Gomelsky v. Apple, Inc.

Filing 59

Brief re 58 MOTION to Dismiss APPLE INC.S NOTICE OF MOTION AND MOTION TO DISMISS THE SECOND AMENDED COMPLAINT APPLE INC.S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO DISMISS THE SECOND AMENDED COMPLAINT filed byApple, Inc.. (Related document(s) 58 ) (Preovolos, Penelope) (Filed on 11/5/2009)

Gomelsky v. Apple, Inc.

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PENELOPE A. PREOVOLOS (CA SBN 87607) ([e-mail]) ANDREW D. MUHLBACH (CA SBN 175694) ([e-mail]) ALEXEI KLESTOFF (CA SBN 224016) ([e-mail]) MORRISON & FOERSTER LLP 425 Market Street San Francisco, California 94105-2482 Telephone: [phone] Facsimile: 415.268.7522 Attorneys for Defendant APPLE INC.

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

REUBEN BERENBLAT, ANDREW PERSONETTE, EARL C. SIMPSON, LAURA MILLER, On behalf of themselves and all others similarly situated, Plaintiffs, v. APPLE INC., Defendant.

Case No. Case No.

C-08-04969 JF C-09-01649 JF

APPLE INC.'S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION TO DISMISS THE SECOND AMENDED COMPLAINT Date: February 5, 2010 Time: 9:00 am Courtroom: 3

THOMAS WAGNER, SCOTT MEYERS, On behalf of themselves and all others similarly situated, Plaintiffs, v. APPLE INC., Defendant.

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TABLE OF CONTENTS Page

TABLE OF AUTHORITIES............................................................................................................ii INTRODUCTION............................................................................................................................ 1 ISSUES TO BE DECIDED.............................................................................................................. 3 FACTUAL BACKGROUND .......................................................................................................... 3 ARGUMENT ................................................................................................................................... 5 I. PLAINTIFFS HAVE AGAIN FAILED TO PLEAD AN IMPLIED WARRANTY CLAIM ......................................................................................................... 6 Plaintiffs Are Bound by the Terms of the Limited Warranty................................... 6 Plaintiffs Have Not Pleaded Their Lack of Pre-Sale Notice or Awareness of Apple's Express Warranty. ............................................... 7 The Alleged Inability to Negotiate Regarding the Warranty's Terms Does Not Invalidate It. ................................................... 8

Because Any Alleged Defects Manifested Themselves After the Expiration of any Implied Warranties, Plaintiffs' Claims Are Barred. .................................................................................................................... 10

PLAINTIFFS HAVE FAILED TO REMEDY THE DEFECTS IN THEIR UCL CLAIM ...................................................................................................................... 11 A. Plaintiffs Have Failed to State a Claim Under the "Unlawful" Prong of the UCL.............................................................................................................. 11 Plaintiffs Have Failed to State a Claim Under the "Unfair" Prong of the UCL. ................................................................................................................. 12 Plaintiffs Have Failed to State a Claim Under the "Fraudulent" Prong of the UCL. .................................................................................................. 13

PLAINTIFFS HAVE MADE NO AMENDMENTS TO THEIR PREVIOUSLY DEFECTIVE UNJUST ENRICHMENT CLAIM ................................... 14

CONCLUSION .............................................................................................................................. 15

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TABLE OF AUTHORITIES Page(s) 24 Hour Fitness, Inc. v. Sup. Ct., 66 Cal. App. 4th 1199 (1998).................................................................................................... 9 Andrews v. Kern's TV & Appliance, Inc., 2000 Ohio 1752 (Ohio Ct. App. 2000).................................................................................... 10 Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) .............................................................................................................. 5 Atkinson v. Elk Corp. of Tex., 142 Cal. App. 4th 212 (2006).................................................................................................. 10 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ............................................................................................................ 5, 12 Berenblat v. Apple, Inc., Nos. 08-4969, 09-1649, 2009 U.S. Dist. LEXIS 80734 (N.D. Cal. Aug. 21, 2009) ................................................................................................ passim Bly-Magee v. California, 236 F.3d 1014 (9th Cir. 2001) ................................................................................................... 5 Branch v. Tunnell, 14 F.3d 449 (9th Cir. 1994) ....................................................................................................... 4 Cal. Packing Corp. v. Sun-Maid Raisin Growers, 81 F.2d 674 (9th Cir. 1936) ....................................................................................................... 8 Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) .................................................................................................................. 9 Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008) ................................................................................. 5, 10, 12, 13 Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824 (2006)...........................................................................................passim Fairlane Estates, Inc. v. Carrico Constr. Co., 228 Cal. App. 2d 65 (1964) ....................................................................................................... 8 Gamer v. Dupont Glore Forgan, Inc., 65 Cal. App. 3d 280 (1976) ....................................................................................................... 9

