Wilson v. Hewlett-Packard Co.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CASS WILSON and DOUGLAS 

KRUSCHEN, on behalf of themselves No. 10-16249

and all others similarly situated, D.C. No.

Plaintiffs-Appellants,

 5:09-cv-02253-

v. RMW

HEWLETT-PACKARD COMPANY, OPINION

Defendants-Appellees.



Appeal from the United States District Court

for the Northern District of California

Ronald M. Whyte, District Judge, Presiding

Argued and Submitted

November 15, 2011—San Francisco, California

February 16, 2012

Before: Michael Daly Hawkins and Milan D. Smith, Jr.,

Circuit Judges, and Kevin Thomas Duffy, District Judge.*

Opinion by Judge Kevin Thomas Duffy

*The Honorable Kevin Thomas Duffy, United States District Judge for

the Southern District of New York, sitting by designation.

1819

1822 WILSON v. HEWLETT-PACKARD

COUNSEL

James C. Shah (argued), Sheperd, Finkelman, Miller & Shah,

Media, Pennsylvania, for the plaintiffs-appellants.

Theane Kapur (argued) and Samuel G. Liversidge, Gibson,

Dunn & Crutcher, Los Angeles, California, for the defendant-

appellee.

OPINION

DUFFY, District Judge:

Plaintiffs Cass Wilson and Douglas Kruschen (“Plaintiffs”)

appeal the dismissal of their second amended complaint alleg-

ing that Hewlett-Packard (“HP”) concealed a design defect in

its Pavilion Notebook computers (the “Laptops”) that mani-

fested after the expiration of the warranty and created an

unreasonable safety hazard in violation of California’s Con-

sumers Legal Remedies Act (“CLRA”), Cal. Civ. Code

§ 1750 et seq., and Unfair Competition Law (“UCL”), Cal.

Bus. & Prof. Code § 17200 et seq. The District Court dis-

missed the second amended complaint, holding that Plaintiffs

failed to plausibly allege a defect in the Laptops that created

a safety hazard or that HP had any knowledge of the alleged

defect. We find that the District Court did not err in requiring

Plaintiffs to allege the existence of an unreasonable safety

defect. We also find that the District Court did not err in hold-

ing that Plaintiffs failed to plausibly allege the existence of an

unreasonable safety defect or HP’s knowledge of a defect.

Accordingly, we AFFIRM the judgment of the District Court.

WILSON v. HEWLETT-PACKARD 1823

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Cass Wilson purchased an HP Pavilion Notebook

computer in the summer of 2004 for approximately $1,500. In

the fall of 2006, over two years after its purchase and shortly

after the limited warranty expired, Wilson’s Laptop began to

display “low power” warnings and would run on battery

power even when plugged into an a/c adapter. Wilson alleges

that the problem became worse until he “was unable to utilize

the Laptop at all.” When Wilson contacted HP about his Lap-

top in or about December 2006, HP informed him that his

warranty had expired on August 15, 2006, and that he could

return the Laptop to HP and have his motherboard replaced

for over $400, plus shipping and taxes.

Wilson then contacted a number of local repair facilities,

which informed him that “there was a known problem with

the power jack and the port for the power jack on a number

of HP’s computers.” Instead of returning the Laptop to HP,

Wilson opted to have the power jack repaired at a local repair

facility for $150. The Laptop and its battery, however, were

still unable to receive power.

In 2007, prior to commencing this action, Wilson became

aware of the pendency of a class action lawsuit (the “PPGC

class action”) that purported to include his Laptop and which

addressed the defect at issue. The lawsuit was ultimately set-

tled, but Wilson’s Laptop claim was not included in the settle-

ment.

On January 5, 2009, Wilson filed a putative class action

lawsuit against HP in California Superior Court, Santa Clara

County, alleging that HP misrepresented and concealed a

“common and uniform” design defect that causes HP’s Pavil-

ion dv, zd, ze, zt, zv and zx Notebooks’ power jacks to fail

at abnormally high rates and render the Laptops unusable, in

breach of HP’s express limited warranty and in violation of

the UCL and CLRA. HP filed a demurrer to the initial com-

1824 WILSON v. HEWLETT-PACKARD

plaint, which the Superior Court sustained with leave to

amend the CLRA and breach of warranty claims and over-

ruled with respect to the UCL claim.

Subsequently, Wilson filed a first amended complaint stat-

ing the same claims and adding an allegation that HP’s Pavil-

ion dv, zd, ze, zt, zv and zx Notebooks “all are substantially

likely to fail during their useful life.” In May 2009, HP

removed the action to the United States District Court for the

Northern District of California. On September 17, 2009, the

District Court granted HP’s motion to dismiss with leave to

amend and denied Wilson’s motion to remand.

