Class Action

New class certification decision: Hewlett-Packard Co. v. Superior Court

By Kimberly A. Kralowec

Last Friday, in Hewlett-Packard Co. v. Superior Court, ___ Cal.App.4th ___ (Sept. 26, 2008), the Court of Appeal (Sixth Appellate District) refused to disturb an order granting class certification, holding that the legal arguments the defendant advanced in opposition to certification intruded upon the merits and therefore could not be resolved at the class certification stage. Monay's Recorder reported that "Ruling Clears Path for Suit Against HP" (subscription).

Hewlett-Packard is a UCL and CLRA case alleging that HP sold certain types of notebook computers knowing that the computers had defective components affecting the brightness of the display. Slip op. at 2. The trial court certified a class of all persons who purchased certain HP notebook computers equipped with a specific type of "inverter" (a component of the display screen that affects the screen's brightness) "and who experienced a dim, dark, or flickering display." Id. at 2-5.

HP argued that non-common questions predominated because Daugherty v. American Honda Co., 144 Cal.App.4th 824 (2006) requires an individual assessment of whether each notebook computer display was substantially certain to fail before the end of its "useful life." Slip op. at 7-8. Both the trial court and the Court of Appeal disagreed, viewing the argument as merits-based and thus inappropriate to consider when ruling on class certification:

While Daugherty may have implications for the merits of [the] underlying action, and indeed may serve to bar claims by plaintiffs that occurred outside the warranty period, it does not affect a determination of class certification. Daugherty is distinguished from the present action because it related to a substantive question on demurrer rather than a procedural question as here on a motion for class certification. And the question in a determination of class certification is ?essentially ... procedural ... [and] does not ask whether an action is legally or factually meritorious.? (Linder, supra, 23 Cal.4th 429, 439-440, emphasis added.)

If we were to accept HP?s argument regarding the application of Daugherty to the present action, we would be considering the merits of the underlying action.

Slip op. at 9 (emphasis in original). The Court of Appeal also disagreed with HP respecting whether, under Daugherty, "a product malfunction is required in order for the product to be considered defective" (id.), and whether that argument would impact the predominance of common questions:

Contrary to HP?s argument in this case, whether or not the alleged defects occurred during the warranty period does not affect a finding of community of interest in the present case. Plaintiffs here allege a common defect in the HP notebook computers and their display screens. In order to prove that defect, plaintiffs will present evidence of call records reporting dim displays, records of repairs of faulty inverters, service notes documenting defects that were known to HP, and an HP policy that all notebooks returned for any reason would have their inverter repaired, regardless of whether the screen actually failed. A jury could find, based on this evidence, that the inverters in question were defective and that HP is liable for the defect. The issue of whether the inverters were defective is appropriate for a joint trial with common proof. For example, if the jury finds that the inverters were defective, then each plaintiff would not need to separately prove that his or her inverter was defective, only that he or she had a computer that contained that type of inverter.

In this writ, HP requests that we order the trial court to vacate its order certifying the class because some of the plaintiffs? claims may be substantively invalid under Daugherty. This is not a proper consideration on the question of class certification. The merits of the case can and will be decided at a later point in this case. Indeed, the trial court noted that stating with regard to Daugherty that it was ?neither ruling on the merits of the causes of action not what limits to recovery for any class member might be.?

Id. at 10. This language from Hewlett-Packard provides a great roadmap to common proof for plaintiffs in consumer product defect class actions and may well limit Daugherty's effects in such cases.

Full post as published by The UCL Practitioner on October 01, 2008 (boomark / email).