HP Consumers May Prove Fraudulent Omissions

     SAN JOSE, Calif. (CN) - Hewlett-Packard must face claims that it recommended graphics cards to customers knowing that the computers they purchased were not powerful enough to handle the upgrades.
     Lead plaintiff David Elias filed a class action against Hewlett-Packard Co. after the company failed to replace or repair his computer when its power supply could not handle the computer's included components and caused damage.
     Elias said he purchased a Pavilion Slimline through HP's website and opted to upgrade the base configuration to include a "recommended" graphics card.
     The 220-watt power supply unit (PSU) in the Slimline was inadequate to handle the graphics card, however, and within the first year the computer began to "randomly freeze, restart, or shut down," according to the complaint. After 17 months, it "shorted out" and "melted," Elias said.
     He claimed that HP knew that the recommended graphics card needed to be powered by at least a 300-watt supply unit and that the company concealed the information to increase its sales of higher-cost components. The graphics card manufacturer itself allegedly recommended to HP that the card only be used by 300-watt PSUs.
     Elias' complaint has already been through three rounds of dismissal, leaving onlt the express warranty and Song-Beverly Act implied warranty claims intact.
     U.S. District Judge Lucy H. Koh found Wednesday that Elias cured past deficiencies and may continue with his common-law fraud claims and allegations under the Consumer Legal Remedies Act and Unfair Competition Law.
     "Plaintiff need only plead sufficient facts to raise a plausible inference that HP knew, or by the exercise of reasonable care should have known, that the PSUs included in computers sold to plaintiff and class members were inadequate, and this inadequacy led to the performance and safety issues plaintiff identifies," Koh wrote. 'The component supplier recommendations and specifications form part of the factual basis supporting plaintiff's allegations that HP was aware that upgraded graphics cards and other components require more power, and more powerful PSUs."
     The complaint provided additional allegations to support HP's knowledge, including the fact that the company maintained an information webpage notifying customers of the importance of upgrading their PSUs when making post-purchase component upgrades, according to the ruling.
     Elias has also alleged that numerous customer complaints and warranty-service requests also putting HP on notice of the inadequate PSUs.
     Koh dismissed HP's argument that Elias could have discovered on his own that the graphics card he purchased would not work properly on his computer.
     "HP provides no basis to conclude that when purchasing a brand new computer from HP's website, plaintiff should have considered whether the upgrades HP offered and encouraged him to buy could be properly powered by the included, non-customizable PSU in his HP computer," the decision states. 'Nor is there any reason to think that many customers, including plaintiff, would be aware that information like PSU capacity recommendations exist, let alone is available on the Internet."
     At this stage in proceedings, Elias' allegations that HP actively encouraged customers to buy more costly, high-performance components through its "help me choose" interface can support a claim that HP actively concealed the fact that the PSUs in computers it sold to class members were not powerful enough to support these components and that its motivation was to increase sales.
     "The court's conclusion should not be read to suggest that plaintiff's active concealment claim could survive in later stages of the litigation," Koh wrote. "Rather, at this stage, the court's review is confined solely to the pleadings."