NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 2 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
In re: INTEL CORP. CPU MARKETING, No. 22-35652 SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION, D.C. No. 3:18-md-02828-SI ______________________________
JIMAYA GOMEZ; et al., MEMORANDUM*
Plaintiffs-Appellants,
v.
INTEL CORPORATION, a Delaware corporation,
Defendant-Appellee.
Appeal from the United States District Court for the District of Oregon Michael H. Simon, District Judge, Presiding
Argued and Submitted October 17, 2023 Portland, Oregon
Before: KOH and SUNG, Circuit Judges, and EZRA,** District Judge.
Plaintiffs appeal the district court’s dismissal of their claims brought against
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable David A. Ezra, United States District Judge for the District of Hawaii, sitting by designation. Intel Corporation (“Intel”) on behalf of a nationwide class.1 In three orders from
2021 to 2022, the district court first dismissed Plaintiffs’ omission-based claims,2
and later dismissed their unfair conduct claims.3 We have jurisdiction under 28
U.S.C. § 1291. We review de novo, see Moore v. Mars Petcare US, Inc., 966 F.3d
1007, 1016 (9th Cir. 2020), and we affirm.
1. Omission-Based Claims. Under California law, a claim will lie for a
fraudulent omission only where the defendant was under a duty to disclose the
omitted fact. See Hodsdon v. Mars, Inc., 891 F.3d 857, 861 (9th Cir. 2018) (citing
Daugherty v. Am. Honda Motor Co., 51 Cal. Rptr. 3d 118, 126 (Ct. App. 2006)). In
Hodsdon v. Mars, Inc., we held that a duty to disclose arises where (1) the
omission is material, (2) “the defect was central to the product’s function,” and (3)
one of the four factors discussed in LiMandri v. Judkins, 60 Cal. Rptr. 2d 539 (Ct.
1 As Plaintiffs did not discuss any of the state subclass claims in their Opening Brief, those claims are forfeited on appeal. Friends of Yosemite Valley v. Kempthorne, 520 F.3d 1024, 1033 (9th Cir. 2008). 2 These claims were raised under California’s Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750; False Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500; the “fraud prong” of the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200; and common law fraud by concealment and omission. 3 These consisted of a claim under the “unfair” prong of the UCL, and a quasi- contract/unjust enrichment claim. The latter claim is predicated on the same conduct as Plaintiffs’ UCL claim, and the two claims therefore rise or fall together. See Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015).
2 App. 1997), is present. Hodsdon, 891 F.3d at 863.
The district court concluded that Plaintiffs failed to plausibly allege that the
defects were central to the function of Intel’s processors. The court observed that
“[t]he fact that Intel’s chips have for years allegedly been vulnerable to novel
[security] attacks, that were never exploited, does not go to the central function of
the microprocessors.” We agree. There is no allegation that Plaintiffs’ processors
ever stopped operating as “the ‘brains’ of the computing device[s], performing all
necessary computations for each application . . . and each peripheral.” Although
the processors’ level of security may well be material to consumers, the security
risk presented by the defects alleged in this case does not make these defects
central to the processors’ function. See id. at 864 (finding alleged defect material,
but not central).
Because we agree that Plaintiffs’ allegations fail to cross Hodsdon’s central
functionality threshold, Plaintiffs have not established that Intel was under a duty
to disclose the defects. As such, the district court properly dismissed Plaintiffs’
omission-based claims.
2. Unfair Conduct Claims. California’s “balancing test,” applicable to
Plaintiffs’ unfair conduct claims, “weigh[s] the utility of the defendant’s conduct
against the gravity of the harm to the alleged victim.” Epic Games, Inc. v. Apple,
Inc., 67 F.4th 946, 1000 (9th Cir. 2023) (alteration in original) (quoting
3 Progressive W. Ins. Co. v. Super. Ct., 37 Cal. Rptr. 3d 434, 452 (Ct. App. 2005)).
The district court initially dismissed Plaintiffs’ unfair conduct claims for Intel’s
conduct prior to September 1, 2017, reasoning that Plaintiffs’ allegations regarding
this time period were coextensive with those of the previously dismissed omission-
based claims. This conclusion was sound. Any allegations that Intel sold its
processors while knowing them to be defective is simply another way of advancing
Plaintiffs’ fraud-by-omission argument, which, as discussed above, was not well
pleaded. As Intel was under no duty to disclose the defects, this conduct cannot
have been “substantially injurious” for purposes of an unfair conduct claim.
