Brazil v. Dell

Citation: Brazil v. Dell, Inc., 2007 WL 2255296 (N.D. Cal. Aug. 3, 2007)

Factual Background
Plaintiffs, Chad Brazil and Steven Seick, on behalf of themselves and all other similarly situated California customers, filed a class action suit for actual, compensatory and punitive damages; injunctive relief; disgorgement of profits; restitution; and costs of suit, against Dell for falsely advertising price discounts for its computers and other products and services.

Brazil purchased a laptop computer from Dell in December 2006 for personal use; Steven Seick purchased a desktop computer from Dell in June 2006 for use in his business. Both purchased the Dell products online through Dell's website. They claim that discounts offered to them were falsely advertised. Specifically, they allege that the discounts offered were discounts from prices that were higher than those normally offered for the “discounted” item. As putative class representatives, plaintiffs allege violations of the California Consumers Legal Remedies Act; California's Unfair Competition Law; false advertising, breach of contract; negligent and intentional misrepresentation; and unjust enrichment.

The Terms and Conditions of Sale to which each Dell online customer agreed, provided in relevant part, that all claims against Dell be arbitrated. The actual terms and conditions were hyperlinked from a page on which the customer must agree to the terms. The electronic confirmation of sale also reiterated to the customer that the purchase was governed by Dells terms and conditions of sale.

Trial Court Proceedings
Dell moved to compel arbitration based on a dispute resolution clause found in the online “Terms and Conditions” ostensibly assented to by both plaintiffs in order to purchase Dell’s products online.

Plaintiffs argued that the class action waiver requested by Dell was both procedurally and substantively unconscionable.

The court found that, in this particular case, the “inclusion of the class action waiver violates fundamental California policies, “including the statutory policies against exculpatory waivers, prohibiting enforcement of unconscionable contract provisions and against waivers of laws established for a public purpose.” Thus, the court denied defendants motion to compel arbitration without prejudice.