An estimated 1.7 million consumers will be eligible for a year’s free warranty coverage for their Gateway computers under a settlement of a 2009 putative class action alleging the company left them in the lurch.
Documents filed on May 12 in U.S. District Court of the Central District of California show Gateway Inc. and National Electronics Warranty LLC agreed to spring for the extra warranty months, which the companies valued at about $60 for each covered computer.
No damages or restitution will be granted the class plaintiffs, as they had sought in Wilson v. Gateway Inc. Plaintffs’ counsel can apply to the court for as much as $1 million in fees and expenses. The defendants deny any wrongdoing.
Plaintiff Peter Wilson, a California college student, bought a Gateway laptop in 2005 and purchased a four-year extended warranty for about $1,000. The computer quit working in 2009, with about a year left on Wilson’s warranty. By that time, Gateway’s fortunes had suffered from the dot.com bust and the company was hoping to be acquired, the complaint alleges. Most of Gateway was sold to Acer Inc., but the plaintiffs’ warranties were sold to MPC Corp., which went bankrupt soon after. Gateway washed its hands of Wilson’s complaint, referring him to MPC, which no longer existed.
“Customers now hold worthless warranties for which they paid considerable sums,” Wilson’s complaint said. “By contrast, Gateway profited considerably by selling the warranties not once but twice—to customers and to MPC.”
National Electronics Warranty partially administered Gateway’s warranties.
Defendants’ counsel are David Walsh and Adam Sevell of Morrison & Foerster. Plaintiffs are represented by Robyn Crowther, Jeanne Fugate and Matthew O’Brien of Caldwell Leslie & Proctor.
Lisa Hoffman contributes to law.com.