ORDER GRANTING DEFENDANT'S MOTION TO DISMISS Re: Dkt. No. 27
RONALD M. WHYTE, District Judge.
In this putative consumer class action involving central processing units, defendant Advanced Micro Devices, Inc. ("AMD") moves to dismiss plaintiff Tony Dickey's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 27. For the reasons set forth below, the court GRANTS defendant's motion to dismiss with leave to amend.
This case involves the components of certain AMD central processing units ("CPUs") for personal computers. AMD, a Delaware corporation based in Sunnyvale, California, manufactures CPUs. Dkt. No. 1 (Compl.) ¶¶ 9, 16. Plaintiff's allegations involve the number of "cores" in AMD's "Bulldozer" line of CPUs. Plaintiff alleges that "a core is an independent processing unit, which, like early CPUs, performs one calculation at a time." Id. ¶ 2. CPU manufacturers sometimes place more than one core on one physical chip to improve performance. Id. As plaintiff describes the technology, each core in a multicore CPU is able to operate (e.g., perform calculations and execute instructions) independently from other cores. Id. According to plaintiff, an eight-core CPU should be able to perform eight calculations simultaneously and independently. Id.
Plaintiff is a resident of Alabama. Compl. ¶ 8. Plaintiff alleges that he visited AMD's website at AMD.com on March 10, 2015. Compl. ¶ 42. Plaintiff allegedly saw materials on AMD's website indicating that AMD's FX-9590 Bulldozer chip was "the first native 8-core desktop processor" and "had `8-cores.'" Id. Plaintiff alleges that he then navigated to www.NewEgg.com, the website of an online retailer, and purchased two FX-9590 Bulldozer processors from Newegg.com for $299.99. Id. ¶ 44. Plaintiff alleges that the Newegg.com website also contained representations created by AMD indicating that the FX-9590 Bulldozer was the "first native 8-core desktop processor" and "the industry's first and only native 8-core desktop processor for unmatched multitasking and pure core performance with `Bulldozer' architecture." Id. ¶ 43. Plaintiff further alleges that the packaging materials for the FX-9590 processors he received indicated that the CPU was an "8-core" processor. Id. ¶ 44.
Plaintiff alleges that AMD's representations regarding the number of cores on each Bulldozer chip were false. Id. ¶ 5. In fact, according to the complaint, the Bulldozer chips functionally have only four cores—not eight, as advertised—because "AMD built the Bulldozer processors by stripping away components from two cores and combining what was left to make a single `module.'" Id. As a result, plaintiff alleges, the cores no longer work independently. Id. For example, plaintiff alleges, two of AMD's Bulldozer "module processing units" share a single floating point unit, or FPU. Id. ¶ 33. According to plaintiff "[i]f one module processing unit performs a floating point calculation, the other must wait until that resource is free for its own floating point calculation, creating a bottleneck."
Plaintiff commenced this lawsuit on October 26, 2015. Dkt. No. 1. Plaintiff's complaint asserts the following causes of action:
Id. Plaintiff seeks to represent a class of "[a]ll individuals in the United States that purchased any of the following AMD Bulldozer processors: FX-8120, FX-8150, FX-8320, FX-8350, FX-8370, FX-9370, and FX-9590." Id. ¶ 49.
AMD moved to dismiss the complaint on December 21, 2015. Dkt. No. 27. Plaintiff filed an opposition on January 26, 2016, Dkt. No. 30, and AMD filed a reply on February 12, 2016, Dkt. No. 38. The court held a hearing on the instant motion on April 1, 2016.
A. Judicial Notice
B. Legal Standard
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. Such a motion tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In considering whether the complaint is sufficient, the court must accept as true all of the factual allegations contained in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). However, the court need not accept as true "allegations that contradict matters properly subject to judicial notice or by exhibit" or "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (citation omitted). While a complaint need not allege detailed factual allegations, it "must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (internal citation omitted).
Defendant moves to dismiss on several grounds. Defendant argues that (1) Alabama law, not California law, governs plaintiff's claims, and so the UCL, FAL, and CRLA claims should be dismissed; (2) even under California law, plaintiff fails to state a claim for fraud; (3) the breach of warranty allegations fail to state a claim; and (4) plaintiff's unjust enrichment allegations fail to state a claim. Dkt. No. 27 at 2-3. The court addresses each of these arguments below.