The complaint we consider here pled the UCL and CLRA

claims and alleged that HP was aware, prior to the marketing

and selling of the Laptops, that the Laptops were inherently

defective and “substantially likely to cease working and

require expensive repair during their useful life with normal

use and after the expiration of the warranty accompanying the

Laptops.” The complaint further alleged that HP had a duty

to disclose the defect to consumers, but misrepresented and

concealed material information concerning the defect in its

marketing, advertising, sale and servicing of the Laptops. In

addition to the power connection problems stated in earlier

versions of the complaint, the instant complaint also alleged

that the design defect posed a safety risk as the extreme heat

caused by the faulty power jack and port resulted in the Lap-

tops’ catching fire.

The second amended complaint also added Plaintiff Doug-

las Kruschen. Kruschen purchased his Laptop in 2004. In

December 2008, after Kruschen plugged an a/c adapter into

the Laptop and pressed the power button, his Laptop began

emitting smoke, sparks and flames from the side of the com-

puter near the power jack. Due to the flames, the Laptop

became so hot that the power adapter welded itself to the Lap-

top, making it unusable. Kruschen sent his Laptop to HP for

WILSON v. HEWLETT-PACKARD 1825

inspection, but HP refused to fix the Laptop or compensate

Kruschen, assertedly since no one was injured by the Laptop.

On January 15, 2010, the District Court granted HP’s sec-

ond motion to dismiss with leave to amend. The Court found

that the complaint’s allegations were insufficient to “plausibly

allege a defect in the HP laptop computers that creates an

unreasonable safety risk.” Although the UCL and CLRA

claims involve fraudulent intent, the District Court held that

the complaint contains “few if any facts . . . from which an

inference of knowledge of the allegedly hazardous defect

could be drawn.” While the pleading made reference to multi-

ple anonymous consumer complaints, these complaints were

either “undated or were made after the named plaintiffs had

already purchased their laptops,” and thus the allegations did

not demonstrate that HP had any knowledge of the defect

prior to the sale of the Laptops to Plaintiffs and the putative

class.

Although Plaintiffs were granted leave to amend, they

chose not to file a third amended complaint and requested

instead that the District Court enter judgment. On May 28,

2010, Plaintiffs filed a notice of appeal.

STANDARD OF REVIEW AND JURISDICTION

This Court reviews de novo a dismissal for failure to state

a claim under Federal Rule of Civil Procedure 12(b)(6). Coal.

for ICANN Transparency, Inc. v. VeriSign, Inc., 611 F.3d 495,

501 (9th Cir. 2010). On a motion to dismiss, all material facts

are accepted as true and are construed in the light most favor-

able to the plaintiff. Id. A complaint need not state “detailed

factual allegations,” but must contain sufficient factual matter

to “state a claim to relief that is plausible on its face.” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). “A claim

has facial plausibility when the plaintiff pleads factual content

that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v.

1826 WILSON v. HEWLETT-PACKARD

Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550

U.S. at 556). We have jurisdiction under 28 U.S.C. § 1291.

DISCUSSION

I. The Unfair Competition Law

Under the UCL, any person or entity that has engaged, is

engaging or threatens to engage “in unfair competition may

be enjoined in any court of competent jurisdiction.” Cal. Bus.

& Prof. Code §§ 17201, 17203. “Unfair competition” includes

“any unlawful, unfair or fraudulent business act or practice

and unfair, deceptive, untrue or misleading advertising.” Cal.

Bus. & Prof. Code § 17200. The California Supreme Court

has held that the UCL’s “coverage is sweeping, embracing

anything that can properly be called a business practice and

that at the same time is forbidden by law.” Cel-Tech

Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180

(1999) (internal quotations and citation omitted). The UCL

“borrows violations of other laws and treats them as unlawful

practices that the unfair competition law makes independently

actionable.” Id. (internal quotations and citation omitted). Fur-

ther, the UCL creates “three varieties of unfair competition—

acts or practices which are unlawful, or unfair, or fraudulent.”

Id.

Plaintiffs allege that HP’s omission violates the CLRA and

California’s common law fraud and deceit statutes. Cal. Civ.

Code §§ 1572(3), 1709, 1710. While the complaint asserts a

claim under the unlawful, unfair and fraudulent prongs of the

UCL, Plaintiffs’ opening brief only discusses the unlawful

prong. Their allegations concerning the remaining prongs are

thus waived, but we consider them for the sake of complete-

ness. See Eberle v. Anaheim, 901 F.2d 814, 818 (9th Cir.

1990) (holding that the court could not consider an issue that

appellant failed to raise in his opening brief).

WILSON v. HEWLETT-PACKARD 1827

II. The Consumers Legal Remedies Act

[1] The CLRA prohibits “unfair methods of competition

and unfair or deceptive acts or practices undertaken by any

person in a transaction intended to result or which results in

the sale or lease of goods or services to any consumer.” Cal.

