HP’s Notebook Computers

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Green & Noblin, P.C., obtained a favorable ruling on September 26, 2008 from the California Court of Appeal for the Sixth Appellate District, allowing a class action to move forward against Hewlett-Packard Company. The evidence before the trial court showed that, only weeks after releasing certain Pavilion notebook computers, HP received complaints of dim, dark, or flickering display screens. HP determined that the inverters in those computers were failing at unacceptably high rates, causing the displays to malfunction. HP nevertheless did not notify consumers of the defect and continued to sell the computers. Additionally, HP quoted consumers whose warranties had expired $650 to fix the problem, even though the inverter manufacturer —not HP — bore all the expenses of the repairs, and even though an inverter costs $20 or less.

The trial court certified the case as a class action in January 2007. HP thereafter filed a petition for writ review in the California Court of Appeal. HP argued that class certification was improper pursuant to a 2006 California Court of Appeal decision titled Daugherty v. American Honda Co., Inc.

In Daugherty, the plaintiffs were owners of Honda automobiles with engines that allegedly suffered from oil leaks causing severe mechanical problems. The Daugherty court found that Honda could not be liable for breach of warranty based on “latent defects” appearing after the expiration of Honda’s express warranty, and that Honda’s alleged “failure to disclose a defect that might, or might not, shorten the effective life span of an automobile part that functions precisely as warranted throughout the term of its express warranty” could not render Honda liable for fraudulent, unfair, or unlawful conduct under California’s Unfair Competition Law. HP argued that Daugherty invalidated the legal theory at the core of the plaintiffs’ case and that, as a result, a class-wide judgment would not establish HP’s liability to the entire class rendering class certification inappropriate.

The California Court of Appeal disagreed. First, the court found that the question as to whether or not Daugherty invalidated some of the class members’ claims was irrelevant. The court agreed with Green & Noblin, P.C. that class certification is a procedural determination as to whether the issues may be jointly tried based on common evidence, and not a determination as to whether an action is legally or factually meritorious. Attorney Scott Leviant, in a post about the decision on The Complex Litigator blog, wrote “I’ve been waiting for a decision that, in plain language, said success or failure of claims is irrelevant to the question of certification.”

Second, the court noted that it was “not persuaded by HP’s reliance on Daugherty for its position that a product malfunction is required in order for the product to be defective.” The Court agreed with Green & Noblin, P.C., based on another California Court of Appeal decision titled Hicks v. Kaufman & Broad Home Corp., that proof of a breach of warranty does not require proof that the product has malfunctioned, but rather that it contains an inherent defect which is substantially certain to result in a malfunction during the product’s useful life. Pursuant to Hicks and based on the evidence, the court noted that a jury could find “that the inverters in question were defective and that HP is liable for the defect.”

Prior to this decision, corporate defendants have tried to use Daugherty, with some success, to limit breach of warranty claims to situations where a product fails and a manufacturer refuses to repair or replace it during the warranty period, and to argue that a seller’s failure to disclose a known defect may never be considered unfair or fraudulent conduct violating consumer protection laws. This decision, however, recognizes that such a reading of Daugherty is far too narrow and therefore constitutes a significant victory for consumers’ rights.

The decision is titled Hewlett-Packard Company v. The Superior Court of Santa Clara County. Click here to view a copy of the opinion.

Green & Noblin, P.C. has been contacted by many consumers with similar complaints. If you have experienced this problem, a similar problem, or would like more information about the lawsuit, please contact us at (415) 477-6700 or by clicking here.