Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: HP shakes off deception claims over defective printers, (Sep 18, 2014)

By Greg Hammond, J.D.

Consumers were unable to state valid California Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA) claims against printer maker Hewlett-Packard Company (HP), after they purchased printers with defective wireless Internet functionality. In dismissing the consumers’ first amended complaint, the federal district court in San Jose determined that the UCL and CLRA claims were either time-barred, or not pleaded with the required particularity (Ferranti v. Hewlett-Packard Co., September 16, 2014, Davila, E.).

Background. HP is the maker of two printers at issue in this case—OfficeJet Pro 8500 Wireless and OfficeJet Pro 8600 Wireless. Two consumers, Vincent Ferranti and Carlos Martinho both purchased the 8500 Wireless printer and subsequently became aware of the wireless defect. After various attempts to resolve the issue with HP customer support failed, the consumers filed a putative class action against the manufacturer, alleging—in part—violations of the UCL and CLRA. HP moved to dismiss, arguing that the CLRA and UCL claims were time barred, or were not pleaded with sufficient particularity.

CLRA claims. Claims arising under the CLRA are subject to a three-year statute of limitations, which begins to run the moment a claim accrues. Under the discovery rule, a plaintiff must specifically plead facts that show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. In the instant case, HP argued that the CLRA claims accrued when the consumers first learned that their printers suffered from wireless connectivity problems. In applying the discovery rule, the court determined that Ferranti’s and Martino’s complaint alleges that they discovered the defect—at the latest—in September 2009 and January 2010, respectively, but neither party filed their complaint within the following three-year time frame. Consequently, the CLRA claims were deemed time-barred.

UCL claims. The statute of limitations for a UCL claim is four-years after the cause of action accrued. HP argued that Ferranti’s claim accrued when he purchased the printer, because HP’s alleged failure to disclose the defect at that time completed the elements of his unfair competition claim. The court agreed that Ferranti’s claim accrued when he purchased the printer in March 2009. However, because there was no justification for applying the delayed discovery rule, as it suffers from the same deficiencies as his CLRA claim, his complaint—which was filed in August 2013—was deemed time barred.

With regard to Martinho’s UCL claim, HP did not argue that the claim was time barred, but rather that Martinho failed to plead his nondisclosure or concealment fraud claim with particularity. To state a nondisclosure or concealment fraud claim in California, Martinho was required to show: (1) HP was in a fiduciary relationship with him; (2) HP had exclusive knowledge of material facts not known to him; (3) HP actively concealed a material fact from him; and (4) HP makes partial representations but also suppresses some material facts.” However, because Martinho failed to allege a duty that was created between HP and himself, as well as how HP had exclusive knowledge of material facts not known to Martinho, his UCL claim was dismissed for failure to plead his fraud based claim with particularity.

The case number is 5:13-CV-03847-EJD.

Attorneys: Cynthia B. Chapman (Caddell & Chapman) for Vincent Ferranti. Aaron H. Bloom (Gibson, Dunn & Crutcher LLP) for Hewlett-Packard Co.

Companies: Hewlett-Packard Co.

Cases: StateUnfairTradePractices CaliforniaNews