Herskowitz v. Apple Inc.

• Decision Date: 15 April 2013
• Docket Number: Case Nos. 12–CV–02131–LHK, 12–CV–03124–LHK.
• Citation: 940 F.Supp.2d 1131
• Court: U.S. District Court — Eastern District of California
• Parties: Robert HERSKOWITZ, individually and on behalf of all others similarly situated, Plaintiff, v. APPLE INC., Defendant. Phoebe Juel, individually and on behalf of all others similarly situated, Plaintiff, v. Apple Inc., Defendant.

940 F.Supp.2d 1131

Robert HERSKOWITZ, individually and on behalf of all others similarly situated, Plaintiff,

v.APPLE INC., Defendant.

Phoebe Juel, individually and on behalf of all others similarly situated, Plaintiff,

v.Apple Inc., Defendant.

Case Nos. 12–CV–02131–LHK, 12–CV–03124–LHK.

United States District Court,

N.D. California,

San Jose Division.

April 15, 2013.

Christopher Land, John Andrew Kithas, Law Offices of John A. Kithas, Joseph J. Tabacco, Jr., Christopher T. Heffelfinger, Anthony David Phillips, Berman Devalerio, San Francisco, CA, Jay Douglas Dean, Robert J. Axelrod, Pomerantz Grossman Hufford Dahlstrom and Gross LLP, Judd Benjamin Grossman, Grossman LLP, New York, NY, Nicole T. Fiorelli, Dworken & Bernstein Co., L.P.A., Michael Robert Rudick, Patrick J. Perotti, Painesville, OH, for Plaintiffs.

Penelope Athene Preovolos, Suzanna Pacht Brickman, Tiffany Cheung, Morrison & Foerster LLP, San Francisco, CA, for Defendant.

ORDER GRANTING MOTION TO DISMISS

LUCY H. KOH, District Judge.

Plaintiffs Robert Herskowitz (“Herskowitz”) and Phoebe Juel (“Juel”) (collectively, “Plaintiffs”) bring this putative class action lawsuit against Apple Inc. (“Apple”), alleging that Apple routinely and unlawfully charges its “e-Store” customers more than once for the same products and services in violation of the consumer agreements governing those transactions, California's Unfair Competition Law, California Business and Professions Code § 17200 et seq., California's Consumer Legal Remedies Act, California Business and Professions Code § 17500 et seq., and California common law.

Apple moves to dismiss Plaintiffs' First Amended Consolidated Complaint (“FAC”). The Court held a hearing on this motion on April 11, 2013. Having considered the submissions of the parties, the parties' oral arguments, and the relevant law, the Court hereby GRANTS Apple's Motion to Dismiss Plaintiffs' First Amended Consolidated Complaint.

I. BACKGROUNDA. Factual Allegations

Apple's “iTunes Store” is a software-based online digital-media store from which customers can purchase music and videos, among other things. FAC ¶ 20, ECF No. 46. Apple also operates an “App Store,” a digital-application distribution platform that allows users to browse and purchase applications (“apps”) for iPhones, iPads, and iPod Touch devices, FAC ¶ 21, as well as a “Mac App Store,” which allows users to purchase and download applications for personal Mac computers, FAC ¶ 22. In addition, Apple operates an “i Bookstore,” which is part of “iBooks,” Apple's e-book application which allows customers to download and read books on the iPhone, the iPad, and the iPod Touch. FAC ¶ 23.

Herskowitz and Juel, on behalf of themselves and others who are similarly situated, allege that Apple bills its “e-Store” customers more than once for the apps, songs, videos, games, and books (“Products”) that they purchase for use on their iPhones, iPads, iPod Touches, and/or Mac personal computers. See FAC ¶ 2. Specifically, Plaintiffs allege that Apple: (1) double bills its customers for a single product at the time of purchase; (2) refuses to allow customers to download for free already purchased products despite the fact that the customers have not downloaded the product more times than the contractually specified limit; and (3) prevents customers from accessing, storing, transferring, or managing already purchased products, causing customers to lose purchased products and requiring customers to re-purchase the products at an additional charge. Id.

1. Double Billing for a Single Product

On or about December 2, 2010, Herskowitz purchased twenty-two songs from the iTunes Store. FAC ¶ 32. However, Apple charged Herskowitz twice for one of his selections, a “pop” song entitled, “Whataya Want from Me.” Id. As a result, Apple billed Herskowitz a total of $2.58 for a song that cost $1.29 to download. Id. Herskowitz reported the double-billing to Apple. FAC ¶ 33. In response, Apple told Herskowitz that it would not refund the overcharge based on its purported no-refund policy:

Your request for a refund for “Whataya Want from Me” was carefully considered; however, according to the iTunes Store Terms of Sale, all purchases made on the iTunes Store are ineligible for refund. This policy matches Apple's refund policies and provides protection for copyrighted material.