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Hoey v. Sony Elecs. Inc., 515 F. Supp. 2d 1099 (N.D. Cal. 2007)......................................................................... 4, 13, 14 Holman Motor Co. v. Evans, 314 S.E.2d 453 (Ga. Ct. App. 1984) ....................................................................................... 10 Hovsepian v. Apple, Inc., Nos. 08-5788, 09-1064, 2009 U.S. Dist. LEXIS 80868 (N.D. Cal. Aug. 21, 2009) ......................................................................................... 6, 7, 10, 13 In re Ford Motor Co. Ignition Switch Prods. Liab. Litig., Nos. 96-3125, 96-1814, 1999 U.S. Dist. LEXIS 22891 (D.N.J. July 27, 1999) ............................................................................................................. 10 Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) ............................................................................................. 5, 14 Larson v. Speetjens, No. C 05-3176, 2006 U.S. Dist. LEXIS 66459 (N.D. Cal. Sept. 1, 2006)..........................................................................................................................8 London v. Coopers & Lybrand, 644 F.2d 811 (9th Cir. 1981) ............................................................................................... 1, 11 Long v. Hewlett-Packard Co., No. C-06-02816, 2007 U.S. Dist. LEXIS 79262 (N.D. Cal. July 27, 2007) .............................................................................................. 5, 10, 15 McGlinchy v. Shell Chem. Co., 845 F.2d 802 (9th Cir. 1988) ..................................................................................................... 5 Melchior v. New Line Prods., Inc., 106 Cal. App. 4th 779 (2003).................................................................................................. 14 Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964 (N.D. Cal. 2008)..................................................................................... 14 Stockton Metro. Transit Dist. v. Amalgamated Transit Union, 132 Cal. App. 3d 203 (1983) ..................................................................................................... 9 Tietsworth v. Sears, Roebuck & Co., C 09-00288, 2009 U.S. Dist. LEXIS 98532 (N.D. Cal. Oct. 13, 2009) ........................................................................................ 9, 12, 13, 14 Transphase Sys., Inc. v. S. Cal. Edison Co., 839 F. Supp. 711 (C.D. Cal. 1993)............................................................................................ 5 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) ............................................................................................... 5, 6
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Wilson v. Hewlett-Packard Co., 2009 U.S. Dist. LEXIS 92692 (N.D. Cal. Sept. 17, 2009) ......................................................................................................... 9 STATUTES Magnuson-Moss Warranty Act, 15 U.S.C. § 2308(b) ................................................................................................................................... 6 OTHER AUTHORITIES Fed. R. Civ. P. 9(b).................................................................................................................passim

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INTRODUCTION Plaintiffs have had three chances to properly allege their claims, and have failed to do so.1 Plaintiffs cannot avoid the fact that (1) Apple's express warranty limits any implied warranties to one year and (2) the Plaintiffs' computers allegedly malfunctioned more than a year after any implied warranties had expired. Thus, Daugherty v. American Honda Motor Co., 144 Cal. App. 4th 824 (2006), and cases of this Court interpreting Daugherty, bar Plaintiffs' claims. Accordingly, Plaintiffs' Second Amended Complaint ("SAC") should be dismissed. Recognizing that the terms of Apple's express warranty barred Plaintiffs' claims, the Court dismissed all claims in the First Amended Complaint ("FAC"), but granted Plaintiffs leave to amend. With regard to the implied warranty claim, the Court gave Plaintiffs the opportunity to add allegations that would avoid the fatal effect of the express warranty's one-year limit on implied warranties. Plaintiffs have not succeeded. As in the FAC, Plaintiffs allege that the limitation of implied warranties is "ineffective," and claim that there is no pre-sale notice; their only new allegation is that the express warranty is provided to consumers in the product packaging. That is not enough. That the warranty is included in the product packaging does not establish that it was not otherwise available pre-sale.2 Most fundamentally, however, as in the FAC, Plaintiffs conspicuously fail to allege that they did not receive pre-sale notice of the warranty. This omission is particularly telling, given that Apple has squarely and repeatedly challenged Plaintiffs to deny that they were on notice of the warranty prior to sale. Moreover, three of the six Plaintiffs exercised their rights under the express warranty. Not only does this establish that Plaintiffs were aware of the warranty, it also bars them as a matter of law from denying the warranty's validity. Similarly, four of the six purchased an AppleCare
1

The Second Amended Complaint ("SAC") that is the subject of Apple's motion was filed in both the Berenblat and the Wagner (formerly Vail) actions. The previous complaints in the Wagner action asserted a violation of the Consumers Legal Remedies Act, as well as the Unfair Competition Law, but under a different theory than that asserted in the SAC. By filing the SAC without these claims or allegations, the Wagner Plaintiffs have abandoned them. See London v. Coopers & Lybrand, 644 F.2d 811, 814 (9th Cir. 1981) (claims in the original complaint that are not realleged in an amended complaint are waived). Accordingly, this brief will only address the complaints in the Berenblat action.
2

