San Miguel v. HP Inc.
| Decision Date | 29 March 2018 |
| Docket Number | Case No. 5:16-cv-05820-EJD |
| Citation | 317 F.Supp.3d 1075 |
| Court | U.S. District Court — Northern District of California |
| Parties | Richard SAN MIGUEL, et al., Plaintiffs, v. HP INC., Defendant. |
Elizabeth Antonia Kramer, Jordan S. Elias, Daniel C. Girard, Girard Gibbs LLP, Joseph R. Saveri, Joseph Saveri Law Firm, Inc., San Francisco, CA, Taylor Christopher Bartlett, Pro Hac Vice, Heninger Garrison Davis, Birmingham, AL, Todd Michael Friedman, Adrian R. Bacon, Law Offices of Todd M. Friedman, P.C., Beverly Hills, CA, for Plaintiffs.
Samuel G. Liversidge, Jared Michael Strumwasser, Gibson Dunn & Crutcher LLP, Los Angeles, CA, Joseph C. Hansen, Gibson, Dunn Crutcher LLP, San Francico, CA, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS CONSOLIDATED AMENDED COMPLAINT
Re: Dkt. No. 66
This putative nation-wide class action suit arises out of Defendant HP Inc.'s ("HP") allegedly unlawful implementation of a firmware update that incapacitated thousands of HP printers and all-in-one devices (collectively "HP printers") and prevented the use of certain third-party ink cartridges in those printers. Plaintiffs Richard San Miguel, DeLores Lawty, Richard Faust, Christopher Ware and James Andrew ("Plaintiffs")1 allege that HP used the firmware in an attempt to gain an advantage over its competitors and to extract higher profits from the ink cartridge aftermarket.
HP moves to dismiss the Consolidated Amended Complaint ("Complaint")2 pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6), asserting, among other things, that HP has no legal obligation to make its printers compatible with any and all third-party ink cartridges. Based upon all pleadings filed to date and the comments of counsel at the hearing, HP's motion to dismiss is granted in part and denied in part.
Plaintiffs each purchased an HP printer and bought third-party ink cartridges when the original HP ink cartridges that came with their printers ran out of ink. Plaintiff Richard San Miguel ("Miguel") purchased an HP printer in December 2015. Miguel refilled his printer with ink cartridges manufactured by an HP competitor. These ink cartridges functioned up until September 12, 2016. On September 13, 2016, Miguel's HP printer unexpectedly failed and the screen displayed a message directing him to remove "damaged" ink cartridges and replace them with new cartridges.
Miguel alleges that HP caused this failure by disabling his printer. Miguel clicked on the link that was displayed on his screen, which led him to an HP website selling HP ink cartridges. The screen on his printer also indicated that his replacement color ink cartridges were empty, but they weren't. Miguel alleges that "[h]is printer's inoperability caused him to expend time and money." Complaint at ¶ 17. He further alleges that when he bought his HP printer, he relied on the ability to use third-party ink cartridges. If he had known that HP would prevent him from using third-party ink cartridges, he would not have bought an HP printer or he would have paid significantly less for it.
Plaintiff DeLores Lawty ("Lawty") purchased an HP printer in February 2015 and used the HP ink cartridges that came with the printer until approximately June 2016. Lawty replaced them with non-HP ink cartridges purchased online and printed documents using those cartridges. On September 15, 2016, Lawty's printer wouldn't work and the screen on her printer said there was an error with her ink cartridges. Lawty checked her cartridges and they were still full of ink. Lawty replaced the non-HP cartridges with a new set of non-HP cartridges, but the printer still would not work. Lawty tried to troubleshoot the problem with HP, but she was unable to get her printer to work. Lawty alleges that HP caused her printer to fail by disabling it. She ultimately bought a replacement printer from HP. Lawty never allowed HP to push through its firmware update. If Lawty had known that HP could or would disable her printer remotely, she would not have bought an HP printer or she would have paid significantly less for it.
