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Tammy Collins et al v. Emachines

November 28, 2011

TAMMY COLLINS ET AL., PLAINTIFFS AND APPELLANTS,
v.
EMACHINES, INC., ET AL., DEFENDANTS AND RESPONDENTS.



(Super. Ct. No. CV025760)

The opinion of the court was delivered by: Butz , J.

Collins v. eMachines

CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

In this class action alleging a failure to disclose a computer defect involving a microchip that controlled floppy disk data transmission, plaintiffs Tammy Collins and Rudolph Roma appeal from a judgment on the pleadings. Plaintiffs have alleged counts under the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.), the unfair competition law (UCL) (Bus. & Prof. Code, §§ 17200 & 17500 et seq.), common law fraud, and unjust enrichment.

We conclude the trial court erroneously granted judgment on the pleadings without leave to amend, and we shall reverse on all counts except unjust enrichment.

FACTUAL AND PROCEDURAL BACKGROUND

Because we are reviewing a successful motion for judgment on the pleadings, and there are no pertinent judicially noticeable facts to consider, our review is confined to the complaint. (DiPirro v. American Isuzu Motors, Inc. (2004) 119 Cal.App.4th 966, 972 (DiPirro).) We consider independently whether the complaint states a cause of action, accepting as true all allegations of material fact but not contentions, deductions or conclusions of fact or law. (Ibid.) "Where, as here, leave to amend was not granted, we determine whether the [pleading] defect can reasonably be cured by amendment. . . . We review the court's denial of leave to amend for abuse of discretion." (Ibid.)

The complaint here consists of (1) a first amended complaint (FAC), which made minor, irrelevant modifications to the original complaint; and (2) a proposed second amended complaint (SAC), which the trial court refused to consider after granting--without leave to amend--the motion for judgment on the pleadings involving the FAC.

The FAC was filed in June 2005, before defendants eMachines, Inc., Gateway Sub II, LLC, and Gateway, Inc. (collectively, eMachines), had responded to the original complaint, which was filed in February 2005. Consequently, the FAC was the first complaint subjected to the testing process of demurrer or judgment on the pleadings.

First Amended Complaint

The FAC alleges as follows:

The FAC is a class action on behalf of the named plaintiffs and similarly situated California residents (plaintiffs) who purchased approximately 400,000 defective eMachines personal computers after October 31, 1999.*fn1

At the time eMachines marketed and sold the defective computers, floppy disks provided the primary means of storing and transporting computer data. Each of the eMachines computers contained a defective microchip, called a "Super I/O" chip, which controlled the operation of the floppy disk drives. Basically, this floppy disk controller defect (FDC Defect) improperly wrote data to, and improperly read data from, floppy disks, resulting in data corruption; specifically, the problem was that the FDC Defect failed to detect the miswriting or the misreading of a segment (a byte) of data at a specific point on the floppy disk, and incapacitated the very function that was to correct such corruption.

No later than October 31, 1999, eMachines discovered the FDC Defect in its computers.

Each of the defective computers had a written warranty that they were "free from defects in materials and workmanship under normal use for a period of [one] year from the date of purchase[.]"

eMachines failed to disclose and actively concealed the FDC Defect from potential purchasers. Despite knowing of the FDC Defect and knowing that the defect could result in critical data corruption, executives of eMachines directed the company to continue to sell the defective computers after October 31, 1999. eMachines actively concealed the existence of the FDC Defect from purchasers by, among other practices specified in the FAC, continuing to issue the warranty knowing the computers had the FDC Defect, and engaging in misleading "customer service" practices that concealed the FDC Defect in online "customer support" guides, in customer service diagnoses of computer problems, and at call centers.

As a result of eMachines's fraudulent concealment, plaintiffs suffered out-of-pocket damages--i.e., the difference between the purchase price of the computers and their fair market value ...


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