Statler v. Dell, Inc.

775 F. Supp. 2d 474, 2011 U.S. Dist. LEXIS 36511, 2011 WL 1326009
CourtDistrict Court, E.D. New York
DecidedMarch 30, 2011
DocketCV 10-3798
StatusPublished
Cited by45 cases

This text of 775 F. Supp. 2d 474 (Statler v. Dell, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Statler v. Dell, Inc., 775 F. Supp. 2d 474, 2011 U.S. Dist. LEXIS 36511, 2011 WL 1326009 (E.D.N.Y. 2011).

Opinion

WEXLER, District Judge.

This is an action commenced by Plaintiff Richard Statler (“Plaintiff’), against Dell, Inc. (“Dell”) alleging several causes of action arising out of the alleged malfunction of five Dell computers purchased by Plaintiff in 2003. Plaintiffs amended complaint sets forth four causes of action, and seeks to represent a class of others similarly situated. Presently before the court is Defendant’s motion, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the amended complaint.

BACKGROUND

I. Factual Background

The facts set forth below are drawn from the allegations of the amended complaint, as well as affidavits and documents properly before the court.

A. Plaintiff’s Purchase and Experience with Dell Optiplex Computers

In late 2003, Plaintiff purchased five Dell Optiplex computers directly from Dell. The computers were purchased for use in Plaintiffs chiropractic business. Four of the five computers were placed in patient treatment areas, and one was used to handle server functions. Accompanying the computers was a five year limited warranty (the “Warranty”). 1 The Warranty covers “defects in materials and workmanship,” in “Dell-branded hardware products, including Dell-branded peripheral products.” It further states that Dell’s responsibility for covered defects “is limited to repair and replacement,” and that Dell accepts no liability beyond the remedies provided for in the Warranty. With respect to the time period of the Warranty, it provides that “[t]he warranty period is not extended if we repair or replace a warranted product or parts.”

The amended complaint details Plaintiffs personal experience with the computers. Without stating a particular date, Plaintiff states that “sometime” after purchase, each of the computers he purchased began to manifest “serious operational errors.” The facts set forth in the amended complaint make clear that Plaintiff attributes the problems to faulty capacitors, a component part manufactured by an outside vendor. It is clear that the capacitors were present in the computers at the time of manufacture and delivery to Plaintiff.

Plaintiff states that he reported his problems to Dell customer service. Dell is alleged to have known, and covered up the fact that the problems experienced by Plaintiff were common to its Optiplex computers, and were traceable to defective capacitors. Although Dell repair technicians were sent to Plaintiffs office, the problems persisted. Dell is alleged to have replaced faulty motherboards with others that were also “populated with defective capacitors.” Ultimately, the Optiplex computers are alleged to have either failed completely, or work only sporadically. Although the amended complaint makes reference to safety hazards alleged to be associated with defective leaking capacitors, Plaintiff nowhere alleges that he *479 or any of his patients or staff suffered any injury in connection with such alleged hazards.

B. Computer Defects and Plaintiffs Knowledge Thereof

Plaintiffs complaint details the capacitor defects that are alleged to have been known by Dell since sometime during 2005, but were, according to Plaintiff, covered up by the company. Plaintiff alleges that he discovered the defects only upon reading a June 2010 article published in the New York Times (the “Times Article”). The court makes no finding with respect to the veracity of the information set forth in the Times Article. However, because Plaintiff relies heavily on that article to support both the facts alleged in his complaint, and the argument that his claims are timely, it is appropriate to consider the contents thereof, and its date of publication, in connection with this motion to dismiss.

The Times Article discusses facts alleged to have been revealed in recently unsealed documents that were produced in connection with a 2007 lawsuit filed against Dell in the United States District Court for the District of North Carolina (the “2007 Lawsuit”). The 2007 Lawsuit was brought by Advanced Internet Technologies, Inc., a company that purchased over 2,000 Optiplex computers from Dell. While the complaint in the 2007 Lawsuit does not specifically reference capacitor problems, it alleges widespread failure associated with the computers, including problems with the “motherboard, power supply and CPU fan failures.” The 2007 Lawsuit also alleges that Dell knew, before 2005, of failures with its Optiplex line of computers. While Dell is stated to have initially honored its warranty obligations, it is alleged that they were later breached. The 2007 Lawsuit set forth causes of action for breach of warranty as well as state law claims of fraud, deceptive business practices, and breach of contract.

Documents produced in the 2007 Lawsuit are stated to have been unsealed shortly before publication of the Times Article. These documents are neither before the court nor considered for the truth thereof, but considered only for the purpose of determining the statute of limitations issue that is central to this motion. The documents bear out and amplify the allegations of the complaint in the 2007 Lawsuit. Specifically, the unsealed documents reveal the failure of millions of computers sold by Dell between 2003 and 2005. The Times Article attributes those problems to “an industrywide encounter with bad capacitors produced by Asian PC computer suppliers.” The Times Article refers to internal Dell documents indicating that Dell shipped at least 11.8 million computers from May of 2003 through July of 2005 that contained the faulty components. Dell is stated to have known of capacitor and related motherboard problems, but to have concealed those defects.

In addition to facts set forth in the Times Article, Plaintiffs complaint refers to a Fall 2002 article noting that “an unnamed Dell source” confirmed Dell’s “awareness that bad capacitors ... had made their way into manufacturer supply chains.” The amended complaint also makes reference to what is described as “an obscure” internet blog article dated August 30, 2005. That article is entitled “Dell Won’t Recall Defective Motherboards,” and makes reference to the Dell computers at issue here. It refers specifically to defective motherboards and defective capacitors.

In addition to the information referred to above, and, in further support of its motion, Dell has submitted the company’s Form 10-Q for the quarterly period ended October 2, 2005 (the “2005 Form 10-Q”). *480 The 2005 Form 10-Q is a publicly available report required to be filed with the Securities and Exchange Commission. It notes that during the referenced quarterly period, Dell recognized “a product charge of $307 million for estimated warranty costs of servicing or replacing certain Optiplex systems that include a vendor part that failed to perform to Dell’s specifications.” (Dell Form 10-Q at 9 n.(a), annexed to the declaration of Christina Hull Eikhoff, submitted with Dell’s motion to dismiss).

C. Allegations Regarding Statutes of Limitation

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775 F. Supp. 2d 474, 2011 U.S. Dist. LEXIS 36511, 2011 WL 1326009, Counsel Stack Legal Research, https://law.counselstack.com/opinion/statler-v-dell-inc-nyed-2011.