Civ. Code § 1770(a). Conduct that is “likely to mislead a rea-

sonable consumer” violates the CLRA. Colgan v. Leatherman

Tool Grp., Inc., 135 Cal. App. 4th 663, 680 (Ct. App. 2006)

(quoting Nagel v. Twin Labs., Inc., 109 Cal. App. 4th 39, 54

(Ct. App. 2003)). Specifically, Plaintiffs allege that HP vio-

lated the provisions of the CLRA that prohibit “[r]epresenting

that goods or services have . . . characteristics . . . which they

do not have,” and “[r]epresenting that goods or services are

of a particular standard, quality, or grade . . . if they are of

another.” Cal. Civ. Code § 1770(a)(5), (7).

III. Duty to Disclose

In alleging that HP concealed a design defect, Plaintiffs

contend that California law does not require that a concealed

fact relate to a safety issue for liability to attach; rather, Plain-

tiffs cite to Falk v. General Motors Corp., 496 F. Supp. 2d

1088 (N.D. Cal. 2007), in arguing that the concealed fact need

only be “material.”

California courts have generally rejected a broad obligation

to disclose, adopting instead the standard as enumerated by

the California Court of Appeal in Daugherty v. American

Honda Motor Co., 144 Cal. App. 4th 824 (Ct. App. 2006).

Daugherty held that a manufacturer is not liable for a fraudu-

lent omission concerning a latent defect under the CLRA,

unless the omission is “contrary to a representation actually

made by the defendant, or an omission of a fact the defendant

was obliged to disclose.” Id. at 835; see Oestreicher v. Alien-

ware Corp., 544 F. Supp. 2d 964, 969 (N.D. Cal. 2008), aff’d,

322 F. App’x 489, 493 (9th Cir. 2009) (discussing

Daugherty). The Daugherty court found the plaintiff alleged

1828 WILSON v. HEWLETT-PACKARD

no facts establishing that the manufacturer was “bound to dis-

close,” as the complaint did not allege “any instance of physi-

cal injury or any safety concerns posed by the defect.”

Daugherty, 144 Cal. App. 4th at 836. The court noted that the

plaintiff merely alleged that the risk posed by the alleged

defect was the cost to repair the product, which did not give

rise to a duty to disclose. Id. Consequently, the court also

rejected plaintiff ’s UCL claim, since absent a duty to dis-

close, the failure to disclose a defect “that might, or might

not” shorten the useful life of a car that “functions precisely

as warranted throughout the term of its express warranty” is

not an unfair or fraudulent business practice under the UCL.

Id. at 838-39.

[2] California federal courts have generally interpreted

Daugherty as holding that “[a] manufacturer’s duty to con-

sumers is limited to its warranty obligations absent either an

affirmative misrepresentation or a safety issue.” Oestreicher,

322 F. App’x at 493; see, e.g., O’Shea v. Epson Am., Inc., No.

CV 09-8063 PSG (CWx), 2011 U.S. Dist. LEXIS 85273, at

*24-28 (C.D. Cal. July 29, 2011) (noting that, “[a]lthough

California courts are split on this issue,” the weight of author-

ity suggests that the duty to disclose is limited to safety

issues); In re Sony Grand Wega KDF-E A10/A20 Series Rear

Projection HDTV Television Litig., 758 F. Supp. 2d 1077,

1095 (S.D. Cal. 2010) (“[A] manufacturer’s duty to disclose

under the CLRA is limited to safety-related issues.”); Morgan

v. Harmonix Music Sys., Inc., No. C08-5211 BZ, 2009 U.S.

Dist. LEXIS 57528, at *11-12 (N.D. Cal. July 7, 2009)

(“According to all relevant case law, defendants are only

under a duty to disclose a known defect in a consumer prod-

uct when there are safety concerns associated with the prod-

uct’s use.”).

Courts have also cited policy considerations to limit the

duty to disclose, noting that to broaden the duty to disclose

beyond safety concerns “would eliminate term limits on war-

ranties, effectively making them perpetual or at least for the

WILSON v. HEWLETT-PACKARD 1829

‘useful life’ of the product.” Oestreicher, 544 F. Supp. 2d at

972. Under a contrary rule, as the Court of Appeal noted in

Daugherty, the “[f]ailure of a product to last forever would

become a ‘defect,’ a manufacturer would no longer be able to

issue limited warranties, and product defect litigation would

become as widespread as manufacturing itself.” 144 Cal. App.

4th at 829.