See footnote 5, infra. 1

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Protection Plan ("APP"), which explicitly extends repair coverage for two years from the date the express warranty expires. Plaintiffs could not have purchased the APP without being aware of the underlying express warranty and its durational limitations. Plaintiffs' new allegations do not establish their lack of pre-sale notice. Plaintiffs also add the allegation that the express warranty is a contract of adhesion. But California law is clear that the mere fact that a warranty is a contract of adhesion does not invalidate it. Were the rule otherwise, no manufacturer of consumer goods would be able to enforce its warranty terms. A warranty, like any other contract of adhesion, is only invalid if its terms are vague, ambiguous, or unconscionable. The SAC does not allege that the limitation on the duration of implied warranties in Apple's express warranty, or any other term of the warranty, is vague or ambiguous. Moreover, the provision at issue -- the limitation of implied warranties to one year -- cannot be unconscionable, since it had been expressly endorsed by the California legislature. Plaintiffs have failed to avoid the express warranty's durational limitation of implied warranties. Accordingly, Plaintiffs' implied warranty claim, and their Unfair Competition Law ("UCL") "unlawful" claim predicated on the implied warranty claim, are barred by Daugherty and its progeny and should be dismissed. Plaintiffs' "unfair" and "fraudulent" claims under the UCL should also be dismissed. All Plaintiffs have added in the SAC is the allegation that Apple failed to inform its customers about the alleged defect until after their warranties had ended. Yet this is exactly what this Court, the Ninth Circuit, and Daugherty have held was insufficient to constitute an unfair or fraudulent business practice under the UCL. In addition, both claims are grounded in fraud, and thus must be pleaded with specificity under Federal Rule of Civil Procedure 9(b). Plaintiffs do not even attempt to satisfy this standard. Plaintiffs have once again failed to adequately plead a claim under any prong of the UCL. Finally, Plaintiffs' allegations regarding unjust enrichment are identical to those in the FAC. Thus, the claim fails for the same reasons it failed in the FAC: no such claim exists in California; Plaintiffs' underlying claims are without merit; and nothing about Apple's actions was unjust.
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The SAC demonstrates that Plaintiffs cannot sufficiently plead their implied warranty, UCL, and unjust enrichment claims. Accordingly, the SAC should be dismissed with prejudice. ISSUES TO BE DECIDED 1. Whether Plaintiffs can state a claim for breach of the implied warranty of

merchantability when the alleged defect manifested itself after the one-year implied warranty period had expired. 2. Whether Plaintiffs can state a claim under the "unlawful," "unfair," or "fraudulent"

prongs of the UCL, where the claim is based on the manifestation of an alleged defect after the expiration of any applicable implied warranties, and where the computer operated as represented during the life of all applicable warranties. 3. Whether Plaintiffs have pleaded their claim under the "unfair" or "fraudulent"

prongs of the UCL with the specificity required by Federal Rule of Civil Procedure 9(b). 4. Whether Plaintiffs can state a claim for unjust enrichment, when no such claim

exists in California and when Plaintiffs' computers functioned as warranted during any applicable warranty period. FACTUAL BACKGROUND As this Court has recognized, Apple's PowerBook G4 models came with a one-year limited express warranty, which limits the duration of any implied warranties to the duration of the express warranty. (Declaration of Alexei Klestoff in support of Apple's Motion to Dismiss First Amended Complaint, Docket No. 40, ¶ 2, Ex. A ("Apple Warranty"), Docket No. 40-2.)3 The SAC makes the same allegations regarding Reuben Berenblat's, Andrew Personette's, Earl Simpson's, and Laura Miller's computers as the FAC. (Compare FAC ¶¶ 31-47 with SAC ¶¶ 49-65.) The allegations establish that these Plaintiffs' computers functioned properly long after the implied warranty period had expired. In its August 21, 2009 Order Granting (Apple's) Motions to Dismiss with Leave to Amend, the Court granted Apple's request for judicial notice of its express warranty because the FAC referenced the warranty and two of the Plaintiffs exercised their rights under the warranty. Berenblat v. Apple, Inc., Nos. 08-4969, 09-1649, 2009 U.S. Dist. LEXIS 80734, at *2 n.3 (N.D. Cal. Aug. 21, 2009). The SAC also references the warranty, and three of the Plaintiffs exercised their rights under the warranty. (SAC ¶¶ 25, 40-42, 53, 62-67, 72-73, 88, 97.)
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The SAC adds two new Plaintiffs. The allegations regarding these Plaintiffs also demonstrate that their computers functioned properly throughout the warranty period and well beyond. Plaintiff Thomas Wagner, a North Carolina resident, allegedly purchased a PowerBook G4 in the summer of 2005. (SAC ¶¶ 15, 66.) He purchased an APP with his computer. (Id. ¶ 66.)4 He alleges that at unspecified times, his computer "appeared sluggish." (Id. ¶ 67.) He did not make a claim under the warranty for this sluggishness, however. He then alleges that threeand-a-half years after his purchase, in January 2009, he learned that his computer was only recognizing 1 GB of RAM and that his memory slot was allegedly defective. (Id. ¶¶ 68-69.) Plaintiff Scott Meyer, a South Dakota resident, allegedly purchased a PowerBook G4 in June 2005. (Id. ¶¶ 16, 72.) He also purchased an APP with his computer. (Id. ¶ 72.) He alleges that more than three years later, in December 2008, he learned that his computer was not recognizing the memory card in the lower memory slot of his computer and that it was allegedly defective. (Id. ¶ 73.) Plaintiffs have filed the present complaint on behalf of themselves and a putative class of PowerBook G4 purchasers. As in the FAC, they allege claims for breach of implied warranty, violation of the UCL, and unjust enrichment. (SAC ¶¶ 85-105.) They seek reimbursement of expenses incurred to repair defective memory slots, restitution, damages representing the difference in value of the allegedly defective PowerBooks purchased and the value the computers would have had if they had been as warranted, and disgorgement of profits. (Id. ¶¶ 6, 91, 98, 105.)

