Faulty Computer Lawsuit Against Dell Alleges Employees Covered Up Problems

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Dell shipped over 11.8 million faulty OptiPlex PCs between 2003 and 2005 that incorporated a faulty capacitor. But recently unsealed court papers allege that Dell sought to cover up the problems.

Dell sold millions of computers with faulty components that caused failures, but employees at the company tried to conceal these problems from customers. Buyers of the machines included Wal-Mart, the University of Texas and Wells Fargo.

That’s according to a report this week in the New York Times which gained access to recently unsealed documents in a lawsuit against Dell over the bad computers.

It’s another setback in a series for Dell, which has suffered lower sales during the recession, struggled to build out its channel so that it could more adequately compete with rivals, lost its number 2 market share spot to Acer, and found itself under the scrutiny of the U.S. Securities and Exchange Commission.

The faulty PC lawsuit, filed in a civil case against Dell in Federal District Court in North Carolina, has yet to go to trial. But recently unsealed documents show that Dell’s PCs were failing due to bad capacitors from a company called Nichicon. And while other computer makers such as HP and Apple also suffered from the bad capacitors, Dell shipped at least 11.8 million computers from May 2003 through July 2005 that were at risk of failing due to faulty components, according to documents.

The affected models included Dell’s OptiPlex computers, mainstream PCs sold to business and government customers. A study by Dell found those computers were expected to cause problems up to 97 percent of the time over a three year period, according to lawsuit documents.

Documents in the case showed that Dell employees tried to conceal the issues.

Advanced Internet Technologies, which filed the lawsuit in 2007, said that Dell refused to take responsibility for the 2,000 PCs sold to A.I.T., an internet services company, and that the company had lost millions of dollars as a result, an expert witness for A.I.T. told the New York Times.

Unsealed documents in the case show that Dell contended that A.I.T had worked the machines too hard under hot conditions, and that as a solution Dell offered to sell the company more expensive computers.

Dell told the New York Times it does not comment on pending litigation.