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Normand Perron, and G. David v. Hewlett-Packard Company

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION


May 6, 2011

NORMAND PERRON, AND G. DAVID
HATFIELD, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED,
PLAINTIFFS,
v.
HEWLETT-PACKARD COMPANY, A DELAWARE CORPORATION, DEFENDANT.

The opinion of the court was delivered by: Lucy H. Koh United States District Court United States District Judge

United States District Court For the Northern District of California

ORDER GRANTING MOTION TO DISMISS WITH PREJUDICE

Plaintiffs Normand Perron and G. David Hatfield brought this class action against Defendant Hewlett-Packard Company ("HP") for claims arising out of wireless connectivity 20 problems allegedly caused by a defective Nvidia chip used in certain HP computers. The parties 21 agree that the claims of named Plaintiffs Perron and Hatfield are extinguished by a class settlement 22 approved in a separate case known as the Nvidia GPU Litigation. HP moves to dismiss with 23 prejudice, or for summary judgment, on that ground. Plaintiffs' counsel argues that the case should 24 not be dismissed and instead seeks leave to amend to substitute new named plaintiffs, modify the 25 definition of the class, propose a new subclass, join Nvidia as a defendant, and add a new claim 26 under New York state law. The Court heard oral argument on these issues on May 5, 2011. 27 Having considered the submissions and arguments of the parties, the Court GRANTS HP's motion 28 to dismiss with prejudice.

I.Background

on behalf of a class and several subclasses, brought suit against Defendant Hewlett-Packard Nvidia chip that renders the HP computers unable to connect to the Internet through the internal 6 wireless device. Compl. ¶¶ 8-11. They claim that HP knew of the defect around the time that its 7 computers reached the market, but did not disclose the wireless connectivity problem, 8 misrepresented the computers as free from defects, and failed to offer a warranty service that 9 effectively remedied the defect. Compl. ¶¶ 2-5. Based on these allegations, Plaintiffs assert five 10 causes of action, each apparently arising under California law: (1) unfair business practices in On February 18, 2010, Plaintiffs Normand Perron and G. David Hatfield, individually and Company ("HP"). Plaintiffs allege that certain HP Notebook Computers incorporate a defective violation of California Business & Professions Code § 17200 et seq.; (2) breach of express United States District Court For the Northern District of California warranty; (3) violation of California Consumers Legal Remedies Act, California Civil Code § 1750 13 et seq.; (4) unlawful business practices in violation of California Business & Professions Code 14 § 17200 et seq. The Complaint proposes a nationwide class of all persons and entities who 16 purchased certain HP computers since August 1, 2006, as well as three subclasses. Compl. ¶ 25. 17

The three proposed subclasses include (1) a Consumer Subclass consisting of class members who 18 purchased the computers for personal, family, or household purposes; (2) a Warranty Subclass 19 consisting of class members who experienced failure of wireless capability within a year of 20 purchase; and (3) a California Subclass consisting of class members who are residents of 21 California. Id. The Court has not yet considered certification of the proposed Class or Subclasses, 22 and no motion for class certification has been filed. 23 24 separate consolidated class action brought against Nvidia Corporation for defects in its graphics 25 processing unit and media communications chip. On September 15, 2010, Judge James Ware of 26 this District issued an order preliminarily approving a class settlement in the Nvidia GPU 27 Litigation. Judge Ware's order prohibited settlement class members from prosecuting any action 28 that asserted claims released by the Nvidia settlement pending a determination of whether the § 17200 et seq.; and (5) fraudulent conduct in violation of California Business & Professions Code The Nvidia GPU litigation, Case No. 08-04312 (N.D. Cal. filed Sept. 12, 2008), is a settlement should be finally approved. Because the parties agreed that the claims asserted in the 2 instant action might be released by the Nvidia settlement, they stipulated to stay all proceedings in 3 this action until 30 days after Judge Ware ruled upon the motion for final approval of the Nvidia 4 settlement. The Court issued an order staying this case on October 7, 2010. 6 class settlement and entering final judgment. Final Judgment, No. 08-4312 JW (N.D. Cal. Dec. 20, 7 ("Henning Decl."), ECF No. 43. Judge Ware's order certified a settlement class ("Nvidia 9 America who purchased a Class Computer in the United States of America," with certain 11 Id.

