Baltazar et al v. Apple Inc

Filing 98

ORDERING GRANTING MOTION TO DISMISS by Hon. William Alsup granting 77 Motion to Dismiss.(whalc1, COURT STAFF) (Filed on 12/22/2011)

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1 2 IN THE UNITED STATES DISTRICT COURT 3 4 FOR THE NORTHERN DISTRICT OF CALIFORNIA 5 6 9 JACOB BALTAZAR, CLAUDIA KELLER, JOHN R. BROWNING, MATTHEW HALPER, JUDI RITCHIE, CHADWICK HORN, individually, and on behalf of all others similarly situated, 10 Plaintiffs, 7 11 For the Northern District of California United States District Court 8 12 13 14 15 No. C 10-03231 WHA ORDER GRANTING MOTION TO DISMISS v. APPLE INC., Defendant. / INTRODUCTION 16 In this consumer class action involving the iPad, plaintiffs allege breach of contract and 17 violation of California’s Unfair Competition Law (“UCL”) against defendant Apple Inc. Apple 18 moves to dismiss plaintiffs’ third amended complaint for failure to state a claim upon which relief 19 may be granted. For the reasons discussed below, the motion to dismiss is GRANTED. 20 STATEMENT 21 Apple launched the iPad on January 27, 2010 (Third Amd. Compl. ¶ 16). Plaintiffs 22 represent a putative class of iPad purchasers, including both a California-only class and a 23 nationwide class (id. ¶ 12). Each of the named plaintiffs alleges that he or she chose to purchase 24 an iPad based at least in part on what they characterize as representations by Apple that the iPad 25 could function outdoors as an e-reader and mobile internet device (id. ¶¶ 34–46). Plaintiffs allege 26 that the iPad did not function outdoors as represented by Apple (ibid.). They claim that the 27 device overheated when it was used outdoors even within the acceptable ambient temperature 28 range, causing it to shut down until it cooled (ibid.). Plaintiffs claim that outdoor overheating was 1 exacerbated by the iPad’s black face, which absorbed more heat from sunlight (id ¶ 20). The 2 operating temperature range for normal use, as defined by Apple in the product specifications 3 available on the packaging and online, was thirty-two to ninety-five degrees Fahrenheit (id. ¶ 23). 4 Plaintiffs base their pleadings on iPad advertisements and the product specifications. 5 Plaintiffs claim that Apple produced a television commercial showing images of the iPad being 6 used outdoors, at least some of the time on sunny days, and posted on its website a video showing 7 scenes of the iPad being used outdoors and in the sun (id. ¶ 24–25). They also base their claims 8 on a statement made on Apple’s website that “[r]eading the iPad is just like reading a book” (id. ¶ 9 28). Finally, they assert that Apple expressly represented, both on the iPad’s packaging and on its website, that the iPad would function normally within the specified ambient temperature range 11 For the Northern District of California United States District Court 10 (id. ¶ 23). This order takes judicial notice of the materials plaintiffs rely on: the iPad warranty, 12 web page regarding iBooks, screenshot of the web-video link, and 30-second television 13 commercial (Dkt. Nos. 12, 30, 54, 64). Plaintiffs do not challenge the authenticity of these 14 materials. 15 District Judge Jeremy Fogel issued two prior orders dismissing plaintiffs’ first and second 16 amended complaints with leave to amend (Dkt. Nos. 50, 68). The order dismissing the second 17 amended complaint held that plaintiffs failed to allege sufficient facts to state breach of warranty 18 claims (express warranty, implied warranty of merchantability, and California Song-Beverly 19 Consumer Warranty Act), common-law fraud, intentional misrepresentation, and negligent 20 misrepresentation claims, their claims under California’s consumer protection statutes, 21 California’s False Advertising Law, Unfair Competition Law, and the Consumers Legal 22 Remedies Act, as well as their claim for unjust enrichment. The order gave plaintiffs “a final 23 opportunity to amend” (Dkt. No. 68 at 2) (emphasis added). In November 2011, this action was 24 reassigned to the undersigned judge. 25 In their now-operative pleading, plaintiffs allege virtually identical facts as their dismissed 26 complaint (compare Third Amd. Compl. ¶¶ 15–48 with Second Amd. Compl. ¶¶ 15–48). 27 Plaintiffs re-plead their UCL claim without any material modifications, and change their warranty 28 2 1 claim into a breach-of-contract claim (compare Third Amd. Compl. ¶¶ 49–67 with Second Amd. 2 Compl. ¶¶ 111–134). 3 ANALYSIS “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a 6 cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. 7 Centinela Hosp. Center, 521 F.3d 1097, 1104 (9th Cir. 2008). “While a complaint attacked by 8 Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation 9 to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, 10 and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. 