Plaintiffs maintain that Falk supports a CLRA claim where

a manufacturer conceals a material fact independent of safety

concerns.1 See also Cirulli v. Hyundai Motor Co., No. SACV

08-0854 AG (MLGx), 2009 U.S. Dist. LEXIS 125139, at *9

(C.D. Cal. June 12, 2009) (holding that plaintiffs plausibly

alleged CLRA and UCL claims based on materiality without

discussing safety concerns); Bristow v. Lycoming Engines,

No. CIV. S-06-1947 LKK GGH, 2007 U.S. Dist. LEXIS

31350, at *21-22 (E.D. Cal. Apr. 10, 2007).2 Courts have held

that, while Falk applied the correct standard to judge material-

ity, safety considerations were “integral to the [Falk] court’s

finding that the non-disclosed information was material.”

Oestreicher, 544 F. Supp. 2d at 971; see O’Shea, 2011 U.S.

Dist. LEXIS 85273, at *24 (holding that Falk was distinguish-

able since there, the omitted fact involved a safety concern).

1

Plaintiffs also cite extensively to Tietsworth v. Sears, Roebuck & Co.,

720 F. Supp. 2d 1123 (N.D. Cal. 2010) (holding that omitted information

about a defect in washing machines that caused consumers to pay large

repair bills was material under CLRA). Tietsworth, however, is distin-

guishable “because the plaintiffs in that case alleged that they began expe-

riencing problems ‘within the first months of purchasing the

Machine’—i.e., within the express warranty period.” In re Sony HDTV,

758 F. Supp. 2d at 1096 n.8 (discussing Tietsworth).

2

The defects in Cirulli and Bristow, however, arguably concerned safety

issues. In Cirulli, the defect was a “defective drain-hole design” that led

to excessive corrosion to the vehicle’s sub-frame, causing plaintiff to lose

control of the vehicle. 2009 U.S. Dist. LEXIS 125139, at *3. The Bristow

court only discussed repair costs and diminution of value, but noted that

failed airplane crankshafts could cause “power loss, engine failure, and

damage to the airplane.” 2007 U.S. Dist. LEXIS 31350, at *2.

1830 WILSON v. HEWLETT-PACKARD

In Falk, plaintiffs brought CLRA and UCL claims, alleging

their vehicles’ speedometers ceased to function properly after

the expiration of the vehicle’s warranty. The court stated that

a failure to disclose can constitute actionable fraud under the

CLRA in four circumstances: “(1) when the defendant is in a

fiduciary relationship with the plaintiff; (2) when the defen-

dant had exclusive knowledge of material facts not known to

the plaintiff; (3) when the defendant actively conceals a mate-

rial fact from the plaintiff; and (4) when the defendant makes

partial representations but also suppresses some material

fact.” Falk, 496 F. Supp. 2d at 1095 (quoting LiMandri v.

Judkins, 52 Cal. App. 4th 326, 337 (1997)). In order for the

concealed fact to be “material,” plaintiffs had to show that

“ ‘had the omitted information been disclosed, one would

have been aware of it and behaved differently.’ ” Id. (quoting

Mirkin v. Wasserman, 5 Cal. 4th 1082, 1093 (1993)). The

court then held that a defective speedometer would be mate-

rial to a reasonable consumer, since a defective speedometer

could lead to “traveling at unsafe speeds and moving violation

penalties.” Id. at 1096. The court further held that “plaintiffs

successfully allege[d] that the potential for failed speedome-

ters constitute[d] a safety hazard.” Id. at 1096 n.*.

[3] Even if this Court applies the factors from Falk regard-

ing materiality, as Plaintiffs suggest, “for the omission to be

material, the failure must [still] pose ‘safety concerns.’ ”

Smith v. Ford Motor Co., 749 F. Supp. 2d 980, 987 (N.D. Cal.

2010); see In re Sony HDTV, 758 F. Supp. 2d at 1096 (“[I]n

the context of the CLRA, materiality is also linked to safety

considerations. Because the defect [p]laintiffs allege in this

case had no impact on the safe use of the televisions, informa-

tion about it was immaterial for the purpose of stating a

CLRA claim.” (citation omitted)).

The remaining cases Plaintiffs cite to support their argu-

ment that a fact need only be material to trigger a duty to dis-

close are distinguishable from the present case. In Baggett v.

Hewlett-Packard Co., 582 F. Supp. 2d 1261 (C.D. Cal. 2007),

WILSON v. HEWLETT-PACKARD 1831

the plaintiff alleged that HP’s printers indicated that printer

cartridges were empty when, in fact, they still contained ink;

the plaintiff did not allege that the printers contained a latent

defect but that HP had represented that the cartridges were

empty. Id. at 1268; see Morgan, 2009 U.S. Dist. LEXIS

57528, at *18 n.8 (discussing Baggett). Second, in Baba v.

Hewlett-Packard Co., No. C 09-05946 RS, 2010 U.S. Dist.

