Gomelsky v. Apple, Inc.

Filing 89

Brief re 87 MOTION to Dismiss the Third Amended Complaint filed byApple, Inc.. (Related document(s) 87 ) (Preovolos, Penelope) (Filed on 6/28/2010)

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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 THIRD AMENDED COMPLAINT Date: September 24, 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............................................................................................................. 2 FACTUAL BACKGROUND ......................................................................................................... 3 ARGUMENT .................................................................................................................................. 3 I. PLAINTIFFS FAIL TO STATE A CLAIM UNDER THE UCL....................................... 4 A. B. Plaintiffs' UCL Claim is Barred by Daugherty and its Progeny............................. 5 Plaintiffs Cannot Avoid Daugherty by Alleging Exclusive Knowledge and Active Concealment. ............................................................................................... 6 1. As a Matter of Law, Neither Exclusive Knowledge nor Active Concealment Can Create a Duty to Disclose. ............................................. 6 Plaintiffs Fail to Allege Facts Demonstrating Exclusive Knowledge or Active Concealment of a Defect. ............................................................ 7 a. b. Plaintiffs Fail to Allege Facts Demonstrating the Existence of a Defect. ...................................................................................... 7 Plaintiffs Fail Allege to Facts Demonstrating Apple's Exclusive Knowledge of a Defect. .................................................. 8 Plaintiffs Fail to Allege Facts Demonstrating Apple's Active Concealment of a Defect.................................................... 15

Plaintiffs Have Not Pled Their UCL Claim with Sufficient Particularity............. 18

PLAINTIFFS' UNJUST ENRICHMENT CLAIM FAILS .............................................. 20

CONCLUSION ............................................................................................................................. 20

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TABLE OF AUTHORITIES Page(s) Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) .......................................................................................................... 2, 3 Bardin v. DaimlerChrysler Corp, 136 Cal. App. 4th 1255 (2006)............................................................................................ 7, 15 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .............................................................................................................. 2, 3 Berenblat v. Apple, Inc., Nos. 09-4969 JF (PVT), 09-1649 JF (PVT), 2009 U.S. Dist. LEXIS 80734 (N.D. Cal. Aug. 21, 2009) ..................................................................................................... 4, 5 Berenblat v. Apple, Inc., Nos. 09-4969 JF (PVT), 09-1649 JF (PVT), 2010 U.S. Dist. LEXIS 46052 (N.D. Cal. Apr. 9, 2010)...................................................................................................passim Brown v. Superior Court, 44 Cal. 3d 1049 (1988)............................................................................................................ 11 Centeno v. Doe, No. 1-08-01435-FJM, 2009 U.S. Dist. LEXIS 118739 (E.D. Cal. Dec. 3, 2009)................... 15 Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008) ..................................................................................... 3, 5, 6, 15 Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824 (2006)...........................................................................................passim Higginbotham v. Baxter Int'l, Inc., 495 F.3d 753 (7th Cir. 2007) ................................................................................................... 13 Hoey v. Sony Elecs. Inc., 515 F. Supp. 2d 1099 (N.D. Cal. 2007)..................................................................................... 5 Hovsepian v. Apple, Inc., No. 08-5788 JF (PVT), 2009 U.S. Dist. LEXIS 117562 (N.D. Cal. Dec. 17, 2009) ........ 18, 19 Ind. Elec. Workers' Pension Trust Fund IBEW v. Shaw Group, Inc., 537 F.3d 527 (5th Cir. 2008) ................................................................................................... 13 Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) ............................................................................................. 4, 19