On December 20, 2010, Judge Ware issued an order granting final approval of the Nvidia 2010), submitted as Ex. A to Decl. or Kristofor T. Henning in Supp. of HP's Mot. to Dismiss 8 Settlement Class") consisting of "[A]ll persons and entities resident in the United States of For the Northern District of California exclusions not relevant here. at 2. The definition of "Class Computer" includes the HP 12 products at issue in the instant litigation. See Stip. and Agreement of Settlement and Release at 4-13 5, submitted as Ex B. to Henning Decl. (defining "Class Computer" to include HP Pavilion series 14 dv6000 and dv9000 and HP Presario series 6000); Compl. ¶ 25 (defining class as purchasers of 15 same HP computers). Pursuant to the Nvidia settlement agreement, Nvidia Settlement Class Members who have not opted out are deemed to have released any claims arising out of a specified 17 defect in the Nvidia chip incorporated into the Class Computers, including Class Computers that 18 exhibit certain "Identified Symptoms." See Henning Decl. Ex. B at 8, 15-16.

The "Identified Exhibit 3 to Stip. and Agreement of Settlement and Release at 4-5, submitted as Ex B. to Henning Plaintiffs Perron and Hatfield, along with a number of other individuals known as the HP Consumer Objectors, objected to approval of the Nvidia settlement before Judge Ware. The HP Consumer Objectors argued, among other things, that the Nvidia settlement would release their 25 claims and those of the proposed class members in this case and another related class action, 26 Nygren v. Hewlett Packard, No. 07-CV-05793 (N.D. Cal.), for little or no consideration.*fn1 See HP 27

United States District Court Symptoms" include the wireless connectivity problems at issue in the instant class action. See 20Decl. 22 Consumers Objections to Final Approval of Settlement at 1, submitted as Ex. C to Henning Decl. 2

They also argued that because the Nvidia settlement provides only for chip replacement or 3 reimbursement for repairs previously paid for by the class member, the settlement provides no 4 remedy to consumers who purchased an HP computer, never made any repairs, and discarded their 5 computers due to the defect.*fn2 Id. at 12-13. This last objection apparently caused the parties to the Class Members who no longer possess their HP Class Computers.*fn3 The amendment, executed on 14.18 Other Litigation. This Agreement shall not preclude a Class Member who is also a member of a class that might be certified in Nygren v. Hewlett Packard Co., Case No. CV 07-05793 JW (N.D. Cal.), or Perron v. Hewlett Packard Co.,Case No. CV 10-00695-LHK (N.D. Cal.), but did not participate in this settlement because the Member no longer had a Class Computer, and did not pay for a repair, from participating in those actions.

Nvidia Settlement to execute an amendment to the settlement agreement directed at Settlement December 6, 2010, reads:

United States District Court For the Northern District of California Opp'n to HP's Mot. to Dismiss or for Summary Judgment. Judge Ware granted final approval of 15 the settlement over the HP Consumers' objections, and the HP Consumer Objectors, including After Judge Ware entered final judgment in the Nvidia GPU Litigation, and the stay in this case expired, HP renewed its previously filed motion to dismiss for failure to state a claim*fn4 and 19 also filed a second motion to dismiss, or for summary judgment, on grounds that Plaintiffs' claims 20 were released by the Nvidia settlement. Plaintiffs then filed a motion to stay this case pending

Amendment No. 3 to Stip. and Agreement of Settlement and Release, submitted as Ex. 2 to Pl.'s 14 Plaintiffs Perron and Hatfield, have now appealed his decision to the Ninth Circuit. 17 appeal of the Nvidia settlement. In arguing the motion to stay, Plaintiffs at no point suggested that 2 the "carve out" created by Amendment No. 3 to the settlement agreement would allow litigation of 3 this action to continue while the Nvidia settlement was being appealed. Rather, they represented 4 that a stay would conserve judicial resources because the Ninth Circuit decision in the Nvidia GPU 5 Litigation would be dispositive of the claims in this case: "If Plaintiffs lose the appeal, then their 6 claims in this case will be extinguished. If Plaintiffs win the appeal, then their claims here will not 7 be extinguished and the litigation can resume." Pls.' Mot. to Stay at 2, ECF No. 48. Because it 8 seemed that this case could be resolved without extensive litigation, and a stay appeared to be in 9 conflict with Judge Ware's Order of Final Judgment in the Nvidia case, the Court denied the 10 motion to stay. See Order Denying Motion to Stay at 4, ECF No. 55.

Plaintiffs now argue that even if the claims of Perron and Hatfield are extinguished by the Nvidia settlement, the "carve-out" amendment should allow them to amend the Complaint to 13 substitute a new plaintiff who discarded his computer and to proceed with the instant litigation.

