In re Apple Inc. Device Performance Litig.

• Decision Date: 01 October 2018
• Docket Number: Case No. 18-md-02827-EJD
• Citation: 347 F.Supp.3d 434
• Court: U.S. District Court — Northern District of California
• Parties: IN RE: APPLE INC. DEVICE PERFORMANCE LITIGATION

347 F.Supp.3d 434

IN RE: APPLE INC. DEVICE PERFORMANCE LITIGATION

Case No. 18-md-02827-EJD

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

Signed October 1, 2018

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

Re: Dkt. No. 176

EDWARD J. DAVILA, United States District Judge

This putative worldwide class action is brought by one hundred and twenty-two Plaintiffs who hale from the fifty states and several U.S. territories as well as multiple foreign countries.¹ Plaintiffs allege that, in an effort to fix battery life issues, Apple included code in updates to its mobile operating system (iOS) that significantly reduced the performance of certain models of the iPhone. Plaintiffs also allege that Apple failed to adequately disclose that the iOS updates would affect the performance of their iPhones and, more broadly, that Apple made representations and omissions regarding the capacity of iPhone and iPad devices.

Apple moves to dismiss claims in the Consolidated Amended Complaint ("Complaint") under Federal Rule of Civil Procedure 12(b)(6). The Court finds that some of Plaintiffs' allegations are at full capacity, but others need to be recharged. The Court GRANTS in part and DENIES in part Apple's motion to dismiss.

I. BACKGROUND

This case primarily concerns Apple's response to software capability and battery capacity issues in certain older-model iPhones and iPads. The following facts are drawn from Plaintiffs' Complaint.

Beginning in late 2015, consumers began reporting that their iPhone and iPad devices were experiencing unexpected shutdowns despite showing more than 30% remaining charge on the battery. CAC ¶¶ 2–3. When the device shut down, it would remain dead until the user reconnected the device to power. Id. ¶ 4. The number of complaints increased through the fall of 2016. Id. ¶¶ 2–3. At the end of 2016, Apple suggested that a remedy would be forthcoming in the next round of software updates. Id. ¶ 7.

On January 23, 2017, Apple released iOS 10.2.1, an update to its iOS 10 operating system. Id. ¶¶ 359, 398. The update was sent directly to users' iPhone and iPad devices, and users had the option of downloading and installing the update on their devices. Id. ¶¶ 359, 386–87. The alert that accompanied the update stated that the "update include[d] bug fixes and improve[d] the security of [the user's] iPhone or iPad." Id. ¶¶ 360, 399. In February 2017, Apple added more information in a "Read Me" section which stated: iOS 10.2.1 "improves power management during peak workloads to avoid unexpected shutdowns on iPhone." Id. ¶ 400. In a statement issued at the end of February 2017, Apple explained that " "[w]ith iOS 10.2.1, Apple made improvements to reduce occurrences of unexpected shutdowns that a small number of users were experiencing with their iPhone." Id. ¶ 401.

On September 19, 2017, Apple released a new version of its operating system, iOS 11. Id. ¶ 406. When consumers with older-model iPhone and iPad devices downloaded iOS 11, they experienced a marked decrease in battery life from the prior iOS 10 operating system. Id. ¶¶ 407–08. On December 2, 2017, Apple released iOS 11.2. Id. ¶ 363. Like the iOS 10.2.1 update, the iOS 11.2 update was sent directly to users' iPhone and iPad devices, and the update was available for immediate download and installation on their devices. Id. ¶¶ 363, 386–87. The alert accompanying the update stated, among other things, that the update "include[d] bug fixes and improvements." Id. ¶ 363.

In mid-December 2017, independent research was published online "demonstrating the marked degradation of performance in a large sampling of ... Devices after installation of the [iOS 10.2.1 and 11.2] Updates." Id. ¶ 11. For example, software engineer John Poole "published a report based on an analysis of 100,000 iPhones and conclud[ed] that the decrease in performance of the affected iPhones was caused by the iOS 10.2.1 and iOS 11.2 updates, and not the normal decreased function that would be caused by an aging battery." Id. ¶ 410. On December 20, 2017, Apple released a statement about the iOS 10.2.1 and 11.2 updates:

Last year we released a feature for iPhone 6, iPhone 6s and iPhone SE to smooth out the instantaneous peaks only when needed to prevent the device from unexpectedly shutting down during these conditions. We've now extended that feature to iPhone 7, with iOS 11.2, and plan to add support for other products in the future.

Id. ¶ 11. Apple also asserted that "another contributor to these user experiences is the continued chemical aging of the batteries in older iPhone 6 and iPhone 6s devices, many of which are still running on their original batteries." Id. ¶ 415.