As stated in Apple's previous Motion to Dismiss, the APP is a service contract that provides customers with coverage for repairs for an additional two years after the expiration of the express warranty. (See Memorandum of Points and Authorities in Support of Apple's Motion to Dismiss the First Amended Complaint, at 3:3-5, Docket No. 39; Declaration of Alexei Klestoff in Support of Motion to Dismiss Second Amended Complaint ("Klestoff Decl."), Ex. A.) The APP is a proper subject of judicial notice because it is referenced in the SAC. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994); Berenblat, 2009 U.S. Dist. LEXIS 80734, at *2 n.3; Hoey v. Sony Elecs. Inc., 515 F. Supp. 2d 1099, 1103 (N.D. Cal. 2007). The Court discussed the APP in its Order granting Apple's previous motion to dismiss. Berenblat, 2009 U.S. Dist. LEXIS 80734, at *3.
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ARGUMENT Under Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss should be granted if the plaintiff is unable to articulate enough facts to state a claim to relief that is "plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008); Long v. Hewlett-Packard Co., No. C-06-02816 JW, 2007 U.S. Dist. LEXIS 79262, at *7 (N.D. Cal. July 27, 2007). A pleading that offers "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Iqbal, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 555). The complaint must allege facts which, when taken as true, raise more than a speculative right to relief. Twombly, 550 U.S. at 555. The facts must "nudge[] [the] claims across the line from conceivable to plausible." Id. at 570. The Court need not accept as true conclusory allegations or legal characterizations, nor need it accept unreasonable inferences or unwarranted deductions of fact. See McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir. 1988); Transphase Sys., Inc. v. S. Cal. Edison Co., 839 F. Supp. 711, 718 (C.D. Cal. 1993). In addition, Rule 9(b) provides that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). Under Rule 9(b), conclusory allegations of fraud are insufficient. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Rule 9(b)'s heightened pleading requirement applies to allegations of fraud and allegations that sound in fraud, including false representations or omissions. Id. at 1106-07. It also applies to claims under the UCL when such claims are based on allegations of fraudulent conduct. Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009); Berenblat, 2009 U.S. Dist. LEXIS 80734, at *17 n.6. The "allegations of fraud must be specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001) (citation and quotations omitted). To meet this standard, a complaint must provide the time, place, and content of the alleged

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fraudulent representation or omission -- the "who, what, when, where, and how" -- as well as the circumstances indicating fraudulent conduct. See Vess, 317 F.3d at 1106. All of Plaintiffs' claims fail as a matter of law and should be dismissed in their entirety. I. PLAINTIFFS HAVE AGAIN FAILED TO PLEAD AN IMPLIED WARRANTY CLAIM

Plaintiffs have failed to remedy the defects in their implied warranty claim. As in their previous complaint, Plaintiffs' implied warranty claim fails because the SAC's allegations establish that Plaintiffs' computers performed without any issues long after any implied warranties had expired. Apple's express warranty limits the duration of implied warranties to the duration of the one-year express warranty. (See Apple Warranty, Docket No 40-2.) As the Court recognized in its Order granting Apple's previous motion to dismiss, this is fully consistent with applicable law. Berenblat, 2009 U.S. Dist. LEXIS 80734, at *13 ("the limitation on the implied warranty appears to comply with the requirements of Cal. Com. Code § 2316"); see also Hovsepian v. Apple, Inc., Nos. 08-5788, 09-1064, 2009 U.S. Dist. LEXIS 80868, at *24 (N.D. Cal. Aug. 21, 2009) ("manufacturers may impose limitations on implied warranties"); Magnuson-Moss Warranty Act, 15 U.S.C. § 2308(b) ("implied warranties may be limited in duration to the duration of a written warranty of reasonable duration"). Thus, any implied warranty of merchantability was limited to one year. Plaintiffs are bound by the express warranty's limitation of implied warranties, and their computers allegedly malfunctioned long after the implied warranty had expired. Accordingly, their implied warranty claim is meritless. A. Plaintiffs Are Bound by the Terms of the Limited Warranty.

