Cho v. Seagate Technology Holdings, Inc.

177 Cal. App. 4th 734, 99 Cal. Rptr. 3d 436, 2009 Cal. App. LEXIS 1520
CourtCalifornia Court of Appeal
DecidedSeptember 15, 2009
DocketA121623
StatusPublished
Cited by23 cases

This text of 177 Cal. App. 4th 734 (Cho v. Seagate Technology Holdings, Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cho v. Seagate Technology Holdings, Inc., 177 Cal. App. 4th 734, 99 Cal. Rptr. 3d 436, 2009 Cal. App. LEXIS 1520 (Cal. Ct. App. 2009).

Opinion

Opinion

SIGGINS, J.

Plaintiff Sara Cho filed a representative class action against Seagate Technology Holdings, Inc. (Seagate), for falsely overstating in advertising and packaging the storage capacity of computer disc drives that it manufactures for public sale. The case was settled and David Klausner objected to the settlement. Klausner argued the class definition was imprecise and misleading, and that there was the possibility of collusion between the parties affecting settlement negotiations. In particular, Klausner claimed that collusion was evident because once the parties learned of Klausner’s objections, they modified their positions on the scope of class membership without changing the class definition. The trial court overruled Klausner’s objections and approved the settlement. We conclude that Klausner has not shown the trial court abused its discretion in approving the settlement, and that there are no facts that show the parties engaged in any collusion or improper conduct. *738 But we remand to require notice to the class that accurately reflects class membership as agreed upon by the parties, and intended by the court to be included within the settlement.

FACTUAL AND PROCEDURAL BACKGROUND

Cho filed her complaint in Los Angeles County Superior Court in August 2005 alleging that defendant Seagate overstated the storage capacity of its computer hard drives in advertising and product labeling by approximately 7 percent. Cho’s amended complaint alleged that the principal reason for the overstatement was that Seagate used a decimal definition of “gigabyte” (equal to one billion bytes) which differed from the binary definition (equal to approximately 1.073 billion bytes) that was used by computer operating systems. Cho asserted claims for unfair business practices, false advertising, and violation of the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.). 1 After this case was transferred to the San Francisco Superior Court, Seagate denied Cho’s allegations and asserted a number of affirmative defenses. The parties engaged in considerable discovery and filed various motions, including motions for summary judgment. While Cho’s motion seeking class certification was pending, the parties engaged in two and a half days of mediation before the Honorable Edward Infante (Ret.). The parties reached a settlement agreement that was preliminarily approved by the trial court in September 2007. Shortly thereafter, the court certified a plaintiff settlement class.

The agreement defined the settlement class to include “all persons and entities who purchased in the United States a Retail Hard Drive between March 22, 2001 and the date of Preliminary Approval.” A “retail hard drive” was defined as “a new Seagate brand hard disc drive that was purchased from an authorized Seagate retailer or distributor, separately as a Seagate product, that was not pre-installed into and sold bundled with a personal computer or other electronic device.” 2 Seagate estimated there were more than six million qualifying purchases during the relevant period.

As consideration for the settlement, Seagate agreed to more precisely disclose the capacity of its hard drives on its packaging and Web site. Seagate also agreed to certain individual benefits for settlement class members. For *739 disc drives purchased before January 1, 2006, class members could choose either a cash payment equal to 5 percent of the net purchase price, or the Seagate Software Suite (the Software) that would allow users to perform enhanced computer and disc management functions. The estimated average cash benefit payable per hard drive was $7, and the Software had an estimated retail value of approximately $40. For disc drives purchased after January 1, 2006, when the packaging included more precise disclosures added by Seagate, class members were entitled to receive the Software. 3 To receive benefits, class members were required to submit a claim form that would be reviewed by a claims administrator. The claim form required the model name and number, amount paid, date of purchase, and name of the merchant. To obtain cash payment, the claim form also required either documentary proof of purchase or the serial number of the hard drive. Counsel for the parties were to be informed of any rejected claims, which, if unresolved, could be presented to the court for review. Seagate also agreed not to challenge an application for attorney fees of up to $1.75 million, costs of up to $35,500, and an incentive fee of $5,000 for Cho.

Notice of the settlement was to be provided through the establishment of a settlement Web site, a hyperlink at the bottom of the home page on Seagate’s Web site, an e-mail notice sent to identified class members, and publication of the notice of settlement once a week for four consecutive weeks in USA Today. Each of the forms of notice advised readers they were “a member of the settlement class if, between March 22, 2001 and September 26, 2007, you purchased in the United States a new Seagate brand hard disc drive from an authorized Seagate retailer or distributor, separately as a Seagate product that was not pre-installed into and bundled with a personal computer or other electronic device.” Publication was made in USA Today. The e-mail notices were sent to approximately 650,000 class members. Seagate posted the hyperlink on its Web site, and the settlement Web site was established and received hits from more than 113,000 uniquely identifiable visitors.

Klausner was the only person who formally objected to the settlement. 4 Klausner argued the notices of settlement were insufficient and inconsistent with the agreement. He claimed it was not possible to determine “whether someone who purchased a Seagate Hard Drive (‘Drive’) from a retailer that is not a Seagate authorized retailer, but that retailer purchased the Drive from an authorized distributor, is a class member under the settlement agreement.” *740 Klausner said that only one of the 10 drives he purchased came from an authorized retailer listed on Seagate’s Web site. 5 The parties initially responded that those who did not purchase their drives directly from an authorized retailer or distributor, as listed on Seagate’s Web site, were not part of the settlement class.

In papers supporting his objections, Klausner argued, inter alia, that the definition of the settlement class provided in the notices, and as construed by the parties, was unduly restrictive. The scope of the plaintiff class described in the complaint had been abandoned, and those who bought their disc drives from independent retailers were unfairly excluded from the class. In response to this argument, Seagate adopted the position that: “The settlement includes anyone who purchased a Retail Hard Drive in the authorized retail distribution channel, regardless of whether the retailer in the transaction is listed on Seagate’s Web site." Cho also acknowledged that she was wrong when she said in her previous brief that authorized retailers and distributors were limited to those listed on Seagate’s Web site.

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Cite This Page — Counsel Stack

Bluebook (online)
177 Cal. App. 4th 734, 99 Cal. Rptr. 3d 436, 2009 Cal. App. LEXIS 1520, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cho-v-seagate-technology-holdings-inc-calctapp-2009.