Anderson v. Apple Inc., Case No. 3:20-cv-02328-WHO

• Citation: 500 F.Supp.3d 993
• Decision Date: 16 November 2020
• Docket Number: Case No. 3:20-cv-02328-WHO
• Parties: Elaine ANDERSON, et al., Plaintiffs, v. APPLE INC., Defendant.
• Court: U.S. District Court — Northern District of California

500 F.Supp.3d 993

Elaine ANDERSON, et al., Plaintiffs,

v.APPLE INC., Defendant.

Case No. 3:20-cv-02328-WHO

United States District Court, N.D. California.

Signed November 16, 2020

Ben Michael Harrington, Hagens Berman, Shana E. Scarlett, Hagens Berman Sobol Shapiro LLP, Berkeley, CA, Steve W. Berman, Thomas Eric Loeser, Hagens Berman Sobol Shapiro LLP, Seattle, WA, Bradley Keith King, Christopher Eric Stiner, Theodore Walter Maya, Tina Wolfson, Ahdoot & Wolfson, PC, Burbank, CA, for Plaintiffs Elaine Anderson, Diana Atkins, Scott Burst, Beth Chavez, Colea Childs, Euihwan Cho, Alison Coleman, Victoria Cornwell, Donald Dahl, Jacqueline Demeritte, Candace Martino, Scott Sapkosky, Erik Villagran.

Bradley Keith King, Christopher Eric Stiner, Theodore Walter Maya, Tina Wolfson, Ahdoot & Wolfson, PC, Burbank, CA, Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, WA, for Plaintiffs Rhonda Mason, Daniel Aviles, Crystal Miller, Taylor Chanek, Matt Taylor, Bernadette Lionetta, Melissa Arellano, Kyle Kristoff, Pamela Vohringer, Michael Miller, Randall Knight, Christopher Adams, Kimberly Walker, Zachary Schwartz, Latecia Cushion Knight, Cuneyit Adiguzel, Jeffrey Messina, Bryan Riviello, Jabre Wise, Veronica Stovall, Rodney Weber, Christian Hunt, Simone Cox, Melanie Cobb, Nancy Prater, Sheila Claxton, Chasidy Dawson, David Kreamer, Beth Tomson, Melissa Lynn Brevig, Marlena Harrison, Wendy Sorrells, Timothy Downs, Deborah Morgan, Yvette Knox, Julie Rambousek, Denice Ryan, James Hines, Raven Shaw, Nicole Prichard, James Matos, Travis Rea, Oskar Villagomez, Mercedes Espinoza, Jennifer Pratt, Merlyn Johnson, Regina Ellison, Andrew Bewick, Robert Altmann, Lesley Villa, Cherie Brown, Pamela Paine, Nina Parker.

Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, WA, for Plaintiff Amanda Fadler.

Arturo J. Gonzalez, Alexandria Armida Amezcua, Sabrina Larson, Tiffany Cheung, Morrison & Foerster LLP, San Francisco, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

Re: Dkt. No. 32

William H. Orrick, United States District Judge

INTRODUCTION

The 68 named plaintiffs in this proposed class action claim that defendant Apple Inc. ("Apple") misled them about the capabilities of one of its smartphones, the iPhone XR. The iPhone XR, like previous generations of iPhones, used a "2x2 MIMO antenna." The iPhone XS and XS Max, Apple smartphones released around the same time as the iPhone XR, used superior "4x4 MIMO antennas." The plaintiffs allege that the 2x2 antenna is less capable when it comes to establishing and maintaining cellular and wireless internet connections. Apple, the plaintiffs say, never disclosed the difference in antenna types, so they purchased their iPhone XRs believing they had materially identical cellular and wireless capabilities as the iPhone XS and XS Max. Their claims fall into two broad categories: claims about Apple's alleged misrepresentations by omission and claims brought under express and implied warranties.

Apple moves to dismiss, and I grant the motion in part. I conclude that the plaintiffs’ misrepresentation-based claims largely survive Apple's challenges. The complaint alleges that Apple made partial representations that obligated it to disclose the information and, even aside from these partial representations, had a duty to disclose the information. The plaintiffs’ claims based on Apple's duty to disclose—that is, their "pure omissions" claims—are adequately pleaded. The plaintiffs have not, however, adequately alleged that they relied on any partial representations. Separately, they have not shown that they possess standing to pursue injunctive relief or that they can receive equitable restitution under California law. Those problems appear curable in a properly amended complaint. Dismissal is with leave to amend.

The plaintiffs’ warranty-based claims are more problematic. They have not adequately alleged that Apple violated its express warranty; that warranty does not entitle customers to redress for design choices or defects. Their claim that Apple violated California's warranty of merchantability fails because Apple validly disclaimed that warranty. And their claim that Apple violated the covenant of good faith and fair dealing is an impermissible attempt to use the express warranty to pursue a design defect-based claim. But because I cannot say that amendment would be futile, dismissal of these claims is also with leave to amend.

BACKGROUND

This case is before me on a motion to dismiss so the facts are drawn from the plaintiffs’ First Amended Complaint ("FAC") [Dkt. No. 23].

