Monday, December 26, 2011

Somebody save me!

Waller v. Hewlett–Packard Co., 2011 WL 6325972 (S.D. Cal.)
“Robert Waller bought a Hewlett Packard ‘SimpleSave’ from Costco that, he alleges, didn't work as described on the packaging.”  The SimpleSave is a portable hard drive that plugs into a computer’s USB port and backs up files automatically. He expected it to back up all his files without any configuration on his part.  But it only backs up some files that way, “which Waller learned the hard way when his computer crashed several months after he purchased the SimpleSave and his WordPerfect files were not on it.”  (This is why I now prefer Dropbox for backing up my active files!  The only configuration required is making sure all your stuff is in your Dropbox folder, which admittedly takes a bit of planning.)
Waller sued HP and the retailers Costco and Staples for the usual California law claims.  Defendants moved to dismiss because the packaging didn’t promise what Waller claimed, arguing that the packaging made clear that the SimpleSave must be manually configured to back up certain file extensions, including WordPerfect files.
On the back, the package said, “Just plug it in.”  Further representations appear “in very small font white letters on a dark background just above five paragraphs written in French, Chinese, Japanese and Spanish”:  “Yes, it's that easy! Automatic, hands-free backup. No software to install, no files to select. Frequent backup update of changed files. Back up and restore multiple computers. Automatically supports most file types.”  Waller argued that the prominent messages promoting the product were that all the consumer user has to do is “just plug it in”; the device has “Automatic Backup Software,” “Hands Free Backup,” “Plug & Play Storage,” “No complicated setting” and it “finds and backs up all” the consumer's “important files” without doing anything more and “Yes, it's that easy.”  The packaging also said there is “no software to install,” “no files to select,” and that the drive “automatically supports most file types,” and “finds and backs up all your important files the minute you plug it in.”
The court found the copies of the SimpleSave packaging attached to the complaint supported the allegations of likely deception.  The back and sides of the packaging did promote “no files to select” etc., though one of the statements was “Automatically supports most file types--Easily add additional file types.”  One side simply said, “Just plug it in .... Yes, it's that easy.” 
The court boiled it down:
So, the facts of this case are rather straightforward. Going by the representations on the SimpleSave packaging, Waller expected that he could connect the SimpleSave to his computer and it would automatically back up all of his files, without him doing anything. That's not how the hard drive works, however, and the question is whether the statements on the packaging are sufficiently false and misleading to support the claims he asserts.
The claims here were subject to Rule 9(b), and the court found the UCL claim properly pled.
The court cautioned that properly pled and winning aren’t the same thing.  “The reasonable interpretation of ‘no files to select’ may be ‘no actual document files to select.’ It may be consistent with ‘no files to select’ that users still need to specify certain file extensions, especially given the representation that the SimpleSave ‘[a]utomatically supports most file types—Easily add additional file types.’ Similarly, the promise of ‘[a]utomatic, hands-free backup’ of ‘all your important files the minute you plug in’ may be consistent with a requirement that users tell the SimpleSave, in the very beginning, to backup certain file types automatically.”  (If I apply the ‘would this fool my parents?’ test, it looks bad for HP.  Especially since my mother uses WordPerfect.)  Still, the claim was properly pled, especially since truthful but misleading statements can be the basis of liability.
Defendants also challenged Waller’s standing because he didn’t lose money or property—they argued that his damages were caused by his hard drive crashing, not by the alleged misrepresentations at issue.  The court disagreed. First, standing doesn’t require that misrepresentations be the sole or even the decisive cause of the injury.  “It's true that it's really Waller's hard drive that failed him, but those files would have been saved if the SimpleSave representations, as Waller construed them, were true. They would have also been saved if the representations were more clear and Waller had understood that he had to configure his SimpleSave to back up WordPerfect files.”  Causation of this nature, which the court characterized as detrimental reliance, was sufficient.
Further, Waller’s alleged damages weren’t limited to the cost of retrieving his lost files.  He alleged that the SimpleSave was worth less than its purchase price given its true functionality.  The claim that he wouldn’t have bought the SimpleSave, or would have paid less for it, had he known the truth can be an injury that provides standing for a UCL claim.
However, the representations allegedly made on Costco’s and Staples’s in-store displays couldn’t support a fraud-based UCL claim (the court didn’t explain this further).  The court reserved judgment on whether the retailer defendants could be held liable simply for selling the SimpleSave in HP’s packaging.
FAL: Ordinarily, a violation of the UCL’s fraud claim is also a violation of the FAL, and so here.  CLRA: Plaintiffs have to give defendants at least 30 days in advance to give them a chance to correct the alleged wrongs before a cause of action for damages under the CLRA will lie.  Waller sent a notice letter in sufficient time before he filed the operative complaint (the second amended complaint), though not before filing the original complaint.  Because he sought damages in the original complaint, the letter was untimely and the damages claims were dismissed with prejudice.
The court commented that it understood defendants’ frustration.  “The shifty evolution of Waller's complaint, along with the fact that Waller's original lawyer was his office-mate and ostensible law partner, raise a reasonable suspicion that Waller is more interested in sharing attorney's fees in this case than actually vindicating consumers' rights.”  The court continued that many purchasers would have returned the hard drive (really? has the judge tried this lately?) or written it off as a regrettable purchase (which is, not for nothing, the theory behind allowing class actions where otherwise lots of people can all be cheated a little bit) rather than suing—but Waller’s motives weren’t for the court to judge.  However, the court did note a separate concern over Waller’s standing, since Waller had said various things about who bought the SimpleSave.  In his brief, Waller said that he and his wife were shopping together at Costco and that he made the decision to buy the SimpleSave while she actually executed the purchase with their money. On those facts, the court found that Waller had standing. 

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