Williams v. Apple, Inc., Case No. 19-CV-04700-LHK

• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
• Writing for the Court: LUCY H. KOH, United States District Judge
• Citation: 449 F.Supp.3d 892
• Parties: Andrea M. WILLIAMS, et al., Plaintiffs, v. APPLE, INC., Defendant.
• Docket Number: Case No. 19-CV-04700-LHK
• Decision Date: 27 March 2020

449 F.Supp.3d 892

Andrea M. WILLIAMS, et al., Plaintiffs,
v.
APPLE, INC., Defendant.

Case No. 19-CV-04700-LHK

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

Signed March 27, 2020

449 F.Supp.3d 897

Azra Z. Mehdi, The Mehdi Firm PC, San Francisco, CA, Roy Arie Katriel, The Katriel Law Firm, Del Mar, CA, for Plaintiffs.

Beatriz Mejia, Lauren Jessica Pomeroy, Matthew Michael Brown, Cooley LLP, San Francisco, CA, Michelle Carrie Doolin, Darcie Allison Tilly, Cooley LLP, San Diego, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART APPLE'S MOTION TO DISMISS

Re: Dkt. No. 15

LUCY H. KOH, United States District Judge

449 F.Supp.3d 898

Plaintiffs bring this putative class action against Defendant Apple, Inc. ("Apple") and allege breach of contract, violations of California's False Advertising Law ("FAL"), and violations of California's Unfair Competition Law ("UCL"). ECF No. 1 ("Class Action Complaint" or "CAC"). Before the Court is Apple's motion to dismiss. ECF No. 15. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS in part and DENIES in part Apple's motion to dismiss.

I. BACKGROUND

A. Factual Background

Apple is a corporation incorporated under the laws of California and has its principal place of business in Cupertino, California. CAC ¶ 7. Apple provides cloud storage services to Apple device users through iCloud, Apple's cloud service. Id . ¶¶ 13-17. iCloud allows subscribers to "utilize certain Internet services, including storing your personal content (such as contacts, calendars, photos, notes, reminders, documents, app data, and iCloud email) and making it accessible on your compatible devices and computers, and certain location based services." CAC, Ex. 1 at 1.

According to the CAC, "[o]wners of Apple devices are granted up to 5 GB of iCloud storage for free. If an Apple device user wishes to store more than 5 GB of data on the cloud through iCloud, then that user must subscribe to iCloud's paid service." CAC ¶ 20. The CAC alleges that "[i]n order to subscribe to iCloud, a user must agree to the iCloud Terms of Service Agreement." Id . ¶ 22. The relevant portion of the iCloud Terms of Service Agreement ("iCloud Agreement") provides the following:

Apple is the provider of the Service , which permits you to utilize certain Internet services, including storing your personal content (such as contacts, calendars, photos, notes, reminders, documents, app data, and iCloud email) and making it accessible on your compatible devices and computers, and certain location based services, only under the terms and conditions set forth in this Agreement. iCloud is automatically enabled when you are running devices on iOS 9 or later and sign in with your Apple ID during device setup, unless you are upgrading the device and have previously chosen not to enable iCloud. You can disable iCloud in Settings. When iCloud is enabled, your content will be automatically sent to and stored by Apple , so you can later access that content or have content wirelessly pushed to your other iCloud-enabled devices or computers. ¶

CAC, Ex. 1 at 1 (emphasis added). This language appears in a September 16, 2015 version of the iCloud Agreement and a September 17, 2018 version of the iCloud Agreement. CAC ¶ 23; CAC, Exs. 1-2.

Named Plaintiffs Andrea M. Williams and James Stewart bring the suit on behalf

449 F.Supp.3d 899

of a putative class of United States iCloud subscribers (excluding Apple, its employees, and its directors) who during the Class Period from August 20, 2015 to the present paid for an Apple iCloud subscription (collectively, "Plaintiffs"). CAC ¶¶ 11-12, 38. Williams is a resident and citizen of Florida who "subscribed to Apple's iCloud service, paid money to Apple for her iCloud subscription, and used iCloud to store her data on the cloud." Id . ¶ 11. Stewart is a resident and citizen of California who "subscribed to Apple's iCloud service, paid money to Apple for his iCloud subscription, and used iCloud to store his data on the cloud." Id. ¶ 12. The CAC does not allege the dates that Williams and Stewart entered into the iCloud Agreement with Apple. Id. ¶¶ 11-12. Rather, the CAC only alleges that Williams and Stewart agreed to the iCloud Agreement sometime "[d]uring the Class Period" from August 20, 2015 to the present. Id.

