A federal court in San Francisco has reversed a ruling on Friday to reopen a class-action lawsuit against Dell alleging that the company sold defective laptops.

The suit against the computer manufacturer alleges that the company was producing and selling defective laptops between July 2004 and January 2005.

The US District Court for the Northern District of California had earlier ordered the parties to arbitration. But when the plaintiffs refused to comply with the arbitration order the court completely dismissed the case.

The plaintiffs said that the PCs shipped by dell had three "inherent defects" including defects in power supply, motherboard and cooling system. The defected models were Dell Inspiron 5160 and Dell Inspiron 1150. They claimed damages and lawyers' fees from Dell.

The plaintiffs of the case were Michael Omstead, Melissa Malloy and Lisa Smith. The case would now be referred back to the district court for further proceedings.

Shares of the company dropped 3 cents and were trading at $12.98 in afternoon trading on the Nasdaq.