Smith v. Intel Corporation, 745 F.Supp.3d 853

Plaintiffs filed a nationwide class action against Intel, alleging that Intel knowingly sold CPUs with defective hardware design that made them vulnerable to security attacks (e.g., Spectre, Meltdown, Downfall) and failed to adequately disclose or remedy these deficiencies.
The alleged vulnerabilities relate to CPU features such as branch prediction and speculative execution, central to CPU performance but also allegedly allowing sensitive data to be accessed by unauthorized code.
Plaintiffs argued Intel's post-2018 CPUs remained insecure despite public knowledge of vulnerabilities, and Intel's software "patches" to address hardware flaws caused significant performance degradation.
Plaintiffs asserted claims under California's UCL, CLRA, FAL, as well as for fraud by omission, unjust enrichment, negligence, and breach of implied warranty, with state law alternatives for non-California plaintiffs.
Defendant Intel moved to dismiss the entire complaint and requested a stay of discovery pending that motion. Prior related litigation over Spectre/Meltdown vulnerabilities had been dismissed in other courts and affirmed on appeal.
The court granted Intel's motion to dismiss, found all claims deficient, and stayed discovery pending possible amendment.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Fraud by Omission (UCL/CLRA/FAL/CL)	Intel failed to disclose continued CPU defects and the inadequacy of its post-2018 hardware; omission was material and central.	Defect was public post-2018; any omission not material or central to product function; claims lack particularity.	Dismissed: Plaintiffs failed to allege defect was central to CPU's core function.
Quasi-Contract/Unjust Enrichment	Intel received unjust benefit by selling defective CPUs at full price.	No actionable misrepresentation or omission pled; thus, no unjust retention of benefit.	Dismissed: Dependent on fraud theory, which was inadequately pled.
Negligence	Defective CPUs caused property damage and performance loss to computers incorporating them.	Economic loss doctrine bars claims; CPU is not analytically distinct from computer.	Dismissed: Economic loss rule bars the claim since CPU and computer are integrally linked.
Breach of Implied Warranty	CPUs lacked basic fitness for ordinary use due to known defects.	CPUs operated as expected; lack of privity bars claim; sale not shown to occur in California.	Dismissed: Privity lacking and sale location requirements not met under California law.
UCL – Unfair/Unlawful Prongs	Intel's sales and mitigation decisions were unfair regardless of fraud theory.	"Unfair" allegations mirror fraud theory; no separate unfair conduct alleged.	Dismissed: No actionable unfair or unlawful conduct pled.

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (sets plausibility standard for pleading under Rule 12(b)(6))
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (further elaborates on plausibility pleading standard)
Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025 (9th Cir. 2008) (complaint construed in nonmovant's favor at 12(b)(6) stage)
Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) (fraud must be pled with particularity under Rule 9(b))
Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008) (privity required for implied warranty under CA law)
Birdsong v. Apple, Inc., 590 F.3d 955 (9th Cir. 2009) (merchantability requires product lacks even "most basic degree of fitness" for use)
Hodsdon v. Mars, Inc., 891 F.3d 857 (9th Cir. 2018) (establishes test for actionable omissions under CA consumer protection laws)
Jimenez v. Superior Ct., 29 Cal. 4th 473 (Cal. 2002) (economic loss doctrine and "other property" exception in product liability claims)
Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824 (Cal. Ct. App. 2006) (duty to disclose for omissions under CA law)
Am. Suzuki Motor Corp. v. Superior Court, 37 Cal. App. 4th 1291 (Cal. Ct. App. 1995) (implied warranty of merchantability under CA law)