Rutledge v HP Order

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SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

ED RUTLEDGE, et al., Case No. 1-03-CV-817837

Plaintiffs,

vs.

ORDER RE: DEFENDANT'S MOTIONS

FOR SUMMARY JUDGMENT, OR

ALTERNATIVELY SUMMARY

ADJUDICATION AND "NO MERITS"

DETERMINATION; PLAINTIFFS'

MOTION FOR SANCTIONS.

HEWLETT-PACKARD COMPANY, et al,

Defendant.

The above-captioned motions came on for hearing before the Honorable James P.

Kleinberg on March 25, 2011 at 9:00a.m. in Department 1. RobertS. Green, Esq., Jenelle

Welling, Esq., and Nicole Reynolds, Esq. appeared on behalf of plaintiffs Ed Rutledge, et al.

("Plaintiffs"). Michael Stortz, Esq., Jay Fowler, Esq., and Daniel Bergeson, Esq. appeared for

defendant Hewlett-Packard Company ("HP"). The matter having been submitted, the court

orders as follows:

II

ORDER RE: DEFENDANT'S MOTIONS- Hearing March 25, 2011

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E-FILEDM ar 29 , 2011 4 :29 P M

D avid H . Y am asakiC h ie f E xecu tive O ffice r/C le rk

S uperio r C ourt o f C A , C ounty o f S anta C la ra

C ase #1-03-C V -817837 F iling #G -30704

B y R . W alker, D eputy

1 HP moves for summary judgment, or alternatively, for summary adjudication and for a

2 "no merits" determination, against the class1

claims and individual claims of plaintiff Susanna

3 Giuliano-Ghahramani ("Giuliano") in the Second Amended Complaint ("SAC") for (1) Violatio

4 of Consumers Legal Remedies Act ("CLRA") [Giluiano] (2) Violation ofthe Unfair Competitio

5 Law ("UCL") [class]; (3) Unjust Enrichment [Giuliano]; and (4) Breach of Express Warranty

6 [class] (hereinafter "HP' s First Motion"). HP also moves for summary judgment, or

7 alternatively for summary adjudication as to class members who owned Zinfandel4.0 notebooks

8 that were never repaired by Bizcom ("HP's Second Motion").

9 Plaintiffs move for sanctions following the March 9, 2011 ex parte application to enforce

10 the February 4, 2011 order.

11 On March 2, 2011, Plaintiffs filed an application to file a supplemental declaration of

12 Nicole D. Reynolds in support of their opposition to HP's MSJ/MSA. The application is

13 DENIED because the papers were served and filed beyond Plaintiffs' opposition deadline, and

14 Plaintiffs fail to demonstrate good cause for the late submission. (See Hobson v. Raychem Corp.

15 (1999) 73 Cal.App.4th 614, 623.)

16 Plaintiffs' Motion for Sanctions

17 Plaintiffs move for issue and evidence sanctions and adverse jury instructions based on

18 HP's failure to comply with a February 4, 2011 order compelling HP to provide further

19 responses and produce documents responsive to Plaintiffs' Request for Production No. 72, which

20 sought copies of monthly reports identified in Richard Chiaramonte's deposition. Plaintiffs seek

21 issue sanctions establishing that: (1) the TDK and Ambit inverters were substantially certain to

22 fail; (2) HP was on notice of and had knowledge ofthe defective nature of the TDK and Ambit

23 inverters as of January 15, 2002. Plaintiffs also seek evidence sanctions that: (1) HP is precluded

24 from utilizing at trial in any fashion documents or computer output, or testimony premised on the

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1 The certified class is defined as: "All persons or entities who own or owned one or more of the

following HP Pavilion notebook models: zt1150; zt1155; zt1170; zt1175; zt1108; zt1185;

zt1190; zt1195; zt1250; xz185; xz275; and xz295; containing a TDK TAD669 Rev. 2.0 inverter

or an Ambit inverter, part numbers PK070012310 and PK070011210; who purchased the

notebook from an entity located in California; and who experienced a dim, dark, or flickering

display. Excluded from the class are employees, directors, officers, or agents of [HP]."