C. Fraud-Based Claims
Assuming that California law applies to plaintiff's claims, defendant argues that plaintiff's CLRA, UCL, FAL, fraudulent inducement, and negligent misrepresentation causes of action must be dismissed due to plaintiff's failure to plead key elements of fraud. Dkt. No. 27 at 13. The Ninth Circuit has held that "where a complaint includes allegations of fraud, Federal Rule of Civil Procedure 9(b) requires more specificity including 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) (citation omitted). Plaintiff's claims sound in fraud, and are thus subject to Rule 9(b)'s pleading requirements. See Pirozzi v. Apple Inc., 913 F.Supp.2d 840, 850 (N.D. Cal. 2012) ("Plaintiff's claims under the UCL, FAL, CLRA, and for Negligent Misrepresentation . . . sound in fraud, and are subject to the heightened pleading requirements of Rule 9(b).") (citing Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir. 2009)).
"[I]n order to be deceived, members of the public must have had an expectation or an assumption about the matter in question." Daugherty v. Am. Honda Motor Co., 144 Cal.App.4th 824, 838 (2006) (citation omitted). Under California law, "a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions." In re Tobacco II Cases, 46 Cal.4th 298, 306 (2009)
Plaintiff's complaint cites non-technical AMD written materials to support plaintiff's argument that AMD made misleading statements on what constitutes a "core." For example, plaintiff alleges that in an investor filing, AMD stated:
Compl. ¶ 19 (citing a 2014 AMD form 10-K, Compl. Ex. A). The complaint also alleges that in 2010, AMD stated that its CPUs are offered "[w]ith the power of four processor cores on a single chip, [and] deliver industry-leading multitasking performance."
Defendant argues that plaintiff fails to plead specific facts to show the basis for his expectations about "cores." Dkt. No. 27 at 13. First, defendant argues that plaintiff does not allege that he personally saw or relied on any statements by AMD indicating that a core is an independent processing unit without any shared resources. Id. at 5. Nor does plaintiff allege that he personally believed that the cores on Bulldozer chips would not share resources when he bought them. Id. Plaintiff responds by arguing that the complaint specifically alleges that plaintiff saw AMD's advertising about the number of cores in its Bulldozer chips and that he relied on that advertising in making his purchase. Dkt. No. 30 at 21-22 (citing Compl. ¶¶ 42-46). The problem with plaintiff's argument is that while plaintiff alleges that he relied on AMD's representations about the number of cores on a chip, the complaint does not allege that plaintiff believed that a core could not share resources or that plaintiff even had a particular understanding of what constitutes a "core." Accordingly, the court finds that plaintiff's allegations regarding reliance are insufficient to state a claim for fraud.
Second, defendant argues, none of the statements by AMD that plaintiff cites asserts that a "core" must be an "independent processing unit" without any shared resources. Dkt. No. 27 at 5. Defendant points out that one of the industry articles cited in the complaint actually suggests that AMD's use of the term "core" was appropriate. See Compl. ¶ 34 n. 23 (citing http://www.tomshardware.com/reviews/fx-8150-zambezi-bulldozer-990fx,3043-3.html) ("To best accommodate its Bulldozer module, the company is saying that anything with its own integer execution pipelines qualifies as a core (no surprise there, right?), if only because most processor workloads emphasize integer math. I don't personally have any problem with that definition."). The court agrees with defendant that the alleged statements by AMD cited in the complaint do not suggest that AMD told consumers that a core had to be completely independent from other cores and could not share any resources. While an alleged statement by AMD's competitor Intel cited in the complaint refers to "independent central processing units in a single computing environment," the complaint does not describe any statements by AMD that suggest complete independence of cores. See Compl. ¶¶ 19-21.
Third, defendant points out that plaintiff does not plead specific details about how the definition of the term "core" allegedly impacted his computer's performance. Dkt. No. 27 at 6. However, defendant cites no authority requiring this level of specificity at the motion to dismiss stage, and the court finds plaintiff's allegations regarding decreased performance to be adequate.
For the reasons stated above, the claims under plaintiff's first, second, third, fourth, and sixth causes of action are dismissed with leave to amend.
D. Applicable Consumer Protection Law
Defendant also argues that plaintiff, an Alabama resident, cannot assert claims under California's consumer protection statutes. The court need not reach the issue of whether another state's consumer protection laws apply at this time because the court finds that plaintiff's consumer protection claims are subject to dismissal even under the assumption that California law applies. Because plaintiff will be allowed to amend his complaint, however, the court provides the analysis below so that plaintiff can address the issues that the court has identified.
Compl. Ex. B; Dkt. No. 28-3.
A different district court similarly rejected an argument by the purchaser of a television in Nikolin v. Samsung:
Nikolin v. Samsung Elecs. Am., Inc., No. CIV.A. 10-1456, 2010 WL 4116997, at *4 n.3 (D.N.J. Oct. 18, 2010) (citation omitted). See also In re Sony Gaming Networks & Customer Data Sec. Breach Litig., 903 F.Supp.2d 942, 964-65 (S.D. Cal. 2012) (rejecting argument that plaintiffs' CLRA, UCL, and FAL claims were governed by the choice of law provision in defendants' terms of service, where "[b]y its own terms, . . . the provision dictates only that California law applies to the construction and interpretation of the contract, and thus the provision does not apply to plaintiffs' non-contractual claims asserted under California's consumer protection statutes").
