Monday, January 24, 2011

California Class Certified in Suit Over Dell Price Advertising

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

In a suit against Dell Inc. under California consumer protection laws, a class was certified consisting of all citizens of the State of California who on or after March 23, 2003 purchased Dell-branded products advertised with a “Slash-Thru” price—a discount from a former sales price—via the Home & Home Office segment of Dell's website, the federal district court in San Jose has ruled.


A key question was whether class members' reliance on Dell's allegedly false representations was susceptible to common proof.

In California, “a presumption, or at least an inference, of reliance arises wherever there is a showing that a misrepresentation was material,” under the California Supreme Court's 2009 decision In re: Tobacco II Cases (CCH Advertising Law Guide ¶63,423).

There was no dispute that the alleged misrepresentations were communicated to all class members, because the representations were made at the point of sale as part of a standardized online purchasing process, the court observed.

Dell's marketing expert contended that while some purchasers might attach importance to a discount off Dell's list price, others would base their decision on wholly unrelated factors. But, under California law, the purchasers did not need to establish that each and every class member based his or her decision on the represented discounts.

The purchasers' common evidence that the representations were material satisfied California's reliance presumption, as well as the federal class action requirement that issues of law and fact common to class members predominate over individual issues, the court determined.

Exclusions from Class

The court excluded from the class purchasers exposed only to Dell's starting “Starting Price” promotions and purchasers through the Small and Medium Business (SMB) segment of Dell's website.

The two named plaintiffs' exposure to alleged misrepresentations regarding a former sales price were not typical of the purchases made after Dell changed to “Starting Price” promotions in mid-2007, the court found. The named plaintiffs failed to satisfy the class action typicality requirement with respect to the later purchases.

As to purchases made through Dell's SMB segment, a purchaser of a large number of computers for a business, or even the purchaser of a single $20,000 commercial server, was unlikely to have a substantially similar purchasing experience as the purchaser of a single laptop for personal use.

It would be difficult to make the same inference of reliance regarding the relevant offers and alleged falsity in the context of Dell's SMB segment, the court said.

The opinion in Brazil v. Dell Inc. will be reported at CCH Advertising Law Guide ¶64,130.

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