Carlotti v. ASUS Computer International

Background

Joseph Carlotti sued ASUS Computer International and ASUSTek Computer Inc. over two laptop models, the ASUS GL502VS and ASUS GL502VKS. He alleged that the laptops had power-supply problems—including battery drain while plugged in, reduced performance when battery power was low, and accelerated battery degradation—and inadequate cooling that caused overheating. He also alleged that the laptops were advertised as portable computers suitable for gaming and video editing even though the defects allegedly made them inadequate for those uses.

The complaint asserted claims for breach of express and implied warranties, violations of the Magnuson-Moss Warranty Act, deceit and fraudulent concealment, unjust enrichment, and violations of several California consumer-protection and warranty statutes. The proposed class initially included people in the United States who purchased one or more of the two laptop models, with a California subclass.

The parties investigated the claims, exchanged documents, conducted discovery, retained an electrical engineering expert, deposed Carlotti, and participated in mediation. The case settled before summary-judgment briefing or a hearing on class certification.

Settlement terms

The proposed agreement provided an extended warranty for certain repairs to all GL502VS laptops, including motherboard repairs or replacement and replacement of an AC power adapter. The warranty would last until the latest of three years after purchase, 90 days after final settlement approval, or 180 days after a prior replacement of specified power-supply components. The court stated that the estimated value of this warranty was $16,110,225.

Class members could also seek monetary relief. Group A generally covered purchasers who registered their laptops, purchased through the ASUS website, or could provide proof of purchase; those members could choose a $110 cash payment or a $210 transferable credit certificate. Group B covered people who had previously complained to ASUS about the defects; they would automatically receive a $210 credit certificate but could instead file a claim for a $110 cash payment. Group C covered other class members who supplied a laptop serial number; they could choose a $55 cash payment or a $105 credit certificate. The opinion stated that the maximum potential monetary recovery was $5,208,000.

Claimants had to certify under penalty of perjury that their laptop experienced one or both alleged defects. ASUS could request an inspection of Group A laptops, subject to a revised inspection period of 20 days or less. The agreement also provided for notice by email, postcard, publication, online advertising, social media, press release, and a settlement website. Angeion Group was appointed as the claims administrator, and ASUS was required to pay notice and administration costs.

Carlotti’s counsel intended to request up to $787,500 in fees and costs after notice and the opportunity to object or opt out. Carlotti also intended to request a $5,000 incentive award. The court did not award those amounts at the preliminary-approval stage; it said the specific fee amount would be decided at the final approval hearing.

Reasons for preliminary approval

The court applied the factors used to evaluate whether a proposed class settlement falls within the range that could receive final approval. It found significant litigation risks, including disputes over whether the alleged defects affected all laptops, whether the advertising could deceive reasonable consumers, whether Carlotti had standing to assert claims involving one model he did not purchase, whether the warranty covered the alleged defects, and whether a class could be certified.

The court found the proposed relief reasonable when considered as a whole. It noted that class members with defective GL502VS laptops could receive repairs valued at approximately $1,193.35, in addition to monetary benefits. It also found that the parties had enough information to make an informed settlement decision despite the early stage of the case and limited formal discovery.

The court found that the proposed notice and claims process was adequate, that the allocation among Groups A, B, and C appeared equitable, and that the proposed attorney-fee request was within a reasonable range for preliminary approval. It also found no sufficient indication of collusion, although it noted that the agreement included a provision under which ASUS would not oppose a fee request up to $787,500.

Conditional settlement-class certification

For settlement purposes, the court conditionally certified a class under Federal Rule of Civil Procedure 23. The settlement class covered people who purchased a new ASUS Rog Strix GL502VS or GL502VSK laptop from ASUS or an authorized retailer between May 4, 2014, and the date preliminary approval was entered, subject to listed exclusions. The settlement class removed the California subclass and excluded people who, among others, had opted out, received a full refund, received a replacement laptop without the alleged defects, or signed a release concerning the laptop.

The court found that the approximately 24,800-person class met the requirements of numerosity, commonality, typicality, adequate representation, predominance, and superiority for settlement purposes. These findings were for the proposed settlement class and did not constitute a decision on the merits of Carlotti’s allegations.

Order

Judge Ryu granted the motion for preliminary approval. She preliminarily approved the settlement as fair, adequate, and reasonable; conditionally certified the settlement class; appointed Carlotti as class representative; appointed Gutride Safier LLP and Migliaccio & Rathod LLP as class counsel; appointed Angeion Group as claims administrator; and approved the proposed claim forms and notices as to form and content.

The court approved the procedures for submitting claims, objecting, and requesting exclusion. It stayed Carlotti’s claims and temporarily barred class members from pursuing released claims against the released parties, except for people who timely and validly opted out. The order stated that if the agreement was not finally approved or became void or terminated, the order and related orders would become null and void and the parties would return to their prior positions.