11 For the Northern District of California 1. 5 United States District Court 4 LEGAL STANDARD FOR MOTION TO DISMISS. Twombly, 127 S. Ct. 1955, 1964–65 (2007) (internal citations omitted). 12 The Court may take judicial notice of “documents whose contents are alleged in a 13 complaint and whose authenticity no party questions, but which are not physically attached to the 14 pleadings.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). In a motion to dismiss, the 15 court need not accept as true allegations that contradict matters properly subject to judicial notice 16 or by exhibit. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 17 18 19 2. BREACH OF CONTRACT. A. Legal Standard. “A cause of action for damages for breach of contract is comprised of the following 20 elements: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) 21 defendant’s breach, and (4) the resulting damages to plaintiff.” Durell v. Sharp Healthcare, 183 22 Cal. App. 4th 1350, 1367 (2010). “A written contract may be pleaded either by its terms—set out 23 verbatim in the complaint or a copy of the contract attached to the complaint and incorporated 24 therein by reference—or by its legal effect. In order to plead a contract by its legal effect, 25 plaintiff must allege the substance of its relevant terms. This is more difficult, for it requires a 26 careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal 27 conclusions.” McKell v. Washington Mut., Inc., 142 Cal. App. 4th 1457, 1489 (2006). 28 3 1 The contractual promise under a breach-of-contract theory is similar to the terms under a 2 warranty theory. See Cal. Comm. Code 2313 (stating that the terms of an express warranty arise 3 from any promise made by the seller to the buyer which relates to the goods and becomes part of 4 the basis of the bargain); Siders v. Schloo, 188 Cal. App. 3d 1217, 1221 (1987) (explaining that 5 plaintiff’s breach-of-contract theory was not significantly different from their warranty claim 6 which tried to incorporate implied terms into the contract of sale). 7 B. Same Factual Deficiencies as the Dismissed Second Amended Complaint. 8 Plaintiffs allege virtually identical facts underlying their breach-of-contract claim as their 9 earlier warranty claims, which were dismissed for insufficient facts. Plaintiffs’ third amended 10 (Third Amd. Compl. ¶¶ 64–67). The advertisements and specifications are insufficient to show For the Northern District of California United States District Court complaint adds no material facts and states only the formulaic elements of breach of contract 11 12 that Apple ever represented or claimed that the iPad would operate without interruption under 13 conditions used by plaintiffs. This was already so held by Judge Fogel. The same analysis 14 applies to plaintiffs’ breach-of-contract claim. Plaintiffs do not explain how re-pleading the same 15 facts as a breach-of-contract claim can change the reasonable promise or warranty by Apple. 16 Once again, the allegations are insufficient to support the essential elements of either a warranty 17 or a breach-of-contract claim. 18 As they did in their dismissed second amended complaint, plaintiffs yet again rely on a 19 commercial containing seven brief scenes depicting the iPad in use in “outdoor locations,” some 20 of which occurred on a “sunny day” (Third Amd. Compl. ¶ 24). Plaintiff fails to mention that the 21 seven brief scenes are only a small fraction of the thirty-second commercial, which consisted of 22 approximately thirty different scenes. The images depiction outdoor use were fast and fleeting. 23 Several of the images were on the screen for less than a second, and none showed the iPad being 24 used in direct sunlight or for an extended period in any outdoor environment (Dkt. No. 54 at 25 Exh. A). The overall impression of the commercial is not that the iPad was an outdoor product, 26 but a mobile product. In fact, the iPad was not even turned on in some of the scenes, but was 27 merely being moved about handily. Even under the most liberal pleading standard, and even 28 4 1 though there are seven of them, these brief depictions cannot be construed as a promise that the 2 device will operate relentlessly outdoors in sunlight. 