Court Opinion

ID: 4857737
Source: CourtListenerOpinion
Date Created: 2021-08-25 15:03:17.40757+00
Date Added: 2024-06-11T08:11:54.388049
License: Public Domain

20-4261
Montgomery v. Stanley Black & Decker Inc.

                              UNITED STATES COURT OF APPEALS
                                  FOR THE SECOND CIRCUIT

                                            SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

        At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
25th day of August, two thousand twenty one.

Present:    JON O. NEWMAN,
            ROSEMARY S. POOLER,
            RAYMOND J. LOHIER, JR.,
                        Circuit Judges.
_____________________________________________________

WILLIAM MONTGOMERY, INDIVIDUALLY AND ON
BEHALF OF ALL OTHERS SIMILARLY SITUATED,
DONALD WOOD, JR., INDIVIDUALLY AND ON
BEHALF OF ALL OTHERS SIMILARLY SITUATED,

                                 Plaintiffs-Appellants,

                         v.                                                 20-4261

STANLEY BLACK & DECKER INC., DBA CRAFTSMAN,

                        Defendant-Appellee. 1
_____________________________________________________

Appearing for Appellants:        Frederick J. Klorczyk III, Bursor & Fisher, P.A., New York, N.Y.

Appearing for Appellee:          Anne M. Voigts, King & Spalding LLP (Michael B. Shortnacy, on
                                 the brief), Palo Alto, CA.

1
    The Clerk of Court is directed to amend the caption as above.
       Appeal from the United States District Court for the District of Connecticut (Covello, J.).
       ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the order of said District Court be and it hereby is AFFIRMED in part,
VACATED in part, and REMANDED in part for further proceedings consistent with this
order.

       William Montgomery and Donald Wood, Jr. (“Appellants”) appeal from the December 1,
2020 judgment of the United States District Court for the District of Connecticut (Covello, J.)
granting defendant Stanley Black & Decker, Inc.’s (“Craftsman”) motion to dismiss Appellants’
amended complaint alleging breach of express and implied warranties, unjust enrichment,
negligent misrepresentation, fraud, and violations of Virginia’s Consumer Protection Act and
Sections 349 and 350 of New York’s General Business Law. We assume the parties’ familiarity
with the underlying facts, procedural history, and specification of issues for review.

        We take all facts from Appellants’ amended complaint and draw all reasonable inferences
in Appellants’ favor. See Cap. Mgmt. Select Fund Ltd. v. Bennett, 680 F.3d 214, 219 (2d Cir.
2012). Montgomery purchased a Craftsman vacuum in Virginia in 2018. The vacuum’s
packaging noted a “5.0 Peak HP.” App’x at 3. The term “HP” describes an object’s horsepower,
or its power output. Montgomery reviewed and relied on the vacuum’s packaging prior to
purchasing it. Wood purchased a Craftsman vacuum with a “5.5 Peak HP” claim in New York in
2018. App’x at 4. Wood also reviewed and relied on the vacuum’s packaging prior to purchasing
it. Appellants allege that the representations of peak horsepower were false in that the “Peak HP”
numbers for various models were exaggerated by 60 to 85 percent. Although Craftsman points
out that the vacuums in normal use do not operate at peak horsepower, the first sentence of their
disclaimer, which they assert as a defense, states that “‘Peak Horsepower’ (PHP) is a term used
in the wet-dry vacuum industry for consumer comparison purposes.” Supp. App’x at 68.

       Montgomery filed an initial complaint in August 2019 alleging claims arising out of the
peak HP representations. Craftsman moved to dismiss, arguing that no reasonable consumer
could have been misled by any peak HP representation because of a disclaimer that appears on
the products’ packaging. That language states:

       †“Peak Horsepower” (PHP) is a term used in the wet-dry vacuum industry for
       consumer comparison purposes. It does not denote the operational horsepower of
       a wet-dry vacuum but rather the horsepower output of a motor, including the
       motor’s inertial contribution, achieved in laboratory testing. In actual use, wet dry
       vacuum motors do not operate at the peak horsepower shown.

App’x at 85. This language is immediately adjacent to a dagger symbol and the same dagger
symbol appears immediately adjacent to the challenged peak HP representations. The disclaimer
language is in 7 point letters on the bottom edge of the vacuum’s packaging’s front panel while
the peak HP representations appear on the upper left side of the front panel in approximately 72
point letters. The disclaimer does not appear in bold, capitalized, or italicized text, and it is not
enclosed in a box. Montgomery did not include or otherwise refer to the disclaimer in his
complaint. After Craftsman filed its first motion to dismiss, Appellants amended the complaint to
add Wood as a plaintiff, but the amended complaint failed to mention or otherwise refer to the

