Ahern v. Apple Inc.

• Decision Date: 11 October 2019
• Docket Number: Case No. 18-CV-07196-LHK
• Citation: 411 F.Supp.3d 541
• Court: U.S. District Court — Northern District of California
• Parties: Kim AHERN, et al., Plaintiffs, v. APPLE INC., Defendant.

411 F.Supp.3d 541

Kim AHERN, et al., Plaintiffs,

v.APPLE INC., Defendant.

Case No. 18-CV-07196-LHK

United States District Court, N.D. California, San Jose Division.

Signed October 11, 2019

Shana E. Scarlett, Jeff D. Friedman, Hagens Berman Sobol Shapiro LLP, Berkeley, CA, Jerrod C. Patterson, Pro Hac Vice, Steve W. Berman, Pro Hac Vice, Hagens Berman Sobol Shapiro LLP, Seattle, WA, for Plaintiffs.

Matthew David Powers, O'Melveny & Myers LLP, San Francisco, CA, for Defendant.

ORDER GRANTING MOTION TO DISMISS IN PART WITH PREJUDICE AND IN PART WITH LEAVE TO AMEND

LUCY H. KOH, United States District Judge

Plaintiffs bring this putative class action against Defendant Apple Inc. ("Apple") and allege common law fraud claims and violations of various state consumer fraud statutes. ECF No. 33 ("Amended Class Action Complaint" or "ACAC"). Before the Court is Apple's motion to dismiss.¹ ECF No. 48. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS Apple's motion to dismiss. The Court GRANTS the motion to dismiss Plaintiffs' Pennsylvania fraudulent concealment claim with prejudice, and GRANTS the motion to dismiss Plaintiffs' nine other claims with leave to amend.

I. BACKGROUND

A. Factual Background

Apple is the manufacturer of "state-of-the-art technology products," including iMac desktops and Macbook laptops (collectively, "Apple computers"). ACAC ¶¶ 1-2. According to Plaintiffs, "Apple's computers ... contain a critical defect that had led to at least two deficiencies" in the computers. Id. ¶ 2. Plaintiffs allege that Apple computers utilize "fans and vents to cool them down," but that "Apple did not install any filters for the vents." Id. This "critical defect"— named the "Filter Defect"—allows "fans [to] suck in dirt and debris." Id. This results in dirt and debris "get[ting] stuck behind the screen, causing permanent dark smudging to appear in the corners of the screens." Id. "The second deficiency caused by the Filter Defect is the harmful effect of dust on the ‘motherboard’ of the computer," which "causes it to overheat," "slows down the processing speed of the computer, and ultimately causes it to crash." Id. ¶ 3.

Plaintiffs are citizens of Arizona, California, Colorado, Florida, Illinois, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Texas, Utah, and Wisconsin who bought Apple computers between March 2011 and April 2018. ACAC ¶¶ 9, 17, 22, 27, 32, 37, 42, 47, 50, 54, 58, 63, 67, 71, 74, and 78. Plaintiffs plead that "Apple promotes and advertises its products" "based on their reliability, durability, and longevity." Id. ¶ 93. According to Plaintiffs, Apple claimed that its computer screens were "clear and remarkably vivid" (id. ¶¶ 59, 64) and of the "highest quality" (id. ¶ 75); that Apple's computer displays were "the most advanced, most brilliant desktop display[s] [Apple] ever built" (id. ¶ 93); that "everything is designed to work just the way you expect it to" (id. ); and that Apple products underwent "rigorous testing methods that simulated customers' experiences" (id. ¶ 94). Plaintiffs allege that they relied on these advertisements when purchasing Apple computers. See, e.g., id. ¶¶ 56, 74, 89, 101.

Plaintiffs also claim that Apple knew about the Filter Defect and the resulting screen "smudges." As evidence, Plaintiffs point to complaints "[o]n Apple's own website," where "Computer owners have been complaining about the dark, smudgy marks on their displays for years , which often appeared just after their one-year warranty expired." Id. ¶ 88. Plaintiffs do not allege, however, that any consumers complained about so-called motherboard issues on Apple's website or elsewhere. Id.

