In re Iphone Application Litig.

• Decision Date: 12 June 2012
• Docket Number: Case No. 11–MD–02250–LHK.
• Citation: 844 F.Supp.2d 1040
• Court: U.S. District Court — Eastern District of California
• Parties: In re IPHONE APPLICATION LITIG.

844 F.Supp.2d 1040

In re IPHONE APPLICATION LITIG.

Case No. 11–MD–02250–LHK.

United States District Court,

N.D. California,

San Jose Division.

June 12, 2012.

Avi Melech Kreitenberg, Kamberlaw, LLP, Jeff S. Westerman, Milberg LLP, Los Angeles, CA, David Christopher Parisi, Azita Moradmand, David Christopher Parisi, Parisi & Havens LLP, Sherman Oaks, CA, David A. Stampley, Scott A. Kamber, Kamberlaw, LLC, Melissa Ryan Clark, Anne Marie Vu, Peter E. Seidman, Milberg LLP, New York, NY, Deborah Kravitz, Kamberlaw LLP, Healdsburg, CA, William M. Audet, Jonas Palmer Mann, Michael Andrew McShane, Audet & Partners, LLP, San Francisco, CA, Jeremy Reade Wilson, Wilson Trosclair & Lovins, Nabil Majed Nachawati, II, Fears Nachawati Law Firm, Joseph H. Malley, Law Office of Joseph H. Malley, PC, Dallas, TX, Sabrina S. Kim, Rancho Santa Fe, CA, Richard A. Lockridge, Lockridge Grindal Nauen, LLP, Robert K. Shelquist, Lockridge Grindal Nauen P.L.L.P., Minneapolis, MN, Donald Chidi Amamgbo, Esq., Amamgbo & Associates, Reginald Von Terrell, The Terrell Law Group, Oakland, CA, Daniel E. Becnel, Jr., Becnel Law Firm, L.L.C., Reserve, LA, John F. Nevares, John F. Nevares & Assoc. PSC, Eric M. Quetglas–Jordan, Quetglas Law Office, San Juan, PR, Fred Robert Rosenthal, Parker Waichman & Alonso, LLP, Port Washington, NY, Jerrold S. Parker, Parker & Waichman, LLC, Great Neck, NY, E. Kirk Wood, Wood Law Firm LLC, Joe R. Whatley, Jr., Whatley Drake & Kallas LLC, Birmingham, AL, Alan M. Mansfield, The Consumer Law Group, San Diego, CA, Thomas D. Mauriello, Mauriello Law Firm APC, San Clemente, CA, Aaron C. Mayer, Mayer Law Group, Charleston, SC, Brian William Smith, Smith & Vanture, LLP, Howard Weil Rubinstein, Law Offices of Howard W. Rubinstein, West Palm Beach, FL, Monica R. Kelly, Ribbeck Law Chartered, Ari Jonathan Scharg, Jay Edelson, Edelson McGuire, LLC, William Charles Gray, Chicago, IL, Corina MacCarin, Gillian Leigh Wade, Sara Dawn Avila, Milstein Adelman LLP, Santa Monica, CA, Richard Alan Proaps, Attorney at Law, Fair Oaks, CA, Sean Patrick Reis, Edelson McGuire, LLP, Rancho Santa Margarita, CA, for Plaintiffs.

Jose Carlos Velez–Colon, Bayamon, PR, pro se.

S. Ashlie Beringer, Jacob Allen Walker, Molly Elizabeth Cutler, Gail E. Lees, Gibson Dunn & Crutcher LLP, Bryan Joseph Wilson, Peter H. Day, Teresa Neet Burlison, Morrison & Foerster LLP, Palo Alto, CA, Jacob Alan Sommer, Zwillgen PLLC, Marc J. Zwillinger, Zwillinger Genetski LLP, Washington, DC, James Francis McCabe, Penelope Athene Preovolos, Morrison & Foerster LLP, Barbara Ann Izzo, Flurry, Inc., Matthew Dean Brown, Michael Graham Rhodes, Cooley LLP, Genevieve Patricia Rosloff, Joseph Charles Gratz, Michael Henry Page, Durie Tangri LLP, San Francisco, CA, Joshua Aaron Jessen, Gibson, Dunn & Crutcher LLP, Irvine, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS

LUCY H. KOH, District Judge.

A putative nationwide class of plaintiffs bring suit against Apple, Inc., Admob, Inc., Flurry, Inc., AdMarval, Inc., Google, Inc., and Medialets, Inc., (aside from Apple, collectively “Mobile Industry Defendants” ¹) for alleged violations of federal and state law. Plaintiffs are United States' residents who use mobile devices manufactured by Apple that operate Apple's “iOS” proprietary operating systems, or what Plaintiffs refer to as iDevices (e.g., iPhone, iPad, and iPod Touch). Plaintiffs claim that Defendants violated their privacy rights by unlawfully allowing third party applications (“apps”) that run on the iDevices to collect and make use of, for commercial purposes, personal information without user consent or knowledge. Apple and the Mobile Industry Defendants have each filed motions to dismiss on various grounds, including lack of Article III standing, consent to privacy agreements, and additional claim-specific reasons. A hearing was held on May 3, 2012. For the reasons explained below, the Court GRANTS Defendant Mobile Industry Defendants motion to dismiss and GRANTS in part and DENIES in part Apple's motion to dismiss. Specifically, Plaintiffs' claims against the Mobile Industry Defendants for violations of the Stored Communications Act, violations of the California Constitutional right to privacy, violations of the Computer Fraud and Abuse Act, trespass, conversion, and unjust enrichment are dismissed. Plaintiffs' claims against Apple for violations of the Stored Communications Act, violations of the Wiretap Act, violations of the California Constitutional right to privacy, negligence, violations of the Computer Fraud and Abuse Act, trespass, conversion, and unjust enrichment are dismissed. For the reasons set forth in Section III.D., these claims are dismissed with prejudice. Plaintiffs' claims against Apple for violations of the Consumer Legal Remedies Act and the Unfair Competition Law survive Apple's motion to dismiss.