3 Plaintiffs’ allegations based on the web video linked to Apple’s website are similarly 4 deficient. The independently created video contained brief scenes of the iPad being used 5 outdoors, including being affixed to the dashboard of a car and the gas tank of a motorcycle 6 (Third Amd. Compl. ¶ 25). Importantly, the Apple web page containing a link to the video 7 clearly described the video as having been created by “iPad owner Jesse Rosten,” and it quoted 8 Rosten’s statement that, “This is an exploration of what is possible, not necessarily what is 9 practical.” Apple also added a footnote to Rosten’s statement, warning “Do not attempt.” Plaintiffs fail to allege that any advertisement promised the particular performance plaintiffs 11 For the Northern District of California United States District Court 10 claim to be entitled to. 12 Plaintiffs allege that the iPad was packaged with an express warranty against defects in 13 materials or workmanship under normal use, and that Apple itself defined normal use to include 14 operation in a place where the ambient temperature was between thirty-two and ninety-five 15 degrees Fahrenheit. While the warranty covered defects that arise if the iPad was used normally, 16 there was no promise that the device would operate without interruption under all conditions 17 within a specified ambient temperature range. To use an obvious example, one could not 18 conclude from the specifications that the iPad would be expected to operate in a rain or snow 19 storm simply because it is designed to operate at certain ambient temperatures. In sum, plaintiffs 20 do not alleged sufficient facts to show there was a breach of contract. 21 22 23 3. UNFAIR COMPETITION LAW. A. Legal Standard. Section 17200 prohibits acts of unfair competition, including “any unlawful, unfair, or 24 fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising.” 25 Claims made under the UCL are governed by the “reasonable consumer” test which focuses on 26 whether “members of the public are likely to be deceived.” Williams v. Gerber Prods. Co., 552 27 F.3d 934, 938 (9th Cir. 2008). If an alleged misrepresentation would not deceive a reasonable 28 5 1 consumer or amounts to mere puffery, then the claim may be dismissed as a matter of law. 2 Haskell v. Time, Inc., 857 F. Supp. 1392, 1399 (E.D. Cal 1994). 3 B. No Material Changes From the Dismissed Second Amended Complaint. 4 Judge Fogel held that plaintiffs had not shown why a reasonable consumer would be 5 deceived by the allegedly misleading advertisements. For reasons already discussed, the 6 advertisements and specifications could not be understood to represent or promise that the iPad 7 would operate without interruption in the specific environmental conditions under which it 8 allegedly tended to shut down. Plaintiffs have not alleged any new information in their operative 9 pleading that remedies this deficiency. 10 specifications to conclude that the iPad would never shut down within the specified ambient For the Northern District of California United States District Court Plaintiffs still fail to explain how they could reasonably rely on the temperature 11 12 temperature range. As already discussed, the temperature specifications did not purport to 13 describe fully the environmental conditions under which the device would operate without 14 interruption. 15 The commercial contained only fleeting images of the iPad being used outdoors, and none 16 of these appeared to be in direct sunlight. Plaintiffs do not explain how they reasonably could 17 rely on the images in the commercial as a basis for believing that the iPad could be used for an 18 extended period in the sun. Plaintiffs claim that they relied on the commercial to conclude that 19 the device would operate “outdoors,” or “under the conditions in the advertisement,” (Third Amd. 20 Compl. ¶ 35) but they allege only that the device fails to operate without interruption in a limited 21 subset of outdoor conditions. 22 None of the named plaintiffs claims to have relied on Apple’s statement that the iPad can 23 be used “just like a book,” which was mere puffery. In light of the clear disclaimers associated 24 with the web video, plaintiffs have not alleged sufficient facts to support a conclusion that 25 reliance upon any representations made in that video is reasonable. 26 Plaintiffs’ UCL claim fails because they did not show why a reasonable consumer would 27 be deceived by the allegedly misleading materials. 28 6 1 4. 2 Because this order is granting Apple’s motion to dismiss the entire pleading, its motion to 3 MOTION TO STRIKE CLASS ALLEGATIONS. strike plaintiffs’ class allegations is moot. 4 5 CONCLUSION Plaintiffs have failed to allege any new material facts in their third amended complaint. 6 As warned in the previous order, plaintiffs will not have a fourth chance. Because plaintiffs have 7 failed to remedy the pleading deficiencies previously identified, the third amended complaint is 8 DISMISSED WITHOUT LEAVE TO AMEND. 9 IT IS SO ORDERED. 11 For the Northern District of California United States District Court 10 12 Dated: December 22, 2011. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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