Monday, September 09, 2013

Home Depot employees know too little to be its agents

Avola v. Louisiana–Pacific Corp., No. 11–CV–4053, 2013 WL 4647535 (E.D.N.Y. Aug. 28, 2013)

Avola had over three decades of experience in carpentry, including more than two decades as a member of the local carpenters’ union.  He’d worked with different types of wood, and testified that one would only use “soft woods” in construction, for which “you hit the nail once and then you take your finger away and you hammer the rest of it in,” unlike the hard woods used in cabinetry.  He recognized the risk of ricochet but stated that he never encountered that with soft woods.

Avola took a part-time job as a sales associate at a Home Depot store, and was assigned to the plumbing department.  He only “knew enough about plumbing to tell [the customers] what they needed,” and other employees were also assigned to work in departments for which they had little-to-no prior experience.  While Home Depot offered department-specific classes, and LP SmartSide might well have been discussed in the lumber department, employees could only “answer with a basic knowledge of the products” in their own departments. 

LP SmartSide is a type of “composite wood” siding product created by combining wood byproducts and chemicals. LP’s website claims that “LP SmartSide products work and cut just like traditional wood, taking nails and screws with ease.”  Home Depot also sells vinyl and actual wood siding (plywood).  While he was still working at Home Depot, he bought siding for a shed in his backyard.  He’d used the plywood siding sold by Home Depot before and was about to buy it again, but a sales associate suggested that he try SmartSide, stating that it “nails just like wood,” “works as easy as traditional wood siding,” and could be installed the same way as the plywood.  Avola bought it. Avola did not visit LP’s website or view a printed ad at that time.

When he started installing SmartSide, he used the same procedures he’d used for wood.  Though the installation instructions—which didn’t come with the product—required two-inch nails, Avola used one-and-a-half-inch nails, which he believed was appropriate under carpenter’s union rules given the thickness of the siding.  Even in the beginning, the nails refused to stay in place after he hammered them once.  As he was nailing the last panel, a nail ricocheted into his left eye.

The court first evaluated Avola’s claim for breach of express warranty.  New York requires  (i) a material statement amounting to a warranty; (ii) the buyer’s reliance on this warranty as a basis for the contract with his immediate seller; (iii) the breach of this warranty; and (iv) injury to the buyer caused by the breach.   A buyer can bring a claim against a manufacturer based on the manufacturer’s ads upon which the buyer relied when contracting with the sellers.  False advertising in NY is similar: (i) a material statement (ii) in consumer-directed advertisements, (iii) upon which the buyer actually relies, where this statement (iv) turns out to be false or misleading and (v) causes the buyer’s injury.

Defendants argued that the LP ad and the Home Depot associate’s statements were mere puffery that no reasonable jury could find material. The court disagreed.  It identified (1) vagueness, (2) subjectivity, and (3) inability to influence buyers’ expectations as key factors in distinguishing puffery from non-puffery.

Vagueness means failing to describe a specific characteristic of the product.  General descriptions—e.g., high-speed internet service as the “fastest, easiest way to get online”; a truck as the “most dependable, long-lasting”; or an insurance policy as putting policyholders “in Good Hands”—can be puffery.  But here, the statements were far more specific. They described key characteristics of SmartSide: “its wood-like working quality and ability to take nails.”

Subjectivity means an inability to measure disputed statements on an objective basis, “such as by reference to clinical studies or comparison with the product’s competitors.”  Statements that a stereo system reflects the “most life-like reproduction of orchestral and vocal sounds” or that a chain of hotels maintains “standards proud enough to bear [the founder’s] name” are subjective.  Here, the statements were quantifiable, in that they equated SmartSide with traditional wood siding products, providing a measurable benchmark.  By contrast, LP’s statement that SmartSide products “also deliver the beautiful, authentic look of real wood for unbeatable curb appeal” was subjective puffery.  The ad used the subjective term “ease,” but also compared SmartSide with traditional wood—considering the ad claim in its entirety, it was not puffery.