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E -F ILE D : M ar 29 , 2011 4 :29 P M , S uperio r C ourt o f C A , C ounty o f S anta C la ra , C ase #1-03-C V -817837 F iling #G -30704

1 review and/or knowledge of such documents or computer output, which were within the scope of

2 the discovery requested by Plaintiffs but not produced; (2) HP is precluded from objecting to

3 Plaintiffs' introduction of documents received from HP in this litigation on authentication and

4 hearsay grounds; and (3) Plaintiffs are permitted to introduce the inverter service notes,

5 engineering advisories, and service bulletins as evidence of defect, and instruct the jury that the

6 service notes and technical services bulletins can be considered as such by the jury. Finally,

7 Plaintiffs seek adverse instructions for the jury that the court has found HP willfully failed to

8 produce documents and provide information in the discovery phase of this case, and that the jury

9 may take that into account when it draws inferences from the evidence.

10 The motion is DENIED. The court is not persuaded that HP's failure to comply with

11 discovery justifies the far-reaching sanctions sought by Plaintiffs.

12 HP's First Motion

13 HP's request for judicial notice of: (1) the court's January 31, 2007 order re: Plaintiffs

14 motion for class certification (Exh. A to June 17, 2010 RJN); (2) June 15, 2009 order after

15 hearing remotion for summary judgment (Exh. B to June 17, 2010 RJN); and (3) October 8,

16 2009 hearing transcript (Exh. C to June 17,2010 RJN) is GRANTED. (See Evid. Code,§ 452,

17 subd. (d).)

18 The court finds that HP carries its burden of demonstrating the absence of triable issues

19 of material fact. Regarding the class claims for breach of warranty, HP demonstrates that it

20 provided a one-year Limited Warranty to each class member at the time of purchase that required

21 the purchasers to give notice of defects within the warranty period to obtain repair or

22 replacement (HP's Sep. St. MF nos. 1-2), and also offered customers extended warranties and

23 customer care and support packages in addition to the standard Limited Warranty that class

24 members could choose from to extend warranties at the time of purchase (MF nos. 3-4). HP also

25 demonstrates that for those notebooks that were timely presented for an in-warranty repair, HP

26 also provided a standard 90-day warranty on the work and materials used in the repair (the

27 "Limited Repair Warranty") at no charge to the customer. (MF nos. 16-17.) In previously

28 granting summary judgment against plaintiff I. Braun Degenshein ("Degenshein"), this court


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1 held that Daugherty v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824 controls,

2 and under Daugherty, an express warranty does not cover a latent defect that manifests itself

3 after the warranty period has elapsed. Thus, as to those class members similarly-situated to

4 Degenshein, HP demonstrates it did not breach its express warranty to them because they never

5 contacted HP within the one-year Limited Warranty period about their alleged defects.

6 As to those class members who did contact HP within a year of purchase regarding a

7 display screen defect, HP demonstrates that there is no evidence HP ever declined to repair or

8 replace a notebook computer that manifested the alleged defect when provided with timely

9 notice, as required under the Limited Warranty. (MF nos. 30.) Thus, HP demonstrates that it

10 complied with its promises under the Limited Warranty. In response to Giuliano's in-warranty

11 contacts, HP demonstrates that it repaired her notebook in November and December, 2002, and

12 that her computer was "working great upon retum".2

Although Giuliano contacted HP again in

13 June of2003 complaining that the back light on her computer screen was out,3

this contact was

14 outside of the Limited Warranty period, as well as the 90-day Limited Repair Warranty period.

15 Thus, HP's failure to repair her computer in June 2003 was not a breach of express warranty.

16 Plaintiffs argue there was a breach of warranty because HP guaranteed that all computers

17 would be "free from defect" but knew that every original inverter was substantially certain to

18 fail. However, this "free from defect" language must be read together with the part of the

19 Limited Warranty that states if HP receives notice of defects during the warranty period, it would

20 repair or replace the products that prove to be defective. Moreover, this court has already

21 rejected that the "substantially certain to prematurely fail" language from Hicks v. Kaufman &

22 Broad Home Corp. (2001) 89 Cal.App.4th 908 is the applicable legal standard for breach of

23 warranty claims not involving home foundations.

