Case 3:20-cv-00863-SI Document 30 Filed 03/29/21 Page 1 of 31
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF OREGON
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`IN RE: INTEL CORP. CPU MARKETING,
`SALES PRACTICES AND PRODUCTS
`LIABILITY LITIGATION
`______________________________________
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`This Document Relates to All Actions.
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`Case No. 3:18-md-2828-SI
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`OPINION AND ORDER GRANTING
`MOTION TO DISMISS WITH LEAVE
`TO AMEND
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`Christopher A. Seeger, SEEGER WEISS LLP, 55 Challenger Road, Ridgefield Park, NJ 07660;
`Rosemary M. Rivas, GIBBS LAW GROUP LLP, 505 14th Street, Suite 1110, Oakland, CA 94612;
`Steve D. Larson and Jennifer S. Wagner, STOLL STOLL BERNE LOKTING & SHLACHTER PC, 209
`SW Oak Street, Suite 500, Portland, OR 97204; Gayle M. Blatt, CASEY GERRY SCHENK
`FRANCAVILLA BLATT & PENFIELD LLP, 110 Laurel Street, San Diego, CA 92101; Stuart A.
`Davidson, ROBBINS GELLER RUDMAN & DOWD LLP, 120 East Palmetto Park Road, Suite 500
`Boca Raton, FL 33432; Melissa R. Emert, KANTROWITZ, GOLDHAMER & GRAIFMAN, P.C., 747
`Chestnut Ridge Road, Suite 200, Chestnut Ridge, NY 10977; Richard M. Hagstrom, HELLMUTH
`& JOHNSON PLLC, 8050 West 78th Street, Edina, MN 55439; Jennifer L. Joost, KESSLER TOPAZ
`MELTZER & CHECK LLP, One Sansome Street, Suite 1850, San Francisco, CA 94104; Adam J.
`Levitt, DICELLO LEVITT & CASEY LLC, Ten North Dearborn Street, 11th Floor, Chicago, IL
`60602; and Charles E. Schaffer, LEVIN SEDRAN & BERMAN LLP, 510 Walnut Street, Suite 500,
`Philadelphia, PA 19106. Of Attorneys for Plaintiffs.
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`Daniel F. Katz, David S. Kurtzer-Ellenbogen, David Krinsky, and Samuel Bryant Davidoff,
`WILLIAMS & CONNOLLY LLP, 725 Twelfth Street NW, Washington, D.C. 20005; and Steven T.
`Lovett and Rachel C. Lee, STOEL RIVES LLP, 760 SW Ninth Avenue, Suite 3000, Portland, OR
`97205. Of Attorneys for Defendant.
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`PAGE 1 – OPINION AND ORDER
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`Case 3:20-cv-00863-SI Document 30 Filed 03/29/21 Page 2 of 31
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`Michael H. Simon, District Judge.
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`In this multidistrict proceeding, Plaintiffs bring a putative nationwide class action against
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`Defendant Intel Corporation (Intel) relating to certain security vulnerabilities in Intel’s
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`microprocessors. Plaintiffs allege that Intel knew for decades about certain design defects in its
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`microprocessors that created security vulnerabilities and that Intel failed to disclose or mitigate
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`these vulnerabilities. Plaintiffs further allege that the ways in which these security vulnerabilities
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`could be exploited became publicly known beginning in January 2018, with new ways
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`continuing to be discovered and publicized. These forms of exploit have become generally
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`known as “Spectre,” “Meltdown,” “Foreshadow,” “ZombieLoad,” “SwapGS,” “RIDL,”
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`“LazyFP,” “CacheOut,” and “Vector Register Sampling,” among others. Plaintiffs contend that
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`until Intel fixes the alleged defects at the hardware level, additional ways to exploit these security
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`vulnerabilities will likely continue to be discovered.