Hodsdon, 891 F.3d at 867; see Hauck v. Advanced Micro Devices, Inc., 816 F.
App’x 39, 43 (9th Cir. 2020) (mem.).
Plaintiffs’ allegations regarding Intel’s conduct after September 1, 2017, fare
no better. To the extent Plaintiffs allege that Intel took advantage of an
“information asymmetry” between Intel and its customers, and that it continued
selling its processors despite knowing of the defects, these allegations are
indistinguishable from the dismissed omission-based claims.
The allegations regarding the impact of Intel’s patches are similarly
unavailing. Plaintiffs simultaneously allege that Intel failed to disclose that “there
were pending security mitigations that could impact security and performance,” but
also that Intel made such a disclosure by “advis[ing] consumers not to download its
4 patches until better versions were deployed.” Aside from these internal
inconsistencies, Plaintiffs do not plausibly allege that the utility of the patches (that
is, at least partial protection from security attacks) was outweighed by the alleged
harm to Plaintiffs by way of reduced processor performance. Cf. Hauck, 816 F.
App’x at 43 (“Plaintiffs have not plausibly alleged . . . that the harm represented by
the theoretical risk of a cybersecurity flaw that has not yet been successfully
exploited outweighs the other benefits of AMD’s processor design.”).
In addition, Plaintiffs’ allegation regarding Intel’s imposition of a licensing
restriction is limited to a single, conclusory sentence in the operative Second
Amended Complaint. See Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009) (conclusory
allegations are “not entitled to be assumed true”).
Finally, Plaintiffs argue that Intel’s unfair conduct is further evidenced by its
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 2 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
In re: INTEL CORP. CPU MARKETING, No. 22-35652 SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION, D.C. No. 3:18-md-02828-SI ______________________________
JIMAYA GOMEZ; et al., MEMORANDUM*
Plaintiffs-Appellants,
v.
INTEL CORPORATION, a Delaware corporation,
Defendant-Appellee.
Appeal from the United States District Court for the District of Oregon Michael H. Simon, District Judge, Presiding
Argued and Submitted October 17, 2023 Portland, Oregon
Before: KOH and SUNG, Circuit Judges, and EZRA,** District Judge.
Plaintiffs appeal the district court’s dismissal of their claims brought against
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable David A. Ezra, United States District Judge for the District of Hawaii, sitting by designation. Intel Corporation (“Intel”) on behalf of a nationwide class.1 In three orders from
2021 to 2022, the district court first dismissed Plaintiffs’ omission-based claims,2
and later dismissed their unfair conduct claims.3 We have jurisdiction under 28
U.S.C. § 1291. We review de novo, see Moore v. Mars Petcare US, Inc., 966 F.3d
1007, 1016 (9th Cir. 2020), and we affirm.
1. Omission-Based Claims. Under California law, a claim will lie for a
fraudulent omission only where the defendant was under a duty to disclose the
omitted fact. See Hodsdon v. Mars, Inc., 891 F.3d 857, 861 (9th Cir. 2018) (citing
Daugherty v. Am. Honda Motor Co., 51 Cal. Rptr. 3d 118, 126 (Ct. App. 2006)). In
Hodsdon v. Mars, Inc., we held that a duty to disclose arises where (1) the
omission is material, (2) “the defect was central to the product’s function,” and (3)
one of the four factors discussed in LiMandri v. Judkins, 60 Cal. Rptr. 2d 539 (Ct.
1 As Plaintiffs did not discuss any of the state subclass claims in their Opening Brief, those claims are forfeited on appeal. Friends of Yosemite Valley v. Kempthorne, 520 F.3d 1024, 1033 (9th Cir. 2008). 2 These claims were raised under California’s Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750; False Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500; the “fraud prong” of the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200; and common law fraud by concealment and omission. 3 These consisted of a claim under the “unfair” prong of the UCL, and a quasi- contract/unjust enrichment claim. The latter claim is predicated on the same conduct as Plaintiffs’ UCL claim, and the two claims therefore rise or fall together. See Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015).
