Lienhart v. Dryvit Systems, Inc. , 255 F.3d 138 ( 2001 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ROBERT B. LIENHART, et al.; DINAH J. 
LIENHART; MICHAEL SMITH; JOLEEN
SMITH; DAVID P. ADAMS; PAMELA M.
ADAMS; BENJAMIN BRASWELL;
BARBARA W. BRASWELL,
Respondents,  No. 00-908
v.
DRYVIT SYSTEMS, INCORPORATED,
Petitioner.

Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
W. Earl Britt, Senior District Judge.
(CA-99-470-5-BR)
Argued: February 27, 2001
Decided: June 26, 2001
Before WIDENER, WILKINS, and WILLIAMS, Circuit Judges.
Petition for review granted and class certification order vacated by
published opinion. Judge Williams wrote the opinion, in which Judge
Widener and Judge Wilkins joined.
COUNSEL
ARGUED: Hada deVarona Haulsee, WOMBLE, CARLYLE, SAN-
DRIDGE & RICE, P.L.L.C., Winston-Salem, North Carolina, for
2 LIENHART v. DRYVIT SYSTEMS
Petitioner. Gary Walker Jackson, MICHAELS, JACKSON & OET-
TINGER, Raleigh, North Carolina, for Respondents. ON PLEAD-
INGS: W. Andrew Copenhaver, F. Bruce Williams, Charles L.
Becker, WOMBLE, CARLYLE, SANDRIDGE & RICE, P.L.L.C.,
Winston-Salem, North Carolina, for Petitioner. Joel R. Rhine, Wil-
mington, North Carolina; Daniel K. Bryson, LEWIS & ROBERTS,
P.L.L.C., Raleigh, North Carolina, for Respondents.
OPINION
WILLIAMS, Circuit Judge:
Dryvit Systems, Inc. petitions for review, pursuant to Federal Rule
of Civil Procedure 23(f), of the district court’s certification of a plain-
tiff class of homeowners who allege that Dryvit’s stucco siding prod-
uct, "Fastrak System 4000" (Fastrak), was negligently designed and
that Dryvit failed to warn purchasers of the product’s alleged defects.
This Circuit has not yet had occasion to articulate the standard gov-
erning our consideration of petitions under Rule 23(f). We adopt a
five-factor "sliding scale" test to guide the consideration of such peti-
tions, grant the petition, and hold that certification of this class is
inappropriate at this time because it is likely that individual issues
necessary to adjudicate Dryvit’s liability will predominate over class
issues in a manner inconsistent with the dictates of Federal Rule of
Civil Procedure 23(b)(3). We thus grant Dryvit’s petition for review
and vacate the district court’s class certification order.
I.
A.
Fastrak is a stucco siding product that is installed on the exterior
of a building in order to provide a water-resistant shield that protects
the building from weather. Fastrak consists of several component
parts: (a) a sheathing comprised of Georgia-Pacific Corporation’s
"Dens-Glass Gold" product; (b) Dryvit non-cementatious base coat
(NCB); (c) reinforcing mesh; and (d) Dryvit finish coat. Dryvit sells
the various components of the system to independent distributors and
LIENHART v. DRYVIT SYSTEMS 3
provides instructions and specifications to applicators, who buy the
components from various suppliers and produce the final product.
Applicators are usually hired by general contractors to install Fastrak
on the exterior of a new building; responsibility for installing Fastrak
and integrating it with other building components, such as windows,
doors, flashing, and the roof is shared between applicators, general
contractors, and subcontractors. Dryvit asserts that Fastrak can fail for
various reasons related to the conduct of third parties, such as applica-
tor error, use of incorrect materials, or improperly sealing Fastrak to
other components of a building, such as windows or the roof.
Fastrak’s design is based upon the premise that a properly face-
sealed barrier can prevent the intrusion of water behind the siding
product, eliminating the need for drainage between the siding and the
wall of a structure. The plaintiff class argues that a face-sealed barrier
of this sort cannot be installed correctly in the field and will inevitably
lack water resistance and ability to resist applied loads.
