McKinney v. Corsair Gaming, Inc.

• Decision Date: 19 July 2022
• Docket Number: 22-cv-00312-CRB
• Parties: ANTONIO MCKINNEY, and CLINT SUNDEEN, each individually and on behalf of all others similarly situated, Plaintiffs, v. CORSAIR GAMING, INC., Defendant.
• Court: U.S. District Court — Northern District of California

ANTONIO MCKINNEY, and CLINT SUNDEEN, each individually and on behalf of all others similarly situated, Plaintiffs,
v.
CORSAIR GAMING, INC., Defendant.

No. 22-cv-00312-CRB

United States District Court, N.D. California

July 19, 2022

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

CHARLES R. BREYER UNITED STATES DISTRICT JUDGE

Plaintiffs Antonio McKinney and Clint Sundeen allege that Defendant Corsair Gaming, Inc.'s (“Corsair”) packaging of and advertisements for its computer memory cards contain deceptive and misleading statements, in violation of the common law and the consumer protection laws of California and 43 other states. FAC ¶¶ 76-140. Before the Court is Corsair's Motion to Dismiss the First Amended Complaint (“MTD”) (dkt. 27). The Court GRANTS the motion to dismiss as to (1) claims based on advertisements, (2) omissions claims, (3) equitable claims, (4) negligent misrepresentation claims, and (5) class claims with respect to products they did not purchase. The Court DENIES the motion as to (1) misrepresentation claims based on statements on the packaging, (2) breach of express warranty claims, and (3) class claims brought under the laws of other states.

I. BACKGROUND

A. The Parties

Plaintiffs McKinney and Sundeen are citizens of California who purchased Corsair memory products. FAC ¶¶ 6-7, 56, 59. Plaintiffs bring this putative class action on behalf of themselves and all consumers who purchased Corsair's high-speed memory products in

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the United States. FAC ¶ 5.

Defendant Corsair is a company headquartered in California and incorporated in Delaware, and it sells “premium, high-speed computer memory.” FAC ¶¶ 1, 9.

B. The First Amended Complaint

Plaintiffs allege the following. Corsair's “flagship” products are its high-speed computer memory sticks. FAC ¶ 14. These memory sticks function when they are plugged into the memory slots of a PC. Id. In its advertisements and on its packaging, Corsair lists a speed rating that signifies “how fast the memory can transfer data,” measured in Megahertz (MHz). Id. ¶ 15. The higher the number of MHz, the faster the memory (and the PC) performs. Id. Corsair markets these memory sticks to computer gamers who want to improve game performance, and sells the products in physical stores, through online vendors, and on its website. Id. ¶¶ 13, 19. Both Plaintiffs bought Corsair products that displayed a speed of 3200 MHz on the packaging. FAC ¶¶ 56-59. Plaintiffs also intend to represent a nationwide class of consumers who purchased Corsair memory products with other speeds advertised on the packaging. FAC ¶¶ 29, 62.

Nothing on the packaging or inside the packaging qualifies the listed speed. Id. ¶ 18. Corsair advertises the MHz listing on its physical product packaging, and its online advertisements also make claims highlighting the speed and reliability of its memory products. Id. ¶¶ 19, 23. Plaintiffs include sample advertisements for Corsair memory products and allege that Corsair made specific statements in these online ads. Id. ¶¶ 20-23.

In their complaint, Plaintiffs seem to state two different theories for their claims: an “out-of-the-box” theory and a “substantial risk” theory.

1. Out-of-the-Box Theory

Plaintiffs allege that the representations of a specific speed indicate to reasonable consumers that the memory will run at the stated speed out of the box, i.e., after being plugged into a computer without additional action by the consumer. Id. ¶¶ 24-25. This makes sense because, when consumers buy a new computer, the memory comes preinstalled and runs at the promised speed. Id. ¶ 27. Further, when aftermarket memory

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(which is bought to add to or replace an existing PC's memory) is advertised to run at “common, standard speeds,” it runs at the stated speed reliably and out of the box. Id.