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`Intel previously moved to dismiss this action, and the Court granted that motion with
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`leave to amend. See In re Intel Corp. CPU Mktg., Sales Practices & Prod. Liab. Litig., No. 3:18-
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`MD-2828-SI, 2020 WL 1495304 (D. Or. Mar. 27, 2020). Plaintiffs then filed an Amended
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`Consolidated Class Action Allegation Complaint (Amended Complaint) (ECF 181), and Intel has
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`moved against that pleading. In their Amended Complaint, Plaintiffs allege that Intel’s
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`processors have two primary design defects. First, the design of the processors heightens the risk
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`of unauthorized access to protected memory secrets. Second, the design does not completely
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`delete, or undo, the memory’s recent retrieval of those secrets, also increasing the risk of
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`unauthorized access. Plaintiffs contend that these design defects create security vulnerabilities
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`that could lead to a breach of confidential data. Plaintiffs also allege that Intel cannot fix these
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`defects after-the-fact, and that the software patches created or distributed by Intel to mitigate
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`these defects substantially diminish the speed of Intel’s processors.
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`PAGE 2 – OPINION AND ORDER
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`Case 3:20-cv-00863-SI Document 30 Filed 03/29/21 Page 3 of 31
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`Based on the alleged defects and Intel’s allegedly inadequate and untimely disclosures
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`and responses, Plaintiffs assert the following nationwide class claims: (1) fraud by concealment
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`or omission; (2) breach of California’s Consumers Legal Remedies Act (CLRA), Cal. Civ. Code
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`§§ 1750, et seq.; (3) breach of California’s Unfair Competition Law (UCL), Cal. Bus. & Prof.
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`Code §§ 17200, et seq.; (4) breach of California’s False Advertising Law (FAL), Cal. Bus. &
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`Prof. Code §§ 17500, et seq.; and (5) unjust enrichment, or quasi-contract. Plaintiffs also assert
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`separate state subclass claims for each state except California, Kentucky, and Massachusetts,
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`plus the District of Columbia, under each jurisdiction’s deceptive or unfair trade practices act or
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`consumer protection law. Plaintiffs seek both money damages and injunctive relief.
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`Against the Amended Complaint, Intel challenges Plaintiffs’ nationwide class claims,
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`Counts I-V, which Intel argues under California law.1 Intel asserts that Plaintiffs fail to state a
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`claim for fraud and that Plaintiffs may not pursue equitable remedies under California statutes
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`because Plaintiffs allege legal remedies. Intel also contends that Plaintiffs fail to state a claim for
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`unfair or unlawful trade practices and for unjust enrichment or quasi-contract. Intel also
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`challenges Plaintiffs’ state subclass claims. Intel argues that Plaintiffs fail to state a claim for any
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`of the six bellwether state counts that the parties agreed to litigate in the pending motion.2 For the
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`reasons explained below, the Court grants Intel’s motion to dismiss the Amended Complaint.
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`1 Intel adds that it reserves the right to argue at a later time that California law does not
`govern claims asserted by persons who are not residents of California.
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`2 The parties chose Plaintiffs’ claims under the Florida Deceptive and Unfair Trade
`Practices Act (FDUTPA), the Illinois Consumer Fraud and Deceptive Business Practices Act
`(ICFA), the New Jersey Consumer Fraud Act, (NJCFA), the New York General Business Law
`(NYGBL), the Ohio Consumer Sales Practices Act (OCSPA), and the Texas Deceptive Trade
`Practices Act (TDTPA).
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`PAGE 3 – OPINION AND ORDER
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`STANDARDS
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`A motion to dismiss for failure to state a claim may be granted only when there is no
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`cognizable legal theory to support the claim or when the complaint lacks sufficient factual
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`allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs.,
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`Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint’s factual
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`allegations, the court must accept as true all well-pleaded material facts alleged in the complaint
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`and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-
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`Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 629
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`F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint
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`“may not simply recite the elements of a cause of action, but must contain sufficient allegations
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`of underlying facts to give fair notice and to enable the opposing party to defend itself
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`effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The court must draw all
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`reasonable inferences from the factual allegations in favor of the plaintiff. Newcal Indus. v. Ikon
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`Office Sol., 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the
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`plaintiff’s legal conclusions couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-
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`79 (2009).
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`A complaint must contain sufficient factual allegations to “plausibly suggest an
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`entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the
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`expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial
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`plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
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`inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing
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`Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). “The plausibility standard is not akin to a
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`probability requirement, but it asks for more than a sheer possibility that a defendant has acted
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`PAGE 4 – OPINION AND ORDER
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`Case 3:20-cv-00863-SI Document 30 Filed 03/29/21 Page 5 of 31
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`unlawfully.” Mashiri v. Epstein Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (quotation
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`marks omitted).
