Day v. Advanced Micro Devices, Inc.

Background

The plaintiffs sued Advanced Micro Devices, Inc. (AMD), alleging that an enabled fTPM feature caused occasional and momentary stuttering on their computers. They purported to represent a nationwide class. AMD moved to dismiss the complaint.

Court’s Analysis

Negligence

The court dismissed the negligence claim because the economic loss rule barred it. That rule generally prevents recovery in negligence for purely economic losses unless an exception applies. The plaintiffs argued that the exception for damage to other property applied, but the court found that they had not adequately alleged physical damage to their computers.

The court distinguished earlier cases in which plaintiffs alleged that defective components caused overheating, degradation of the central processing unit or battery, shortened battery life, or reduced computer life spans. Here, the plaintiffs alleged only occasional and momentary stuttering when the fTPM was enabled, and their allegations suggested that the problem resolved when the fTPM was disabled.

Unjust Enrichment

The court dismissed the unjust enrichment claim because the plaintiffs purported to represent a nationwide class but did not provide even one state’s law as a representative example. The court also explained that, at least under California law, unjust enrichment must be pleaded in the alternative and the plaintiffs must allege why their legal remedies are inadequate. The plaintiffs had not attempted to allege that legal remedies were inadequate.

The court rejected as essentially meritless the argument that California law does not recognize an unjust enrichment cause of action. It stated that California law recognizes at least a quasi-contract claim based on an unjust-enrichment theory.

Implied Warranty of Merchantability

The court dismissed the claims for breach of the implied warranty of merchantability. The plaintiffs’ descriptions of how often the stuttering occurred were too abstract and insufficiently specific to suggest that the computers were unmerchantable. The court questioned whether “frequently” or “nearly every time” meant one or two brief incidents per day or continuous problems.

The complaint relied on quotations from unnamed user complaints, which suggested that the stuttering lasted about half a second and occurred three or four times a day. The court stated that, although such stuttering could be frustrating, the alleged duration and frequency did not suggest that the central processing unit was unmerchantable.

Illinois and West Virginia Consumer-Protection Claims

The court said it could not determine what legal theories the plaintiffs were pursuing under the Illinois and West Virginia consumer-protection statutes. In their opposition brief, the plaintiffs disclaimed fraud-based theories and said they were pursuing claims based only on unfair or unethical practices. At the hearing, however, their lawyer appeared to suggest that they were pursuing fraud-based claims.

The court stated that, if the plaintiffs were pursuing fraud-based claims, the complaint appeared deficient because it alleged almost nothing about AMD’s knowledge before the sales, characterized AMD’s statements as nonactionable promotional claims, and did not plead reliance with enough detail. If the plaintiffs were instead pursuing unfair- or unethical-practice theories, the court found that they had not adequately presented the relevant law or the elements of those claims under the two states’ statutes.

Disposition

Judge Vince Chhabria granted AMD’s motion to dismiss with leave to amend. The court ordered that any amended complaint be filed within 21 days of the order, and that AMD’s response be filed within 21 days after an amendment. The opinion does not state whether a class had been certified.