Inability to influence means that “the disputed statements are made by all of the product’s competitors, or these statements cannot mean everything that they suggest.”  A claim that a sports beverage will “Upgrade your game” “is plainly an exaggeration, because no buyer truly believes” that it would improve athletic abilities.  And “consumers know that vehicles that are ‘rock-solid’ will be dented by an impact that would not dent a rock.”  But here, the statements could reasonably influence buyers and shape their expectations.  A claim that SmartSide acted like “traditional wood” siding was not so overblown that the buyers ought to have known better.  “Nor should the buyers expect to hear these statements from the manufacturers of other siding products that do not act like ‘traditional wood’ siding products but have other distinguishing characteristics.” 

(I don’t really understand what the court is saying about “everyone does it”—if everyone in the market made a verifiably false claim, why would that be any defense at all?  Suppose every supplement maker using a particular ingredient falsely claims that the ingredient promotes weight loss.  If the statement is specific and objective, its market prevalance should have no weight at all—if anything, it might be more credible if everyone’s saying it.  And the court implicitly acknowledges this by defining the relevant class as a subset of siding products, since a false claim that “everybody” in a product category makes might not change resource allocation within the category, but can clearly shift consumption of that entire category upwards.  Also this seems to be an empirical inquiry—is everyone doing it?—that the court answers in a normative way—consumers wouldn’t expect everyone to do it—but that’s the least of the issues.)

Anyway, defendants failed to show that the statements at issue were puffery as a matter of law.

The court turned next to reliance: Avola didn’t see the website before buying SmartSide.  The court disagreed that this was fatal, in that the jury could find that Avola relied on the ad as recited by the Home Depot sales associate.  Defendants argued that Avola’s testimony about what the sales associate said was inadmissible hearsay.  Not so: Avola testified to the making of, not the truth of, the statements.  As long as Avola’s testimony sufficiently showed that the sales associate’s statements recited LP’s ad, even if only orally and not in writing, that would allow a finding of reliance.  Here, there was enough evidence to survive summary judgment.  A reasonable jury could find that the claims that SmartSide “nails just like wood” and “works as easy as traditional wood siding” parroted LP’s claims.

However, the claims against Home Depot failed, because the jury couldn’t reasonably find that Avola relied on any warranties or advertising by Home Depot.  Just “passively” reciting statements in the ads wouldn’t do it; that just leads to reliance for the claims against LP.  Without more, the sole basis for the bargain would be LP’s statements.

Assuming the Home Depot not only recited LP’s claims, but separately represented that SmartSide could be installed the same way as plywood siding with which Avola was familiar, the claim still failed because the sales associate wasn’t acting as Home Depot’s agent for this purpose.  (OK, I’m not deeply familiar with the law of agency, but how can an employee who touts a product sold by the employer, for the purpose for which it’s sold (albeit perhaps not giving proper installation instructions), possibly not be an agent?) 

The court held that Home Depot never told its employees that they had actual authority to make statements promising or promoting the performance of the products sold.  To the contrary, Home Depot hired employees “without requiring any experience in home improvement or construction, and assigned them to departments for which they had no prior experience”; “only offered them basic classes on the products in their department, but did not require that they read about or train in the use of these products”; and expected them to work the entire store, not just their department. (I can see this language appearing in comparative ads, the way Domino’s slammed Papa John’s for the latter’s successful puffery defense in court.) “No employee would have thought that Home Depot vested them with actual authority to make actionable representations about any products.” 

And Avola, an employee himself, shouldn’t have believed that Home Depot vested another employee with apparent authority to tout products.  “In light of what he knew as an employee, Avola had no basis for believing that Home Depot authorized the sales associate’s Related Statements about LP SmartSide.”  (So Avola’s specific situation is important here.  I find it hard to believe that a consumer who wasn’t also a Home Depot employee should be deemed to know that Home Depot employees don’t know what they’re saying.)

Tidying up, the court also held that Avola wasn’t required to submit expert testimony on SmartSide’s failure to comport with the advertising, or on causation of Avola’s injury. A jury may find causation “from its consideration of the characteristics of the [product] and plaintiff’s description of how the accident happened.”  Defendants argued that expert testimony was needed to define what “traditional wood” siding products are, in order to compare them with SmartSide.  But the evidence that SmartSide didn’t perform like any wood used in construction was sufficient to raise triable issues about falsity even without a specific definition.  The court noted that “the meaning of phrases in advertising should not rely too much on the technical meanings that experts might provide; instead, ‘[t]he important criterion is the net impression which the advertisement is likely to make upon the general populace,’ not ‘the wise and the worldly’ universe of experts.”

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