But Plaintiffs allege that Corsair's 3200 MHz memory sticks do not operate at the advertised speed out of the box. Id. ¶¶ 25, 29-30. They allege that the memory runs at only 2133 MHz-the standard operating speed for PC memory-and it may never achieve the advertised speed depending on the computer platform. Id. ¶¶ 27, 29-32.^[1]

2. Substantial Risk Theory

Plaintiffs' second theory is that, when consumers optimize their system to run the memory, there is a substantial risk that the memory still does not work reliably. Corsair advertises that the memory products are “‘optimized' for overclocking on the latest Intel and AMD motherboards.” Id. ¶ 23. “Overclocking” refers to running computer components (like memory) at higher than standard speeds. Id. Overclocking requires adjusting a computer's Basic Input/Output System (BIOS) or Unified Extensible Firmware Interface (UEFI) settings, which on many computers are accessible only by “restarting the computer and repeatedly pressing a designated keyboard button . . . during a brief window of time after the computer turns on.” Id. ¶¶ 33, 34.

But Plaintiffs allege that the process of “overclocking” is not reliable. Id. ¶¶ 32-33. There is a “substantial risk that the user's particular combination of other computer components . . . simply cannot support overclocking at the advertised speed.” Id. ¶ 42. A blog post on Corsair's website authored by a Corsair employee admits that the ability to achieve high speeds through the process of overclocking is a “lottery.” Id. ¶ 32. Additionally, overclocking “poses material risks to the functionality of the computer system, as well as to the memory sticks themselves.” Id. ¶ 39. If the combination of components in a particular PC does not support running at high speeds, “the memory will not run at the advertised speed or it will run unstably (causing software glitches or system

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crashes).” Id. ¶ 42. This is because “memory interacts with other components in complex ways and overclocking is sensitive to this.” Id.

McKinney altered his BIOS settings soon after plugging in the Corsair memory stick. Id. ¶ 57. However, it still did not run stably at the advertised speed. Id. When Sundeen discovered that he needed to adjust his BIOS to achieve the advertised speed and attempted to do so, his computer crashed. Id. ¶ 60.

3. Plaintiffs' Claims

Plaintiffs allege that they were injured by Corsair's false statements and material omissions on its packaging and in advertisements. Id. ¶¶ 49-54. They allege that they would not have bought (or would not have paid the same price for) the product had they known that it did not run reliably at the stated speed. Id. ¶¶ 57, 60. Further, Plaintiffs allege that Corsair knows “the truth” that overclocking is unreliable, and “knows that the statements on its packaging and ads are false and misleading to reasonable consumers.” Id. ¶ 55. Plaintiffs also allege that “Corsair intends that consumers will rely on these false and misleading statements when purchasing High-Speed Memory.” Id.

Plaintiffs assert claims based on (1) the State Consumer Protection Acts of 44 separate states (including California); (2) California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq.; (3) California's False Advertising Laws (“FAL”), Cal. Bus. & Prof. Code § 17500, et seq.; (4) Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et seq.; (5) breach of express warranty; and (6) negligent misrepresentation. Id. ¶¶ 76-140. Corsair moves to dismiss and requests judicial notice of six exhibits. See MTD; RJN (dkt. 27-1 through 27-8).

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), the Court may dismiss a complaint for failure to state a claim upon which relief may be granted. Dismissal may be based on either “the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Godecke v. Kinetic Concepts, Inc., 937 F.3d 1201, 1208 (9th Cir. 2019) (cleaned up). A complaint must plead “sufficient factual matter, accepted as

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true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (cleaned up). A claim is plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. When evaluating a motion to dismiss, the court “must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the nonmoving party.” Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). “Courts must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).

Claims for fraud must meet the pleading standard of Federal Rule of Civil Procedure 9(b), which requires a party “alleging fraud or mistake [to] state with particularity the circumstances constituting fraud or mistake.” Rule 9(b) “requires . . . an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (cleaned up). “This means that averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged.” In re Google Assistant Priv. Litig., 546 F.Supp.3d 945, 955 (N.D. Cal. 2021) (internal quotations omitted).

If a court dismisses a complaint for failure to state a claim, it should “freely give leave” to amend “when justice so requires.” Fed.R.Civ.P. 15(a)(2). A court has discretion to deny leave to amend due to “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendment previously allowed, undue prejudice to the opposing party by virtue of...