York resident Todd Anderson as the new named plaintiff in this action. In its reply, HP noted, 16 among other things, that substitution of Todd Anderson would be futile, as he is not a California 17 resident and therefore could not bring claims under California consumer protection statutes. HP 18 also pointed out that the proposal to substitute Anderson as the named plaintiff was inconsistent 19 with Plaintiffs' representation, in their opposition to HP's other motion, that they were limiting 20 their claims against HP to California residents.*fn5 filed a motion for leave to file a First Amended Complaint ("FAC"), including the proposed amended complaint. The proposed FAC would add two new named Plaintiffs, Todd Anderson of New York and Mark Alward of California, who did not pay for repairs and discarded their 3 computers out of frustration with the wireless defect. It would also join Nvidia Company as a 4 defendant and add allegations against it; redefine the class to include only those who discarded 5 their computers; create a new proposed subclass of New York residents; and add a claim under a New York consumer protection statute. HP disputes that the carve-out amendment permits any 7 amendment of Plaintiffs' Complaint and argues that the case should be dismissed with prejudice, 8 or, alternatively, that summary judgment should be entered in its favor.

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). "A Rule 12(b)(6) dismissal may be based on either a 'lack of a cognizable legal theory' or 'the absence of sufficient 13 facts alleged under a cognizable legal theory.'" Johnson v. Riverside Healthcare System, LP, 534 14 (9th Cir. 1990)). In considering whether the complaint is sufficient to state a claim, the court must 16 accept as true all of the factual allegations contained in the complaint. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). As a general rule, a district court may not consider any material beyond the 18 pleadings in ruling on a 12(b)(6) motion to dismiss for failure to state a claim. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). However, a court may take judicial notice of matters 20 of public record outside the pleadings, id. at 689, including briefs, transcripts, and other court 21 filings in related litigation. See Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (taking judicial notice of briefs and transcripts from a settlement fairness hearing, 23 as well as other court filings, to determine the preclusive effect of a settlement on a motion to 24 dismiss). Generally, if a court grants a motion to dismiss, leave to amend should be granted unless 25 the pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000). If amendment would be futile, however, a dismissal may be ordered 27 with prejudice. Gordon v. City of Oakland,627 F.3d 1092, 1094 (9th Cir. 2010).

II.Legal Standard

United States District Court For the Northern District of California F.3d 1116, 1121-22 (9th Cir. 2008) (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 15

III.Discussion

prejudice because Plaintiffs' claims are released by the Nvidia settlement. The Court agrees that it 5 is clear, based upon the Complaint and the judicially noticeable filings in the Nvidia GPU Litigation, that the claims of Plaintiffs Perron and Hatfield have been extinguished by the Nvidia 7 settlement. Plaintiff Perron's claims stem from his September 26, 2006 purchase of an HP Presario

A.Dismissal of Plaintiffs' Complaint

In its motion to dismiss, HP argues that the Complaint in this case must be dismissed with V6030 that experienced wireless connectivity failures. Compl. ¶¶ 15-17. Plaintiff Hatfield's 9 claims stem from his August 3, 2007 purchase of an HP Pavilion dv6448se that experienced similar 10 wireless connectivity failures. Compl. ¶¶ 20-23. Because Plaintiffs' computers and wireless Henning Decl. Ex. B at 4-5 (defining Class Computer to include HP Presario v60xx purchased 14 between May 2006 and October 31, 2008, and HP Pavilion dv64xx purchased between May 2006 15 and April 30, 2009); id. at Ex. 3 (defining Identified Symptoms to include failure to detect wireless 16 adaptor in HP systems); id. at 15 (release of claims). Moreover, by objecting to and appealing the Class whose claims are extinguished by the settlement. See Reyn's Pasta Bella, 442 F.3d at 746 19 ("Plaintiffs' appearance through counsel at the Wal--Mart fairness hearing binds them to the Wal-- 20 Mart settlement and all of its preclusive effects"). Indeed, Plaintiffs have repeatedly represented 21 that their claims are fully released by the Nvidia settlement. See, e.g., Transcript of April 7, 2011 22 (concession by Plaintiffs' counsel that Plaintiffs' claims were released by Nvidia settlement); Decl. (stating that HP Consumer Objectors' claims were "settled out from under them" and 26 discharged by the Nvidia settlement); Pl.'s Mot. to Stay at 2, ECF No. 48 ("If Plaintiffs lose the 27 appeal [of the Nvidia settlement], then their claims in this case will be extinguished."). connectivity problems are covered by the Nvidia settlement agreement, and neither Plaintiff chose United States District Court For the Northern District of California to opt out, their claims were released by the Order of Final Judgment issued by Judge Ware. See Nvidia class settlement, Plaintiffs have conceded that they are members of the Nvidia Settlement Hearing on Pls.' Mot. to Stay, Decl. of Kristofor T. Henning in Supp. of HP's Reply, Ex. 1 at 2 23 Mediation Questionnaire filed by Plaintiffs before the Ninth Circuit, submitted as Ex. F to Henning out" amendment to the settlement agreement, see Pls.' Opp'n at 4, Plaintiffs conflate their 3 individual claims with the claims of the proposed class. No one has suggested that individual

