The 10 Biggest Dell Lawsuits in Company History

Dell

Dell entered the market in 1988 and became a global company that designs, manufactures, and develops some of the best personal computers. Additionally, it has a wide range of components to replace broken parts in computers. For these reasons, the company has experienced tremendous growth to become one of the best suppliers of personal computers globally. The success that the company has experienced has also been loomed by challenges that have come due to the products they have been supplying, which clients have experienced technical flaws. Therefore, the company has engaged with clients in lawsuit battles. This write will look into ten of the most prominent Lawsuits cases that Dell has faced in Company History.

10. Dell Sued for firing an employee after Disclosing Heath’s status ($50,000)

In September 2016, a court in Pennsylvania ordered Dell to pay $50,000 after an employee sued the company for unlawful discrimination. He revealed to the manager his health condition, which needed a transplant. Zappacosta was 51 years old and had worked for the company for ten good years. He was fired on the ground of redundancy, and the manager touched no other position in the company in the process. In their submission, the plaintiff’s lawyer argued that Dell Technologies and its EMC division violated their clients’ Age Discrimination in Employment Act and another law provision of the Americans with Disabilities Act. The case was submitted at the U.S. District Court in the Eastern District of Pennsylvania. Dell and the Zappacosta team agreed to settle the case outside court, and Dell promised to improve their workforce working conditions in a press statement that they released.

9. Dell vs. EEOC Equal pay dispute ($75,000)

In 2017, EEOC sued Dell for not following the Equal Pay Laws to a female IT specialist that the company hired. According to the Press Released from U.S EEOC, Dell had hired Golden, an IT specialist and other three male counterparts to work in the same department. According to the EEOC argument in court, Dell failed to take action and correct the issue even after Golden made a complaint to her employers regarding the discrimination claim. Golden performed the same chores as her male colleagues during her year of service with Dell. But she was paid $17,510 less annually compared to her counterpart’s colleagues, which was a violation prohibited by the Equal Pay Act (EPA) based on someone’s gender. Dell Inc S representative decided to look for a way to have a pre-suit settlement with the plaintiff’s representative. They also signed a conciliation agreement to protect their image because they had violated the Civil Rights Act of 1964. Federal laws were clear and required both females and males in a workforce to be remunerated equally for equal work unless there is a justification by a different factor that is not based on sex. The District Court in Northern District of Texas, Dallas Division, left the two parties to agree out of court. EEOC was seeking compensation for their client for the defendant to back pay all her rightful dues, injustice relief, compensatory and corrective damages. They also wanted the court to bar Dell from engaging in another discriminatory treatment of its workers in the future. The two parties in the case agreed for a settlement in which Dell was to pay $75,000 and settle other relief settlements to EEOC, such as providing training about the Equal Pay Act (EPA). They were also to make copies about employees’ rights as per provision under EPA and report any case regarding employees’ discrimination to EEOC for two years from that agreement. The agreement was submitted to the court, and the federal court approved it.

8. Dell False Marketing case ($490,000)

Dell lost a case in which they withdrew the price they had a place online for their products. A customer in Taiwan saw the offer and ordered 18 Dell laptops and 76 monitors. Thirty-one other consumers placed orders for the same products, which were believed to be a third of the standard retailing prices. Dell pulled the offer from their site, but they lost the case, and they are expected to appeal the outcome of the case.

7. Dell INC vs. Wise ($668,000)

In 2013, a court of Appeal in Texas ruled that Dell had to compensate one of its former sales representatives whom they wrongfully sent home, Mr. William Wise Junior. The settlement amount was $668,000, and Dell was also to pay $221,000 for attorney fees. Mr. Wise was discriminated against after working with the company for 11 years. The company representative failed to illustrate why Wise was fired for poor performance, yet he was a performer from their records. He was being discriminated against. From the submission in court by Mr. Wise’s lawyers, it was argued that Dell had three primary divisions, namely the educational sales division, the federal sales division, and the health care sales division, that were functioning using the same format. The performance review that the company used focused on historical data for two years to gauge the sales rep’s quota performance. However, some factors could impact an employee’s not meeting their sales quotas. These factors were like economic conditions, affecting the company sales projection. New members joining a team could also impact their team performance and the technical sales rep’s performance. The plaintiff’s lawyer argued that Mr. Wise had met all the quotas performances for sales quotas for two quarters and even received good reviews from customers’ appraisals. The court found out that Dell failed to follow its procedure of disciplining and evaluating Mr. Wise. They terminated him from work and even refused to get some of his available items at his desk. This discrimination caused him mental torture and anguish to the extent of affecting him to stop playing in a band he had been part of for over thirty-two years. He was also worried about how his family would fare after the job loss. The judge ruled out that Mr. Wise be awarded $44,400 for the damage compensatory that included the mental anguish he went through, especially for failing to get another job even after sending more than sixty applications.