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Long v. Hewlett-Packard Co., No. C 06-02816 JW, 2007 U.S. Dist. LEXIS 79262 (N.D. Cal. July 27, 2007), aff'd, 2009 U.S. App. LEXIS 4422 (9th Cir. Cal. Mar. 3, 1009) ..................................... passim Markel Am. Ins. Co. v. Pac. Asian Enters., Inc., No. C-07-5749 SC, 2008 U.S. Dist. LEXIS 60536 (N.D. Cal. July 28, 2008) ......................... 7 McGlinchy v. Shell Chem. Co., 845 F.2d 802 (9th Cir. 1988) ..................................................................................................... 4 Morgan v. Harmonix Music Sys., Inc., No. C 08-5211 BZ, 2009 U.S. Dist. LEXIS 57528 (N.D. Cal. July 7, 2009) .................. passim Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964 (N.D. Cal. 2008), aff'd, 2009 U.S. App. LEXIS 7259 (9th Cir. Apr. 2, 2009) ............................................. passim Provencio v. Armor Holdings, Inc., No. CV-F-07-00651 AWI-TAG, 2007 U.S. Dist. LEXIS 70831 (E.D. Cal. Sept. 25, 2007) ......................................................................................................... 7 Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252 (11th Cir. 2009) ............................................................................................... 15 Stearns v. Select Comfort Retail Corp., No. 08-2746 JF, 2009 U.S. Dist. LEXIS 48367 (N.D. Cal. June 5, 2009).................. 12, 17, 18 Tietsworth v. Sears, Roebuck & Co., No. 5:09-cv-00288 JF (HRL), 2009 U.S. Dist. LEXIS 98532 (N.D. Cal. Oct. 13, 2009) ................................................................................................. passim Transphase Sys., Inc. v. S. Cal. Edison Co., 839 F. Supp. 711 (C.D. Cal. 1993)............................................................................................ 4 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) ............................................................................................. 4, 19 Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981 (9th Cir. 2009) ............................................................................................. 13, 19 OTHER AUTHORITIES Fed. R. Civ. P. 9(b).......................................................................................................................... 4

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INTRODUCTION Plaintiffs have failed, for the fourth time, to state a claim for relief. Plaintiffs cannot remedy this failure because their computers functioned properly long after all applicable warranty periods had expired. Thus, Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824 (2006), and cases of this Court interpreting Daugherty, bar Plaintiffs' claims. The Third Amended Complaint ("TAC") should be dismissed with prejudice. The Court recognized the Daugherty rule and dismissed all the claims in the Second Amended Complaint ("SAC"), only granting leave to amend as to Plaintiffs' claim under the "fraudulent" prong of the Unfair Competition Law ("UCL") and their unjust enrichment claim. In dismissing the UCL claim, the Court found that Plaintiffs had failed to provide specific allegations establishing a duty to disclose by Apple. The TAC does not remedy this defect. Under Daugherty and its progeny, a manufacturer is not liable for failure to disclose a purported defect that manifests itself after expiration of applicable warranty periods, unless the omission is contrary to a representation actually made by the manufacturer or the alleged defect involves a safety issue. Neither of these circumstances exists here, and thus the UCL claim fails. Plaintiffs attempt to avoid this result by claiming that Apple had exclusive knowledge of the purported defect and actively concealed it, and thus had a duty to disclose. The Ninth Circuit, this Court, and the California Court of Appeal have rejected such attempts. As these courts have recognized, all manufacturers have knowledge that a part will fail at some point in time, and allowing such knowledge to give rise to liability would render warranty limitations meaningless. These courts have also rejected claims based on active concealment where the product functioned for the term of all applicable warranties. Thus, neither exclusive knowledge nor active concealment can create a duty to disclose as a matter of law. In addition, Plaintiffs have failed to adequately plead either exclusive knowledge or active concealment. Most fundamentally, these theories are predicated on "exclusive knowledge" and "active concealment" of a product defect, and the TAC does not plead any facts that would support an inference of a product defect here. The TAC does not identify any aspect of the memory slot's design that allegedly rendered it defective, nor does the TAC specify the cause or
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nature of the purported defect. Further, the TAC does not allege any other indicia of a defect. The TAC contains no allegations of an unusually high failure rate, the number or percentage of customer service calls relating to the memory slot, or the number or percentage of repairs. All the TAC alleges is that some users experienced problems with their computers; under the Daugherty rule, this does not establish the existence of a defect. The TAC also fails to sufficiently allege Apple's knowledge or concealment of a defect. Plaintiffs rely on message board posts and Apple's Repair Exchange Program ("REP"), which this Court has previously found insufficient to create a duty to disclose. Plaintiffs also rely on allegations of anonymous witnesses and alleged internal articles, but fail to provide sufficient factual detail regarding either to meet the standard set forth in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), much less Federal Rule of Civil Procedure 9(b)'s heighted pleading standard (which undisputedly applies here).1 The UCL claim should be dismissed. Plaintiffs' unjust enrichment claim should be dismissed as well. The claim fails for the same reason it failed in the First Amended Complaint and in the SAC: no such claim exists in California; Plaintiffs' underlying claim is meritless; and Apple's alleged actions were not "unjust." Plaintiffs' failure to properly plead their claims for the fourth time eliminates any doubt as to the futility of further amendments. The TAC should be dismissed with prejudice. ISSUES TO BE DECIDED 1. Whether Plaintiffs can state a claim under the "fraudulent" prong of the UCL