LEXIS 59747 (N.D. Cal. June 16, 2010), the defect mani-

fested during the express warranty period, and is thus distin-

guishable from the present case. Id. at *9-10; see O’Shea,

2011 U.S. Dist. LEXIS 85273, at *24 n.7 (noting Baba is dis-

tinguishable from Daugherty). Several other cases concern

services rather than manufactured products. See, e.g., In re

Mediscan Research, Ltd., 940 F.2d 558 (9th Cir. 1991) (hold-

ing that appellant had a duty to disclose that the terms of the

offering of limited partnership shares had been modified);

Stickrath v. Globalstar, Inc., No. C07-1941 THE, 2008 U.S.

Dist. LEXIS 12190 (N.D. Cal. Feb. 6, 2008) (holding that

plaintiffs successfully alleged concealment of a defect in

defendant’s satellite telephone service); Lovejoy v. AT&T

Corp., 92 Cal. App. 4th 85 (Ct. App. 2001) (finding that

plaintiff stated a fraudulent concealment claim based on

AT&T’s appropriation of plaintiff ’s 1-800 number).

[4] Thus, as Plaintiffs allege that HP concealed the design

defect in the Laptops, the District Court did not err in requir-

ing Plaintiffs to allege that the design defect caused an unrea-

sonable safety hazard.

IV. The Existence of an Unreasonable Safety Defect

The District Court correctly dismissed the complaint, as

Plaintiffs have not sufficiently alleged a causal connection

between the alleged design defect and the alleged safety haz-

ard.

A. The Alleged Design Defect

The second amended complaint describes the design defect

in some detail. First, it states that the component that connects

1832 WILSON v. HEWLETT-PACKARD

the power jack to the motherboard “was designed in a manner

that is exceedingly fragile,” as the connection is supported

only by a few pins affixed with solder. Thus, plugging an a/c

adapter into the power jack will weaken the power jack’s con-

nection to the motherboard until the power jack can no longer

deliver power to the Laptops. Additionally, the complaint

states that the repeated heating and cooling that occurs when

the Laptops are switched on and off weakens the solder con-

nections causing the failure of the connection between the

power jack and the computer.

B. The Alleged Safety Hazard

The second amended complaint states that the Laptops con-

tain “a serious design defect that causes the power jacks . . .

[to] expose owners and users to a safety hazard as a result of

severe overheating often resulting in the Laptops [sic] catch-

ing on fire.” In addition to Kruschen’s experience with his

laptop, the complaint also contains several customer com-

plaints concerning the Laptops’ overheating problem, such as:

• The power connection jack shorted out, caught

the motherboard on fire and melted into a useless

clump of junk . . . .

• AC adapter failed and caught fire.

• The ac power adapter has caught fire . . . .

• At the time when the power jack completely

failed, smoke began to flow rapidly from inside

the computer.

C. The Causal Connection Between the Alleged Defect

and the Alleged Safety Hazard

[5] Plaintiffs have not alleged a sufficient nexus between

the alleged design defect and the alleged safety hazard. In

WILSON v. HEWLETT-PACKARD 1833

Tietsworth v. Sears, Roebuck & Co., No. 5:09-CV-00288 JF

(HRL), 2009 U.S. Dist. LEXIS 98532 (N.D. Cal. Oct. 13,

2009), plaintiffs asserted that Sears’ washing machines con-

tained a defect in their Electronic Control Boards that caused

the machines to stop mid-cycle and display a variety of error

codes. In their complaint, plaintiffs also alleged that the

defective control boards led to the machines’ spinning out of

control and exploding. Id. at *14-15. The court found that

there was “no obvious nexus . . . between this allegation and

the specific defect in the Electronic Control Board asserted

continuously throughout the [complaint].”3 Id. at *15.

[6] In the case at bar, the complaint goes into some detail

as to how normal use of the Laptops (i.e., turning them on and

off, plugging in an a/c adapter) causes the connection between

the power jack and the motherboard to weaken, resulting in

a loss of power to the Laptops. The complaint, however, does

not allege how the weakening or loss of the connection

between the power jack and the motherboard causes the Lap-

tops to ignite. See Rhynes v. Stryker Corp., No. 10-5619 SC,

2011 WL 2149095, at *3 (N.D. Cal. May 31, 2011) (dismiss-

ing plaintiff ’s strict liability and negligence claims under

Iqbal where plaintiff did “not allege facts indicating how the

[design defect] has caused her harm”). The complaint merely

states that when Kruschen plugged in his computer and turned

it on, the Laptop emitted “heavy smoke, flames, and sparks

from the left side of the Laptop (close to the power jack).”