B.
On July 25, 1999, plaintiff Robert E. Lienhart and others (collec-
tively "Lienhart") filed a complaint in the Superior Court for Wake
County, North Carolina against defendant Dryvit, for themselves and
on behalf of a class comprised of all entities in North Carolina whose
buildings were constructed after January 1, 1992 using Fastrak. Lien-
hart alleged that Dryvit had committed negligence, gross negligence,
negligent misrepresentation, fraud, and unfair and deceptive trade
practices. Lienhart alleged that Fastrak caused damage to their struc-
tures by "trapping" water within each structure’s walls. On July 22,
1999, Dryvit removed this action to the United States District Court
for the Eastern District of North Carolina based on diversity of citi-
zenship. On December 18, 2000, the district court certified the pro-
posed class. Certification was limited to the issues of (1) whether
Dryvit’s product was defectively designed; and (2) whether Dryvit
had breached a duty to warn homeowners of the hazards inherent in
the use of its product.
Dryvit timely filed a Petition for Review pursuant to Rule 23(f)
with this Court.1
1
On December 28, Dryvit filed a petition seeking Rule 23(f) review of
the district court’s certification order; an amended petition was filed with
4 LIENHART v. DRYVIT SYSTEMS
II.
A.
This Circuit has not yet had occasion to consider the standards for
granting a petition to appeal class certification under Federal Rule of
Civil Procedure 23(f), a new provision added in 1998 to Rule 23, the
rule governing class actions.
Rule 23(f) provides:
A court of appeals may in its discretion permit an appeal
from an order of a district court granting or denying class
action certification under this rule if application is made to
it within ten days after entry of the order. An appeal does
not stay proceedings in the district court unless the district
judge or the court of appeals so orders.
Fed. R. Civ. P. 23(f).
The advisory committee note to Rule 23(f) states that "the court of
appeals is given unfettered discretion whether to permit" a Rule 23(f)
appeal, "akin to the discretion exercised by the Supreme Court in act-
ing on a petition for certiorari." Fed. R. Civ. P. 23(f) advisory com-
mittee note. Noting that "[t]he courts of appeals will develop
standards for granting review that reflect the changing areas of uncer-
tainty in class litigation," the advisory committee note states that
Lienhart’s consent on January 3, the date Dryvit asserts the petition was
due under a correct reading of the time limits contained in the Federal
Rules of Civil Procedure and Federal Rules of Appellate Procedure. Dry-
vit notes that because Federal Rule of Appellate Procedure 5(a)(2) states
that the time for filing a petition is governed by the statute or rule autho-
rizing the petition, and Rule 23(f) appeals are authorized by the Federal
Rules of Civil Procedure, Federal Rule of Civil Procedure 6(a), which
mandates the exclusion of weekends from time computations, governs
the time period for filing a Rule 23(f) petition. This conclusion, which
has been adopted by the Seventh Circuit, is correct. See Blair v. Equifax
Check Serv., Inc., 181 F.3d 832, 837 (7th Cir. 1999).
LIENHART v. DRYVIT SYSTEMS 5
"[p]ermission to appeal may be granted or denied on the basis of any
consideration that the court of appeals finds persuasive." Id. The note
discusses three circumstances in which such review may be especially
appropriate: where an order denying certification effectively ends the
litigation because the individual claims are uneconomical to litigate,
so that no review will in practice be available from a final judgment;
where an order granting certification effectively ends the litigation
because it produces irresistible pressure on the defendant to settle; and
"when the certification decision turns on a novel or unsettled question
of law." Id.The first federal court of appeals decision addressing the standards
for granting a Rule 23(f) petition was the Seventh Circuit’s opinion
in Blair v. Equifax Check Serv., Inc., 181 F.3d 832 (7th Cir. 1999).