I. BACKGROUNDA. Factual Background

Unless otherwise noted, the following allegations are taken from the Amended Consolidated Complaint and are presumed to be true for purposes of ruling upon Defendants' motions to dismiss. Generally speaking, Plaintiffs' Amended Consolidated Complaint asserts claims with respect to two separate putative classes of individuals and challenges two separate aspects of the iDevices used by Plaintiffs.

The iDevice Class²

iDevices enable users to download apps via Apple's “App Store” application and website. First Amended Consolidated Complaint (“AC”) ¶ 86. Apple exercises significant control over the apps that are available in its store. Id. ¶¶ 123–126. Apple's App Store has set Apple products apart from Apple's competitors: “[i]n the post 3G 2.0 iOS era, the success of Apple's iPhones sales [sic] is inextricably linked to consumers' access to its App Store.” Id. ¶ 86. Apple represents to users of the App Store that it “takes precautions—including administrative, technical, and physical measures—to safeguard your personal information against theft, loss, and misuse, as well as against unauthorized access, disclosure, alteration, and destruction.” Id. ¶ 78.

Although the apps at issue in this litigation are provided for free, Plaintiffs contend that they in fact pay a price for the use of the “free” apps because these Apple-approved apps allow their personal data to be collected from their iDevices. AC ¶¶ 1; 160. Plaintiffs allege that Apple designs its mobile devices to allow personal information to be disclosed to the Mobile Industry Defendants. Id. ¶¶ 159–60. “When users download and install the Apps on their iDevices the [Mobile Industry Defendants'] software accesses personalinformation on those devices without users' awareness or permission and transmits the information to the [Mobile Industry Defendants].” Id. ¶ 161. The information collected by Defendants includes Plaintiffs' addresses and current whereabouts; the unique device identifier (“UDID”) assigned to the iDevice; the user's gender, age, zip code and time zone; and app-specific information such as which functions Plaintiff performed on the app. Id. ¶ 2; see also id. ¶¶ 53–67, 161. These practices have allowed the Mobile Industry Defendants to “acquire details about consumers and to track consumers on an ongoing basis, across numerous applications and tracking consumers when they accessed Apps from different mobile devices.” Id. ¶ 164.

Plaintiffs allege that, in light of Apple's public statements about protecting user privacy, Plaintiffs did not expect or consent to the Mobile Industry Defendants' tracking and collecting their app use or otherwise personal information. Id. ¶ 173–74. Moreover, Plaintiffs allege that they consider the information about their mobile communications to be personal and confidential. Id. ¶ 177.

Plaintiffs assert that these practices have led to several concrete harms to the “iDevice Class,” defined as “[a]ll persons residing in the United States who have purchased iPhones and downloaded free Apps from the App Store on a mobile device that runs Apple's iOS, from December 1, 2008 to the date of the filing of this Complaint.” AC ¶ 203. For one, the Mobile Industry Defendants' actions have consumed finite resources in the form of bandwidth and storage space on their iDevices. Id. ¶ 198. For example, downloading the Weather Channel App “caused a compressed.zip file of approximately two megabytes in size to be downloaded to each of Plaintiffs' iDevices and for purposes unrelated to those expected in the Weather Channel App.” Id. Additionally, the transmission of personal information to the Mobile Industry Defendants was done without encryption, thus “exposing each Plaintiff to unreasonable risks of the interception of their personal information.” Id. ¶¶ 66–67. Finally, Plaintiffs allege that as a result of Apple's failure to disclose its practices with respect to the allegedly “free apps,” Plaintiffs overpaid for their iDevices. In other words “[h]ad Apple disclosed the true cost of the purportedly free Apps ... the value of the iPhones would have been materially less than what Plaintiffs paid.” Id. ¶ 29.

The Geolocation Class

Additionally, Plaintiffs Gupta and Rodimer represent the “Geolocation Class,” a putative class of iDevice purchasers who “have unwittingly, and without notice or consent transmitted location data to Apple's servers.” Id. ¶ 204. Apple designed its iOS 4 software to retrieve and transmit geolocation information located on its customers' iPhones to Apple's servers. Id. ¶ 30. Plaintiffs allege that in June 2010, with the release of its iOS 4 operating system, Apple began intentionally collecting Plaintiffs' precise geographic location and storing that information on the iDevice in order to develop an expansive database of information about the geographic location of cellular towers and wireless networks throughout the United States. Id. ¶¶ 115, 137. The geographic location information was accumulated from either Wi-fi towers or cell phone towers, and in some cas...