Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—NDCal: HP not liable for allegedly misrepresenting computer upgrades, (Jun 24, 2013)

By Jody Coultas, J.D.

A computer purchaser failed to state California consumer protection law class action claims against Hewlett-Packard Company for allegedly misrepresenting, or otherwise failing to disclose, issues concerning computer upgrade components, according to the federal district court in San Jose (Elias v. Hewlett-Packard Company, June 21, 2013, Koh, L.).

The purchaser sought to represent a nationwide class of HP computer purchasers that bought a computer with an included power supply unit having a rated capacity lower than (1) the total combined wattage of all internal PC components and peripherals or (2) the capacity recommended by the manufacturer of any included component or peripheral. Specifically, the purchaser alleged that HP misrepresented that the computers would have ample power to reliably operate all upgraded components that could be chosen at the time of purchase and failed to disclose that the higher performance components rendered the computers underpowered, and resulted in a decrease in performance, efficiency, and life-span. The upgrades also allegedly increased the risk of the computer catching fire.

There was insufficient evidence that HP affirmatively misrepresented the power supplies of the computers, according to the court. The purchaser alleged that HP misrepresented that the computers at issue possessed sufficient power supplies. However, the allegations were mere puffery and nonactionable. Advertising that merely states in general terms that one product is superior is not actionable. The statements, including that the computer was “ultra-reliable” or “packed with power,” were general and did not address the specific characteristics or components of the computer.

The court dismissed the claims based on the alleged post-warranty safety-based claims. HP allegedly failed to inform purchasers that the HP computer did not include an adequate power supply to properly operate the computer with the upgraded graphics card. Omission are actionable where the omission is contrary to a representation actually made by the defendant, or an omission of a fact the defendant was obliged to disclose. Claims of omission for failures outside the warranty period are only actionable if there was a safety issue. There was no evidence that any computer actually caught fire, but only alleged that the defect could cause a fire.

The purchaser was also unable to state claims based on HP’s allegedly fraudulent omissions regarding malfunctions that manifested during the warranty period, according to the court. The computer allegedly froze, rebooted, and randomly restarted because of the defect. There was insufficient evidence to support the purchaser’s allegations that HP knew of the power inadequacies at the time of sale or that HP intentionally concealed or suppressed this information.

Finally, the court dismissed the California Unfair Competition Law (UCL) unfair and unlawful claims. The purchaser made only conclusory statements regarding HP’s allegedly unfair business practices. However, evidence that HP agreed that its practices were improper because, after the suit was filed, HP stopped offering customers the option to select upgraded, power-hungry components in the models at issue in the complaint was sufficient to allow a the purchaser to amend the claim.

The case is No. 12-CV-00421-LHK.

Attorneys: Adam Gutride (Gutride Safier LLP) for David Elias. Brandon S. Dimond (Gibson Dunn & Crutcher LLP) for Hewlett-Packard Co.

Companies: Hewlett-Packard Co.

Cases: StateUnfairTradePractices CaliforniaNews