where their computers operated as represented during the term of all applicable warranties. 2. Whether Plaintiffs have pled their claim under the "fraudulent" prong of the UCL

with the specificity required by Rule 9(b).

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In seeking discovery before filing the TAC, (see Plaintiffs' Motion for Administrative Relief, Docket No. 83), Plaintiffs have conceded that they cannot meet these standards. The need for discovery is not an excuse for deficient pleading, however. Under the Federal Rules, plaintiffs have an obligation to state a claim before unlocking the door to discovery. Twombly, 550 U.S. at 557-59; Iqbal, 129 S. Ct. at 1949.
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3.

Whether Plaintiffs can state a claim for unjust enrichment, when no such claim

exists in California and when Plaintiffs' computers functioned as warranted during the applicable warranty period. FACTUAL BACKGROUND The TAC makes the same allegations regarding each Plaintiff's computer as the SAC. (Compare TAC ¶¶ 67-93 with SAC ¶¶ 49-75.) The allegations establish that these Plaintiffs' computers functioned properly long after all applicable express and implied warranties had expired. As they did in previous complaints, Plaintiffs contend in the TAC that Apple had exclusive knowledge of and actively concealed an alleged defect in the PowerBook G4's memory slot. (TAC ¶ 4.) To support this claim, the TAC makes largely the same allegations regarding Apple's conduct as the FAC. The TAC also adds more allegations regarding message board posts of user complaints and triple hearsay, generalized claims of unidentified purported ex-employees, and purported internal articles with unspecified contents. (TAC ¶¶ 30-33, 35, 53-54.) Plaintiffs have filed the present complaint on behalf of themselves and a putative class of PowerBook G4 purchasers. They allege a claim for violation of the UCL solely under the "fraudulent" prong, as well as a claim for unjust enrichment. (TAC ¶¶ 102-125.) 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 for 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 Court need not accept as true conclusory
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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). The rule undisputedly 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, 1125 (9th Cir. 2009); Berenblat v. Apple, Inc., Nos. 09-4969 JF (PVT), 09-1649 JF (PVT), 2009 U.S. Dist. LEXIS 80734, at *17 n.6 (N.D. Cal. Aug. 21, 2009) ("Berenblat I"). Rule 9(b) serves three purposes: "(1) to provide defendants with adequate notice to allow them to defend the charge and deter plaintiffs from the filing of complaints `as a pretext for the discovery of unknown wrongs'; (2) to protect those whose reputation would be harmed as a result of being subject to fraud charges; and (3) to `prohibit plaintiff[s] from unilaterally imposing upon the court, the parties and society enormous social and economic costs absent some factual basis.'" Kearns, 567 F.3d at 1125 (citation omitted). 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. To meet Rule 9(b)'s standard, a complaint must provide the time, place, and content of the alleged 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. Plaintiffs' claims fail as a matter of law and should be dismissed in their entirety. I. PLAINTIFFS FAIL TO STATE A CLAIM UNDER THE UCL

Plaintiffs assert their UCL claim solely under the "fraudulent" prong, and base it on Apple's alleged failure to inform customers about the purported defect. (See TAC ¶¶ 104-105.) The claim fails.