Plaintiffs once again attempt to avoid the express warranty by contending that it is "ineffective." (SAC ¶ 41.) To support this contention in the FAC, Plaintiffs alleged that Apple's limitation of warranties is ineffective because "it is not delivered to consumers in advance of their purchases, consumers are not permitted to negotiate the terms, and the terms of the limited warranty unreasonably favor Apple." (FAC ¶ 25.) The FAC further alleged that "[t]he
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unconscionability of Apple's purported limitation of warranties is compounded by Apple's knowledge that it manufactured defective computers, yet continued to sell them without correcting the defects." (Id.) The Court found that these allegations were insufficient to support an exception to "an otherwise binding contractual agreement." Berenblat, 2009 U.S. Dist. LEXIS 80734, at *13; see also Hovsepian, 2009 U.S. Dist. LEXIS 80868, at *24 (plaintiff's allegation that Apple's express warranty's limitation of implied warranties is "unreasonable, unconscionable, and void" was insufficient to overcome the presumption of validity of the warranty). The SAC fails to remedy this defect. It contains the same allegations as the FAC; the only new allegation is that customers received the warranty in the product packaging. (SAC ¶ 41.) But this adds nothing of significance to the allegations already contained in the FAC that customers did not receive the warranty pre-sale and were not able to bargain regarding its terms, allegations that the Court already has found insufficient.5 Fatally, Plaintiffs still do not plead -- and it is now clear they cannot plead -- that they did not receive pre-sale notice of the warranty. Plaintiffs' allegations do not rebut the presumption of validity of the warranty. See Hovsepian, 2009 U.S. Dist. LEXIS 80868, at *24 (Apple's express warranty is presumptively valid). 1. Plaintiffs Have Not Pleaded Their Lack of Pre-Sale Notice or Awareness of Apple's Express Warranty.

The SAC's allegations regarding lack of pre-sale notice are fatally defective. As in the FAC, Plaintiffs do not plead that they lacked notice or awareness of the express warranty. This defect was squarely raised by Apple's previous motion, yet Plaintiffs have not attempted to remedy it. See Apple's Reply in Support of its Motion to Dismiss, at 6:16-18 ("None of the plaintiffs plead that they in fact failed to receive notice of Apple's express warranty"); Berenblat, 2009 U.S. Dist. LEXIS 80734, at *13 ("the Berenblat FAC is devoid of factual allegations that

Nor does the fact that the warranty was contained in the product packaging establish, as Plaintiffs contend, that the warranty was not available pre-sale. If this case progresses past the pleading stage, discovery will show that Apple's warranty was also available on Apple's website and upon request prior to sale.
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would support an exception to an otherwise binding contractual agreement"). It is now apparent that Plaintiffs cannot do so. Moreover, three of the six Plaintiffs exercised their rights under the express warranty, demonstrating that they were aware of the warranty and its terms. (SAC ¶ 53 (alleging that Apple replaced Personette's computer in 2005), ¶ 62 (alleging that Apple replaced Miller's motherboard in 2006), ¶ 67 (alleging that Apple repaired other problems with Wagner's computer).) In addition, a party who accepts the benefits of a contract cannot deny its validity. Cal. Packing Corp. v. Sun-Maid Raisin Growers, 81 F.2d 674, 678 (9th Cir. 1936) (where party accepted benefits of the contract, it ratified the contract); Fairlane Estates, Inc. v. Carrico Constr. Co., 228 Cal. App. 2d 65, 70 (1964) (acceptance of the benefits of the contract was a ratification that cured any defect in the execution of the contract); see also Larson v. Speetjens, No. C 05-3176 SBA, 2006 U.S. Dist. LEXIS 66459, at *14 (N.D. Cal. Sept. 1, 2006) ("A party should not be allowed to claim the benefit of the contract and simultaneously avoid its burdens."). Further, four of the six Plaintiffs purchased an APP that provided them with coverage for repairs for an additional two years after their express warranty expired. (See SAC ¶ 53 (Personette), ¶ 63 (Miller), ¶ 66 (Wagner), ¶ 72 (Meyer).) The APP contract explicitly discusses the express warranty: "Your coverage for defects begins on the date your Covered Equipment's Apple hardware warranty expires." (Klestoff Decl. Ex. A at 1.c.) Plaintiffs would have no reason to purchase an APP unless they were aware of the express warranty and knew that it was limited to one year. For this reason as well, Plaintiffs cannot plausibly argue that they were unaware of the warranty. 2. The Alleged Inability to Negotiate Regarding the Warranty's Terms Does Not Invalidate It.