Plaintiff Richard Faust ("Faust") purchased an HP printer in 2014. When the ink cartridges that came with the printer ran out of ink, he purchased and installed ink cartridges made by an HP competitor. He used the non-HP cartridges to print hundreds of pages of documents. On or about September 16, 2016, Faust's printer wouldn't work. The error message on the printer screen said that the ink cartridges were missing or damaged. Faust alleges that HP caused his printer to fail by disabling it. When investigating his printer problem, Faust learned of an optional firmware update that HP had released to fix the problem. Faust downloaded the update, but still couldn't print documents. Faust contacted HP's technical support, but the problem was not resolved. Faust purchased a Canon printer to replace his HP printer. If Faust had known HP would disable his printer if he installed non-HP ink cartridges, he would not have bought an HP printer or would have paid significantly less for it.
Christopher Ware ("Ware") experienced similar problems with his HP printer. The error message on Ware's HP printer screen said: Complaint at ¶ 39. Ware tried twice to download the "patch" offered by HP to regain operability with certain non-HP printer cartridges, but was unable to do so. Id. at ¶ 41. Ware installed HP printer cartridges and was again able to use his HP printer.
When James Andrews ("Andrews") was shopping for a printer, he "learned that the HP Officejet 4500 printer used 901 and 61 ink cartridges; HP represented on the product box that the printer used these models." Id. at ¶ 44. Andrew alleges that "[t]he 901 and 61 labels are generic part numbers for cartridges that are compatible, because of their size and functionality, with his printer." Id. Andrew alleges that HP never disclosed to him that he would not be able to print documents using third-party ink cartridges. Id. Andrews planned to use third-party ink cartridges because he knew that HP ink cartridges were much more expensive. Andrews purchased and used "901 and 61 ink cartridges from third-party sellers." Id. at ¶ 47. However, in November 2016 his printer began rejecting the third-party ink cartridges and refills. When Andrews inserted a new third-party ink cartridge, the printer showed an error code and would not print. Andrews "later learned that HP, th[r]ough his computer, had forced a firmware modification that [ ] froze his printer and prevented him from using third-party ink cartridges." Id. at ¶ 49. Andrews never permitted HP to modify his printer's firmware. Andrews "had to buy new HP-branded ink cartridges at a considerably higher price than he paid for the non-HP cartridges" to get his printer to work again. Id. at ¶ 51. Andrews alleges that he relied to his detriment on "HP's material representations and omissions that he would be able to buy third-party ink cartridges and use them in his printer." Id. at ¶ 52. Andrews would not have bought the HP printer if he had known that "HP's representations were false or that HP would forcibly control and modify his printer." Id. at ¶ 53.
Plaintiffs collectively allege that HP's firmware update changed the communication protocol between HP printers and microchips located in both HP-branded ink cartridges and third-party cartridges so that certain varieties of third-party inkjet cartridge microchips, including those manufactured and distributed by Apex Microelectronics and Static Control Components, could no longer communicate with the HP printer. Id. at ¶¶ 80-82. The firmware blocked ink cartridges containing these chips from functioning in an HP printer. Id. Plaintiffs allege that this type of conduct, which HP refers to as "dynamic security," "has disrupted the marketplace in the inkjet cartridge and refill market, by systematically disabling technology lawfully reengineered by third-party makers who sell their products in the same market as HP." Id. at ¶¶ 82-83. Plaintiffs allege that the firmware updates have rendered third-party products obsolete with the click of a button, harmed competition, and caused consumers to pay more for HP products. Id. at ¶ 83.
Plaintiffs allege that HP's conduct in disabling printers prompted a flurry of complaints and criticisms from consumers, advocacy groups, and others. Id. at ¶ 88. In response, on September 28, 2016, Jon Flaxman, the Chief Operating Officer of HP, issued a public statement, which said: Id. at ¶ 89. On October 12, 2016, HP notified customers "regarding an optional firmware update that customers could download." Id. at ¶ 91. Plaintiffs allege, however, that HP's notice of this remedial update did not fully and clearly disclose which printers and ink cartridges its firmware update impaired. Id. at ¶ 92. Plaintiffs also allege that HP has failed to adequately make Plaintiffs and class members aware that an update purporting to reverse the printer disablement is available. Id. at ¶ 93. Id. at ¶ 94. Plaintiffs allege that ordinary consumers "had no way of learning about HP's remedial update because HP buried its notice of this update on its website, with very limited notice to consumers." Id. at ¶ 97. Moreover, Plaintiffs allege that the remedial update is inadequate to restore printer functionality. Id. at ¶ 99.
HP's warranty for the printers identified in the complaint ("Class Printers")4 provides: "The use of a...
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