Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Consumer protection action over computer processing chip fails, (Apr 11, 2016)

By Michael Menzhuber, J.D., LL.M.

An individual’s putative class action, alleging that Advanced Micro Device Inc. (AMD) made misrepresentations about its computer processing chip in violation of California consumer protection laws, failed to plead the elements of fraud, according to the federal district court in San Jose, California (Dickey v. Advanced Micro Devices, Inc., April 7, 2016, Whyte, R.).

After seeing materials on AMD’s website, representing that the FX-9590 Bulldozer chip was "the first native 8-core desktop processor" and had "8-cores," Tony Dickey, an Alabama resident, went to an online retailer website and purchased two Bulldozer chips. The online retailers’ website contained the same representations about the Bulldozer chips that were indicated on AMD’s website.

Dickey alleged that AMD’s representations were false because the Bulldozer chips functionally had only four cores and, as a consequence, no longer worked independently. He further alleged that when he used the Bulldozer chips, his computer processing unit (CPU) did not perform as well as a CPU with the same clock speed but with eight true cores.

Dickey brought a putative class action against AMD, asserting violations of California’s Legal Remedies Act (CLRA), Unfair Competition Law (UCL), and False Advertising Law (FAL).

AMD moved to dismiss on grounds that: (1) Alabama Law, not California Law, governed Dickey’s claims and (2) even under California Law, Dickey failed to state a claim for fraud.

AMD argued that Dickey’s CLRA, UCL, and FAL claims should be dismissed for failure to plead key elements of fraud. The court agreed. After noting that, under California law, a class representative proceeding on a claim of misrepresentation must demonstrate actual reliance on the allegedly deceptive and misleading statements, the court found that Dickey’s complaint did not allege: (1) that he believed that a core could not share resources; (2) that he had a particular understanding of what constituted a core; or (3) that AMD told consumers that a core had to be completely independent from other cores and could not share resources.

Although Dickey’s consumer protection claims were subject to dismissal under California law, the court explained that AMD’s choice of law provision, which required claims to be brought under California law, did not apply because: (1) the claims had to relate to materials on AMD’s website and (2) Dickey’s claims arose from alleged misrepresentations that appeared on the online retailer’s website, as well as AMD’s product packaging. The court also noted that Dickey’s proposed class definition did not distinguish between purchasers who viewed AMD’s website before purchasing AMD products and those who did not.

The case is No. 5:15-cv-04922-RMW.

Attorneys: Alexander Nguyen (Edelson PC) for Tony Dickey. Matthew David Powers (O'Melveny & Myers LLP) for Advanced Micro Devices, Inc.

Companies: Advanced Micro Devices, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews