Dinan v. SanDisk LLC

Background

This proposed class action concerned the meaning of “GB,” or gigabyte, on SanDisk’s electronic-storage products. The plaintiffs alleged that SanDisk used “GB” on product packaging to mean one billion bytes, while many computer operating systems used “GB” to mean 1,073,741,824 bytes. They claimed that reasonable consumers could therefore believe they were receiving more storage capacity than the products actually provided.

The named plaintiffs alleged that they bought SanDisk storage products labeled as 64 GB or 256 GB for use with devices that use the binary system. They asserted four claims: breach of contract; violation of California’s Unfair Competition Law; violation of California’s Consumer Legal Remedies Act; and violation of California’s False Advertising Law. The court had previously dismissed the original complaint, allowing amendment as to the three statutory claims but not as to the contract claim.

Judicial Notice and the Packaging

The court took judicial notice of the packaging for John Dinan’s SanDisk 64 GB iXPAND Flash Drive USB 3.0. The packaging displayed “64 GB” on the front with an asterisk, and the back stated, “1GB = 1,000,000,000 bytes.” The court found that the disclosure was small but legible and that the asterisk directed consumers to supplemental information. The court did not take judicial notice of the packaging for the products purchased by the other two named plaintiffs because those packages had not been submitted.

The court also took judicial notice of federal statutes and National Institute of Standards and Technology materials stating that the International System of Units prefixes represent powers of 10, and that “giga” means 1,000,000,000. The court concluded that the decimal meaning was the preferred standard measurement for United States trade and commerce. It also noted that dictionary definitions recognized both decimal and binary meanings of gigabyte.

Rule 12(b)(6) Standard

The defendant moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint contains enough legally sufficient facts to state a claim. The court generally had to accept the complaint’s factual allegations as true and view them favorably to the plaintiffs, but it did not have to accept unreasonable inferences or unsupported conclusions. The statutory consumer-protection claims also had to satisfy Rule 9(b), which requires fraud-based claims to identify the who, what, when, where, and how of the alleged misconduct.

Consumer-Protection Claims

The court held that the claims under the Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law failed under the reasonable-consumer test. That test asks whether a significant portion of ordinary consumers, acting reasonably, would probably be misled.

For the product purchased by Dinan, the court concluded that the packaging was not deceptive. The term “GB” could have two meanings, but the packaging accurately stated the number of decimal gigabytes and separately disclosed the number of bytes. The court characterized that disclosure as clarifying the meaning of “GB,” rather than attempting to cure a deceptive front-of-package statement. The court rejected the argument that SanDisk had to state how many binary gigabytes the product contained.

The court also held that the plaintiffs’ statutory claims were barred by California’s safe-harbor doctrine. That doctrine prevents courts from condemning conduct that the Legislature has clearly permitted. California law adopted the measurement definitions published by the National Institute of Standards and Technology for transactions in the state, and those definitions use the decimal meaning of “giga.” The court therefore held that SanDisk’s use of the decimal meaning of gigabyte was clearly permitted under California law. The safe harbor barred the Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law claims as to all of SanDisk’s products.

Because the plaintiffs had already amended once and could not cure the safe-harbor defect, the court found that further amendment would be futile. It dismissed Counts 2, 3, and 4 with prejudice.

Breach-of-Contract Claim

The court again dismissed Count 1, the breach-of-contract claim, with prejudice. In the earlier order, it had held that the packaging expressly promised 64 decimal gigabytes—“1 GB = 1,000,000,000 bytes”—and that SanDisk provided what the packaging promised. The plaintiffs repleaded the claim but did not argue that the amended complaint cured the previously identified defect. The court therefore declined to revisit its earlier ruling and dismissed Count 1 with prejudice.

Disposition

The court granted SanDisk’s motion to dismiss without leave to amend. It dismissed all four claims with prejudice and ordered that the amended complaint be dismissed with prejudice.