Apple is incorporated and has its principal place of business in California. FAC ¶ 376. It designs, manufactures, and sells, among other electronic products, the iPhone. Id. In September 2018, it released the iPhone XS and XS Max; in October 2018, it released the iPhone XR. Id. ¶ 378. The XS and XS Max were equipped with a "4x4 MIMO antenna" while the XR was equipped with a "2x2 MIMO antenna." Id. ¶¶ 378–79. According to the FAC, a 2x2 MIMO antenna "is only capable of two streams of data for transmit and receive pathways while [a] 4x4 MIMO antenna ... offers four streams." Id. ¶ 379. As a result, "a device equipped with a 2x2 MIMO antenna does not connect as well [to a cellular networks or Wi-Fi] and suffers from an inferior signal connection compared to a device equipped with the superior 4x4 MIMO antenna." Id. ¶ 380. The 2x2 MIMO antenna, the plaintiffs allege, is "less capable of obtaining a reliable connection" to a cellular signal. Id. ¶¶ 3, 380.

Because the FAC includes allegations of 68 named plaintiffs, I discuss only those experiences of the plaintiffs relevant to resolving this motion. Each plaintiff purchased at least one iPhone XR. See, e.g. , id. ¶¶ 12, 17, 22, 27, 32, 39, 44, 49. 64 of the plaintiffs claim that they "reviewed marketing materials and advertisements concerning the iPhone XR prior to purchasing" it but "were not made aware of any features of the iPhone XR that would render it less capable of voice, text, and internet connectivity than other iPhone models." See, e.g. , id. ¶¶ 13, 18, 23, 28, 33, 40, 45. They claim that, in particular, they were "not made aware of the fact that the iPhone XR was equipped with an inferior 2x2 MIMO antenna." Id. Four of the named plaintiffs do not allege they reviewed any such materials. See id. ¶¶ 180, 330, 342, 348. Instead, they assert that they were "not made aware of any features of the iPhone XR that would render it less capable of voice, text, and internet connectivity than other iPhone models." Id.

Each plaintiff alleges that, if he or she had "known about the inferior 2x2 MIMO antenna on the iPhone XR," he or she "would have paid less for the phones, or ... would have selected a different model or different manufacturer's phone that did not use an inferior antenna." See, e.g. , id. ¶¶ 13, 18, 23, 28, 33, 40, 45. The plaintiffs claim that they experienced "connectivity issues with [their] iPhone XRs." See, e.g. , id. ¶¶ 14, 19, 24, 29, 34, 41, 46. Some allege that they "complained to Apple" within the period of their warranty. See, e.g. , id. ¶ 15.

The plaintiffs claim that the difference in quality between the 2x2 and 4x4 MIMO antennas have been widely commented on in the press and that other Apple consumers have had complaints about the iPhone XR's alleged connectivity problems. See, e.g. , id. ¶¶ 381–93.

The plaintiffs assert that it was never made clear to them that the iPhone XR had inferior connectivity capabilities than the iPhone XS or XS Max. They argue, in fact, that Apple "concealed, and continues to conceal the fact that the iPhone XR contains an inferior 2x2 MIMO antenna that renders the iPhone XR incapable of performing its central functions as reasonably expected." Id. ¶ 401. They allege that the iPhone XR had inferior connectivity than other companies’ smartphones "at the same price-point." Id. ¶ 396. Additionally, the plaintiffs contend that, rather than remedying the problem, Apple would replace iPhone XRs experiencing connectivity problems with others that, by their nature, shared the "defect" of using a 2x2 antenna. Id. ¶ 401.

The 68 named plaintiffs hale from dozens of states, including California. See id. at 3–58. They filed this proposed class action on behalf of themselves and others similarly situated—namely, "[a]ll U.S. persons or entities who own or owned an iPhone XR." Id. ¶ 414. They also allege a claim on behalf of a nationwide subclass (the "Nationwide Express Warranty Subclass") consisting of "All members of the Nationwide Class who presented their phone to Apple, an authorized Apple reseller, or an authorized Apple service center for repair of connectivity issues, whose iPhone XRs were not fixed, or were replaced with iPhone XRs." Id. ¶ 415. They request that, if I determine that California law does not apply to all class members, the claims be split into state subclasses based on those states’ laws.

The plaintiffs filed their original Complaint on April 6, 2020, Dkt. No. 1, and filed their FAC on May 28, 2020, alleging eleven causes of action. Two are for violation of federal law: (1) breach of express warranty under the Magnuson-Moss Warranty Act ("MMWA") and (2) breach of implied warranty under the MMWA. Five are for violations of California law: (3) violation of the Consumer Legal Remedies Act ("CLRA"), (4) violation of the Unfair Competition Law ("UCL"), (5) fraud by concealment, (6) breach of the implied warranty of merchantability, and (7) breach of the covenant of good faith and fair dealing. The other four are counts brought in the alternative under the laws of the other states in which the plaintiffs reside if I determine that California law cannot apply to the non-California plaintiffs: (8) violation of state consumer protection acts, (9) fraud by concealment, (10) breach of the implied warranty of merchantability, and (11) breach of the covenant of good faith and fair dealing. Apple now moves...