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`BACKGROUND
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`Plaintiffs’ Amended Complaint is 409 pages long and contains 1,544 separately
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`numbered paragraphs. It contains much technical detail on the many so-called exploits (or ways
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`in which the security vulnerabilities can be exploited) that have been discovered and become
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`publicly known during the past three years. The Amended Complaint explains how these security
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`vulnerabilities affect Intel’s microprocessors, also called “chips” or simply “processors.” It also
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`details the history of Intel’s chip development and competition with Advanced Micro Devices,
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`Inc. (AMD). In this section, the Court summarizes the facts most relevant to the pending motion.
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`Intel manufactures microprocessors. A microprocessor is an integrated electronic circuit
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`that contains the functions of a central processing unit (CPU) of a computer. The CPU is the
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`“brains” of the computing device, performing the necessary computations for programs or
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`applications, such as Microsoft Word, and peripheral devices, such as printers. Each program
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`communicates with a processor through instructions, with each instruction representing a
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`calculation or operation that the CPU must execute on behalf of the requesting program. For each
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`calculation, the CPU “fetches” an instruction from the computer’s memory, “decodes” the
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`instruction, “executes” it, and, finally, “writes-back” the result. The time that it takes a CPU to
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`process instructions is measured in “clock cycles.” Each step in the process—fetch, decode,
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`execute, and write-back—takes at least one clock cycle. The number of clock cycles that a CPU
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`completes per second is known as the “clock rate.” The speed of a CPU often is measured in
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`“clock speed.”
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`Plaintiffs allege that clock speed “is a material attribute for consumers purchasing”
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`devices, that consumers “really care about speed,” and that “milliseconds matter.” Am. Compl.
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`PAGE 5 – OPINION AND ORDER
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`¶¶ 454, 683, 687 (emphasis in original). Intel markets its microprocessors as having faster clock
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`speed than the processors of its competitors (including AMD) and charges a premium for its
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`fastest processors. To obtain higher clock speed, modern processors usually implement two
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`techniques—branch prediction and speculative execution. These techniques allow the CPU to
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`predict what actions might be needed, perform those actions “out of order,” and later reconcile
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`what actions were needed versus what actions were not needed and may be discarded. The CPU
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`then properly orders the actions that were needed.
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`Plaintiffs allege that Intel’s design implements branch prediction, speculative execution,
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`out-of-order execution, and an unsecured cache subsystem in a way that contains the two alleged
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`defects. The first alleged defect (Unauthorized Access) creates windows of time during which an
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`unauthorized user could have the processor allow unnecessary or unauthorized memory access to
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`copies of sensitive or privileged data. This essentially allows the return of “secrets” to a
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`“transient instruction.” The second alleged defect (Incomplete Undo) allows the accessed
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`privileged information (or data about that privileged information sufficient to allow an
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`unauthorized user to retrieve the privileged information) to remain in the CPU’s cache after the
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`mistaken or unauthorized access is discovered during the “reconciliation” step.
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`Processors contain, among other things, an “instruction set” and “microarchitecture.” The
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`instruction set serves as an interface between a computer’s software and hardware. The
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`microarchitecture governs the various parts of the processor and how they work together to
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`implement the instruction set. Plaintiffs describe the history of Intel’s chip development,
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`including its changes in microarchitecture and instruction sets, which the Court need not
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`summarize here. It is enough to say that Intel designed different privilege levels in its instruction
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`set in its 1982 processor that protect a computer’s most privileged information. In 1985 Intel
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`PAGE 6 – OPINION AND ORDER
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`improved the functionality of key aspects of this design—protected mode and virtual memory.
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`Plaintiffs allege that all modern processors use these functionalities. Plaintiffs also allege that
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`when Intel incorporated branch prediction and speculative execution in its chips in 1996 with its
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`P6 architecture, Intel’s chips did not return “real values” but instead returned a random number,
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`which was the way that AMD processors worked. Plaintiffs allege that this type of processor is
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`not vulnerable to most of the security exploits that have been recently discovered, except for
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`Spectre.
