California’s “Safety Requirement” Takes Another Hit

Here is a noteworthy excerpt from Judge Whyte’s motion to dismiss and class certification ruling in the pending MDL class action involving Lenovo computers that came pre-installed with adware.  The excerpt below pertains to the California safety requirement in duty to disclose cases – a topic about which we have written several times.  (The excerpt is otherwise offered without commentary since Girard Gibbs LLP is court-appointed class counsel in the litigation.)

Lenovo argues that plaintiffs cannot allege a duty to disclose because a “manufacturer’s duty to consumers is limited to its warranty obligations absent either an affirmative misrepresentation or a safety issue.” Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1141 (9th Cir. 2012).
This court must apply California law. In Wilson, cited by Lenovo, the Ninth Circuit noted that California federal courts have generally interpreted Daugherty, a California Court of Appeal decision, as limiting a manufacturer’s duty to disclose “to its warranty obligations absent either an affirmative misrepresentation or a safety issue.” 668 F.3d at 1141 (citing Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824 (2006), as modified (Nov. 8, 2006)). In Norcia, cited by plaintiffs, the district court noted that “the California Court of Appeal itself has very recently clarified that this is a misreading of California law.” 2015 WL 4967247, at *6 (citing Rutledge v. Hewlett-Packard Co., 238 Cal. App. 4th 1164, 1174 (2015), as modified on denial of reh’g (Aug. 21, 2015)). In Rutledge, the California Court of Appeal explained that Daugherty decision itself addressed the “disclosure of defects related to safety concerns in the context of CLRA and UCL,” but that nothing in Daugherty precludes the existence of “a duty to disclose material information known to a manufacturer and concealed from a consumer” in the absence of safety concerns. 238 Cal. App. 4th at 1174 (finding that plaintiffs had stated a fraudulent omissions claim by alleging that HP concealed “the material fact that HP notebook computers have known defects that cause display problems”).
No clear and convincing evidence suggests that the California Supreme Court would decide Rutledge differently. As explained in Rutledge, the California Court of Appeal’s earlier Daugherty decision does not explicitly foreclose the possibility of a duty to disclose absent an affirmative representation or safety concern. Accordingly, the court declines to dismiss plaintiffs’ UCL and CLRA claims for failure to allege either an affirmative misrepresentation or a safety concern.
(emphases added and some citations omitted)