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A.

Plaintiffs' UCL Claim is Barred by Daugherty and its Progeny.

It is well established that a manufacturer cannot be liable under any prong of the UCL for failure to disclose an alleged defect that manifests itself after expiration of applicable warranty periods. The Ninth Circuit, this Court, and the California Court of Appeal have all so held. Clemens, 534 F.3d at 1026; Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 972 (N.D. Cal. 2008); Hoey v. Sony Elecs. Inc., 515 F. Supp. 2d 1099, 1104-05 (N.D. Cal. 2007); Long, 2007 U.S. Dist. LEXIS 79262, at *23-24; Morgan v. Harmonix Music Sys., Inc., No. C 08-5211 BZ, 2009 U.S. Dist. LEXIS 57528, at *11-12 (N.D. Cal. July 7, 2009); Daugherty, 144 Cal. App. 4th at 838. There are only two exceptions to this rule: (1) where the omission is contrary to a representation actually made by the defendant; or (2) where the omission pertains to facts relating to product safety. Oestreicher, 544 F. Supp. 2d at 969, aff'd 2009 U.S. App. LEXIS 7259, at *9 ("A manufacturer's duty to consumers is limited to its warranty obligations absent either an affirmative misrepresentation or a safety issue."); Morgan, 2009 U.S. Dist. LEXIS 57528, at *1112 ("According to all relevant case law, defendants are only under a duty to disclose a known defect in a consumer product when there are safety concerns associated with the product's use.") (citing Daugherty, 144 Cal. App. 4th at 835-36; Bardin v. DaimlerChrysler Corp, 136 Cal. App. 4th 1255 (2006); Long, 2007 U.S. Dist. LEXIS 79262, at *8). The alleged defects in Plaintiffs' computers manifested themselves long after all applicable warranties had expired, and neither of the exceptions to the Daugherty rule applies here. First, it is undisputed that safety is not an issue in this case. Second, the TAC simply realleges the same representations that were alleged in the SAC. (Compare TAC ¶ 27 with SAC ¶ 26.) This Court has twice held these representations not to be actionable. Berenblat I, 2009 U.S. Dist. LEXIS 80734, at *20; Berenblat v. Apple, Inc., Nos. 09-4969 JF (PVT), 09-1649 JF (PVT), 2010 U.S. Dist. LEXIS 46052, at *26-27 (N.D. Cal. Apr. 9, 2010) ("Berenblat II"). Accordingly, Plaintiffs cannot establish either of the exceptions to the Daugherty rule, and the UCL claim fails.

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B.

Plaintiffs Cannot Avoid Daugherty by Alleging Exclusive Knowledge and Active Concealment.

Plaintiffs ignore the Daugherty rule. Instead, they attempt to impose a duty to disclose on Apple by virtue of Apple's alleged "exclusive knowledge" and "active concealment" of the purported defect. (TAC ¶¶ 110-112.) This attempt fails. 1. As a Matter of Law, Neither Exclusive Knowledge nor Active Concealment Can Create a Duty to Disclose.

