Elias bought an HP computer through HP’s website with a
“recommended” graphics card, which HP marketed and advertised as a “faster,
higher performance, more powerful and/or upgraded” computer component. However,
although the graphics card manufacturer expressly recommended a 300-watt or
greater power supply, Elias’s computer only had 220 watts. HP didn’t tell Elias about the recommendation
or offer a power supply upgrade. HP didn’t
disclose that using the graphics card with the 220-watt power supply would decrease
the computer's performance, efficiency, and life-span, and increase its safety
hazards, including the risk of catching fire. Within the first year, Elias’s computer began
to “randomly freeze, restart, or shut down,” and 17 months after purchase, the
computer “shorted out,” “melted,” and was damaged beyond repair. HP refused to
repair or replace it. He filed a putative
class action making the usual California claims.
The court didn’t dismiss the breach of warranty claims
because Elias specifically alleged that the power supply was insufficient for
the components, that the insufficiency was likely to result in malfunctions
beyond normal troubleshooting, and that the defects manifested during the
one-year warranty period. Elias also
stated a claim under the Song-Beverly Act.
The court then dismissed Elias’s consumer protection claims
based on alleged affirmative misrepresentations. The claims to which he pointed were
nonactionable puffery: “ultra-reliable performance,” “full power and
performance,” “versatile, reliable system,” “delivers the power you need,” “packing
power and style into your tightest spaces,” and “Compact but powerful,” were
all puffery, despite Elias’s allegation that the small physical size of the
computer was part of the problem in terms of overheating/power supply. Nor was offering the upgraded graphics card
for sale with this model an affirmative representation that the power supply would
be sufficient for it. Even viewing the
claims in their totality, the combination of puffing statements doesn’t automatically
create an actionable misrepresentation.
The fraudulent omission claims also failed. For failure to inform consumers of a risk
outside the warranty period, there can only be materiality and thus liability
if the failure poses safety concerns or if it’s linked with an affirmative
misrepresentation. But what about a risk
inside the warranty period? The court agreed that “[i]t makes logical sense
that the average consumer would expect the manufacturer to disclose significant
defects of any nature that arise within the warranty period. But outside of
that warranty period, the average consumer would only expect the manufacturer
to guarantee against unreasonable safety risks.” Thus, Elias could allege
fraudulent omissions beyond safety-related concerns if those omissions led to
malfunctions during the warranty period, whereas omissions outside the warranty
period would only be actionable if there was some kind of safety issue.
Elias alleged that, due to the insufficient power supply,
HP's computers were more likely to catch fire, creating a significant safety
risk. But he didn’t allege that anyone’s
computer ever actually caught fire, or explain why a melting computer would
create an unreasonable safety risk. Nor
did he cite facts beyond hypotheticals to show a nexus between the deficient
power supply and the ultimate risk of fire.
As for events within the warranty period, Elias didn’t
sufficiently allege HP’s awareness of the defect to trigger its duty to
disclose. Conclusory allegations of
knowledge or intent aren’t enough without a plausible basis for such knowledge. Elias cited to recommendations by
manufacturers of minimum power supplies for certain graphics cards, but didn’t
allege that HP knew of these manufacturer recommendations at the time of sale. Though
HP offered a webpage on “Troubleshooting Power Supply Issues,” which discusses
the need for adequate power supplies, that didn’t show that HP was aware that
the specific customizable computers at issue in this case lacked sufficient
power supplies at the time of purchase.
Thus, Elias failed to allege intentional concealment, though he had
leave to amend.
As for unfairness under the UCL, the court allowed Elias
leave to amend to add the allegation that HP stopped offering customers the
option to “select upgraded, power-hungry components in the models at issue in
the complaint.” This might support a UCL
claim based on unfair business practices as HP’s acknowledgement of the
problem. The UCL unlawfulness claim also
failed without a predicate violation of the UCL’s ban on fraudulent conduct,
since breach of warranty isn’t itself an unlawful act for purposes of the UCL.
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