Plaintiffs also contend that because consumers cannot negotiate regarding the express warranty's limitation of implied warranties, it is a "classic" contract of adhesion and is thus "ineffective." (SAC ¶¶ 41-42.) This contention proves too much. If the fact that a warranty is adhesive sufficed to render the warranty limitations unenforceable, no manufacturer's warranty could be enforced. That is not the law. The mere fact that a contract is adhesive does not render
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it unenforceable unless its terms are otherwise vague, ambiguous, or unconscionable. That is not the case here. "Adhesion contracts are not per se unenforceable, they are valid and will be enforced where they are reasonably certain and do not contain unconscionable terms." Stockton Metro. Transit Dist. v. Amalgamated Transit Union, 132 Cal. App. 3d 203, 214 (1983) Gamer v. duPont Glore Forgan, Inc., 65 Cal. App. 3d 280, 286 (1976) (adhesion contracts are "valid and enforced according to their terms unless they are ambiguous . . . It requires more than a showing that a contract was on a printed form prepared by one of the parties to make it invalid as a contract of adhesion.").6 The SAC contains no allegations that Apple's express warranty is uncertain or ambiguous. Nor is the limitation of implied warranties to one year unconscionable; indeed, the California Legislature has expressly approved such a limitation.7 See Apple's Reply in Support of Apple's Motion to Dismiss at 7:4-8, Docket No. 51; Wilson v. Hewlett-Packard Co., No. C-092253 RMW, 2009 U.S. Dist. LEXIS 92692, at *4 (N.D. Cal. Sept. 17, 2009) ("Limitations on warranties [are] authorized by the California Uniform Commercial Code § 2316 and have been routinely upheld."); see also Tietsworth v. Sears, Roebuck & Co., C 09-00288, 2009 U.S. Dist. LEXIS 98532, at *29-32 (N.D. Cal. Oct. 13, 2009) (rejecting argument that one-year warranty limitation was unconscionable because defendants limited the warranties and actively concealed a known defect). The SAC adds no allegations to demonstrate otherwise. Accordingly, the express warranty properly limited the duration of any implied warranties to one year, and Plaintiffs are bound by those terms.

See also 24 Hour Fitness, Inc. v. Super. Ct., 66 Cal. App. 4th 1199, 1213 (1998) (rejecting plaintiff's attempt to invalidate arbitration clause by arguing that the contract was one of adhesion); cf. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593-595 (1991) (a nonnegotiated forum selection clause included in a form contract may be enforced even if it was not the subject of bargaining). In addition, Plaintiffs had the right to return their computers and purchase a computer from another manufacturer if they did want to be bound by Apple's warranty. There are no allegations in the SAC to the contrary.
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B.

Because Any Alleged Defects Manifested Themselves After the Expiration of any Implied Warranties, Plaintiffs' Claims Are Barred.

As was true of the FAC, the SAC makes plain that the Plaintiffs' alleged defects manifested themselves more than a year after Plaintiffs purchased their PowerBooks: Reuben Berenblat purchased his computer on July 12, 2005, and the alleged defect manifested itself over three years later, in September 2008. (SAC ¶¶ 49-50.) Andrew Personette purchased his computer in 2005, and the alleged defect manifested itself two years later, in 2007. (Id. ¶¶ 53-54.) Earl Simpson purchased his computer on August 20, 2005, and the alleged defect manifested itself over three years later, on October 12, 2008. (Id. ¶¶ 57-58.) Laura Miller purchased her computer in early 2006, and the alleged defect manifested itself over three years later, in early 2009. (Id. ¶¶ 61-64; Klestoff Decl., Ex. A.) Thomas Wagner purchased his computer in the summer of 2005, and the alleged defect manifested itself approximately three-and-a-half years later, in January 2009. (SAC ¶¶ 66, 68.) Scott Meyer purchased his computer in June 2005, and the alleged defect manifested itself approximately three years later, in 2008. (Id. ¶¶ 72-73.) Thus, the alleged defects manifested themselves long after any implied warranties had expired. As this and numerous other courts have held, a plaintiff has no implied warranty claim for alleged defects that manifest themselves after the warranty period has expired. Berenblat, 2009 U.S. Dist. LEXIS 80734, at *13; Hovsepian, 2009 U.S. Dist. LEXIS 80868, at *24 (dismissing implied warranty claim where Apple product allegedly failed outside of the one-year implied warranty period); Atkinson v. Elk Corp. of Tex., 142 Cal. App. 4th 212, 227-32 (2006) (implied warranty of merchantability claim was barred as a matter of law because the defect manifested itself after expiration of one-year implied warranty period); Andrews v. Kern's TV & Appliance, Inc., 2000 Ohio 1752, at *11 (Ohio Ct. App. 2000) (no breach of implied warranties where problems with product occurred after warranties had expired); In re Ford Motor Co. Ignition Switch Prods. Liab. Litig., Nos. 96-3125, 96-1814, 1999 U.S. Dist. LEXIS 22891, at *56 (D.N.J. July 27, 1999) (same); Holman Motor Co. v. Evans, 314 S.E.2d 453, 455 (Ga. Ct. App. 1984) (same); see also Daugherty, 144 Cal. App. 4th at 830 (express warranty claim barred as a

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matter of law because malfunction occurred after expiration of the warranty); Clemens, 534 F.3d at 1023 (same); Long, 2007 U.S. Dist. LEXIS 79262, at *10-11 (same).8 Plaintiffs' implied warranty claim accordingly fails. Plaintiffs have had three chances to sufficiently plead an implied warranty claim, and have failed to do so. Accordingly, the claim should be dismissed with prejudice. II. PLAINTIFFS HAVE FAILED TO REMEDY THE DEFECTS IN THEIR UCL CLAIM

As with their implied warranty claim, Plaintiffs have failed to remedy the defects in their UCL claim. Like the FAC, the SAC alleges a UCL claim under the "unlawful" and "unfair" prongs. (SAC ¶¶ 86-89.) It also adds a UCL claim under the "fraudulent" prong. (FAC ¶ 88.) Their claim fails under all three prongs. A. Plaintiffs Have Failed to State a Claim Under the "Unlawful" Prong of the UCL.