As a matter of law, Plaintiffs' allegations of exclusive knowledge and active concealment cannot support their UCL claim. Where, as here, a product operates properly for the term of all applicable warranties, knowledge of an alleged defect cannot give rise to liability for failure to disclose. As Judge Patel recognized in Oestreicher, manufacturers always have knowledge regarding the likelihood of a part failing within a particular period of time, and "[a] rule that would make failure of a part actionable based on such `knowledge' would render meaningless time/mileage limitations in warranty coverage." Oestreicher, 544 F. Supp. 2d at 972 (citation omitted); see also Daugherty, 144 Cal. App. 4th at 830. Other courts have also rejected UCL claims based on the defendant's knowledge of an alleged defect. Long rejected a UCL claim where the defendant allegedly learned of the purported defect through its call center, factory failures, field failures, internal tests, and repair reports, and had repeated internal discussions regarding the purported defect. 2007 U.S. Dist. LEXIS 79262, at *3-4, 24; see also Morgan, 2009 U.S. Dist. LEXIS 57528, at *18 (alleged knowledge that product would fail to work properly after only slight use insufficient to create a duty to disclose). Thus, exclusive knowledge cannot establish Apple's liability under the UCL. Active concealment similarly cannot give rise to liability where a product functions for the length of all applicable warranties. Numerous courts have refused to find liability for failure to disclose based on allegations of concealment. See Clemens, 534 F.3d at 1025-26 (affirming dismissal of UCL claim based on fraudulent concealment of an alleged head gasket defect); Long, 2007 U.S. Dist. LEXIS 79262, at *4 (dismissing UCL claim where plaintiff alleged that defendant "publicly denied" that there was any defect in its products); Oestreicher, 544 F. Supp.
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2d at 966 (dismissing UCL and CLRA claims where plaintiff alleged that defendant "concealed material information regarding a design defect when selling certain computers that [defendant] knew to be defective"); Bardin, 136 Cal. App. 4th at 1275 (dismissing UCL claim where plaintiff alleged that defendant "concealed material facts" about the use of certain materials in defendant's products). Thus, allegations of exclusive knowledge and active concealment cannot create a duty to disclose here. 2. Plaintiffs Fail to Allege Facts Demonstrating Exclusive Knowledge or Active Concealment of a Defect.

Even if exclusive knowledge or active concealment could be a basis for liability for failure to disclose--which it is not--Plaintiffs have failed to sufficiently allege either circumstance here. a. Plaintiffs Fail to Allege Facts Demonstrating the Existence of a Defect.

The TAC's fundamental flaw is that it states that the memory slot was defective but fails to plead facts demonstrating that this was so. The TAC offers only the generalized allegation that a "widespread product defect and design flaw existing at the time of manufacture . . . renders one or more of Apple's PowerBook G4's memory slots inoperative during the computer's useful life." (TAC ¶ 1.) This allegation is wholly conclusory and does not contain any facts identifying what, if anything, specifically was wrong with the memory slot. It cannot pass the Iqbal/Twombly test. See, e.g., Markel Am. Ins. Co. v. Pac. Asian Enters., Inc., No. C-07-5749 SC, 2008 U.S. Dist. LEXIS 60536, at *14 (N.D. Cal. July 28, 2008) (dismissing claim alleging that vessel was "dangerous" and "defective" on Iqbal/Twombly grounds because the claims failed, among other things, to identify the purported defect); Provencio v. Armor Holdings, Inc., No. CV-F-07-00651 AWI-TAG, 2007 U.S. Dist. LEXIS 70831, at *6 (E.D. Cal. Sept. 25, 2007) (dismissing claim because it failed, among other things, to identify "how or why the product was allegedly defective"). Nor does any other allegation in the TAC plead facts that establish the existence of a defect. The TAC does not identify any specific aspects of the memory slot's design that allegedly rendered it defective. The TAC does not even purport to identify the nature of the alleged defect,
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much less its cause. To allege a product defect, Plaintiffs must plead something more than anecdotal evidence of individual users' computers malfunctioning. Some percentage of products (and product components) will always fail; that is the nature of products. To suggest the existence of a defect, the failures rate must be unusually high. The TAC alleges no such unusually high failure rate for the memory slot. In fact, the TAC does not allege any failure rate at all. The TAC merely alleges that some users experienced problems with their computers long after all applicable warranties had expired. The fact that a product ceases to function years after its warranties have expired cannot establish a defect. If it could, all products would be considered defective, because all parts eventually fail. This is not the law. See Oestreicher, 544 F. Supp. 2d at 972 (acknowledging that all parts will fail eventually, and holding that knowledge of this fact cannot be actionable) (citing Abraham v. Volkswagen of Am., Inc., 795 F.2d 238, 250 (2d Cir. 1986)). The TAC also fails to allege any other facts that might suggest the possibility of a defect. For example, it does not allege a number or percentage of calls to customer support regarding the memory slot. Nor does it allege a number or percentage of repairs of the memory slot. Moreover, Plaintiffs fail to account for potential damage to the memory slot by customers improperly installing memory cards or using incorrect memory cards. Thus, the TAC fails to plead facts establishing the fundamental requirement for Plaintiffs' claim: the existence of a defect.2 b. Plaintiffs Fail Allege to Facts Demonstrating Apple's Exclusive Knowledge of a Defect.

