SFMS Announces Victory For Consumers In Sharplin v. Gateway, Inc.

June 13th, 2007

Shepherd Finkelman Miller & Shah, LLC ("SFMS") is pleased to announce that the Honorable James V. Selna has denied Gateway, Inc.'s ("Gateway") Motion to Dismiss with the exception of Plaintiff's allegations that the warranty provision violated Section 1770(a)(19) of the California Civil Code.

The Court reached the following conclusion:

•In denying Gateway's request to dismiss Plaintiff's false and misleading advertising claim, the Court found that Plaintiff has alleged that Gateway made false representations in its advertising and marketing regarding the characteristics and components of the 6800 series laptops. Further, with respect to Gateway's arguments that the representations in question were not actionable puffery, the Court found "that the phrases 'most stringent quality control tests' and 'brand-name components' are specific factual statements which may be established or disproved through discovery, and are therefore not mere puffery."

•In rejecting Gateway's arguments concerning whether Gateway had a duty to disclose potential defects that may occur outside the warranty period, the Court held that "[I]t is unnecessary at the pleading stage, for the court to determine whether Gateway had a duty to disclose potential defects because Sharplin's claims rely upon more than merely a failure to disclose: the Complaint alleges affirmative misrepresentations."

•The Court affirmed its prior holding in Anunziato v. eMachines, 402 F.Supp. 2d at 1139, that Proposition 64 does not require a plaintiff to plead reliance as part of a claim under either section 17200 or 17500. "The purposes of Proposition 64 are fully met without imposing requirements which go beyond actual injury." Anunziato, 402 F.Supp. 2d at 1138.

•The Court found that Plaintiff sufficiently alleged reliance in his complaint at this pleading stage.

•The Court found that California law was appropriate to apply to out-of-state Class members who were deceived by misrepresentations that emanated from California.

•With respect to Plaintiff's argument that the one-year warranty was an unconscionable provision under Section 1770(a)(19) of the CLRA, the Court held that "what Gateway knew when it included a one-year warranty may state claims under other consumer protection statutes, but they are insufficient to allege that the warranty itself was substantively unconscionable."

SFMS congratulates James Miller, James Shah and Nathan Zipperian for their excellent work on this case.