24 HP demonstrates that class members cannot prevail on a "fraudulent" UCL theory

25 because this court has already determined in granting summary judgment against Degenshein

26 that the statements alleged in the SAC (e.g., in HP's press releases, on the company's website,

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28 2 See Depo. Giuliano at pp. 112:7-121:17, Exh. I to Decl. B. Amese ISO HP's MSJ/MSA. 3

Id. at p. 150.


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1 and in HP's 2001 annual report) are not actionable for purposes of the fraudulent prong of the

2 UCL because they do not relate to specific characteristics of subject notebooks, e.g., inverters or

3 display screens. (See MF nos. 35-36.) HP demonstrates that class members cannot prevail on an

4 "unfair" theory under the UCL because this court has already found that HP's quoting of a price

5 to repair a notebook after the warranty expiration could not be considered "unfair," since HP was

6 under no obligation to provide free repairs outside of the warranty period. Finally, HP

7 demonstrates that class members cannot establish an "unlawful" UCL claim because the only

8 statutory violation in support of this claim is the CLRA (MF no. 12), but as this court determined

9 in granting summary judgment against Degenshein, the analysis as to the CLRA and UCL fraud-

10 based claims is identical and dispositive, and alleging a breach of warranty cannot serve as the

11 predicate violation for unlawful conduct under the UCL because warranties are private contracts.

12 HP establishes the lack of merit in Giuliano's CLRA claim by demonstrating that

13 Giuliano cannot show that she relied on HP's press releases or other materials described in the

14 SAC prior to purchasing her notebook (MF no. 60), and cannot establish actual damages and lost

15 money or property for purposes of the CLRA and UCL, since she paid nothing out of pocket for

16 her in-warranty repairs (MF nos. 61-62). Finally, HP demonstrates that Giuliano cannot

17 establish her unjust enrichment claim, because an express binding agreement exists and defines

18 the parties' rights (MF nos. 63-64). (See California Med. Assn v. Aetna US. Healthcare of

19 California, Inc. (200 1) 94 Cal.App.4th 151, 172.)

20 Plaintiffs argue Giuliano's claims, as well as all of the class members' claims should

21 survive summary adjudication because every class member received a defective inverter.

22 Plaintiffs submit the declaration of engineering expert, Eric A. Langberg, who states that all of

23 the Zinfandel3.5 computers, and 42,000 Zinfandel4.0 computers contained a TDK inverter that

24 had an insufficient fuse rating, meaning the backlight would not receive adequate power to light

25 the screen, and thus, they were all defective. (Plaintiffs' Sep. St. Additional Material Facts

26 ["AMF"] nos. 1-4, 16, 18; Decl. Langberg 38, 40.) Plaintiffs submit that HP documented that

27 the fuse rating on the TDK inverter was insufficient for its application, causing the fuse to

28 "blow" out and directed its Original Design Manufacturer, Compal, to stop using the TDK


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1 inverters, implementing a silent recall program dubbed "Repair on Return" wherein its

2 authorized repair center Bizcom replaced the defective TDK inverters in any Zinfandel computer

3 sent in for warranty service for any reason with inverters made by Ambit. (AMF nos. 8, 12, 19.)

4 HP also exercised its contractual right to make Compal absorb the costs of this "epidemic"

5 failure. (AMF nos. 21-28.)

6 However, Langberg's opinion on the defective nature ofthe Zinfandel3.5 and 4.0

7 computers is based on tlie "substantially certain to prematurely fail" language derived from

8 Hicks, which this court has repeatedly refused to accept as the applicable standard for

9 establishing breach of warranty for the consumer goods at issue in this lawsuit. Moreover, as HP

10 points out, Lang berg failed to provide critical testimony in support of his opinion in this regard.