The Seventh Circuit noted that in light of the discretionary nature of
Rule 23(f), it would be inappropriate to adopt a bright-line approach
which would unduly constrain the court’s discretion. Id. at 834. How-
ever, the court discussed and elaborated upon some circumstances
which may justify the grant of a Rule 23(f) petition. First, the court
stated that "when denial of class status seems likely to be fatal, and
when the plaintiff has a solid argument in opposition to the district
court’s decision," review is warranted. Id. In this area, however, the
Seventh Circuit cautioned that courts entertaining such "death knell"
Rule 23(f) claims must be "wary lest the mind hear a bell that is not
tolling," noting that even where individual claims would ordinarily be
too small to litigate individually, law firms with substantial resources
may pursue an individual claim to final judgment in the hope of win-
ning a favorable ruling on class certification on appeal from final
judgment. Id. Second, the court stated that review may be appropriate
where a grant of class certification creates irresistible pressure on the
defendant to settle, especially where the plaintiff’s probability of suc-
cess on the merits is slight. Id. Noting that "some plaintiffs or even
some district judges may be tempted to use the class device to wring
settlements from defendants whose legal positions are justified but
unpopular," the court suggested that the "interaction of procedure
with the merits justifies an earlier appellate look."2 Id. Third, the
2
This position is in line with the Seventh Circuit’s controversial posi-
tion in In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995),
6 LIENHART v. DRYVIT SYSTEMS
Seventh Circuit held that whether hearing an appeal would help to
"facilitate the development of the law" by clearing up a significant
unresolved issue also is relevant. Id. at 835. The court reasoned that
one of the purposes of Rule 23(f) was to promote the development of
case law regarding certain fundamental class action issues which tend
to be under-litigated because so many class actions are settled or oth-
erwise resolved in ways that preclude eventual appellate consideration
of procedural issues. The court noted that when the basis for granting
review is to contribute to the development of the law, "it is less
important to show that the district judge’s decision is shaky," as affir-
mances as well as reversals may serve to illuminate important ques-
tions. Id. Thus, the court granted the Rule 23(f) petition before it to
resolve issues related to the propriety of multiple, overlapping, con-
currently litigated class actions, but it ultimately affirmed the district
court’s certification order. Id. at 838-39.
The First Circuit, in Waste Management Holdings, Inc. v. Mow-
bray, 208 F.3d 288 (1st Cir. 2000), adopted several variations on the
Seventh Circuit’s approach in Blair. The court noted that it "ordinar-
ily will grant leave to appeal when a Rule 23(f) application falls into
one of the three [Blair] categories," but noted its ongoing discretion
in this area. Id. at 294. The court also restricted the third Blair cate-
gory to those instances in which "an appeal will permit the resolution
of an unsettled legal issue that is important to the particular litigation
as well as important in itself and likely to escape effective review if
left hanging until the end of the case." Id. The stated rationale for this
additional restriction was that otherwise it would be too easy for cre-
ative lawyers to argue that their case involves a "fundamental" issue,
undermining the objective of making Rule 23(f) review "the excep-
tion, not the rule." Id.that a preliminary examination of the merits of the underlying claims
should be viewed as relevant to the appropriateness of class certification.
But see Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1232 (9th Cir.
1996) (noting authority for the proposition that the merits are irrelevant
to class certification). While we do not view the merits of the underlying
claims as relevant to the appropriateness of certification, the merits may
on occasion inform the Court’s exercise of discretion to grant early
review of certification under Rule 23(f).
LIENHART v. DRYVIT SYSTEMS 7
In Prado-Steiman v. Bush, 221 F.3d 1266 (11th Cir. 2000), the
Eleventh Circuit further elaborated upon Rule 23(f) standards. Noting
that given the volume of class action litigation in the district courts,
routine interlocutory appellate review of class certifications "is simply
not practicable," the court announced several guideposts to be used in
evaluating Rule 23(f) petitions. Id. at 1273-77. Recognizing that Rule
23(f) was explicitly promulgated to replace the use of mandamus in
reviewing manifestly erroneous class certifications, the court stated
that it would be inappropriate to review such petitions under standards
as stringent as those which govern mandamus. Id. at 1275 n.10.