Then, on December 28, 2017, Apple released another statement that confirmed some consumers' suspicions that the iOS updates had intentionally slowed down the processing speeds of iPhone 6 and iPhone 7 models. Id. ¶ 20. Apple's statement read:

iOS 10.2.1 (released January 2017) includes updates for previous models of iPhone to prevent them from unexpectedly shutting down. This includes a feature for iPhone 6, iPhone 6 Plus, iPhone 6s, iPhone 6s Plus, and iPhone SE to dynamically manage the instantaneous performance peaks, only when needed, to prevent the device from unexpectedly shutting down. This capability was also extended to iPhone 7 and iPhone 7 Plus with iOS 11.2, and we will continue improving our power management feature in the future. This feature's only intent is to prevent unexpected shutdowns so that the iPhone can still be used. This power management feature is specific to iPhone and does not apply to any other Apple products.

This power management works by looking at a combination of the device temperature, battery state of charge, and battery impedance. Only if these variables require it, iOS will dynamically manage the maximum performance of some system components, such as the CPU and GPU, in order to prevent unexpected shutdowns. As a result, the device workloads will self-balance, allowing a smoother distribution of system tasks, rather than larger, quick spikes of performance all at once. In some cases, a user may not notice any differences in daily device performance. The level of perceived change depends on how much power management is required for a particular device.

Id. Apple also admitted that in extreme cases, the user may notice effects such as longer launch times, lower frame rates, backlight dimming, and lower speaker volume. Id. The iOS updates impaired the functioning of Plaintiffs' iPhones by substantially slowing their processing speed (by as much as 50%). Id. ¶¶ 405, 409–17.

According to Plaintiffs, Apple's iOS updates were symptomatic of a greater defect that was present in older-model iPhone and iPad devices from the date of purchase.² Specifically, Plaintiffs allege that Apple was attempting to conceal the "mismatch between the Devices' hardware, including their processing chips and rechargeable lithium-ion batteries, and the ever-increasing demands placed on the Devices via Apple's constantly-updating iOS software platform." Id. ¶ 9; id. ¶ 370 (noting "an inherent mismatch between battery performance and the operational needs of the Devices"). Whereas faster and more powerful processing units "require more power from the phone's battery," id. ¶ 391, "[a] lithium-ion battery's capacity is degraded over time by discharge/recharge cycles, elevated temperatures, and aging," id. ¶ 380. Eventually, a phone may shut down when "the battery ages and is unable to deliver the peak power demanded by the phone's processor." Id. ¶ 396. Apple allegedly knew about this phenomenon but did not design the devices to ensure that the battery would "be capable of meeting the processor's peak power demands for years to come." Id. ¶ 393.

A number of class action lawsuits were filed by consumers against Apple. These lawsuits generally alleged that Apple's conduct violated federal and state computer-intrusion laws, as well as state consumer-protection laws and common law. In early 2018, one of the plaintiffs who filed a class action in this district moved to centralize pretrial proceedings in a single judicial district. 28 U.S.C. § 1407(a) ("When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings."). On April 4, 2018, the Judicial Panel on Multidistrict Litigation ("JPML") issued a transfer order selecting the undersigned judge as the transferee court for "coordinated or consolidated pretrial proceedings" in the multidistrict litigation ("MDL") arising out of Apple's conduct. See Dkt. No. 1 at 1–2.

At the April 25, 2018 initial case management conference, the Court suggested—and the parties agreed—to proceed with a motion to dismiss on a limited set of claims in Plaintiffs' forthcoming consolidated complaint. Dkt. No. 23 at 24:13–26:7. In the subsequent case management orders filed on April 26, 2018 and May 18, 2018, the Court solicited the parties' "proposals for proceeding on a limited set of claims in the consolidated complaint." Dkt. Nos. 101 at 1, 21 at 1.

On July 2, 2018, Plaintiffs filed their Complaint, which asserts seventy-six causes of action under one federal statute, all fifty states' statutes, and the common law on behalf of a global class of consumers from the fifty states and other territories of the United States as well as multiple foreign countries. See generally CAC. Plaintiffs proposed "prioritiz[ing] the California statutory claims (Counts 2 through 5), the Trespass to Chattels common law claim (Count 6) and the federal Computer Fraud and Abuse Act claim (Count 1) for the upcoming Motion to Dismiss." Dkt. No. 153 at 3. Apple proposed focusing on two threshold issues: "(1) Plaintiffs' attempt to assert claims on behalf of non-U.S. residents; and (2) the conclusory allegations seeking to expand this case to include iPad devices." Id. at...