E. Express Warranty Claim
"In order to plead a cause of action for breach of express warranty, one must allege the exact terms of the warranty, plaintiff's reasonable reliance thereon, and a breach of that warranty which proximately causes plaintiff injury." Williams v. Beechnut Nutrition Corp., 185 Cal.App.3d 135, 142 (1986). Plaintiff claims that AMD's marketing and packaging materials stating the number of cores on Bulldozer processors created an express warranty under California law that the CPUs would contain the number of cores so stated. See Compl. ¶¶ 110-112.
Defendant moves to dismiss plaintiff's warranty claims on three grounds, one of which the court finds persuasive. First, AMD argues that plaintiff's express warranty claim depends on a technical interpretation of the term "core" that plaintiff does not allege that he personally had. Dkt. No. 27 at 3 n.3. In other words, defendant argues, plaintiff's breach of warranty claim is a fraud claim in disguise, and it should fail for the same reasons that plaintiff's fraud-based claims fail. Plaintiff's opposition brief does not directly refute this argument. The court finds that plaintiff has not adequately alleged a breach of an express warranty because he has not adequately alleged what his understanding of a "core" was.
Defendant also argues that AMD's marketing materials cannot create an express warranty because AMD's actual Limited Warranty
Defendant also argues that plaintiff has failed to give AMD pre-suit notice of a breach of warranty as required by California law. Dkt. No. 27 at 15. "To avoid dismissal of a breach of contract or breach of warranty claim in California, [a] buyer must plead that notice of the alleged breach was provided to the seller within a reasonable time after discovery of the breach." Alvarez v. Chevron Corp., 656 F.3d 925, 932 (9th Cir. 2011) (citation omitted); Cal. Com. Code § 2607(3)(A). Plaintiff argues that notice is not required when an injured customer did not deal directly with the manufacturer whose warranty may apply. Dkt. No. 30 at 24; see Minkler v. Apple, Inc., 65 F.Supp.3d 810, 817 (N.D. Cal. 2014) (noting that "timely notice of a breach of an express warranty is not required where the action is brought by `injured consumers against manufacturers with whom they have not dealt'") (citing Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57, 61 (1963)). Defendant responds that the Greenman notice exception only applies in personal injury cases, but defendant cites no authority in support of this argument. Accordingly, the court does not rely on lack of notice in dismissing plaintiff's breach of warranty claim.
Nevertheless, because plaintiff has not alleged sufficient facts regarding his understanding of the term "core," his claim for breach of warranty is dismissed with leave to amend.
F. Unjust Enrichment
Finally, defendant moves to dismiss plaintiff's unjust enrichment claim on the ground that unjust enrichment is not an independent cause of action in California. Dkt. No. 27 at 16. The Ninth Circuit recently held that "in California, there is not a standalone cause of action for `unjust enrichment,' which is synonymous with `restitution.'" Astiana v. Hain Celestial Group, Inc., 783 F.3d 753, 762 (9th Cir. 2015). However, the Astiana Court further held that "when a plaintiff alleges unjust enrichment, a court may construe the cause of action as a quasi-contract claim seeking restitution." Id. (citation omitted). AMD argues that even if unjust enrichment were a valid claim, it is not available if the plaintiff alleges that a valid express contract covering the same subject matter exists between the parties. Dkt. No. 27 at 25 (citing Gerlinger v. Amazon.Com, Inc., 311 F.Supp.2d 838, 856 (N.D. Cal. 2004)). Moreover, AMD argues, a contract claim is necessary for plaintiff's warranty claims. Plaintiff responds that he may properly plead unjust enrichment and breach of warranty in the alternative. Dkt. No. 30 at 25 (citing Blennis v. Hewlett-Packard Co., No. C 07-00333 JF, 2008 WL 818526, at *4 (N.D. Cal. Mar. 25, 2008)). In this case, the court finds that plaintiff's "unjust enrichment theory rests on allegations covered by other claims that provide for legal remedies." Top Agent Network, Inc. v. Zillow, Inc., No. 14-CV-04769-RS, 2015 WL 7709655, at *8 (N.D. Cal. Apr. 13, 2015). Plaintiff's unjust enrichment claim is superfluous, and, accordingly, dismissed.
For the foregoing reasons, the court GRANTS defendant's motion to dismiss with leave to amend. Within 14 days, plaintiff shall submit an amended complaint that corrects the deficiencies identified in this order. Furthermore, a case management conference will be held on May 13, 2016 at 10:30 a.m. The parties shall submit a joint case management statement by May 6, 2013.