Accordingly, the court set forth five factors that are relevant to the
appropriateness of granting a Rule 23(f) petition: (1) whether the cer-
tification ruling is likely dispositive of the litigation; (2) whether the
district court’s certification decision contains a substantial weakness;
(3) whether the appeal will permit the resolution of an unsettled legal
question of general importance; (4) the nature and status of the litiga-
tion before the district court (such as the presence of outstanding dis-
positive motions and the status of discovery); and (5) the likelihood
that future events will make appellate review more or less appropri-
ate. Id. at 1274-76.
In explaining the second factor, "substantial weakness in the class
certification," the Eleventh Circuit noted that "interlocutory review
may be appropriate when it promises to spare the parties and the dis-
trict court the expense and burden of litigating the matter to final
judgment only to have it inevitably reversed . . . on an appeal." Id. at
1274-75. The Eleventh Circuit held that this factor is to be viewed "on
a sliding scale" with the other factors, such that the stronger the case
that class certification was a clear abuse of discretion, the weaker a
showing is needed on the other factors to gain review. Id. at 1274-75.
As to the third factor, the court noted that the impact of the questions
at issue to related actions involving the same or similarly-situated par-
ties is an appropriate part of the inquiry relative to this prong. Id. at
1275. The Eleventh Circuit explained its fifth factor, the "likelihood
that future events may make appellate review more or less appropri-
ate," by reference to issues such as the prospect of imminent settle-
ment negotiations or the status of an action as the first-litigated of a
number of similar claims. Id.
Dryvit reads Prado-Steiman to suggest that a sufficient showing of
"substantial weakness," the third factor, alone can constitute grounds
8 LIENHART v. DRYVIT SYSTEMS
for granting a Rule 23(f) motion. Dryvit also embraces Prado-
Steiman’s somewhat more expansive list of factors capable of sup-
porting a grant of a Rule 23(f) petition. Lienhart, on the other hand,
argues that Mowbray, with its emphasis on the importance of an
unsettled issue of law of general importance, substantially narrowed
the Blair approach, and contends that Prado-Steiman further limited
Mowbray’s approach. (Respondent’s Answer, at 16 (asserting that
"each successive Court of Appeals that has dealt with Fed. R. Civ. P.
23(f) has limited and narrowed the availability of such an appeal")).
We do not believe that Prado-Steiman limited Mowbray; to the
contrary, by adding the weakness of the district court’s certification
decision as an independent factor supporting review and noting that
the impact of a question raised in a Rule 23(f) petition on related liti-
gation can favor review, the Prado-Steiman court broadened the
bases for a grant of review. See Prado-Steiman, 221 F.3d at 1275
(Rule 23(f) review may be appropriate to "spare the parties and the
district court the expense and burden of litigating the matter to final
judgment only to have it inevitably reversed"). In light of Rule 23(f)’s
purpose to eliminate the unduly restrictive review practices which
obtained when mandamus was the only available means to review a
class certification prior to final judgment in the absence of a district
court’s decision to voluntarily certify the issue for immediate review,
we do not believe the exceptionally stringent standards for review
urged by Lienhart are appropriate. Standards certainly must reflect the
limited capacity of appellate courts to consider interlocutory appeals,
as well as the institutional advantage possessed by district courts in
managing the course of litigation and the judicial diseconomy of per-
mitting routine interlocutory appeals. Routine interlocutory review of
class certifications is simply not feasible as a practical matter. See id.
at 1273 (noting that "there are too many class actions filed each year
for federal appeals courts practicably to adjudicate class certification
decisions on an interlocutory basis as a matter of course"). However,
we must remain cognizant that Rule 23(f) was enacted by the
Supreme Court to permit such appeals, pursuant to an express grant
of authority by Congress to create appellate jurisdiction over non-
final judgments. See 28 U.S.C.A. § 1292(e). In addition to addressing
"death knell" situations and promoting the resolution of legal ques-
tions of general importance, a careful and sparing use of Rule 23(f)
LIENHART v. DRYVIT SYSTEMS 9
may promote judicial economy by enabling the correction of certain
manifestly flawed class certifications prior to trial and final judgment.