FAC ¶ 7. Herskowitz alleges that Apple has sent identical responses to “countless other customers” who have raised similar complaints, despite the fact that Apple's standard “Terms and Conditions,” which “govern[ ] the ‘use of’ the Apple Stores,” do not explicitly state such a policy. FAC ¶ 7.

2. Charging Customers Twice for Re-downloading Products That They Cannot Access

On or about December 31, 2010, Juel purchased and downloaded a song from iTunes. FAC ¶ 10. Although Juel attempted to access the song later, she could not do so. Id. Consequently, Juel downloaded the same song again. Id. When she did, Apple charged her a second time for purchasing the song, despite the fact that Apple's records showed that she purchased the song previously. Id.

Juel alleges that Apple has “adopted a policy and practice of refusing to allow customers to access Products that they previously purchased from the Apple Stores and then charging those customers a second time after the original download for re-downloading the same Product.” FAC ¶ 9. Juel contends that this policy is contrary to Apple's “Terms and Conditions” (the “Agreement”), which: (1) provides that personal and noncommercial customers are entitled to keep and utilize the products they purchase from the Apple stores for as long as they wish; (2) allows customers to use their products on five Apple-authorized devices at any time; and (3) permits customers to store products from up to five different Accounts at a time on their compatible devices. Id.

Plaintiffs seek to bring this putative class action on behalf of a nationwide class consisting of “all individuals or entities who purchased Products from the App Store, the iTunes Store, the iBookstore, and/or the Mac App Store and who were charged more than once and paid Defendant more than once for the same product.” FAC ¶ 44. This class also includes two proposed subclasses. Herskowitz seeks to represent Subclass A, which includes: “[a]ll individuals or entities who were charged at the time of purchase and paid Apple more than once for the same Product ....” Id. (“Subclass A”). Juel seeks to represent Subclass B, which includes: “[a]ll individuals or entities who purchased any Product ... and were billed again for subsequently downloading the same Product.” Id. (“Subclass B”). Plaintiffs seek damages and injunctive relief.

B. Procedural History

Herskowitz filed his initial complaint in federal court on April 27, 2012, ECF No. 1, which he then amended on June 15, 2012, ECF No. 12. Juel filed her initial complaint in the Santa Clara Superior Court, which Apple then removed to this Court on June 15, 2012. See ECF No. 1, Ex. B, Case No. 12–CV–03124. On July 10, 2012, the Court related the Herskowitz and Juel cases. ECF No. 15. Apple then filed a Motion to Consolidate the Related Actions, which the Court granted on November 2, 2012. ECF No. 42.

Plaintiffs filed a First Amended Consolidated Class Action Complaint on November21, 2012. ECF No. 46. On December 11, 2012, Apple filed a Motion to Dismiss the First Amended Complaint for: (1) failure to state a claim upon which relief may be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure; (2) failure to plead claims grounded in fraud with sufficient particularity, as required by Rule 9(b) of the Federal Rules of Civil Procedure; and (3) lack of subject matter jurisdiction as required by Rule 12(b)(1) of the Federal Rules of Civil Procedure. See Def.'s Mot. to Dismiss (“Mot.”), ECF No. 47. Apple also filed a Request for Judicial Notice. ECF No. 48. Plaintiffs filed an opposition to the Motion to Dismiss, see Pls.' Opp. to Def.'s Mot. to Dismiss (“Opp'n”), ECF No. 52, to which Defendants filed a reply, see Def.'s Reply Supp. Mot. to Dismiss (“Reply”), ECF No. 53.

II. LEGAL STANDARDSA. Rule 12(b)(6)

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an action for failure to allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. 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. 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.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal citation 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).

However, a court need not accept as true allegations contradicted by judicially noticeable facts, Shwarz v. United States, 234 F.3d 428, 435 (9th Cir.2000), and a “court may look beyond the plaintiff's complaint to matters of public record” without converting the Rule 12(b)(6) motion into one for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n. 1 (9th Cir.1995). Nor is a court required to “ ‘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) (quoting W. Min. Council v. Watt, 643 F.2d 618, 624 (9th Cir.1981)). 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....