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`Plaintiffs allege that in July 1999 AMD “took the ‘speed crown’” for developing a faster
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`processor than Intel. Plaintiffs describe Intel and AMD’s ongoing competition and speed “wars,”
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`and allege that Intel faced product and market difficulties for a few years. Plaintiffs allege that
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`these problems led to Intel designing and releasing in 2006 a new chip based on a new
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`microarchitecture that went back to its P6 microarchitecture. This new microarchitecture was
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`called “Core.” The Core chips increased the use of out-of-order execution, speculative execution,
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`branch prediction, and cache subsystems, and significantly increased clock speed. According to
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`Plaintiffs, Core, unlike P6, uses an allegedly unsafe practice of returning “real values” instead of
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`dummy, or random, values, thereby creating the Intel-only Unauthorized Access defect. Thus,
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`allege Plaintiffs, Intel made critical design choices with Core to focus on improving clock speed
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`to the detriment of security.
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`Plaintiffs assert that the two alleged defects, resulting from Intel’s decision to prioritize
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`processing speed rather than security, make users’ confidential information more susceptible to
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`cache timing “side-channel attacks.” Side-channel attacks are based on information gleaned from
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`operating the computer system and are not reliant on software bugs. Plaintiffs allege that the
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`Unauthorized Access defect has existed since 2006, and the Incomplete Undo defect has been
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`PAGE 7 – OPINION AND ORDER
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`present for at least 20 years. Plaintiffs also allege that Intel knew that its processors had
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`increased vulnerability to cache timing side-channel attacks resulting from these two alleged
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`design defects. Plaintiffs further allege that the fact that Intel’s processors were susceptible to
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`cache timing side-channel attacks was described in highly technical literature and in Intel’s
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`patent filings beginning in the mid-1990s. Plaintiffs describe the various articles, white papers,
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`and patent filings containing this information.
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`Starting in 2017, independent research teams began discovering specific processor
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`security vulnerabilities. Plaintiffs describe these as “exploits” of the alleged defects. According
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`to Plaintiffs, the alleged defects created the security vulnerabilities that allowed the exploits to
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`occur. In April 2017, researchers discovered the first of a series of exploits, known as “Spectre,”
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`which comes from “speculative execution.” Spectre allows for unauthorized access within the
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`same process based on branch prediction. Spectre broadly affects processors across
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`manufacturers.
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`In July 2017, researchers discovered Meltdown, an exploit that takes advantage of both
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`Unauthorized Access and Incomplete Undo. In January 2018, a third exploit, Foreshadow, was
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`discovered. Foreshadow also takes advantage of both Unauthorized Access and Incomplete
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`Undo. Later in 2018, researchers discovered an exploit named “SwapGS,” which was not
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`publicly disclosed until August 2019. Plaintiffs allege that only Intel-designed chips are
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`susceptible to SwapGS. Also in 2018, researchers began revealing a new series of exploits,
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`categorized by Intel as “microarchitectural data sampling” or “MDS” exploits. These include
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`RIDL (Rogue in Flight Data Load), ZombieLoad, Fallout, and CacheOut. These exploits have
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`been described as “powerful.” The MDS exploits obtain sensitive information “in flight” versus
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`PAGE 8 – OPINION AND ORDER
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`Case 3:20-cv-00863-SI Document 30 Filed 03/29/21 Page 9 of 31
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`in the cache. MDS exploits have been revealed in 2019 (LazyFP) and 2020 (CacheOut and
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`Snoop-Assisted L1).
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`Plaintiffs assert that the many discovered security exploits “take advantage” of the two
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`alleged defects in Intel’s chip design. In January 2018, it was publicly revealed that Intel’s
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`microprocessors were vulnerable to the first of these security risks. Plaintiffs allege that the
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`microprocessors made by AMD and other competitors of Intel are not vulnerable to any of these
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`alleged exploits other than Spectre. Plaintiffs also allege that other than Spectre, the exploits
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`result from Intel’s specific microprocessor design choices. Spectre, on the other hand, is a
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`widespread vulnerability that allegedly arises from speculative execution and branch prediction,
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`as it generally is applied in chips and is shared by other microprocessor designs.
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`Plaintiffs do not allege that they, or anyone else, have had their computers breached or
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`that any data has been compromised as a result of any of the alleged defects in Intel’s CPUs,
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`through Spectre, Meltdown, Foreshadow, or any similar exploitation of the alleged defects.