6. Dell Sued over Faulty Laptop Battery ($1.4 million)

A couple in New Zealand has filed a lawsuit against Dell Inc. The damage that happened to their $2 million lodges caught fire when a defective laptop battery exploded. The plaintiff in the case, Denise and McGregor, claim that the fire destroyed the central part of their lodge. It is believed that it was so huge that even the firefighter could not salvage the situation. According to S&C, an investigation that the fire investigation department conducted confirmed that the Dell laptop battery exploded. It is believed the battery of their notebook products tends to overheat, flash, and even start battery fires. The case hasn’t been concluded. Dell eventually began the process of recalling over four million batteries which it had supplied which were produced by Sony hat were a threat to customers to cause a fire hazard

5. Dell vs. EEOC ($7 million)

Dell was found guilty of discriminating against some of its workers at their base in Round Rock, Texas. The seven million compensation that the court ruled in favor of the affected employees was intended to settle their lost wages, interests, and other benefits they were to earn. The victims claimed that they were racially and gender abused while working. Dell was also ordered to assure its labor force receives equal employment chances. This case was one of the biggest wins for the Labor Department Office of Federal Contract Compensation Program (OFCCP)

4. Dell Vs. Merkamerica Inc ($9.6 million)

On June 18, 2020, Merkamerica Inc sued Dell Inc’s marketing for the output components they supplied, which were described as faulty. The suit was filed in North Carolina and was heard in the Federal District Court. In their application, the Internet service company accused Dell of supplying about 11.8 million pieces of computers to them that were faulty and were at risk of breaking down to paralyze their company activities. After making the delivery, Dell even tried to conceal the computers’ defects to their customers for all the 2,000 computers they made between 2003 and 2005. Dell settled the case out of court to not progress to trial. The computer’s problem was causing customers who bought them to lose data.

3. Dell vs.T.Rowe Company Buyout Lawsuit ($25 million)

A case in which T.Rowe and other investors such as Hedge Fund Magnetar Capital Partners had sued Dell at a Delaware Chancery Court was a blow to the company. These investors sued Dell, and Silver Lake Partners for the share leverages of the $13.75 buyout process in which they were not appraised by the two. The plaintiff argued through their lawyers that Dell’s fair value was $17.62 per share, which was about 28% of the actual purchasing price. This could have made T.Rowe Price and other mutual fund holders about $200 million. T.Rowe opposed the idea of Dell’s LBO and cast its vote in favor of the takeover deal. The plaintiff argued that its vote was a technical glitch. The courts determined that Dell’s initial buyout was significantly too low, which validated their original investment view. Therefore, when they compensate their clients by following the court’s consideration, they will benefit more than what they were supposed to get if the merger becomes successful. The defendant further stated that T.Rowe’s shares rose slowly by less than 1 percent during the recent trading. The battle was to continue with an appeal by T.Rowe for the verdict. Still, Dell decided to have an out-of-court settlement to pay $25 million to drop the case and disqualified them from a larger payday over the technical error in the buyout process.

2. Dell Action Lawsuit for Data Breach ($40 million)

This is a case that had dragged from September 13, 2006. About four of these class action lawsuits were heard at the Western District of Texas, where Dell was sued. The plaintiff was suing Dell for fraudulent culture deception. It is believed that the defendant was inflating the company revenues by $463 million from 2003 to 2006. The plaintiff further claimed that the individual defendants were taking advantage of the company’s overstated share prices to unload large sums of cash from their personal holdings into the company stock. This case had been dismissed and appealed several times. In what puzzles many, Dell settled the case out of court while the case was pending an appeal hearing. The timing at which Dell paid the $40 million settlement is what is not clear and why they did that.

1. Dell vs. Silver Lake Partners ($6 billion)

A Delaware Court ruled in a case involving Dell owner Michael Dell and Silver Lake Partners. During the transaction with Dell, the private equity firm was accused of paying too little when they purchased Dell for $25 billion, equivalent to $13.75 per share. According to Fortune, the court ruled out that the acquisition was supposed to be $17.62 per share for Dell. Therefore, the shareholders who were to be awarded the rest of the money are those that voted against the deal in the first place. Magnetar has been one of the largest shareholders in the agreement who voted against it. The judge ruled out that Michael Dell and Silver stone needed to pay for the $20 million for the eligible 5.2 shares that were to be appraised with interest. The gap of share gap valuation was excessive considering the market performance that Dell Inc had and the company’s perception. This case placed Michael Dell under severe criticism for taking advantage of the entire situation by being the seller and buyer in that transaction. The board was also feting him by delaying to vote to raise the offer for them to twist the voting rules, which did not apply to the stock that they did not vote for.

Conclusion

Many Dell court cases that have affected the company image are about their products quality, employee discrimination, and marketing mistake, which the company has to focus on to avoid making the same mistake repeatedly.

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