11 For example, he testified that he did not think he could put a percentage on the phrase

12 "substantially certain to premature fai1".4 When asked ifhe had an opinion about the useful life

13 of notebook computers, he said: "From a statistical reliability standpoint, I do not have an

14 opinion on notebook computer useful life. "5 He also testified that he had no way to know how

15 many 3.5 and 4.0 notebooks actually had failed inverters as of December 31, 2006 and 2007,

16 testifying that the repair data does not indicate "what's actually happening in the field."6

He

1 7 further testified that he had "no basis for making any type of opinion on when [an inverter

18 failure] would be premature versus not premature." 7 He also testified that he was not asked to

19 render an opinion on when HP knew of defects in the TDK or Ambit inverters in the 3.5 and 4.0

20 Zinfandels. 8 Thus, even in support of a "substantially certain to prematurely fail" theory for

21 breach of express warranty, Langberg's opinion does not contain the necessary evidence to

22 establish a triable issue.

23 Plaintiffs submit that the Ambit inverters installed as original equipment in some

24 Zinfandel3.5s and 4.0s had a second design defect- the area allocated for the mounting screw

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4 See Depo. E. Langberg at p. 84:8-12, Exh. A to Decl. B. Amese ISO HP's Reply ISO

MSJ/MSA. 5

!d. at p. 96:19-23. 6

!d. at pp. 97:17-25 to 98:1-9. 7

!d. at p. 105:3-15. 8

!d. at p. 132:15-20.


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1 was placed too closely to the integrated circuit and the location of the integrated circuit inhibited

2 the flex necessary to accommodate the mechanical stress induced when opening and closing the

3 notebook, leading to mechanical stress concentrated at the integrated circuit pins, and leading to

4 early failure. (AMF nos. 30-35.) Plaintiffs submit a third defect in workmanship: the amount o

5 force used to mount the inverters caused cracks in the soldering where the integrated circuit is

6 fastened (MF no. 36), and inverter will not function properly with soldering cracks. (AMF nos.

7 32, 44, 47-48.) Plaintiffs contend HP later destroyed many of the weekly reports Bizcom

8 provided about such repeat repairs and refused to produce data entries indicating repeat repairs.

9 (See Decl. Reynolds in Opp. to MSJ/MSA 66, AMF nos. 50-51.) According to Plaintiffs, an

10 analysis of the incomplete data HP produced indicates that more than 1,350 inverters failed more

11 than once between January 1, 2002 and October 31, 2003. (AMF no. 52.) Plaintiffs argue that a

12 reasonable jury could conclude that each time Bizcom replaced an inverter, the accompanying

13 receipt (which indicated the computer had been "repaired" [AMF nos. 92-93]) was a

14 misrepresentation. Plaintiffs submit that when Giuliano sent in her computer for warranty

15 service, Bizcom used too much force in mounting the replacement inverter, and then returned the

16 computer with the cracked inverter. (AMF nos. 44.) Plaintiffs maintain that this was not a

17 "repair" and thus, HP misrepresented that it had repaired Giuliano's computer for her. (AMF no.

18 93.)

19 There is no corresponding allegation in the SAC that HP misrepresented that computers

20 were "repaired" when they, in fact, were not. As discussed above, the undisputed evidence

21 demonstrates that when Giuliano's computer was returned to her in December of2002, she

22 stated that it "worked great," and Giuliano did not contact HP again until June of2003, which

23 was outside of the Limited Warranty period, as well as the 90-day Limited Repair Warranty

24 period. At the hearing on this motion, Plaintiffs' counsel pointed out that Giuliano later

25 disagreed with the statement that her computer worked great. Counsel also argued that there is a

26 triable issue as to whether HP's promise to "repair" is reasonably susceptible to the interpretation

27 that HP promised to "cure" any nonconformity, and the court should not conclude that "repair"

28 just means to "replace a part." However, as HP's counsel pointed out, HP's promise to "repair"


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1 must still be read in conjunction with the warranty period, and there is no dispute that in respons

2 to Giuliano's in-warranty complaint, HP returned her computer to her in December of2002 fully

3 operable. The evidence demonstrates that Giuliano did not contact HP again until after the

4 Limited Warranty period and Limited Repair Warranty period expired, and Plaintiffs have

5 submitted no evidence suggesting that Giuliano's computer was not operable between the time

6 HP returned her computer to her in December of2002 and June of2003 when she contacted HP

7 again. Thus, it is still undisputed that HP did what it was obliged to do under its warranties by

8 providing an adequate repair to Giuliano for her in-warranty claims.