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`Plaintiffs allege, however, that the exploits have been “weaponized ‘in the wild’” and already
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`have associated malware. Plaintiffs add that that any breach that may result in the future from
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`any of these exploits would be undetectable.
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`Plaintiffs also allege that Intel’s mitigation efforts, including providing software patches,
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`leave consumers more susceptible to future security breaches, caused Plaintiffs to spend time and
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`effort researching and implementing multiple mitigation techniques, caused freezing, crashing,
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`and other computer performance problems, and have significantly reduced the speed or other
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`performance features of Intel’s CPUs. Plaintiffs contend that Intel has caused damage in the form
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`of diminished value of Plaintiffs’ computing devices and caused Plaintiffs to be deprived of the
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`benefit of their bargain. Plaintiffs also assert that they would not have purchased Intel’s CPUs or
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`PAGE 9 – OPINION AND ORDER
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`would not have paid as high a price as they paid if Plaintiffs had known about the alleged defects
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`in the Intel microprocessors that created the alleged security vulnerabilities.
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`DISCUSSION
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`A. Nationwide Claims—Fraud and the California Statutes that Sound in Fraud
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`Plaintiffs’ fraud claim alleges only concealment and omission, not affirmative
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`misrepresentation. Intel argues that Plaintiffs have not stated a claim for fraud, and thus have not
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`stated a claim under the CLRA, FAL, or the “fraud” prong of the UCL. Intel contends that
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`Plaintiffs have not alleged: (1) a defect with allegations that comply with Rule 9(b) of the
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`Federal Rules of Civil Procedure; (2) materiality; (3) reliance; or (4) a duty to disclose.3 Because
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`the Court concludes that Plaintiffs have not adequately alleged a duty to disclose, which is
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`required for claims alleging concealment or omission, the Court need not address Intel’s other
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`arguments regarding fraud.
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`1. Standards
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`Plaintiffs argue that they have sufficiently alleged material omissions to support claims
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`under California’s FAL, CLRA, and the fraud prong of the UCL. The CLRA prohibits “unfair
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`methods of competition and unfair or deceptive acts or practices undertaken by any person in a
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`transaction intended to result or that results in the sale or lease of goods or services to any
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`consumer.” Cal. Civ. Code § 1770. The UCL prohibits any “unlawful, unfair or fraudulent
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`business act or practice and unfair, deceptive, untrue, or misleading advertising.” Cal. Bus. &
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`Prof. Code § 17200. The FAL prohibits “untrue or misleading” statements in connection with the
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`sale of real or personal property or the provision of services. Cal. Bus. & Prof. Code § 17500.
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`3 Intel also argues that Plaintiffs fail to adequately allege a nationwide claim of
`affirmative misrepresentation. Plaintiffs, however, do not assert such a claim and confirmed at
`oral argument that they are not alleging a nationwide claim of affirmative misrepresentation.
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`PAGE 10 – OPINION AND ORDER
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`These statutes “rely on the same objective test, that is, whether ‘members of the public are likely
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`to be deceived.’” Bruno v. Quten Rsch. Inst., LLC, 280 F.R.D. 524, 532 (C.D. Cal. 2011)
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`(quoting In re Tobacco II Cases, 46 Cal. 4th 298, 312 (2009)). For these claims, a plaintiff must
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`“show not only that a defendant’s conduct was deceptive but that the deception caused them
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`harm,” which requires a showing of reliance. Mass. Mut. Life Ins. Co. v. Superior Ct., 97 Cal.
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`App. 4th 1282, 1292 (2002), as modified on denial of reh’g (May 29, 2002).
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`Plaintiffs also allege common law fraud by concealment or omission. Under California
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`law, to be liable for fraudulent concealment, “(1) the defendant must have concealed or
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`suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to
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`the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the
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`intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not
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`have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of
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`the concealment or suppression of the fact, the plaintiff must have sustained damage.” Linear
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`Tech. Corp v. Applied Materials, Inc., 152 Cal. App. 4th 115, 131 (2007). To state a claim for
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`fraudulent omission, a plaintiff need not show purposeful suppression or concealment, however,
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`a plaintiff must allege “an omission of a fact the defendant was obliged to disclose.” Daugherty
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`v. Am. Honda Motor Co., Inc., 144 Cal. App. 4th 824, 835 (2006). Additionally, a plaintiff “must
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`sufficiently allege that a defendant was aware of a defect at the time of sale.” Wilson, 668 F.3d
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`at 1145.