The complaint is silent on whether the power jack’s becoming

disconnected in any way led to Kruschen’s Laptop’s catching

fire. Some of the customer complaints do minimally allege

such a causal connection, such as “[a]t the time when the

power jack completely failed, smoke began to flow rapidly

from inside the computer.” These statements, however, are

not accompanied by any supporting factual basis.

3

The Tietsworth court concluded that neither plaintiffs nor any putative

class members offered any factual allegations that they actually experi-

enced a machine’s spinning out of control, and thus, lacked standing to

pursue the claim. 2009 U.S. Dist. LEXIS 98532, at *15.

1834 WILSON v. HEWLETT-PACKARD

Plaintiffs simultaneously allege that the design defect cuts

off power from the Laptops and that the Laptops can ignite

into flames through normal use. But it is difficult to conceive

(and the complaint does not explain) how the Laptops could

ignite if they are “unable to receive an electrical charge.”4 See

In re Toyota Motor Corp. Unintended Acceleration Mktg.,

Sales Practices, & Prods. Liab. Litig., 790 F. Supp. 2d 1152

(C.D. Cal. 2011) (holding that dismissal is appropriate where

plaintiffs’ allegations about the alleged defect are implausi-

ble). The present case is therefore distinguishable from those

cases surviving a motion to dismiss where the alleged design

defect could conceivably lead to a safety hazard. See, e.g.,

Cholakyan v. Mercedes-Benz USA, LLC, 796 F. Supp. 2d

1220 (C.D. Cal. 2011) (holding that vehicle’s water-leak

defect could cause sudden and unexpected engine failure and

result in personal injury or death); Marsikian v. Mercedes

Benz USA, LLC, No. CV 08-04876 AHM (JTLx), 2009 U.S.

Dist. LEXIS 117012, at *16-17 (C.D. Cal. May 4, 2009)

(denying motion to dismiss a CLRA claim where plaintiff

alleged that air intake systems were “susceptible to clogging”

and the defect could lead to “substantial electrical failure”

because “it is not implausible that the [clogging] would cause

‘catastrophic engine and electrical system failure’ while the

car is on the road”).

[7] As Plaintiffs do not plead any facts indicating how the

alleged design defect, i.e., the loss of the connection between

4

Although not raised in the second amended complaint, Plaintiffs argue

in their reply brief that the connection between the power jack and the

motherboard weakens over time before becoming completely discon-

nected. Plaintiffs explain that power continues to reach the motherboard

through a weakened connection, “which can lead to electrical sparking,

increased heat, and flames.” While Plaintiffs state that the result of the

weakened connection is “obvious,” it is not clear that this is a reasonable

inference to draw from the alleged defect. See, e.g., Sprewell v. Golden

State Warriors, 266 F.3d 979, 988 (9th Cir. 2001) (“[T]he court [is not]

required to accept as true allegations that are merely conclusory, unwar-

ranted deductions of fact, or unreasonable inferences.”).

WILSON v. HEWLETT-PACKARD 1835

the power jack and the motherboard, causes the Laptops to

burst into flames, the District Court did not err in finding that

Plaintiffs failed to plausibly allege the existence of an unrea-

sonable safety defect.

V. HP’s Knowledge of a Defect

[8] Plaintiffs must allege HP’s knowledge of a defect to

succeed on their claims of deceptive practices and fraud. The

CLRA prohibits “unfair methods of competition and unfair or

deceptive acts or practices undertaken by any person in a

transaction intended to result or which results in the sale or

lease of goods or services to any consumer.” Cal. Civ. Code

§ 1770(a) (emphasis added). Consequently, California federal

courts have held that, under the CLRA, plaintiffs must suffi-

ciently allege that a defendant was aware of a defect at the

time of sale to survive a motion to dismiss. See In re Sony

HDTV, 758 F. Supp. 2d at 1095 (“Sony had no duty to dis-

close facts of which it was unaware.”); Kent v. Hewlett-

Packard Co., No. 09-5341 JF (PVT), 2010 U.S. Dist. LEXIS

76818, at *29 (N.D. Cal. July 6, 2010) (“Plaintiffs have not

alleged with specificity any other facts that could support a

claim that HP knew the computers in suit were defective at

the time of sale or that HP actively concealed a defect at the

time of sale.”).

