Freund v. HP, Inc.

Background

Gary Freund and Wayne McMath brought a proposed class action against HP, Inc. They alleged that HP’s all-in-one printers were marketed as devices that could print, copy, scan, and sometimes fax, but that the printers would not scan or fax when their ink cartridges were low or empty. They alleged that HP did not disclose this limitation and that they would not have bought the printers, or would not have paid as much for them, had they known about it. They sought to represent a nationwide class and California and Minnesota subclasses.

The complaint asserted eight counts: negligent misrepresentation; unjust enrichment; breach of express warranty under California law; violations of California’s Unfair Competition Law and False Advertising Law; breach of express warranty under Minnesota law; and violations of Minnesota’s Deceptive Trade Practices Act and False Advertising Law.

Fraud-Based Claims

The court held that the fraud-based claims—negligent misrepresentation and the claims under the California and Minnesota consumer-protection and false-advertising statutes—were inadequately pleaded under the heightened detail requirement for fraud claims. The plaintiffs did not plausibly allege that HP affirmatively represented that the printers could scan or fax without ink. Their allegations instead concerned an alleged failure to disclose.

The court also held that the alleged omission was not contrary to HP’s stated representations that the printers could print, copy, scan, and fax. The plaintiffs also failed to plead facts showing that HP knew or reasonably should have known about the alleged defect and concealed it at the time of sale. In addition, the complaint did not identify whether the alleged defect occurred during the warranty period or otherwise involved a safety concern. The plaintiffs did not identify the actual design defect with sufficient particularity; they described the result—that scanning stopped when ink was low or depleted—but did not identify what caused that result. The court noted that, if the plaintiffs had tested the products and determined that the problem was software-related, they should include facts about that software problem in an amended complaint.

The court dismissed the fraud-based claims in Counts 1, 4, 5, 7, and 8 with leave to amend. Independently, it dismissed the negligent-misrepresentation claim because the allegations substantially paralleled the breach-of-warranty claims and therefore could amount to a contract claim presented as a tort claim.

Express-Warranty Claims

The court dismissed the California and Minnesota express-warranty claims in Counts 3 and 6 with leave to amend. The plaintiffs called the alleged problem a design flaw but did not plead facts showing that it was a manufacturing defect. The court also held that the plaintiffs did not identify the specific and unequivocal written statements that allegedly created the warranties. Their general allegations that HP advertised the printers as multifunction devices with scanning and fax features were too generic. The court stated that any amended allegations asserting manufacturing defects should include supporting facts.

Equitable Relief and Unjust Enrichment

The court dismissed with leave to amend the claims seeking equitable restitution under unjust enrichment and the California and Minnesota statutes. The plaintiffs could plead equitable relief in the alternative, but they had to allege facts showing that their negligent-misrepresentation and breach-of-warranty claims did not provide adequate legal remedies.

The court separately found that the plaintiffs adequately pleaded requests for injunctive relief under the California and Minnesota statutes. Their allegations that they might buy HP all-in-one printers again if HP continued to advertise them as “all-in-one” were sufficient to support standing for prospective injunctive relief. The court also found that those requests were not barred because damages would provide a retrospective remedy while an injunction would provide prospective relief.

The court dismissed the unjust-enrichment claim in Count 2 with leave to amend because, although the claim could be pleaded in the alternative to the warranty claims, the complaint alleged that HP had issued a valid warranty and did not include the necessary alternative allegations.

Non-Purchased Products

The court dismissed with leave to amend the claims involving all-in-one printers that neither named plaintiff purchased. The complaint did not allege facts showing that the non-purchased products were substantially similar to the purchased products or that they used the same alleged software defect. The court also noted that neither named plaintiff was alleged to have purchased a printer with fax capabilities or experienced the alleged defect while using fax functionality. If the plaintiffs sought to represent purchasers of printers with fax capabilities, the amended complaint would need facts suggesting that the fax functionality had a substantially similar defect.

Disposition

The court granted HP’s motion to dismiss with leave to amend as to the fraud-based claims for failure to state a claim; granted it with leave to amend as to negligent misrepresentation for failure to state a claim; granted it with leave to amend as to the claims seeking equitable restitution for lack of equitable jurisdiction; and granted it with leave to amend as to claims concerning non-purchased all-in-one printers. The opinion also expressly dismissed the express-warranty claims and unjust-enrichment claim with leave to amend, while allowing the requests for injunctive relief to proceed. Plaintiffs could submit an amended complaint by February 10, 2023.