To the extent that Plaintiffs now argue that some of their claims survive through the "carve- Plaintiffs Perron or Hatfield discarded their computers and would qualify as someone who "did not 5 participate in [the Nvidia] settlement because [he] no longer had a Class Computer, and did not pay 6 for a repair," as required by the carve-out amendment. Pl.'s Opp'n Ex. 2. There may be 7 individuals within the class proposed in the Complaint who would fall within the carve-out 8 amendment. At this point, however, no class has been certified, and this action consists solely of 9 the individual claims of Perron and Hatfield. See Sanford v. MemberWorks, Inc.,625 F.3d 550, 10 consists of the named Plaintiffs' individual claims). Because there is no dispute that the individual claims of each of the named Plaintiffs have been released by the Nvidia settlement, the Complaint 13 as it stands contains no claims that can be litigated. Accordingly, HP's motion to dismiss the Complaint must be granted. of new named Plaintiffs who fall within the carve-out amendment. The carve-out amendment 18 provides as follows: 556 n.3 (9th Cir. 2010) (noting that where a court has not ruled on class certification, the action United States District Court For the Northern District of California

B.Leave to Amend

The more difficult question is whether leave to amend should be given to allow substitution 14.18 Other Litigation. This Agreement shall not preclude a Class Member who is also a member of a class that might be certified in Nygren v. Hewlett Packard Co., Case No. CV 07-05793 JW (N.D. Cal.), or Perron v. Hewlett Packard Co., Case No. CV 10-00695-LHK (N.D. Cal.), but did not participate in this settlement because the Member no longer had a Class Computer, and did not pay for a repair, from participating in those actions.

Pl.'s Opp'n Ex. 2. Plaintiff argues that the amendment is intended to allow this action, Perron v. 24 HP, to proceed as a class action on behalf of Nvidia Class Members who purchased one of the HP 25 computers at issue in this case (such that they would be a member of the proposed class in this 26 case), but who lack a remedy under the Nvidia settlement because they did not pay for any repairs 27 and no longer have their Class Computer. Plaintiffs (or, more accurately, Plaintiffs' counsel) thus 28 seek to amend the Complaint to bring an action on behalf of a different proposed class, with new named Plaintiffs asserting a new claim under a different state law, and against a new defendant.

No. 66. HP argues, however, that the carve-out, at most, permits certain Nvidia Settlement Class HP claims that the carve-out does not permit new claims or new lawsuits, and because no class has 6 been certified in this case, the carve-out amendment does not permit continued litigation. by all parties, the Court remains somewhat perplexed by the amendment. On the one hand, the See Pls.' Admin. Mot. for Leave to File [Proposed] First Amended Complaint at 2 & Exs. 1-2, ECF 3 Members to participate as class members in the event that a class is certified in Nygren or Perron.

Having carefully considered the language of the carve-out amendment and heard arguments Court agrees with HP that the language of the amendment is quite narrow in scope. It does not 10 exclude the "carved out" group from the Nvidia Settlement Class, nor does it remove them from the definition of "Releasing Persons."*fn6 Rather, the carve-out amendment explicitly refers to "Class Members" and suggests that this group of people remains part of the Nvidia Settlement Class, 13 subject to the general release of claims, with the exception that they may be able to obtain relief 14 outside the settlement in the event that such relief becomes available in the Nygren or Perron 15 actions. The language used in the amendment is quite limited: "This Agreement shall not preclude . . . a member of a class that might be certified in [Nygren or Perron] . . . from participating in 17 those actions." Pls.' Opp'n Ex. 2. This language suggests only that certain Nvidia class members 18 may participate, as class members, in a class certified in Perron or Nygren, and that they may 19 benefit from any class remedies resulting from those lawsuits. It does not suggest that Nvidia Class Members, whose claims are otherwise released by the settlement, should be able to institute a new 21 action on a behalf of a newly defined class. Yet this is essentially what Plaintiffs' counsel seeks to 22 do within the confines of the existing lawsuit. In this sense, the amendment appears to favor HP's 23 position.