The CAC alleges that Williams and Stewart were not informed by Apple that his or her data was being stored on "non-Apple remote servers and facilities" despite alleged assurances to the contrary. Id. ¶¶ 11-12. Specifically, Plaintiffs allege that they "bargained for, agreed, and paid to have Apple—an entity they trusted—store their data."¹ Id. ¶ 32. According to the CAC, however, Apple's representations were false and "Apple lacked the facilities needed to readily provide the cloud storage space being sold to class members through iCloud." Id. ¶ 27. "Unable to provide the cloud storage space..., Apple breached its iCloud agreement with its subscribers and had these users' data stored not by Apple on Apple facilities, but instead turned the users' digital files to other entities, like Amazon and Microsoft[,] for them to store on their facilities." Id . ¶ 28.

The CAC alleges that "[h]ad Apple disclosed that, contrary to its contractual representation, Apple was not the provider of the cloud storage," putative class members "would not have subscribed to Apple's iCloud service or would have not agreed to pay as much as [they] did for the service." Id. ¶¶ 11-12. The CAC claims that other companies, such as Microsoft and Google, offer cheaper cloud storage services than Apple and that Apple's "price premium" harmed putative class members who would have otherwise utilized these cheaper cloud storage alternatives. Id. ¶¶ 34-37.

B. Procedural History

On August 12, 2019, Plaintiffs filed a class action complaint against Apple on behalf of a putative class of United States iCloud subscribers (excluding Apple, its employees, and its directors) who during the Class Period from August 20, 2015 to the present paid for an Apple iCloud subscription. CAC ¶¶ 11-12, 38. Plaintiffs attached three exhibits to their CAC: a September 16, 2015 version of the iCloud Agreement, a September 17, 2018 version of the iCloud Agreement, and a version of the iCloud Agreement for subscribers in China. CAC, Exs. 1-3.

The CAC alleges three causes of action against Apple: (1) breach of contract, (2) violations of California's False Advertising Law ("FAL"); and (3) violations of California's Unfair Competition Law ("UCL"). Id .

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¶¶ 45-66. Plaintiffs allege that Apple agreed to be the "provider of the [iCloud] Service" and to store putative class members' content on Apple's servers. Id. ¶¶ 46-47. According to Plaintiffs, however, Apple breached this promise because "storage was provided by non-Apple third parties with whom neither [Named] Plaintiffs nor class members had bargained." Id. ¶¶ 47-49. Plaintiffs also ground their FAL and UCL claims on the allegation that Apple's representation that "Apple was the provider of the iCloud cloud storage service and that class members' data would be stored on the cloud by Apple were and are false and misleading." Id. ¶¶ 56, 63-65. In addition to monetary damages, Plaintiffs request injunctive relief. Id. ¶¶ 60, 66. Plaintiffs, however, do not allege whether they are currently paying for iCloud storage.

On October 4, 2019, Apple filed a motion to dismiss the CAC. ECF No. 15 ("Mot."). On October 18, 2019, Plaintiffs filed an opposition. ECF No. 19 ("Opp."). On October 25, 2019, Apple filed a reply. ECF No. 22 ("Reply").

II. LEGAL STANDARD

A. Motion to Dismiss Under Rule 12(b)(1)

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) tests whether the court has subject matter jurisdiction. Although lack of "statutory standing" requires dismissal for failure to state a claim under Rule 12(b)(6), lack of Article III standing requires dismissal for want of subject matter jurisdiction under Rule 12(b)(1). See Nw. Requirements Utilities v. F.E.R.C. , 798 F.3d 796, 808 (9th Cir. 2015) ("Unlike Article III standing, however, ‘statutory standing’ does not implicate our subject-matter jurisdiction." (citing Lexmark Int'l, Inc. v. Static Control Components, Inc. , 572 U.S. 118, 128 n.4, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014) ); Maya v. Centex Corp. , 658 F.3d 1060, 1067 (9th Cir. 2011). A Rule 12(b)(1) jurisdictional attack may be factual or facial. Safe Air for Everyone v. Meyer , 373 F.3d 1035, 1039 (9th Cir. 2004).

"[I]n a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Id. In resolving such an attack, unlike with a motion to dismiss under Rule 12(b)(6), a court "may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment." Id. Moreover, the court "need not presume the...