; if at some point down the line, Plaintiffs try to introduce evidence of remedial efforts in a way that violates Rule 407, Simpson can challenge the use then, when the Court is better apprised of the circumstances and can rule on the admissibly of that evidence.
C. Citations to Werdowatz’s Expert Declaration
Lastly, Simpson argues that the Court should strike Plaintiffs’ citations to the expert
declaration of Dan R. Werdowatz because they are impermissible under Federal Rule of Civil
Procedure 10. Rule 10(c) provides that “[a] copy of a written instrument that is an exhibit to a
pleading is a part of the pleading for all purposes.” Simpson argues that this limits the types of
documents that a party may attach to or cite within a complaint to “written instruments,” and that
an expert declaration is such a document.
This Court has held that “[a] ‘written instrument’ within the meaning of Rule 10(c) is ‘a
document evidencing legal rights or duties or giving formal expression to a legal act or agreement,
such as a deed, will, bond, lease, insurance policy or security agreement.’”
City of Royal Oak Ret.
Sys. v. Juniper Networks, Inc.
,
Under Rule 10(c) and caselaw, the Court has no reason to and will not consider
Werdowatz’s expert declaration.
[4]
Plaintiffs argue that they included citations to Werdowatz’s
declaration to “buttress” their allegations “concerning the Products’ intended design, use,
installation, and useful life,” and that they did so “mindful of the Court’s initial conclusion that the
allegation that Plaintiffs expected that Products permanently embedded in concrete foundations
were permanent was ‘plainly false’ . . . .” But that’s not what the Court held. The Court found
“plainly false” Plaintiffs’ allegations that Simpson’s High Wind-Resistant Construction
Application Guide created a reasonable expectation that Simpson’s products “would never corrode
even if installed exactly according to Simpson’s recommendations, or that Simpson's products
would last the life of a house or never need to be replaced.” ECF No. 57 at 10-11. Plaintiffs now
allege something different, that “reasonable construction professional expectations” are “that
Simpson connectors installed in original construction will last the lives of the homes in which they
are installed . . . .” SAC ¶ 104. Whether or not that allegation, along with the plethora of other
new allegations in the SAC, helps the SAC survive a challenge to the pleadings has not yet been
tested. We are still at the motion to dismiss stage: either Plaintiffs have alleged enough to survive
a motion to dismiss or they have not. There is no reason for them to include an expert declaration,
because the Court did not and will not decide whether Plaintiffs’ allegations are truthful or
supported by evidence.
See DeMarco
,
Nevertheless, although the Court will strike references to Werdowatz’s declaration (it needn’t strike the declaration, because it’s not attached to the SAC), the Court does not find it appropriate to strike the allegations in the SAC which were derived from that declaration. See, e.g. , id. at 1222 (holding that expert affidavit did not qualify as a “written instrument” within the meaning of Rule 10(c) and thus striking it but declining to strike portions of the complaint derived from the affidavit). Regardless of the source of the information or belief upon which Plaintiffs make those allegations, they are allowed to make them; Simpson can challenge them later on. Simpson concedes that the allegations “need not be stricken,” Mot. at 9, but argues they are “conclusory statements of opinion” which “carry no additional probative weight and are not entitled to a presumption of truth,” Reply at 8. To the extent the allegations are merely conclusory they will be entitled to no weight, and the Court will treat the allegations like every other allegation in the complaint. V. CONCLUSION For the foregoing reasons, the Court GRANTS in part and DENIES in part Simpson’s Motion to Strike. The following references and text are STRICKEN from the SAC: All citations to ECF No. 61-2; “According to a structural engineer licensed in California for thirty- five years who has analyzed and specified Simpson products for decades, and whose declaration was previously filed in this case at
ECF Document 61-2,” ¶ 67;
“Ultimately, the Ocean Pointe case resolved for tens of millions of dollars, most of which funded a repair program to install new anchor bolt holdown systems to replace tens of thousands of defective and corroding HD Strap-Tie Holdowns and MAS Mudsill Anchors embedded in 1,628 Ocean Pointe homes,” ¶ 127; “Ultimately, the Ewa by Gentry case resolved for tens of millions of dollars, most of which funded a repair program to install new anchor bolt holdown systems to replace tens of thousands of defective and corroding HD Strap-Tie Holdowns and MAS Mudsill Anchors embedded in 2,136 Ewa by Gentry homes,” ¶ 129.
IT IS SO ORDERED. Dated: September 2, 2020
THOMAS S. HIXSON United States Magistrate Judge
[1] Simpson had also argued that Plaintiffs’ settlements allegations violated the confidentiality terms 25 of one of the settlements in those cases and thus should be stricken on that ground also. Mot. at 5- 6. After Plaintiffs challenged that assertion as inaccurate, Opp’n at 1, 3-5, Simpson admitted that it had “made an error and Plaintiffs are correct that the settlement agreement that resolved the 26 Ocean Pointe litigation in Hawai‘i was not confidential,” Reply at 2. Accordingly, the Court will 27 not consider this argument. The Court does not find that Simpson’s statements regarding the confidentiality of the settlement were made with the intent to mislead the court, but rather were 28 made out of error. See Decl. of Erick C. Howard ISO Reply, ECF No. 90.
Notes
[2] In their Opposition, Plaintiffs reference a portion of one of the two settlement agreements and included therein an apparent payment made by “Simpson’s Insurers.” Opp’n at 4-5. But Plaintiffs make no allegation in the SAC concerning whatever payment that was or who made it or for what reason it was made, so the reference doesn’t change the Court’s analysis. Furthermore, even if the SAC did contain those allegations, that type of evidence would likely be the type excluded by FRE 408.
[3] Once you peel away Plaintiffs’ argument that the allegations in the paragraphs as a whole go to Simpson’s knowledge, there’s no argument left for why the settlement allegations are material or pertinent—i.e., for why they are in the complaint.
[4] In this case, Plaintiffs haven’t even attached the declaration to the SAC. They merely cite to the docket where the declaration was filed in connection with a separate motion (Simpson’s Rule 11 sanctions motion) filed in connection with the First Amended Complaint. That would be an additional reason to strike reference to the declaration as the declaration is not even properly attached to or filed with the operative complaint.