Where a district court’s certification decision is manifestly errone-
ous and virtually certain to be reversed on appeal, the issues involved
need not be of general importance, nor must the certification decision
constitute a "death knell" for the litigation. Such a rule would waste,
rather than conserve, judicial resources, because self-evidently defec-
tive classes would proceed through trial to final judgment, only to
face certain decertification on appeal and a requirement that the pro-
cess begin again from square one. The weakness of the district court’s
certification, viewed in terms of the likelihood of reversal under an
abuse of discretion standard, operates on a "sliding scale" in conjunc-
tion with the other factors enumerated by the Eleventh Circuit in
Prado-Steiman. In extreme cases, where decertification is a functional
certainty, the weakness of the certification order may alone suffice to
permit the Court of Appeals to grant review. Conversely, when the
weakness of the district court’s certification is less substantial (or
insubstantial), a commensurately stronger showing on the other fac-
tors is necessary to support review. We thus adopt the Eleventh Cir-
cuit’s five-factor Prado-Steiman test for judging the appropriateness
of granting a petition for review under Rule 23(f), and hold that the
"substantial weakness" prong operates on a sliding scale to determine
the strength of the necessary showing regarding the other Prado-
Steiman factors. See Prado-Steiman, 221 F.3d at 1274-76.
B.
Having adopted, with some elaboration, the five-factor Prado-
Steiman test for determining when to grant a Rule 23(f) petition, we
now apply this test to the Rule 23(f) petition before us. The grant of
oral argument in this case for the purpose of addressing the proper
Rule 23(f) standard — an issue of first impression in this Circuit —
has of necessity led to an extensive examination of the merits of class
certification. For the reasons set forth below, and after extensively
reviewing the merits of the district court’s certification, we conclude
that, on the current state of the factual record, the proposed class certi-
fication is manifestly erroneous and is certain to be vacated on appeal
from final judgment. Thus, under the sliding-scale approach we have
adopted, review is appropriate without regard to the other factors in
10 LIENHART v. DRYVIT SYSTEMS
order to avoid the judicial diseconomy entailed in allowing a class
certification which is clearly infirm to be litigated to final judgment
only to face vacatur on appeal. Therefore, we grant the petition for
review under Rule 23(f).3
C.
A district court "has broad discretion in deciding whether to certify
a class, but that discretion must be exercised within the framework of
Rule 23." In re American Med. Sys., Inc., 75 F.3d 1069, 1079 (6th
Cir. 1996). Actions such as this one, brought under Federal Rule of
Civil Procedure 23(b)(3), may be brought only if the numerosity,
commonality, typicality, representativeness, predominance, and supe-
riority requirements of both Rule 23(a) and (b)(3) are met. Fed. R.
Civ. P. 23. The party seeking class certification bears the burden of
proof. Int’l Woodworkers of Am. v. Chesapeake Bay Plywood Corp.,
659 F.2d 1259, 1267 (4th Cir. 1981).
In reviewing the Rule 23(a) requirements, we note that numerosity
requires that a class be so large that "joinder of all members is
impracticable." Fed. R. Civ. P. 23(a)(1). Commonality requires that
"there are questions of law or fact common to the class." Fed. R. Civ.
P. 23(a)(2). The common questions must be dispositive and over-
shadow other issues.4 Stott v. Haworth, 916 F.2d 134, 145 (4th Cir.