Plaintiffs' UCL claim under the "unlawful" prong in the SAC fails for the same reason it failed in the FAC. In its Order dismissing the FAC, the Court held that Plaintiffs' UCL claim under the "unlawful" prong failed because their other claims failed, and because Plaintiffs had not pleaded any other common law claims such as negligence.9 Berenblat, 2009 U.S. Dist. LEXIS 80734, at *16-17. Plaintiffs have added no allegations in the SAC that address these defects, and as stated above, Plaintiffs' implied warranty claim still fails. Accordingly, Plaintiffs' UCL claim under the "unlawful" prong is baseless.

The SAC makes a vague allegation that plaintiff Wagner's computer "appeared sluggish" at unspecified times. (SAC ¶ 67.) But this allegation is irrelevant, since Wagner never made a claim during the one-year period as required by the express warranty. (See Apple Warranty (stating that "[i]f a hardware defect arises and a valid claim is received within the Warranty period" Apple will repair the defect, replace the product, or refund the purchase price) (emphasis added), Docket No. 40-2.) In fact, Plaintiffs are foreclosed from asserting a negligence claim, because they pleaded negligence in their first complaint, but abandoned it in the FAC. London, 644 F.2d at 814 (claims in the original complaint that are not realleged in an amended complaint are waived).
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B.

Plaintiffs Have Failed to State a Claim Under the "Unfair" Prong of the UCL.

Plaintiffs' UCL claim under the "unfair" prong is similarly meritless. The only new UCL allegations in the SAC are as follows: As also described herein, Defendant failed to repair or replace the defective laptops purchased by its customers when they were brought in for repair as per their one-year warranty or Apple Care extended protection. Apple engaged in an unfair and fraudulent business practice in not informing their customers about the defect until after their warranty protections lapsed. (SAC ¶ 88.) These allegations are deliberately ambiguous. To the extent these allegations can be read to allege that Apple refused to repair computers that were within the express warranty period or were still covered by AppleCare, the SAC itself demonstrates that they are false. Three of the Plaintiffs did obtain service within the warranty period. (See SAC ¶ 53 (alleging that Apple replaced Personette's computer in 2005), ¶ 62 (alleging that Apple replaced Miller's motherboard in 2006), ¶ 67 (alleging that Apple repaired other problems with Wagner's computer).) Similarly, none of the Plaintiffs alleges that he or she made a warranty claim and was refused service within the warranty or APP period. See Tietsworth, 2009 U.S. Dist. LEXIS, at *15 (plaintiffs could not pursue claims based on safety defects that they had not experienced). Finally, the allegations are wholly conclusory and fail to meet the Iqbal/Twombly pleading standard. Alternatively, Plaintiffs may mean to allege that Apple should have repaired the memory slots of computers that were tendered for repair for other issues during the warranty period, even though there was no memory malfunction. However, there is no legal requirement that a manufacturer repair a component that has not malfunctioned. Plaintiffs admit as much when they do not include these allegations as part of their warranty claims. To suggest that failing to repair a component that is functioning properly is somehow "unfair" is absurd. The real core of these allegations is nothing new. It is the same "unfairness" alleged in the prior complaints: that Apple did not inform customers of the alleged defect during the warranty period. These allegations fail under the holdings of this Court, the Ninth Circuit, and Daugherty:
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[T]he failure to disclose a defect that might, or might not, shorten the effective life span of [a product] that functions precisely as warranted throughout the term of its express warranty cannot be characterized as causing a substantial injury to consumers, and accordingly cannot constitute an unfair practice under the UCL. Berenblat, 2009 U.S. Dist. LEXIS 80734, at *17 (quoting Clemens, 534 F.3d at 1026-27); Daugherty, 144 Cal. App. 4th at 839. Plaintiffs' UCL claim under the "unfairness" prong also must be dismissed for the additional reason that it fails to meet the pleading requirements of Rule 9(b). The only "unfairness" Plaintiffs point to was Apple's supposed concealment of the alleged defect, but they completely fail to plead the specific circumstances of this concealment. "Generalized allegations" regarding active concealment are insufficient to meet the Rule 9(b) standard. See Hovsepian, 2009 U.S. Dist. LEXIS 80868 at *9, 14. Plaintiffs' UCL claim under the "unfairness" prong fails. C. Plaintiffs Have Failed to State a Claim Under the "Fraudulent" Prong of the UCL.