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disclaimer. The packaging for Wood’s vacuum included similar disclaimer language on a side
panel, which was also unmentioned in the amended complaint. When Craftsman again moved to
dismiss, the district court granted Craftsman’s motion, concluding that Appellants failed to state
plausible claims because the disclaimer indicated that in actual use, the vacuums do not operate
at the peak HP amounts shown. The district court ruled that the vacuums’ packaging, which was
referred to in the Appellants’ complaint and which was attached as exhibits to Craftsman’s
motion to dismiss, was incorporated by reference into the complaint. Appellants do not challenge
this ruling on appeal. Further, because the amended complaint did not mention or otherwise
discuss the disclaimer, the district court did not consider Appellants’ arguments in opposition to
Craftsman’s motion to dismiss, for example, that the disclaimer did not cure any
misrepresentations, finding that such arguments were not properly before it.

       Appellants argue that the district court erred by failing to consider their arguments in
opposition to Craftsman’s motion to dismiss and that the district court also erred when it
dismissed their complaint and abused its discretion when it made the dismissal with prejudice.
We agree.

        Appellants argue that the district court erred when it failed to consider their arguments in
opposition to Craftsman’s motion to dismiss because a district court may only decline to consider
arguments under limited circumstances not present here, such as when a party makes a new
argument in a reply brief or fails to present an argument to a magistrate judge. We have
previously held that “[o]rdinarily, parties may not amend the pleadings through motion papers”
because “a party is not entitled to amend its complaint through statements made in motion
papers.” Soules v. Conn., Dep’t of Emergency Servs. & Pub. Prot., 882 F.3d 52, 55 (2d Cir.
2018) (citation omitted). Here, Appellants did not seek to amend their pleadings—they merely
sought to counter Craftsman’s argument that the disclaimer was sufficient for a reasonable
consumer not to be misled by the peak HP claims. The district court erred when it failed to
consider Appellants’ arguments that the disclaimer’s size and placement were insufficient to
render Craftsman’s claims not misleading to a reasonable consumer. Though we have held that
“[a] plaintiff who alleges that he was deceived by an advertisement may not misquote or
misleadingly excerpt the language of the advertisement in his pleadings and expect his action to
survive a motion to dismiss, or, indeed, to escape admonishment,” Fink v. Time Warner Cable,
714 F.3d 739, 742 (2d Cir. 2013), Appellants included the full language of the challenged
representation about maximum horsepower in their pleadings. We remand for the district court to
permit Appellants to make the argument that the disclaimer does not render the complaint
insufficient, i.e., that the disclaimer’s statement about normal operating horsepower does not
eliminate the misleading nature of the claim about maximum horsepower.

        Appellants also argue that the district court erred by dismissing their complaint with
prejudice because they could amend their complaint to include additional allegations regarding
their understanding of the disclaimer, its size, placement, and context. They did not file a formal
motion to amend their complaint and included their request to amend in the last sentence of their
opposition papers.

     We review a district court’s denial of leave to amend for abuse of discretion. See ATSI
Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108 (2d Cir. 2007). “As a general principle,

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district courts should freely grant a plaintiff leave to amend the complaint.” Nakahata v. New
York-Presbyterian Healthcare Sys., Inc., 723 F.3d 192, 198 (2d Cir. 2013). A district court
abuses its discretion when plaintiffs “[are] not provided an opportunity to seek leave to amend in
response to the District Court’s order of dismissal.” Id. This occurs, for example, when a district
court “enter[s] final judgment the next business day after the opinion was issued.” Id. This is
because “[a]bsent an opportunity to amend, Plaintiffs cannot be held accountable for failing to
make the necessary motion.” Id. The district court issued its order granting Craftsman’s motion
to dismiss on November 30, 2020 and entered judgment in Craftsman’s favor on December 1,
2020. Appellants did not have the opportunity to seek formal leave to amend in response to the
district court’s order. The district court knew the theory that Appellants would raise in any
amended complaint regarding the disclaimer because Appellants included their theory—namely
that the disclaimer was insufficient because it appeared in small point letters that were separated
from the peak HP claims and not capitalized or bolded—in their opposition to the motion to
dismiss.

        Accordingly, the judgment of the district court hereby is AFFIRMED in part as to the
dismissal of Wood’s negligent misrepresentation claim, 2 and otherwise VACATED in part and
REMANDED in part with an instruction that the district court permit Appellants to make the
argument that the disclaimer does not render Appellants’ complaint insufficient. We also instruct
the district court to grant Appellants leave to amend.

                                                     FOR THE COURT:
                                                     Catherine O’Hagan Wolfe, Clerk

2
 In the district court, Wood conceded that he “[did] not allege a ‘special relationship’ with
[Craftsman] sufficient to state a claim for negligent misrepresentation under New York law.”
App’x at 160. The dismissal of that claim is not affected by this appeal.

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