1990). Typicality requires that the claims of the named class represen-
3
A court making the threshold determination of whether to grant Rule
23(f) review often will not delve as deeply into the merits of the certifi-
cation as we do in this case. An approach stating that review is required
whenever a panel concludes, in the final analysis, that the certification
is defective would functionally mean the automatic grant of all Rule
23(f) petitions, since a reviewing court would have to fully resolve the
merits in order to determine whether to grant the petition. We leave the
decision as to the appropriate level of analytic depth at which to examine
potential defects in certification to the discretion of future panels.
4
In a class action brought under Rule 23(b)(3), the "commonality"
requirement of Rule 23(a)(2) is "subsumed under, or superseded by, the
more stringent Rule 23(b)(3) requirement that questions common to the
class "predominate over" other questions. Amchem Prods., Inc. v. Wind-
sor, 521 U.S. 591, 609 (1997).
LIENHART v. DRYVIT SYSTEMS 11
tatives be typical of those of the class; "a class representative must be
part of the class and possess the same interest and suffer the same
injury as the class members." General Tel. Co. of Southwest v.
Falcon, 457 U.S. 147, 156 (1982) (internal quotation marks omitted).
Representativeness requires that the class representatives "will fairly
and adequately protect the interests of the class." Fed. R. Civ. P.
23(a)(4). We have stated that the final three requirements of Rule
23(a) "tend to merge, with commonality and typicality ‘serv[ing] as
guideposts for determining whether . . . maintenance of a class action
is economical and whether the named plaintiff’s claim and the class
claims are so interrelated that the interests of the class members will
be fairly and adequately protected in their absence.’" Broussard v.
Meineke Discount Muffler Shops, Inc., 155 F.3d 331, 337 (4th Cir.
1998) (quoting Falcon, 457 U.S. at 157 n.13).
In contrast to actions under Rule 23(b)(1) and (b)(2), Rule 23(b)(3)
actions are "[f]ramed for situations in which class-action treatment is
not clearly called for," but "may nevertheless be convenient and desir-
able." Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 615 (1997)
(internal quotation marks omitted). In addition to the four Rule 23(a)
requirements, Rule 23(b)(3) actions such as this one must meet two
requirements: predominance and superiority. Predominance requires
that "[common] questions of law or fact . . . predominate over any
questions affecting only individual members." Fed. R. Civ. P.
23(b)(3). The predominance inquiry "tests whether proposed classes
are sufficiently cohesive to warrant adjudication by representation."
Amchem, 521 U.S. at 623. Superiority requires that a class action be
"superior to other methods for the fair and efficient adjudication of
the controversy." Fed. R. Civ. P. 23(b)(3).
In Broussard, we addressed the predominance, commonality and
typicality difficulties that arise under Rule 23 when a myriad of plain-
tiffs attempt to consolidate legally and factually different claims via
the class action device. Addressing a class comprised of various fran-
chisees who signed different contracts at different times and had dif-
ferent levels of compensable injury, relied on different alleged
misrepresentations, and based statute of limitations tolling arguments
on different facts, we held that "the class . . . was thus no more than
a hodgepodge of factually as well as legally different plaintiffs that
should not have been cobbled together for trial." Broussard, 155 F.3d
12 LIENHART v. DRYVIT SYSTEMS
at 343 (internal quotation marks omitted). Relevantly, we noted that
while the need for individualized proof of damages does not necessar-
ily preclude class certification so long as common issues continue to
predominate over individual issues, it is impermissible to determine
damages on a classwide basis in order to facilitate class treatment of
a case when the governing law requires individualized proof of dam-
ages. Id. at 343. This Court has further held that the need for individu-
alized proof of damages may defeat predominance where proof of
damages is essential to liability. Windham v. American Brands, 565
F.2d 59, 66 (4th Cir. 1977).