[9] Plaintiffs’ UCL claim also requires that they allege

HP’s knowledge of a defect. An action under the UCL’s

unlawful prong “borrows violations of other laws and treats

them as unlawful practices that the unfair competition law

makes independently actionable.”5 Cel-Tech Commc’ns, Inc.,

5

As noted above, although the second amended complaint asserts a

UCL claim under the unlawful, unfair and fraudulent prongs of the UCL,

Plaintiffs’ opening brief only discusses the unlawful prong. Regardless of

whether or not Plaintiffs waived the portion of their UCL claim concern-

ing the unfair and fraudulent prongs, the failure to disclose a fact that a

manufacturer does not have a duty to disclose, i.e., a defect of which it is

not aware, does not constitute an unfair or fraudulent practice. See

Daugherty, 144 Cal. App. 4th at 838-39; see also In re Sony HDTV, 758

F. Supp. 2d at 1095.

1836 WILSON v. HEWLETT-PACKARD

20 Cal. 4th at 180 (internal quotations and citation omitted).

The second amended complaint states that HP’s omission

amounts to violations of the CLRA and California’s common

law fraud and deceit statutes, Cal. Civ. Code §§ 1572(3),

1709, 1710, and are unlawful practices that are independently

actionable under the UCL. As both the fraud and deceit stat-

utes have an intent requirement, Plaintiffs must show that HP

was aware of the alleged defect at the time the Laptops were

sold.6

Plaintiffs allege that HP has been aware of the Laptops’

defect since 2002. The complaint states that “[s]ince the Lap-

tops suffer from an inadequate Design for Reliability, HP also

has been on notice, since the time it began manufacturing and

selling these Laptops that these computers were seriously

defective and hazardous.” According to Plaintiffs, HP was

also aware of the defect because it had “access to the aggre-

gate information and data regarding the risk of overheating”

and there had been another lawsuit involving the same defect

on a different model of laptop computers. Plaintiffs also sub-

mitted several customer complaints to support their allegation

that HP had knowledge of the defect.

Plaintiffs further claim that the PPGC class action should

have alerted HP to the defect. It is unclear, however, how this

class action should have made HP aware that the defect posed

a safety hazard. The complaint states that “very little substan-

tive discovery” took place in the class action, and the settle-

ment did not include Wilson’s Laptop claim. Further, the

complaint notes that all the computers involved in the class

action suffered from the “same common defect,” but never

6

Under Cal. Civ. Code § 1572(3), actual fraud includes the “suppression

of that which is true, by one having knowledge or belief of the fact,” and

who is a party to a contract acting “with intent to deceive another party”

to enter the contract or to induce another to enter a contract. Similarly, one

commits fraudulent deceit “who willfully deceives another with intent to

induce him to alter his position to his injury or risk.” Cal. Civ. Code

§ 1709.

WILSON v. HEWLETT-PACKARD 1837

specifies the defect or alleges that any of these computers

were prone to overheating or bursting into flames.

Typically, plaintiffs who successfully allege that a manu-

facturer was aware of a defect present a stronger factual basis

for their claims than Plaintiffs have here. In Cirulli, the court

held that the plaintiff had sufficiently pled Hyundai was

aware that its vehicles were unusually vulnerable to premature

oxidation and corrosion, and consequently structural deterio-

ration, where plaintiff alleged, among other things: “Since

1999, [Defendant] has . . . constantly tracked the National

Highway Traffic Safety Administration . . . database to track

reports of defective Sonata sub-frames. From this source,

[Defendant] knew that its 1999-2004 Sonatas were experienc-

ing unusually high levels of sub-frame deterioration, steering

control arm separation, steering loss, and highway accidents

. . . .” 2009 U.S. Dist. LEXIS 125139 at *9-10. Similarly, in

Kowalsky v. Hewlett-Packard Co., No. 10-CV-02176-LHK,

2011 U.S. Dist. LEXIS 89379 (N.D. Cal. Aug. 10, 2011), the

plaintiff successfully alleged that HP was aware of a defect

that caused its printers to randomly skip pages when copying,

scanning and faxing by alleging: (i) HP advertised that it

adheres to “the recognized ISO/IEC 24734 and 24735 stan-

dards,” which require multiple tests using repeated scanning

of a multi-page document; and (ii) there were customer com-

plaints concerning the defect three months before the plaintiff

purchased his printer. Id. at *12-13.

[10] By comparison, in the case at bar, Plaintiffs’ allega-

tions that HP “became familiar with” and was “on notice” of

the defect plaguing the Laptops at the time of manufacture

and as early as 2002, seem merely conclusory. Plaintiffs make

a generalized assertion that the Laptops’ alleged “inadequate

Design for Reliability” put HP on notice that the Laptops

“were and are seriously defective,” but reference neither the

specific defect alleged in the complaint nor HP’s knowledge

of that defect. The allegation that HP, as the manufacturer,

had “access to the aggregate information and data regarding

1838 WILSON v. HEWLETT-PACKARD

the risk of overheating” is speculative and does not suggest

how any tests or information could have alerted HP to the

defect. See Tietsworth, 2009 U.S. Dist. LEXIS 98532, at *13

(holding as conclusory the allegation that defendants were in

a “superior position to know the truth about the [product]”);

Oestreicher, 544 F. Supp. 2d at 974 (holding allegation that

defendant had “exclusive knowledge as the manufacturer” did

not support claim that defendant was aware of a defect). By

contrast, the plaintiffs in Falk alleged that “[o]nly GM had

access to the aggregate data from its dealers[,] only GM had

access to pre-release testing data[, and] only GM had access

to the numerous complaints from its customers.” These facts

led the court to conclude that plaintiffs sufficiently “state[d]

a claim that GM had exclusive knowledge of the alleged

defect in their speedometers.” 496 F. Supp. 2d at 1096 (inter-

nal quotations omitted).