On the other hand, it appears that HP's position would essentially render the carve-out amendment meaningless. On December 6, 2010, when the amendment was executed, Perron was stayed, Nygren had been appealed, and there was no prospect that a class would be certified in 2 either case in the near future. Once the settlement was granted final approval on December 20, 3 2010, the named plaintiffs in both actions were barred from further litigating their claims because 4 each had retained possession of their Class Computers. Accordingly, neither case could go forward 5 without amendment of the complaint and substitution of a new named plaintiff who could represent 6 a class of those who discarded their HP computers. If such amendment is not permitted under the 7 terms of the amendment, it seems to this Court that the carve-out amendment could never have had 8 any effect.*fn7 Drawing on this reasoning, Plaintiffs have pointed out that the parties to the Nvidia 9 settlement represented to Judge Ware that the amendment was not a nullity, but would in fact allow 10 certain HP purchasers to pursue their claims.*fn8 Plaintiffs therefore argue that a ruling denying leave agreement Judge Ware actually approved and the Order of Final Judgment he issued. The Order of 14 Final Judgment states: "Upon the entry of this Final Judgment, the Releasing Persons have 15 completely discharged, settled, dismissed with prejudice any Released Claim, whether known or 16 unknown, against each of every Released Person and the assertion, prosecution, or continuation by 17 Henning Decl. Ex. A ¶ 10. As noted above, the carve-out amendment does not suggest that those who no longer possess Class Computers and paid for no repairs are excluded from the Settlement Class or should not be considered Releasing Persons. Rather, the amendment explicitly refers to 3 this group as "Class Member[s]." Pl.'s Opp'n Ex. 2. To the extent that the amendment allows a 4 group of Nvidia Class Members to actively prosecute Released Claims, as Plaintiffs argue, the 5 amendment would be in conflict with the Final Order enjoining "assertion, prosecution, or 6 continuation" of Released Claims by any member of the Settlement Class. prejudice on December 20, 2010, when the Final Judgment and settlement release took effect. See In addition, as HP points out, Plaintiffs' individual claims were effectively dismissed with Henning Decl. Ex. B at 23 ¶ 12.2 (settlement becomes effective upon entry of Final Judgment). As 10 of that date, Plaintiffs were permanently enjoined from asserting or continuing their claims, and this Court was required to dismiss their claims with prejudice. See Henning Decl. Ex. A ¶ 10.

("Upon the entry of this Final Judgment, the Releasing Persons have completely discharged, 13 settled, dismissed with prejudice any Released Claim. . . .") (emphasis added). Thus, any order 14 dismissing Plaintiffs' claims without prejudice and allowing them to continue their claims in order 15 to seek amendment would violate the clear terms of Judge Ware's Order of Final Judgment.*fn9

For these reasons, the Court finds that the carve-out amendment does not permit an individual who discarded his Class Computer and never paid for repairs to actively prosecute 18 released wireless connectivity claims by becoming a named plaintiff in the instant action. Pursuant 19 to Judge Ware's Order of Final Judgment, the claims of Plaintiffs Perron and Hatfield were 20 extinguished and dismissed with prejudice on December 20, 2010. This Court must give effect to 21 that order now by dismissing their claims with prejudice. Whatever limited effect the carve-out 22 amendment may have, it does not allow a new plaintiff to step in, revive claims that have been 23 dismissed with prejudice, and actively prosecute those claims on behalf of a new proposed class.*fn10

Nor does it allow assertion of new claims against a newly joined Defendant. Because the 2 amendment Plaintiffs seek is not permitted under the Nvidia settlement and Judge Ware's Order of Final Judgment, Plaintiffs' request for leave to amend must be denied.

IV.Conclusion 5

For the foregoing reasons, the Court GRANTS HP's second motion to dismiss (ECF No.42), with prejudice, on grounds that Plaintiffs' claims are extinguished and dismissed with 7 prejudice by the settlement and Order of Final Judgment in the Nvidia GPU Litigation.

Accordingly, the Court does not reach HP's earlier motion to dismiss (ECF Nos. 32, 45) dealing 9 with the sufficiency of Plaintiffs' claims, and denies that motion as moot. The clerk shall close the 10 file.

IT IS SO ORDERED.

For the Northern District of California

Case No.: 10-CV-00695-LHK ORDER GRANTING MOTION TO DISMISS WITH PREJUDICE


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