Lienhart argues that proof of individual damages is unnecessary
because the theory of this case is that publicity surrounding problems
with the Fastrak product has caused "stigma damage" in the form of
a diminished market value for homes clad with Fastrak, independent
of whether these homes have in fact suffered any tangible damage. It
also appears, however, that the complaint alleges compensable dam-
ages deriving from the actual failure of Fastrak and resultant physical
damage to the homes of some plaintiff class members. The district
court suggested that damages subclasses might be necessary at a later
date.
The district court placed great emphasis on the fact that Lienhart
does not assert claims against third parties or allege that the conduct
of third parties contributed to the failure of the Fastrak product. In the
district court’s view, this fact distinguished the instant case from that
in In re Stucco Litig., 175 F.R.D. 210 (E.D.N.C. 1997), in which the
need to assess the contribution of third-party contractors to the failure
of a different stucco siding product was held by the same district court
to destroy predominance and preclude class certification. Id. at 215.
The district court held that because Lienhart alleged claims only
against Dryvit, issues regarding the conduct of third parties could be
resolved in subsequent contribution and indemnity actions and thus
did not preclude class certification.
The difficulty with this holding is that under North Carolina law,
the failure of a product user to follow express and adequate instruc-
tions or warnings absolutely precludes liability in a products liability
action. N.C. Gen. Stat. § 99B-4(1) (1999). Dryvit thus argues that the
alleged failure of applicators and contractors to follow its installation
LIENHART v. DRYVIT SYSTEMS 13
instructions does more than give rise to a subsequent contribution
claim; such failure, if proven, would entirely preclude Dryvit’s liabil-
ity. As a result, Dryvit asserts, this case differs from In re Stucco only
in that the third-party conduct issues will arise by means of Dryvit’s
statutory affirmative defenses, rather than the plaintiff class’s direct
claims.
N.C. Gen. Stat. § 99B-4(1) "merely codif[ies] the doctrine of con-
tributory negligence." Champs Convenience Stores, Inc. v. United
Chem. Co., Inc., 406 S.E.2d 856, 860 (N.C. 1991); see also Lee v.
Crest Chem. Co., 583 F. Supp. 131 (M.D.N.C. 1984) (concluding that
§ 99B-4(1) codifies the doctrine of contributory negligence in prod-
ucts liability cases). In a closely analogous case to this one, the North
Carolina Court of Appeals has held that § 99B-4(1) bars liability on
the part of a manufacturer of a roofing system if a contractor improp-
erly installed a roofing system, but only if the manufacturer has not
"contracted to instruct [the contractor] on installation procedures, and
. . . in fact assisted [the contractor] in the installation of the roof."
Westover Prods., Inc. v. Gateway Roofing Co., Inc., 380 S.E.2d 369,
374 (N.C. Ct. App. 1989). Thus, if Dryvit contracted to instruct third
parties and assisted those third parties in installing Fastrak, the third
parties’ failure to follow instructions cannot provide Dryvit with an
affirmative defense to liability under North Carolina law. If, on the
other hand, a given third party with whom Dryvit did not contract to
provide instruction on installation procedures and whom Dryvit did
not assist with installation failed to follow Dryvit’s instructions, and
this failure caused some of the damage suffered by a particular plain-
tiff, such failure would provide Dryvit with a complete defense to lia-
bility to that plaintiff under North Carolina law. Id.Thus, if third parties contributed to the failure of Fastrak and Dry-
vit did not contract to provide instruction to these parties and assist
them in installing Fastrak, Dryvit’s claims regarding these parties are
not contribution and indemnity claims which may be addressed in a
second stage after this litigation, but are instead claims regarding
affirmative defenses which, if established, negate Dryvit’s liability ab
initio. Given this conclusion, even if all plaintiffs suffered some
"stigma" damage due to Fastrak’s reputation, two problems in certify-
ing a class are apparent.