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`Under the California statutes at issue and common law, an omission is actionable “if the
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`omitted fact is (1) contrary to a [material] representation actually made by the defendant or (2) is
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`a fact the defendant was obliged to disclose.” Gutierrez v. Carmax Auto Superstores Cal., 19
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`Cal. App. 5th 1234, 1258 (2018) (alteration in original) (quotation marks omitted) (quoting
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`Daugherty, 144 Cal. App. 4th at 835). The omitted fact also must be material. See id. at 1256.
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`Something is material “if a reasonable consumer would deem it important in determining how to
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`act in the transaction at issue.” Id. at 1258.
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`In this case, the Court previously determined that in evaluating whether Intel had a duty
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`to disclose, the Court would apply California’s “central function” standard the Ninth Circuit
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`discussed in Hodsdon v. Mars, Inc., 891 F.3d 857 (9th Cir. 2018). Under this standard, a
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`complaint sufficiently pleads a duty to disclose for an “omission claim when: the plaintiff alleges
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`that the omission was material; second, the plaintiff must plead that the defect was central to the
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`product’s function; and third, the plaintiff must allege one of the four LiMandri factors.”
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`Hodsdon, 891 F.3d at 863 (citing Collins v. eMachines, Inc., 202 Cal. App. 4th 249, 255-58
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`(2011)). The LiMandri factors are: “(1) when the defendant is in a fiduciary relationship with the
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`plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the
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`plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and
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`(4) when the defendant makes partial representations but also suppresses some material facts.”
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`LiMandri v. Judkins, 52 Cal. App. 4th 326, 336 (1997) (quoting Heliotis v. Schuman, 181 Cal.
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`App. 3d 646, 651 (1986)).
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`2. Omissions and Concealment
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`In its first motion to dismiss, Intel argued that Plaintiffs failed to allege an actionable
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`omission because the alleged defects were publicly disclosed in the articles, white papers, and
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`other documents described in Plaintiffs’ Consolidated Class Action Complaint. The Court found
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`that the publicly available technical articles and white papers discussed what Plaintiffs
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`previously alleged was “Flaw Two” (Incomplete Undo) and those discussions rendered that
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`alleged defect not an omission as that term is used in Plaintiffs’ claims. In re Intel Corp., 2020
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`WL 1495304, at *16-17.
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`PAGE 12 – OPINION AND ORDER
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`Plaintiffs previously asserted that “Flaw One” (Unauthorized Access), which Plaintiffs
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`described at oral argument as involving in part the fact that Intel retrieved “real values” instead
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`of “dummy values,” was not revealed in any public discussion and was concealed or suppressed.
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`Previously, the Court relied heavily on counsel’s assertions that the alleged articles, white
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`papers, and patent filings did not cover this alleged defect and that it was unknown outside Intel.
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`As a result, the Court found Plaintiffs had adequately this alleged defect to be an omission
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`because it was not disclosed in the public articles or white papers. Id.
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`In the Amended Complaint, Plaintiffs call the alleged defects “Unauthorized Access” and
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`“Incomplete Undo,” instead of “Flaw One” and “Flaw Two.” Plaintiffs also allege more
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`technical articles and white papers. In ¶¶ 516-526 of the Amended Complaint, Plaintiffs describe
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`various articles and white papers discussing security risks and potential flaws of
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`microprocessors, mainly in Intel chips. These publicly available documents mostly discuss the
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`microarchitecture of chips that create the risk of cache side channel attacks. Plaintiffs allege that
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`“research papers describe cache side-channel exploits that exploit Intel’s decision to lessen the
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`security of its CPUs—while seeking additional performance to further marketing claims—and
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`thus gain access to kernel memory and other privileged information.” Am. Compl. ¶ 527. One
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`alleged example is an Intel white paper describing how persons could use a side-channel exploit
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`against AES cryptographic keys with the ability to “seed the cache” and “identify changes in the
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`cache.” Id. ¶ 517. In another alleged example, a researcher published a paper in which he used
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`shared memory caches to retrieve confidential information, and warned Intel about the risk. Id.