9 Plaintiffs further argue that HP emphasized the reliability of its computers, not as an

10 opinion, exaggeration or hyperbole, but as a product attribute (AMF nos. 83-84) and Giuliano

11 testified she bought the computer because she believed it would be reliable (AMF nos. 80-82).

12 Plaintiffs submit the expert opinion of Michael Belch, a marketing communications expert, who

13 opines that HP's product positioning is not non-actionable puffery because consumers

14 purchasing computers pay more attention to specific product claims such as reliability; that HP

15 would not have advertised the inverter component specifically; and that in advertising the display

16 screen, HP necessarily represented that all components necessary for the screen to function

17 properly would themselves function properly. (AMF nos. 84-89; Decl. Belch ,-r,-r 17-21.)

18 Plaintiffs submit that Giuliano was persuaded to buy the Zinfandel because of the advertised

19 display screen. (AMF no. 80.)

20 This court has repeatedly held that the language cited in the SAC regarding HP's public

21 assertions of quality and reliability constitute non-actionable puffery, and there is no evidence

22 that HP made representations that relate to specific characteristics of subject notebooks, e.g.,

23 inverters or display screens. As for Belch's opinion that HP made specific misrepresentations

24 regarding the functioning of inverter components, this is not alleged in the SAC. Giuliano did

25 not testify that the Circuit City mailer advertisements she saw included representations about

26 anything other than the types of vague and highly subjective statements this court has found to b

27 puffery. Plaintiffs cannot create a triable issue on this issue with legal conclusions by a

28 marketing expert. As for a duty to disclose, Daugherty held that a manufacturer had no duty to


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1 disclose that, "in the fullness of time," a given part might eventually fail, necessitating repairs.

2 Because HP did not make any distinct misrepresentations about its inverter in any

3 advertisements, and it had no duty to disclose any possible inverter issues, there are no omissions

4 alleged or evidence presented that could support a cause of action under the "fraudulent" prong

5 of the UCL or the CLRA.

6 As to the unjust enrichment claim, Giuliano does not dispute HP's argument that a quasi-

7 contract action for unjust enrichment does not lie where an express binding agreement exists and

8 defines the parties' rights. Here, the Limited Warranty defines the rights between HP and

9 Giuliano, and as discussed above, there is no dispute that HP complied with its obligations under

10 the Limited Warranty or the Limited Repair Warranty.

11 Finally, Plaintiffs argue that there are still triable issues as to the non-enforceability of the

12 Limited Warranty on the grounds that (1) the Limited Warranty failed of its essential purpose

13 due to repeated and unreasonable delays in repairing or inability to adequately repair the

14 inverters (AMF nos. 124-128); and (2) the Limited Warranty is unconscionable because the

15 Limited Warranty was presented on a take-it-or-leave-it basis (AMF no. 129) and the "extended

16 warranties" are actually service contracts, which are not alternatives to express warranties,

17 according to Plaintiffs' expert consumer law expert, James L. Brown (AMF no. 130, Decl. J.

18 38-40). There is no corresponding allegation in the SAC that HP's Limited Warranty

19 "failed of its essential purpose" or that there were unreasonable delays in repairing computers

20 that were sent to HP during the warranty period. Moreover, i t cannot be said that the Limited

21 Warranty failed of its essential purpose because there is no evidence that HP failed to repair or

22 replace a defective computer sent to HP during the warranty period. This court has already

23 rejected Plaintiffs' assertion of unconscionability in connection with the breach of warranty

24 claims because unconscionability is a defense to the enforcement of a contract.

25 For all ofthese reasons, HP's motion for summary judgment is GRANTED, and the cou

26 determines there is no merit to Giuliano's CLRA claim.

27 //

28 //


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1 HP's Second Motion

2 HP moves for summary judgment/adjudication as to certain class members who owned

3 Zinfandel4.0 notebooks. Given that HP's First Motion applies to all class members' claims,

4 HP's Second Motion is moot in light of the ruling above granting HP's First Motion.

5 IT IS SO ORDERED.

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Dated: March '2 ?, 2011

Honorable James P. Kleinberg

Judge of the Superior Court


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Documents

Rutledge v HP Order