14 LIENHART v. DRYVIT SYSTEMS
First, if this "stigma" damage coincides with damage from actual
failure of the Fastrak product or expected future failure, and if this
actual or expected failure is due in part to applicator or contractor fail-
ure to follow instructions, Dryvit cannot be held liable to plaintiffs for
whom this is true. The "stigma" injury attributable to a home being
clad with Fastrak per se is, in such a case, inseparable from the injury
attributable to a home being clad with improperly installed Fastrak
which, as a result of improper installation, either has failed or will fail
earlier or more severely than would otherwise be the case. Under the
law of contributory negligence, such negligence need not cause all of
the alleged injury; if contributory negligence causes any of a plain-
tiff’s injury, recovery is barred. See McGill v. French, 424 S.E.2d
108, 113 (N.C. 1993) (stating that to establish contributory negli-
gence, "the defendant must show that the plaintiff’s injuries were
proximately caused by his own negligence," defined as "the injury
complained of"). Indeed, it is this principle that distinguishes contrib-
utory from comparative negligence. This principle cannot be avoided
by artificially segmenting the injury into "stigma" damage caused
entirely by Dryvit and other damage caused by applicators and con-
tractors. Here, the "injury complained of," on the face of the com-
plaint, appears to encompass both stigma damage and actual physical
damage caused by the failure of Fastrak in some installations. As a
result, defining the parameters of a class for whom Dryvit’s liability
can be determined based on classwide proof may require the district
court to probe deeply into the individualized details of applicator and
contractor behavior with respect to each Fastrak installation, because
Dryvit cannot be adjudged liable to class members whose injuries
were caused in part by applicators and contractors whom Dryvit nei-
ther contracted to train nor assisted. If such an individualized inquiry
is needed to determine the membership of a workable class, it is clear
that common issues do not predominate over individual issues as
required by Rule 23(b)(3). As in Windham v. American Brands, Inc.,
565 F.2d 59, 66 (4th Cir. 1977), individualized proof of damages —
in this case, individualized proof of damage causation — would be
essential to liability, destroying predominance. The functional equiva-
lent of a full-blown trial on damages causation for each putative class
member would be required to determine to which individuals Dryvit
is liable as a result of the class suit’s result. We do not believe that
such a class can meet the prerequisites of Rule 23(b)(3).
LIENHART v. DRYVIT SYSTEMS 15
Second, even for plaintiffs whose damage is wholly of the "stigma"
variety, the contributory negligence of applicators and contractors
may be a partial cause of any "stigma" attached to the Fastrak prod-
uct. In other words, Fastrak’s market reputation may be poor in part
due to a tendency of applicators and contractors to install the product
in a manner incompatible with Dryvit’s instructions. While classwide
proof would appear to be possible on this issue, and thus, it does not
per se destroy predominance, the district court’s judgment that this
class action is feasible from a manageability standpoint depends in
part on the district court’s belief that it will be possible to avoid the
issues of applicator and contractor behavior entirely during the liabil-
ity phase. Our conclusion regarding the application of N.C. Gen. Stat.
§ 99B-4 casts considerable doubt on this assumption.
III.
We thus conclude that class certification in this case is not feasible
under Rule 23 if Dryvit did not contract with applicators and contrac-
tors to instruct these parties regarding the proper installation of
Fastrak and did not assist these parties in installing the product, and
therefore, N.C. Gen. Stat. § 99B-4 applies to bar Dryvit’s liability to
any class member whose injuries were caused in part by applicator
and contractor failure to follow instructions. The current state of the
record is not entirely clear regarding the details of Dryvit’s relation-
ship with contractors and applicators, and thus, the propriety of the
district court’s class certification turns on a factual determination best
made by the district court in the first instance. As a result, we vacate
the district court’s class certification and remand with instructions to
reconsider the propriety of class certification in light of the fact that
if N.C. Gen. Stat. § 99B-4 applies on the facts of this case, it poses
major — and perhaps insuperable — obstacles to the feasibility of
certifying this proposed class.
VACATED AND REMANDED WITH INSTRUCTIONS