Plaintiffs' UCL claim under the "fraudulent" prong also fails. To support this claim, Plaintiffs allege that Apple's failure to inform customers about the defect until after their warranty protections lapsed is a fraudulent business practice. (SAC ¶ 88.) But this is exactly what Plaintiffs alleged in the Vail complaint, and what the Court held insufficient: "Vail has not pled a claim based on any fraudulent omission or unfairness to consumers because the memory slots appear to have functioned throughout the term of the express warranty." Berenblat, 2009 U.S. Dist. LEXIS 80734, at *23 (citing Clemens, 534 F.3d at 1026-27). Daugherty similarly held that where a product functions properly for the length of applicable warranties, a plaintiff has no claim under the "fraudulent" prong of the UCL. Daugherty, 144 Cal. App. 4th at 838; see also Hoey, 515 F. Supp. 2d at 1106 (dismissing CLRA and fraudulent concealment claims, stating "plaintiffs must allege more than the existence of a warranty and a defect occurring outside the warranty period to survive a motion to dismiss"); Tietsworth, 2009 U.S. Dist. LEXIS, at *25

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(mere failure to disclose a latent defect does not constitute a fraudulent business practice under the UCL).10 Finally, to the extent Plaintiffs allege affirmative misrepresentations under the UCL, the claim is also meritless. First, the SAC fails to allege any actionable statements by Apple. The only representation by Apple alleged in the SAC is that that the PowerBook G4 could support 2 GB of memory. (SAC ¶ 26.) But this Court has already held that this representation is not sufficient. Berenblat, U.S. Dist. LEXIS 80734, at *20 ("Vail must allege something more than the bare fact that Apple stated that the PowerBook could support 2 GB of memory."). Second, Plaintiffs do not even attempt to satisfy the requirements of Rule 9(b). The SAC does not so much as hint at, let alone adequately plead, where, when, how, or even if Plaintiffs were exposed to the alleged misrepresentation. See Kearns, 567 F.3d at 1126 (complaint for violations of UCL and CLRA failed to satisfy Rule 9(b) because it failed to allege when plaintiff was exposed to the alleged misrepresentations and which ones he relied on or found material). Plaintiffs' UCL claim under the "fraudulent" prong fails. The SAC's failure to remedy any of the defects that led to dismissal of the UCL claim in the FAC demonstrates that any further amendment would be futile. Accordingly, Plaintiffs' UCL claim should be dismissed with prejudice. III. PLAINTIFFS HAVE MADE NO AMENDMENTS TO THEIR PREVIOUSLY DEFECTIVE UNJUST ENRICHMENT CLAIM

The SAC's unjust enrichment allegations are identical to those in the FAC, making the claim as fatally defective as it was in the FAC. First, "[t]here is no cause of action in California for unjust enrichment." Melchior v. New Line Prods., Inc., 106 Cal. App. 4th 779, 794 (2003) (affirming trial court's dismissal of "unjust enrichment" claim on the ground that California law does not recognize such a cause of action). "Under California law, a claim for unjust enrichment cannot stand alone as an independent claim for relief." Tietsworth, 2009 U.S. Dist. LEXIS The fraudulent omission claim also fails to satisfy Rule 9(b), because it fails to allege the circumstances of Apple's alleged omission with specificity. See Hovsepian, 2009 U.S. Dist. LEXIS 80868, at *9 ("Generalized allegations" regarding fraudulent omissions are insufficient to meet the Rule 9(b) standard).
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98532, at *42-43 (citing Jogani v. Super. Ct., 165 Cal. App. 4th 901, 911 (2008)). Because Plaintiffs' other claims fail, their unjust enrichment claim fails as well. See Oestreicher v. Alienware Corp, 544 F. Supp. 2d 964, 975 (N.D. Cal. 2008); Hoey, 515 F. Supp. 2d at 1106. Second, even if it could be pleaded as an independent cause of action, Plaintiffs' unjust enrichment claim is without merit. Because Plaintiffs' computers functioned exactly as warranted during any applicable warranty period, none of Apple's alleged actions were unjust or inequitable. Cf. Daugherty, 144 Cal. App. 4th at 839 ("[T]he failure to disclose a defect that might, or might not, shorten the effective life span of an automobile part that functions precisely as warranted throughout the term of its express warranty cannot be characterized as causing a substantial injury to consumers, and accordingly does not constitute an unfair practice under the UCL."). All Plaintiffs could expect was that their computers would function properly for the duration of any applicable warranties, and that expectation was met here. See id. at 838 (absent a manufacturer representation as to the life span of the part in question, the only expectation that purchaser could have had was that the product would function properly for the duration of the express warranty); Long, 2007 U.S. Dist. LEXIS 79262, at *23-24 (same) (citing Daugherty, 144 Cal. App. 4th at 838). Plaintiffs have not even attempted to remedy the defects that led to previous dismissal of their unjust enrichment claim. Accordingly, that claim should be dismissed with prejudice. CONCLUSION As was true in their prior two complaints, Plaintiffs do not dispute that their computers functioned properly for the term of all applicable warranties. Nor do Plaintiffs deny that they were fully aware of the durational limitation of all applicable warranties, despite repeated invitations to do so. Enough is enough. Plaintiffs' claims are barred by Daugherty and by the decisions of this Court. For the reasons stated herein, Plaintiffs' Second Amended Complaint should be dismissed with prejudice.

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Dated: November 5, 2009

PENELOPE A. PREOVOLOS ANDREW D. MUHLBACH ALEXEI KLESTOFF MORRISON & FOERSTER LLP By: /s/ Penelope A. Preovolos Penelope A. Preovolos Attorneys for Defendant APPLE INC.

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