APT Sys. v. Apple, Inc.
| Decision Date | 26 January 2022 |
| Docket Number | Civil Action 21-2121 |
| Parties | APT SYSTEMS, INC., Plaintiff, v. APPLE, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
The plaintiff purchased and enhanced an app which was then made available for purchase on the defendant's app store. Unfortunately, a third party stole the access information for this app and, inter alia, changed the account information so that any subscriber fees for the app went to a different bank account than the one that the plaintiff had set up with the defendant. Although the plaintiff raised the issue of the theft of its app with the defendant's support services, it alleges that it was unable to get a resolution of the issue despite months of correspondence and negotiation with the defendant, in large part because the defendant seemingly would not recognize that the plaintiff owned the app. The plaintiff asserts that it lost not only the subscriber fees for the app for numerous months but future revenue once the defendant ultimately removed the app from its app store.
After unsuccessfully attempting to resolve its issues with the theft of its app by communicating with the defendant, the plaintiff filed an action in a Pennsylvania state court. The defendant then removed the matter here claiming that this court has diversity jurisdiction over this matter. The plaintiff later amended its complaint to attempt to claim an amount in controversy that was below the $75, 000 amount-in-controversy threshold set in the diversity jurisdiction statute, 28 U.S.C. § 1332(a). It also moved to have this court remand the matter to the state court based on the allegations in the amended complaint because the amount in controversy no longer exceeded the jurisdictional threshold of $75, 000.
The defendant opposes this court remanding the matter, and it has separately moved to have the court dismiss the amended complaint or, in the alternative, transfer this action to the United States District Court for the Northern District of California. Upon reviewing the motion to transfer, the court required the parties to brief this part of the defendant's motion and then heard oral argument on the motion to transfer and the plaintiff's motion to remand.
As discussed in more detail below, the court will deny the motion to remand and grant the motion to transfer. With respect to the motion to remand, the court cannot consider the amended complaint in which the plaintiff attempted to defeat federal jurisdiction by, inter alia, seeking damages in amount that would not reach the $75, 000 threshold. The court therefore could only review the original complaint, which did not limit the sought-after damages to $75, 000 or a lower amount. The allegations in the original complaint show that the plaintiff was seeking an amount in excess of $75, 000, and the plaintiff has not shown to a legal certainty that it could not recover in excess of $75 000 based on that original complaint. As such, the court cannot remand this matter to the state court.
Concerning the motion to transfer, the defendant and the plaintiff are bound by a valid forum selection clause, which requires that the court transfer this case to the Northern District of California. In this regard, the court does not find that (1) the forum selection clause is the result of fraud or overreaching, (2) its enforcement would violate a strong public policy of this forum, or (3) its enforcement would result in litigation so seriously inconvenient and unreasonable that it would deprive the plaintiff of its day in court. Further, the plaintiff has not shown that the relevant public interests overwhelmingly disfavor transferring this case to the Northern District of California.
The original plaintiffs, APT Systems, Inc. (“APT”) and Snapt Games, Inc. (“Snapt”), commenced this action by filing a complaint against the defendant, Apple, Inc. (“Apple”), in the Court of Common Pleas of Berks County on April 5, 2021.[1] See Notice of Removal, Ex. A, Compl., Doc. No. 1-1. In general, the original plaintiffs' allegations related to a third-party “thief” gaining access to their Apple account and operating an app that the plaintiffs owned. See Compl. at ECF pp. 4-6. This thief obtained the revenue from subscribers' use of the app, and the plaintiffs claimed that Apple refused to give them access to their app and the revenue associated with it despite the plaintiffs having provided Apple with proof of ownership of the app. See Id. at ECF pp. 5-9. Based on these allegations, the plaintiffs asserted causes of action for (1) breach of bailment, (2) conversion, (3) intentional interference of contractual and business relations, and (4) unjust enrichment. See Id. at ECF pp. 9-14. For relief, the plaintiffs sought, inter alia, (1) consequential and compensatory damages, (2) an accounting, (3) attorney's fees, (4) equitable relief in the nature of requiring Apple to establish an App Store Ombudsman, which “under this court's order and oversight, . . . [would] fairly, efficiently and expeditiously address issues of nature, among others, faced by Plaintiffs, ” and (5) punitive damages (relating to the conversion cause of action). See Id. at ECF pp. 11, 12, 13, 14.
