Federal Court Allows Consumers to Add Gateway to Lawsuit Challenging Computer Sales Scam |
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May 07, 2008
Class-Action Lawsuit in California Alleges Computer Giant Gateway, Inc., Aided and Abetted BlueHippo in Taking Millions from Unwitting Consumers
In a ruling issued yesterday, United States District Judge Jeffrey S. White denied a motion by Gateway, Inc., to dismiss claims that the computer giant assisted a controversial computer-sales company in an unlawful scheme to take millions of dollars from low-income consumers.
The class-action lawsuit, filed in March 2006 in federal court in San Francisco, seeks damages for thousands of California residents who paid hundreds of dollars each to a company called BlueHippo Funding. The lawsuit alleges that BlueHippo has used promises of “no credit check” and “low weekly payments” to lure low-income consumers into paying exorbitant prices for computers and other electronics. The lawsuit also claims the company forces most of its customers to forfeit all of their payments while receiving nothing in return. BlueHippo’s business practices have drawn legal action by the Federal Trade Commission and by regulators in Florida, Illinois, Maryland and West Virginia.
The California lawsuit alleges that Gateway, a subsidiary of Acer, Inc., assisted BlueHippo by letting the company use the Gateway logo and by directing business to BlueHippo from Gateway’s website. Gateway could be held liable if it aided and abetted BlueHippo’s unlawful sales scheme. As yesterday’s court’s ruling explained, “a third party does not have a duty to report another’s tortious activity. But neither does a third party have a right to aid and abet another in a tortious activity and profit from it by providing substantial assistance.”
“The court’s ruling is a big victory for consumers,” said attorney David J. Marshall of Washington, D.C.’s. Katz, Marshall & Banks, which represents the plaintiffs in the case. “A manufacturer should not be able to escape liability when it knowingly assists a retailer in ripping off the public, especially when the manufacturer lends legitimacy to the sales scam and helps the retailer lure consumers into unfair transactions.” The National Consumer Law Center, law professor Gary Peller, and the California law firm of Bramson, Plutnik, Mahler & Birkhaeuser also represent the plaintiffs.