2 App. 1997), is present. Hodsdon, 891 F.3d at 863.
The district court concluded that Plaintiffs failed to plausibly allege that the
defects were central to the function of Intel’s processors. The court observed that
“[t]he fact that Intel’s chips have for years allegedly been vulnerable to novel
[security] attacks, that were never exploited, does not go to the central function of
the microprocessors.” We agree. There is no allegation that Plaintiffs’ processors
ever stopped operating as “the ‘brains’ of the computing device[s], performing all
necessary computations for each application . . . and each peripheral.” Although
the processors’ level of security may well be material to consumers, the security
risk presented by the defects alleged in this case does not make these defects
central to the processors’ function. See id. at 864 (finding alleged defect material,
but not central).
Because we agree that Plaintiffs’ allegations fail to cross Hodsdon’s central
functionality threshold, Plaintiffs have not established that Intel was under a duty
to disclose the defects. As such, the district court properly dismissed Plaintiffs’
omission-based claims.
2. Unfair Conduct Claims. California’s “balancing test,” applicable to
Plaintiffs’ unfair conduct claims, “weigh[s] the utility of the defendant’s conduct
against the gravity of the harm to the alleged victim.” Epic Games, Inc. v. Apple,
Inc., 67 F.4th 946, 1000 (9th Cir. 2023) (alteration in original) (quoting
3 Progressive W. Ins. Co. v. Super. Ct., 37 Cal. Rptr. 3d 434, 452 (Ct. App. 2005)).
The district court initially dismissed Plaintiffs’ unfair conduct claims for Intel’s
conduct prior to September 1, 2017, reasoning that Plaintiffs’ allegations regarding
this time period were coextensive with those of the previously dismissed omission-
based claims. This conclusion was sound. Any allegations that Intel sold its
processors while knowing them to be defective is simply another way of advancing
Plaintiffs’ fraud-by-omission argument, which, as discussed above, was not well
pleaded. As Intel was under no duty to disclose the defects, this conduct cannot
have been “substantially injurious” for purposes of an unfair conduct claim.
Hodsdon, 891 F.3d at 867; see Hauck v. Advanced Micro Devices, Inc., 816 F.
App’x 39, 43 (9th Cir. 2020) (mem.).
Plaintiffs’ allegations regarding Intel’s conduct after September 1, 2017, fare
no better. To the extent Plaintiffs allege that Intel took advantage of an
“information asymmetry” between Intel and its customers, and that it continued
selling its processors despite knowing of the defects, these allegations are
indistinguishable from the dismissed omission-based claims.
The allegations regarding the impact of Intel’s patches are similarly
unavailing. Plaintiffs simultaneously allege that Intel failed to disclose that “there
were pending security mitigations that could impact security and performance,” but
also that Intel made such a disclosure by “advis[ing] consumers not to download its
4 patches until better versions were deployed.” Aside from these internal
inconsistencies, Plaintiffs do not plausibly allege that the utility of the patches (that
is, at least partial protection from security attacks) was outweighed by the alleged
harm to Plaintiffs by way of reduced processor performance. Cf. Hauck, 816 F.
App’x at 43 (“Plaintiffs have not plausibly alleged . . . that the harm represented by
the theoretical risk of a cybersecurity flaw that has not yet been successfully
exploited outweighs the other benefits of AMD’s processor design.”).
In addition, Plaintiffs’ allegation regarding Intel’s imposition of a licensing
restriction is limited to a single, conclusory sentence in the operative Second
Amended Complaint. See Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009) (conclusory
allegations are “not entitled to be assumed true”).
Finally, Plaintiffs argue that Intel’s unfair conduct is further evidenced by its
statement to a media outlet that the exploits “were an industry-wide problem and
not unique to Intel.” However, given that Plaintiffs also allege that this statement
was publicly denied by AMD, one of Intel’s competitors, Plaintiffs fail to plausibly
show that a reasonable consumer would have been misled by Intel’s statement. Cf.
Ebner v. Fresh, Inc., 838 F.3d 958, 965–66 (9th Cir. 2016) (affirming Rule
12(b)(6) dismissal of California statutory claims where plaintiffs failed to plausibly
allege “that the reasonable consumer would be deceived” by product’s label).
Moreover, Plaintiffs fail to allege that they actually relied on this statement. See In
5 re Tobacco II Cases, 207 P.3d 20, 26 (Cal. 2009) (“[A plaintiff] 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[.]”). Taken in
their totality, none of Plaintiffs’ allegations state a plausible claim that Intel
engaged in unfair business practices.4
AFFIRMED.
4 Because we agree that Plaintiffs did not state plausible claims for unfair conduct, we also conclude that the district court did not abuse its discretion in granting Intel’s motion for reconsideration.