Collins v. eMachines, Inc.
202 Cal. App. 4th 249
| Cal. Ct. App. | 2011Background
- This is a class action by Collins and Roma alleging CLRA, UCL, common law fraud, and unjust enrichment against eMachines for a defective Super I/O chip (FDC Defect) in ~400,000 PCs sold after Oct. 31, 1999.
- The FAC alleged concealment and failure to disclose the FDC Defect, with continued sales after discovery and misleading customer service efforts.
- The FAC claimed damages equal to the purchase price minus value with defect; warranty already stated as unhelpful due to latent defect.
- The SAC proposed to add data loss, cross-computer corruption, and a hardware deficiency in the chip (missing hardware logic) as to when the defect existed.
- The trial court granted judgment on the pleadings (without leave to amend) in July 2010, and the appellate court reversed on all counts except unjust enrichment, remanding for amendment.
- The proposed SAC increased the purchased-quantity figure to 600,000 defective computers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CLRA viability for concealment claim | Collins argues defendants knew of the defect and concealed it. | eMachines contends Daugherty/Bardin foreclose CLRA for latent post-warranty issues. | CLRA claim viable; concealment alleged material facts. |
| UCL viability under unlawful and fraudulent prongs | Collins/Roma rely on CLRA and concealment to show unlawful/fraudulent practices. | eMachines argues defects inadequate to establish public deception. | UCL claim viable under unlawful and fraud prongs. |
| Common law fraud viability | Fraud elements are satisfied by concealment and reliance, including damages from data loss. | Defense contends no injury and insufficient nexus. | Common law fraud claim viable. |
| Restitution based on unjust enrichment unnecessary | Equitable relief may be available if legal remedies are inadequate. | Restitution should be available if unjust enrichment proven. | Unjust enrichment restitution not necessary given adequate legal remedies. |
| Judgment on the pleadings without leave to amend abuse of discretion | FAC could be cured by amendment to SAC. | Judgment on pleadings proper as no injury alleged. | Judgment on pleadings without leave to amend reversed; leave to amend granted. |
Key Cases Cited
- DiPirro v. American Isuzu Motors, Inc., 119 Cal.App.4th 966 (Cal. Ct. App. 2004) (review of judgment on the pleadings; standard of cure by amendment)
- Daugherty v. American Honda Motor Co., Inc., 144 Cal.App.4th 824 (Cal. Ct. App. 2006) (CLRA, unlawful prong; reasonable consumer; failure to disclose)
- Bardin v. DaimlerChrysler Corp., 136 Cal.App.4th 1255 (Cal. Ct. App. 2006) (CLRA, material facts; post-warranty defect; expectations of public)
- Outboard Marine Corp. v. Superior Court, 52 Cal.App.3d 30 (Cal. Ct. App. 1975) (concealment or suppression of material facts in CLRA context)
- LiMandri v. Judkins, 52 Cal.App.4th 326 (Cal. Ct. App. 1997) (duty to disclose; four circumstances where failure to disclose is fraudulent)
- Engalla v. Permanente Medical Group, Inc., 15 Cal.4th 951 (Cal. 1997) (materiality standard for CLRA disclosures)
- In re Tobacco II Cases, 46 Cal.4th 298 (Cal. 2009) (UCL fraud prong—likelihood of deception; public perception)
- Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979 (Cal. 2004) (elements of common law fraud)