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`¶ 519. Plaintiffs allege that this “is one variation of the same basic theme—an unauthorized actor
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`exploiting the changes a process causes to the micro-architectural state of a CPU (in particular, a
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`shared memory cache) in order to acquire another’s information.” Id. Plaintiffs also allege that
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`PAGE 13 – OPINION AND ORDER
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`Case 3:20-cv-00863-SI Document 30 Filed 03/29/21 Page 14 of 31
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`“in various patent filings Intel acknowledged the security risks caused by cache side-channel
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`timing exploits.” Id. ¶ 529 (describing patent filings).
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`The Amended Complaint alleges that Intel’s knowledge of both Incomplete Undo and
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`Unauthorized Access is evidenced by the technical articles, white papers, and patent filings.
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`Plaintiffs’ allegations in the Amended Complaint do not appear to show that only Incomplete
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`Undo was disclosed in these public filings. When asked at oral argument whether the alleged
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`technical articles and white papers show Intel’s knowledge of Unauthorized Access, Incomplete
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`Undo, or both, counsel for Plaintiffs responded that it was his understanding that they are
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`evidence relating to both. See ECF 202 at 11:19-24. Because Plaintiffs assert that the alleged
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`articles and white papers show Intel’s knowledge of both alleged defects, it also follows that they
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`are evidence showing “industry knowledge” of both alleged defects.
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`Plaintiffs appear to concede this fact, arguing that the articles, white papers, and patent
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`filings were “unknown to the consuming public” and “are not commonly viewed by the general
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`public buying Intel’s CPUs and products containing them, given the sophisticated and
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`specialized nature of the papers. Rather, these types of research papers are often aimed at
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`industry insiders, such as Intel, and academics.” ¶¶ 516, 528. Although Plaintiffs allege that the
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`general public are not sophisticated enough to discover or understand such technical information,
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`that is not enough to allege an actionable omission under the facts of this case.4
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`Information that was known in the industry is not information that the Court finds under
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`the facts of this case that Intel fraudulently concealed or suppressed. Nor is it information that
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`was necessarily unavailable for the general public to discover or understand. Technically
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`4 The Court expresses no opinion on whether, were Intel aware of actual data breaches
`occurring as a result of its microarchitecture design and Intel and others disclosed Intel’s design
`vulnerabilities only in technical papers, that would be sufficient disclosure.
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`PAGE 14 – OPINION AND ORDER
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`Case 3:20-cv-00863-SI Document 30 Filed 03/29/21 Page 15 of 31
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`sophisticated persons, such as technical product reviewers, can explain complicated information
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`(or at least the effects) to the general consuming public. Further, competitors can provide
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`consumers with information relating to a product’s technical problems in a more understandable
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`manner. Based on the allegations in the Amended Complaint that broadly allege public
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`disclosure of the alleged defects and counsel’s admission that the publicly-disclosed information
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`relates to both alleged defects, the Court finds that Plaintiffs have not sufficiently alleged that
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`Intel suppressed or concealed the alleged defects. Plaintiffs rely solely on their allegations that
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`the information, although public, was too technical to be considered “disclosed.” The Court
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`rejects this contention. Thus, Plaintiffs have not alleged an actionable omission or concealment.
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`Even if Plaintiffs had alleged an actionable omission, however, as discussed next, Plaintiffs have
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`not adequately shown that Intel had a duty to disclose the alleged defects.
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`3. Duty to disclose
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`Intel had a duty to disclose under California law if the alleged omissions were material,
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`related to a “central defect,” and at least one of the LiMandri factors was present. Intel argues
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`that Plaintiffs’ allegations meet none of these requirements. The Court focuses on whether the
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`alleged omissions relate to a central defect.
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`The parties dispute what constitutes a “central defect.” In discussing the central
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`functionality test, the Ninth Circuit has explained that the alleged defect must be “central to the
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`product’s function.” Hodsdon, 891 F.3d at 864 (emphasis in original). As examples of when a
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`product’s central function is affected, the Ninth Circuit noted that “[a] computer chip that
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`corrupts the hard drive, or a laptop screen that goes dark, renders those products incapable of use
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`by any consumer[.]” Id. In a footnote, the Ninth Circuit, in discussing two California cases, noted
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`that although they did not mention central functionality, “their facts are consistent with requiring
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`that the alleged defect be physical and