Furthermore, according to Plaintiffs, "Apple has acknowledged the Filter Defect exists" and included a "limited disclosure of the Filter Defect in user manuals." Id. ¶ 91. The disclosure allegedly states the following:

Do not operate your iMac in areas with significant amounts of airborne dust, or smoke from cigarettes, cigars, ashtrays, stoves, or fireplaces, or near an ultrasonic humidifier using unfiltered tap water. Tiny airborne particles produced by smoking, cooking, burning, or using an ultrasonic humidifier with unfiltered water may, in rare instances, enter the ventilation openings of your iMac and, under certain conditions, result in a slight haze on the inside surface of the glass panel that covers the iMac display.

Id. Plaintiffs do not allege that they viewed this "limited disclosure" prior to purchasing their Apple computers.

B. Procedural History

On November 28, 2018, Plaintiffs Kim Ahern, Nikolas Frenzel, and Justin Evans filed a putative class action complaint against Apple that alleged causes of action under (1) California's Unfair Competition Law ("California UCL" or "UCL"), Cal. Bus. & Prof. Code § 17200 ; (2) California's Consumer Legal Remedies Act, Cal. Civ. Code § 1750 ; (3) California's False Advertisement Law, Cal. Bus. & Prof. Code § 17500 ; (4) breach of contract; (5) fraudulent concealment; and the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301. See ECF No. 1.

On February 15, 2019, Plaintiffs filed the Amended Class Action Complaint ("ACAC"). ECF No. 33. The ACAC adds several named Plaintiffs and causes of action under the laws of Arizona, Colorado, Florida, Illinois, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Texas, and Utah. See id. In total, the FAC alleges 46 causes of action, one nationwide class, and 14 state subclasses.

On March 15, 2019, Apple filed a motion to dismiss all 46 causes of action. ECF No. 34. The Court determined that addressing all issues at once was unwieldy and denied Apple's motion to dismiss without prejudice. ECF No. 42 at 1-2. The Court ordered each party to select five causes of action to litigate for purposes of the instant motion to dismiss and through trial. Id. at 2.

The parties selected the following 10 causes of action: (1) California UCL, Cal. Bus. & Prof. Code § 17200 ; (2) California fraudulent concealment; (3) Arizona Consumer Fraud Act ("Arizona CFA"), Ariz. Rev. Stat. § 44- 1521, et seq. ; (4) Florida fraudulent concealment; (5) Illinois Consumer Fraud and Deceptive Business Practices Act ("Illinois CFA"), 815 Ill. Comp. Stat. 505/1, et seq. ; (6) New Hampshire Consumer Protection Act ("New Hampshire CPA"), N.H. Rev. Stat. Ann. § 358-A, et seq. ; (7) New Mexico Unfair Trade Practices Act ("New Mexico UTPA"), N.M. Stat. Ann. § 358-A:1, et seq. ; (8) North Carolina Unfair and Deceptive Practices Acts ("North Carolina UDPA"), N.C. Gen. Stat. § 75-1.1, et seq. ; (9) Oregon Unlawful Trade Practices Act ("Oregon UTPA"), Or. Rev. Stat. § 646.605, et seq. ; and (10) Pennsylvania fraudulent concealment. ECF Nos. 45 and 47. Additionally, Plaintiffs voluntarily dismissed their causes of action under the Magnuson-Moss Warranty Act and all state breach of contract claims. ECF No. 46.

On August 2, 2019, Apple filed the instant motion to dismiss. ECF No. 48 ("Mot."). On August 23, Plaintiffs filed an opposition. ECF No. 49 ("Opp."). On September 4, 2019, Apple filed a reply. ECF No. 50 ("Reply").²

II. LEGAL STANDARD

A. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include "a short and plain statement of the claim showing that the pleader is entitled to relief." A complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). The U.S. Supreme Court has held that Rule 8(a) requires a plaintiff to plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

"The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (internal quotation marks omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008).

The Court, however, need not "assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Fayer v. Vaughn , 649 F.3d 1061, 1064 (9th Cir. 2011) (per curiam) (internal quotation marks omitted). Mere "conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Adams v. Johnson , 355 F.3d 1179, 1183 (9th Cir. 2004).

B. Motion to Dismiss Under Federal Rule of Civil Procedure 9(b)

Claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Bly-Magee v. California , 236 F.3d 1014, 1018 (9th Cir. 2001). Under the federal rules, a plaintiff alleging fraud "must state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). To satisfy this standard, the allegations must be "specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner , 780 F.2d 727, 731 (9th Cir. 1985). Thus, claims sounding in fraud must allege "an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP , 476 F.3d 756, 764 (9th Cir. 2007). In other words, "[a]verments of fraud must be accompanied by ‘the who, what, when,...