Apple received a copy of the complaint on April 23, 2021. See Notice of Removal at ¶ 3. On May 7, 2021, Apple removed the case from the Court of Common Pleas of Berks County to this court under 28 U.S.C. §§ 1332 and 1441 based on this court's diversity jurisdiction. See Id. at ¶ 6. In the notice of removal, Apple claims that the parties are completely diverse because it is a citizen of California, and the plaintiffs are citizens of Delaware and Pennsylvania. Id. at ¶¶ 8-10. Apple also asserts that the matter satisfies the $75, 000 amount-in-controversy requirement because (1) “a reasonable interpretation of Plaintiffs' requested relief, including for compensatory and consequential damages, makes it clear that the amount requested exceeds the $75, 000 threshold, ” and (2) the parties exchanged letters (which were referenced in the complaint) where the plaintiffs demanded $225, 000 in direct damages. See Id. at ¶¶ 11-12.
On June 25, 2021, Apple filed a motion to dismiss the complaint or, in the alternative, to transfer venue to the United States District Court for the Northern District of California. See Doc. No. 4. On July 12, 2021, Judge Schmehl approved a stipulation extending the time for the plaintiffs to respond to the motion to dismiss until August 9, 2021. See Doc. No. 8. On July 30, 2021, Chief Judge Juan R. Sanchez reassigned this matter from Judge Schmehl's calendar to the undersigned's calendar. See Doc. No. 19.
On August 9, 2021, APT responded to the motion to dismiss by filing an amended complaint.[2] See Doc. No. 21. The amended complaint contains similar allegations as the original complaint but as discussed below, it changes the requested relief and removes a cause of action.
Regarding the allegations in the amended complaint, the plaintiff alleges that in April 2018, Snapt purchased “ThemeZone Live Wallpapers” App (the “App”), which is a “subscription fee generating live wallpaper App, ” from a third-party developer for $36, 000. See Am. Compl. at ¶ 6, Doc. No. 21. The App was hosted on Apple's App Store. See id.
Promptly after purchasing the App, Snapt took control over the associated developer account. See Id. at ¶ 8. It changed the administrative contact details and modified App support to link to Snapt's official website. See Id. It also changed the bank account associated with the App to its bank account. See id.
By early May 2018, Snapt determined that Apple was not depositing the App's subscription fees to Snapt's bank account. See Id. at ¶ 9. Instead, Apple sent those funds to the App's prior owner. See Id. at ¶ 10.
Snapt's CEO contacted Apple about this banking issue, and Apple began depositing Snapt's portion of the App's subscriber fees into Snapt's bank account starting on June 7, 2018. See Id. at ¶ 11. Thereafter, the subscriber fees would arrive in Snapt's bank account generally within 60 days after Apple would collect the fees from the App's subscribers. See id.
In mid-January 2019, Snapt could no longer access its developer account for the App, and Snapt contacted Apple to inquire about this issue. See Id. at ¶ 12. Apple's support staff required proof of Snapt's ownership of the App, so Snapt's CEO e-mailed documents showing its proof of ownership to Apple on February 1, 2019. See Id. at ¶ 13. Snapt's CEO continued to place follow-up phone calls and e-mail messages to Apple's support staff to address the accessibility issue with its App. See Id. at ¶¶ 13, 15-17.
Apple's support staff “escalated” the accessibility issue to Apple's “operations team” so it could review and process the issue. See Id. at ¶ 14. While the issue was with the operations team, Snapt's CEO informed Apple that the App was getting bad reviews due to unauthorized changes, and she also sought information about where the subscriber fees were being sent. See Id. at ¶ 17. The operations team finally completed its review of the accessibility issue and, on February 26, 2019, Apple e-mailed Snapt's CEO to inform her that it could not help because the operations team could not verify Snapt's Apple ID and control of the account. See Id. at ¶ 18.
Snapt's CEO continued to try to get the accessibility issue resolved with Apple. On March 19, 2019, she e-mailed the following message to Apple:
The app was stolen from us and the revenue as well. We cannot verify or authenticate because the questions have been edited and changed by the person who took the app and account away from us. We provided proof of ownership already and our website is...
To continue reading
Request your trial