Plaintiffs rely on Falk and distinguish Kowalsky v. Hewlett-

Packard Co., 771 F. Supp. 2d 1138, (N.D. Cal. 2010),

vacated in part by 771 F. Supp. 2d 1156 (N.D. Cal. 2011), in

asserting that customer complaints can impute knowledge on

a defendant. See Falk, 496 F. Supp. 2d at 1096; Kowalsky,

771 F. Supp. 2d at 1145 (“[I]n some cases, allegations of con-

sumer complaints posted on a defendant’s own customer sup-

port website may be sufficient to raise a reasonable inference

that the defendant knew of a product defect . . . . [I]t is reason-

able to infer that a company monitors the complaints it

receives on its website.”). The Falk court, however, consid-

ered “the amassed weight of [customer] complaints” together

with other indications that GM had knowledge of the defect.

496 F. Supp. 2d at 1096-97.

[11] Some courts have expressed doubt that customer com-

plaints in and of themselves adequately support an inference

that a manufacturer was aware of a defect, noting that com-

plaints posted on a manufacturer’s webpage “merely establish

the fact that some consumers were complaining. By them-

selves they are insufficient to show that [the manufacturer]

WILSON v. HEWLETT-PACKARD 1839

had knowledge [of the defect].” Berenblat v. Apple, Inc., Nos.

08-4969 JF (PVT), 09-1649 JF (PVT), 2010 WL 1460297, at

*9 (N.D. Cal. Apr. 9, 2010); see Baba v. Hewlett-Packard

Co., No. C 09-05946 RS, 2011 U.S. Dist. LEXIS 8527, at *9-

10 (N.D. Cal. Jan. 28, 2011) (“Awareness of a few customer

complaints, however, does not establish knowledge of an

alleged defect.”).

Furthermore, courts have rejected undated customer com-

plaints offered as a factual basis for a manufacturer’s knowl-

edge of a defect because they provide no indication whether

the manufacturer was aware of the defect at the time of sale.

Baba, 2010 U.S. Dist. LEXIS 59747, at *14 (finding that

none of the consumer complaints “include[d] any dates, and

therefore shed no light on when HP knew of the alleged

defects”);7 see Oestreicher, 544 F. Supp. 2d at 974 n.9

(“Random anecdotal examples of disgruntled customers post-

ing their views on websites at an unknown time is not enough

to impute knowledge upon defendants. There are no allega-

tions that Alienware knew of the customer complaints at the

time plaintiff bought his computer.”).

[12] Here, Plaintiffs have submitted fourteen customer

complaints, but the second amended complaint does not indi-

cate where or how the complaints were made (e.g., via HP’s

website). Twelve of those complaints are undated. The two

complaints that are dated were made over two years after

Plaintiffs purchased the Laptops. Thus, as the District Court

concluded, the complaints do not support an inference that HP

7

Plaintiff argues that the present case is distinguishable from Baba,

since in Baba the court found that the complaint failed because there were

“no averments that HP knew of the alleged defects at the time it sold the

computers.” Baba, 2010 U.S. Dist. LEXIS 59747, at *14. The court noted,

however, that instead of averring that HP was aware of the defect, the

complaint stated that “HP is aware of the defect due to the numerous com-

plaints it has received . . . .” Id. at *14-15. The court then concluded that

the undated complaints did not indicate that HP was aware of the defect

at the time of the sale. Id. at *15.

1840 WILSON v. HEWLETT-PACKARD

was aware of the defect at the time it sold the Laptops to Plain-

tiffs.8

[13] The District Court therefore did not err in holding that

the second amended complaint did not sufficiently allege that

HP knew of the alleged defect at the time of sale.

CONCLUSION

For all of the above reasons, the judgment of the district

court is affirmed.

AFFIRMED.

8

Plaintiffs assert that the court in Falk relied on consumer complaints

made after some of the plaintiffs had purchased their vehicles. In doing so,

Plaintiffs state that the Falk consumer complaints were dated from 2003

to 2007 for vehicles purchased in 2003 and 2004. The Falk court, how-

ever, held that the consumer complaints dated from 2003 to 2007 for vehi-

cles purchased between 2003 to 2007 were sufficient to survive a motion

to dismiss. 496 F. Supp. 2d at 1096.