In re Seagate Technology LLC Litigation
233 F. Supp. 3d 776
N.D. Cal.2017Background
- Seagate sold internal and external 3TB Barracuda hard drives (model ST3000DM001); plaintiffs allege a latent, model‑wide defect causing very high failure rates and unsuitability for some RAID/NAS uses.
- Nine named plaintiffs from different states bought drives from retailers, relied on Seagate marketing and warranty, and experienced drive failures; plaintiffs seek nationwide class (or nine state subclasses).
- Claims: violations of state consumer protection statutes (including California FAL, CLRA, UCL), breach of express and implied warranties (including Song‑Beverly theory), and unjust enrichment.
- Key alleged misrepresentations: published annualized failure rate (AFR <1%), NAS/RAID suitability, read‑error metrics, AcuTrac technology claims, and general reliability/performance statements. Plaintiffs rely in part on Backblaze monitoring data showing much higher failure rates.
- Seagate moved to dismiss under Rules 12(b)(6) and 9(b); court evaluated pleading sufficiency for affirmative misrepresentations, omissions, warranty theories (including essential‑purpose and privity), and UCL prongs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Express warranty breach (replacement drives) | Warranty failed its essential purpose and Song‑Beverly remedies warranted because replacements failed and customers remained harmed | Seagate complied with warranty by replacing drives; replacements are "functionally equivalent" and warranty contemplates subsequent replacement; no allegation Seagate refused replacement while drive still under warranty | Dismissed with leave to amend: plaintiffs did not plausibly allege breach under warranty terms, essential‑purpose, or Song‑Beverly (no showing Seagate deprived any plaintiff of contractual remedy) |
| Implied warranty (Cal. Com. Code §2314) — privity / third‑party beneficiary | End purchasers can sue manufacturer as third‑party beneficiaries of distribution contracts | Manufacturer not in privity with retail purchaser; Ninth Circuit precedent forecloses creating new exceptions | Dismissed as to California Commercial Code implied warranty; court follows Clemens and rejects broad third‑party beneficiary extension; implied warranty claims under other states and Song‑Beverly (Cal. Civ. Code §1792) survive |
| False advertising — AFR statistic (<1%) | AFR statement false and misleading; Backblaze data plausibly shows much higher AFR; consumers relied on AFR | AFR is statistical/test data not a guarantee; Backblaze methodology unreliable (shucking, commercial use) | Survives: plaintiffs plausibly alleged AFR misrepresentation and reliance; motion denied as to AFR‑based claims |
| False advertising / other technical claims (read‑error rate, AcuTrac, NAS suitability, general reliability) | Plaintiffs allege those statements were misleading and material to purchase decisions | Seagate: many statements are puffery or lack particularized factual falsity; Backblaze does not address read‑error or AcuTrac; NAS/RAID claims not uniformly false | Mixed: claims based on read‑error rate, AcuTrac, NAS capabilities, and broad reliability/performance statements dismissed with leave to amend (some RAID statements survive where plaintiffs alleged reliance and specific contrary information) |
| Omission claims and duty to disclose | Seagate knew AFR and RAID limitations and failed to disclose contrary facts | No general duty to disclose absent safety issue or when not tied to affirmative misrepresentation | Survives in part: omissions tied to AFR and RAID representations adequately pleaded; omissions about NAS/read‑error not plausibly alleged and dismissed |
| UCL (unlawful/unfair prongs) | UCL claims mirror statutory/warranty violations and unfair practices (e.g., charging high fees for data recovery) | Breach of contract alone not "unlawful" under UCL; some unfair theories overlap with warranty terms | "Unlawful" prong survives only to extent predicate statutory claims survive; "Unfair" prong partly dismissed but theory about excessive data‑recovery charges survives |
| Unjust enrichment | Plaintiffs plead unjust enrichment as alternative restitutionary remedy | Seagate argues duplicative of other remedies | Survives at pleading stage; not dismissed because alternative pleading permissible |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (labels and conclusions insufficient; factual plausibility required)
- Kearns v. Ford Motor Co., 567 F.3d 1120 (Rule 9(b) applied to fraud‑based advertising claims)
- Vess v. Ciba‑Geigy Corp. U.S.A., 317 F.3d 1097 (unified course of fraudulent conduct can subject claims to Rule 9(b))
- Neubronner v. Milken, 6 F.3d 666 (particularity required for fraud pleading)
- Clemens v. Daimler‑Chrysler Corp., 534 F.3d 1017 (Ninth Circuit forecloses creating new privity exceptions for consumer implied‑warranty claims)
- Williams v. Gerber Prods. Co., 552 F.3d 934 (reasonable‑consumer test; context matters for determining deception)
- Cel‑Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163 (UCL "unfair" prong standard for competitor suits; guidance on tethering unfairness to policy)