Monday, December 27, 2010

post-warranty TV failures can't sustain class action

In re Sony Grand WEGA KDF-E A10/A20 Series Rear Projection HDTV Television Litigation, 2010 WL 4892114 (S.D. Cal.)

The court dismissed this putative class action for failure to state a claim. Plaintiffs bought the named TVs sold in the second half of 2005 for $2500 or more. Sony marketed the televisions as offering superior picture quality to that of standard televisions and being capable of taking full advantage of HDTV programming. The express limited warranty was for one year, at which point the warranty provided that all express and implied warranties would be waived.

Some time after the warranty period ended, plaintiffs alleged, the televisions began to display anomalies, including bright blue, yellow, and green spots, stains, and haze, allegedly caused by an inherent defect in the LCD rear-projection technology. Replacing the relevant part costs $1500, and Sony refused to do so at no cost because the warranty had expired.

The court first held that the causes of action under California and other states’ consumer protection statutes failed. Plaintiffs alleged that Sony knew of the latent defect at the time of sale, but still misrepresented the quality of the TVs by claiming they were of "high," "superior," and "excellent" quality and failing to disclose the defect. These theories sounded in fraudulent concealment and fraudulent misrepresentation and had to satisfy Rule 9(b)'s heightened pleading requirements, which they did not. First, the alleged misrepresentations were nothing more than puffery. Second, even if Sony made representations related to absolute characteristics, plaintiffs didn’t sufficiently allege that the representations were untrue or misleading when made: “Plaintiffs have only alleged that the televisions stopped rendering a quality image after some unspecified period of time--but, in any event, not until after the warranty period expired. A manufacturer's failure to disclose a fact that it has no affirmative duty to disclose cannot be ‘likely to deceive’ reasonable consumers. For a statement to be deceptive or misleading, consumers must have held expectations about the matter in question. Where a manufacturer has expressly warranted a product, consumers can only expect that product to function properly for the length of the manufacturer's express warranty.”

Finally, plaintiffs failed to offer sufficiently particularized allegations showing that Sony was aware of the defect when they bought their TVs. Plaintiffs pointed to patent applications filed by Sony between 1998 and 2006, but those didn’t show knowledge of the 2005 defect. Though language from the applications discusses certain "disadvantages" of LCD technology, that language was about the state of LCD technology generally, not about defects specific to any Sony models, and it didn’t indicate any awareness on Sony’s part that the defects would manifest themselves shortly after the warranty expired. Nor was Sony’s experience with predecessor models helpful to plaintiffs, since they didn’t allege that the 2005 models used identical technology to that in predecessor models or identify specific similarities in the technology.

Plaintiffs’ claims under the Song-Beverly Act and the Magnuson-Moss Warranty Act also failed.

What about “unfair” conduct under the UCL? This requires substantial consumer injury, not outweighed by any countervailing benefits, that consumers themselves could not reasonably have avoided. The court held that failure to disclose a defect that might shorten the effective life span of a component part doesn’t constitute a "substantial injury" where the product functions as warranted throughout the term of its express warranty.

In addition, with respect to the FAL claims, plaintiffs failed to identify specific ads, when and where they were shown, or why they were untrue or misleading. This flunked both Rule 9(b) and Rule 8’s pleading requirements, failing to provide Sony with adequate notice.

Under the CLRA, meanwhile, a manufacturer's duty to disclose information related to a defect that manifests after the expiration of an express warranty is limited to issues related to product safety. Disappointed expectations of other sorts are not sufficient, because to hold otherwise would render limits on express warranties meaningless. Even though some cases speak about concealing or suppressing “material” facts, the court found that this actually meant safety-related.

The state-law claims from other states also failed because they weren’t pled with sufficient particularity.

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