Plaintiffs' contention that Apple had exclusive knowledge of the alleged defect does not create a duty to disclose. As established above, exclusive knowledge cannot form the basis of
2

The TAC suggests that Apple's REP is evidence of a widespread defect. (TAC ¶¶ 49-50.) It is not. An REP is a subsequent remedial measure and cannot establish a defect. Allowing plaintiffs to use an REP to establish a defect "would create a perverse incentive for manufacturers not to provide consumers with refunds or upgrades when defects exist." Tietsworth v. Sears, Roebuck & Co., No. 5:09-cv-00288 JF (HRL), 2009 U.S. Dist. LEXIS 98532, at *17 (N.D. Cal. Oct. 13, 2009). The appropriate inference from the REP is that to the extent there was an issue with computers for certain weeks of manufacture, Apple fixed it. Such a program does not indicate the existence of a problem with units not covered by the program.
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liability for failure to disclose as a matter of law. Oestreicher, 544 F. Supp. 2d at 972; Daugherty, 144 Cal. App. 4th at 830; Long, 2007 U.S. Dist. LEXIS 79262, at *3-4, 24; Morgan, 2009 U.S. Dist. LEXIS 57528, at *18. In any event, the TAC fails to allege facts demonstrating Apple's exclusive knowledge of an alleged defect here. Again, there are no allegations regarding the part's failure rate; the number or percentage of calls to customer support regarding the memory slot; the number or percentage of repairs related to the memory slot; or any other facts that might suggest Apple's knowledge of a widespread defect. Instead of alleging such facts, Plaintiffs cite to online message board posts, Apple's REP, the allegations of anonymous former Apple employees, and alleged internal articles. (TAC ¶ 111.) None of these allegations sufficiently pleads Apple's exclusive knowledge of any widespread defect affecting Plaintiffs' computers. Message Board Posts. Public internet message board posts cannot create a duty to disclose here. Many of the posts alleged in the TAC are the same as those included in the SAC, which the Court previously found insufficient to establish Apple's knowledge of a defect. (Compare TAC ¶¶ 29, 65 with SAC ¶¶ 31, 33.) The new posts alleged in the TAC are not meaningfully different from those alleged in the SAC, and also fail to establish Apple's knowledge. As this Court stated in dismissing the SAC, "the complaints posted on Apple's consumer website merely establish the fact that some consumers were complaining. By themselves they are insufficient to show that Apple had knowledge that the memory slot in fact was defective."3 Berenblat II, 2009 U.S. Dist. LEXIS 46052, at *27. Other opinions of this Court have also recognized that customer complaints cannot create a duty to disclose. See Oestreicher, 544 F. Supp. 2d at 967 (plaintiff claimed that manufacturer was made aware of the alleged defects through "consumer complaints and postings on the internet"); Long, 2007 U.S. Dist. LEXIS 79262, at *3-4 (plaintiff alleged that manufacturer received "thousands of calls and conducted thousands of repairs" related to the alleged defect);

