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UCL Class Action Defense Cases–Hewlett-Packard v. Superior Court: California Court Denies Writ Seeking Reversal Of Class Action Certification Order In Unfair Competition Law (UCL) Class Action

Class Action Complaint Alleging Violations of California’s Unfair Competition Law (UCL) Properly Certified as Class Action because Class Action’s Product Defect Claims were Susceptible of Common Proof and Objection to Class Action Treatment went to Merits of the Lawsuit California Appellate Court Holds

Plaintiff filed a class action complaint against Hewlett-Packard alleging inter alia violations of California’s Unfair Competition Law (UCL); specifically, the class action alleged that HP sold laptop computers knowing that they contained a manufacturing defect that “the computers had defective inverters that could potentially cause dim displays,” but HP failed to disclose this fact to prospective purchasers. . Hewlett-Packard Co. v. Superior Court, ___ Cal.App.4th ___, 83 Cal.Rptr.3d 836 (Cal.App. September 26, 2008) [Slip Opn., at 1-2]. The class action complaint alleged violations of California’s UCL and Consumer Legal Remedies Act, as well as breach of express warranty and unjust enrichment. Id., at 2. Plaintiff first moved the trial court to certify the litigation as a class action in August 2005; defense attorneys opposed class action treatment on the grounds that “plaintiffs had not shown either that common issues of fact and law predominated or that there was an ascertainable class” because “[out] of the approximately 118,514 class model computers sold under the Pavilion brand name, [only] approximately 4,716 were reported to need repairs due to display screen problems.” Id., at 3. The trial court denied the motion, finding that the proposed definition of the class was unworkable but stated that it would consider a new motion for class action certification if plaintiff cured the defect. Id. Plaintiff again sought class action certification, but the trial court expressed concern that the class definition failed to include the specific type of inverter underlying the putative class claims and gave plaintiff an additional opportunity to correct the definition. Id., at 4. Eventually, after several months and additional briefing to address various concerns, the trial court granted the motion and certified the lawsuit as a class action. Id., at 4-5. Defense attorneys filed a petition for a peremptory writ of mandate seeking to vacate the class action certification order on the ground that the required “community of interest” principles enunciated in Daugherty v. American Honda Co., Inc. (2006) 144 Cal.App.4th 824 were not met, thus class action treatment was inappropriate. Id., at 1. In certifying the class, the trial court stated that it was not considering the impact of the Daugherty opinion because the holding in that case went to “whether individual class members are entitled to recover, not whether there is a sufficient class.” Id., at 5. The California Court of Appeal denied the writ.

After the California Supreme Court’s denied a petition for review in Daugherty, defense attorneys filed a motion with the trial court for decertification of the class action. Hewlett-Packard, at 5. The trial court denied the motion on the ground that decertification was “premature,” but the court requested plaintiff to “submit[] a revised proposed class action notice” which it subsequently approved. Id. Defense attorneys filed a petition for writ of mandate, id. After discussing class actions in general and noting that it reviewed the trial court’s order for abuse of discretion, see id., at 5-7, the appellate court explained that “the primary issue in dispute is whether the trial court abused its discretion in concluding that common issues predominate necessitating class treatment,” id., at 7. Defense attorneys argued that Daugherty compelled denial of class action treatment; Daugherty held that claims for breach of express warranty do not extend product defect claims beyond the warranty period, and the defense argued that under the reasoning of Daugherty, the class action claims involve individual issues rather than issues subject to common proof. Id. Defense attorneys argued that the trial court therefore “erred in refusing to apply the principals of Daugherty to the determination of class certification.” Id. The appellate court disagreed.

The Court of Appeal explained, “Daugherty holds that failure of a component part after the expiration of the express warranty does not support a claim for relief under an express warranty claim.” Hewlett-Packard, at 8 (citation omitted). Here, the class action complaint alleges that “certain HP notebook computers contained types of inverters that HP knew would likely fail and cause the screens to dim and darken at some time before the end of the notebook’s ‘useful life.’” Id. The appellate court stated at page 8 that “Daugherty holds there can be no claim for breach of express warranty or UCL violations arising from proof that the manufacturer knew at the time of the sale that the component part might fail at some point in the future.” (Citation omitted.) However, the Court explained that this goes to the merits of the class action claims, and may preclude any claims outside the warranty period, but “it does not affect a determination of class certification.” Id., at 9. The common question found by the trial court was whether the screens on the laptop computers “were substantially certain to fail prematurely”; the appellate court concluded that this was sufficient to support the court’s order granting the motion for class action certification. Id., at 10. Whether the defect exists is susceptible to common proof, and whether Daugherty bars any of the class action claims goes to the merits of the lawsuit. Id., at 10-11. Accordingly, the trial court did not abuse its discretion in certifying the lawsuit as a class action and the appellate court denied the petition for writ of mandate. Id., at 11.

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