3

Plaintiffs admit that message board complaints cannot establish Apple's knowledge, stating, "Given the prevalence of complaints, discovery will likely reveal Apple's awareness of the inherent defect in the PowerBook computers." (TAC ¶ 94.)
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see also Daugherty, 144 Cal. App. 4th at 828 (plaintiff alleged that manufacturer received "adverse event reports and actual notice" of the alleged defect). Thus, the posts alleged in the TAC cannot create a duty to disclose.4 Furthermore, these posts do not establish "exclusive knowledge." Many of the posts are simply customers complaining about problems they had with their own particular computer. (See, e.g., TAC ¶¶ 36, 65.) Anecdotal complaints regarding a few users' computer problems cannot establish Apple's exclusive knowledge of a widespread defect. Another set of posts contain complaints regarding the alleged lack of notice of Apple's REP,5 which also cannot establish exclusive knowledge of any defect. (See, e.g., id. at ¶¶ 60-61.) Other posts relate to use of nonApple memory cards (See, e.g., id. at ¶ 36), suggesting that any alleged problem originated with the third-party memory card, not with the user's computer. Certain other posts claim Apple denied that the memory slot was defective. (See, e.g., TAC ¶¶ 35-36.) Such triple hearsay is not sufficient to plead a statement by Apple. Moreover, these posts merely reflect Apple's position that there was no product defect. That was and is true. The TAC provides no facts that suggest otherwise. Aside from those described above, there are six posts relating alleged Apple statements regarding the purported problem. Several of these statements relate merely to Apple's alleged recognition that a user's particular computer was experiencing a problem, and do not in any way suggest that Apple had knowledge that a widespread defect existed in PowerBooks generally. (See, e.g., TAC ¶ 60 ("Tony Chien"), ¶ 65 ("Hotmac," "Tony Chien").) For example, user
4

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Plaintiffs' selective quotation of these posts also fails to tell the whole story. For example, Plaintiffs neglected to include the final posting in the 2004 thread quoted in paragraph 29 of the TAC. The final posting states that "Jim Babcock" installed a different memory card and experienced no further problems. (See Declaration of A. Klestoff in Support of Apple Inc.'s Motion to Dismiss the TAC Ex. A.) Thus, the issue was the memory card, not any component of the computer. Clearly, this 2004 thread cannot establish existence of a defect or Apple's knowledge of a defect.
5

The REP, which was in place from January 2006 through July 2008, only covered 15-inch PowerBook G4 models manufactured during certain weeks. (TAC Ex. A at 1.) As discussed infra, such a program cannot be used as evidence of a defect, nor can it possibly suggest the existence or knowledge of an issue with other units not covered by the program. At most, the REP shows that when Apple became aware of a potential issue, it instituted a repair program to address it.
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"Hotmac" states that Apple support told him that his computer had a problem, not that this problem existed in PowerBooks generally. (Id. at ¶ 65.) Other posts were written in 2008 and 2009, long after Apple stopped selling PowerBooks. (TAC ¶¶ 60, 65 ("Tony Chien," "Aaron McFarland").) Thus, these allegations are irrelevant to the issue of Apple's knowledge at the time of sale.6 See, e.g., Daugherty, 144 Cal. App. 4th at 837 n.6 (holding that press releases regarding repair program could not give rise to a duty to disclose because they were issued "in 2000 and 2001, not at the time of sale"); cf Brown v. Superior Court, 44 Cal. 3d 1049, 1065-66, 1072 (1988) (holding that claims of strict liability for design defect premised on failure to warn and breach of warranty are conditioned on the actual or constructive knowledge of the alleged defect "as of the time the product was sold or distributed"). The remaining two posts fail to establish Apple's exclusive knowledge as well. One post, by "Jim Babcock," was also alleged in the SAC and was among the posts the Court found insufficient to establish a duty to disclose (further, as noted above, "Babcock's" computer proved not to be defective).7 Berenblat II, 2009 U.S. Dist. LEXIS 46052, at *27. The final post, by "Sandy Pawlowski," is not meaningfully different from the "Jim Babcock" post, and also cannot establish Apple's knowledge. Moreover, the alleged statement in that post appears to be based on other posts. (TAC ¶ 65 ("[this `problem'] has occurred a number of times to many customers as evidenced by this [online consumer] petition").) Thus, "Sandy Pawlowski's" post relates fourthhand, unreliable hearsay, which cannot suffice to plead Apple's knowledge with the specificity required here.

6

These, and many other posts, post-date Plaintiffs' purchases as well. In order to have standing to pursue their UCL claim, however, Plaintiffs must establish that Apple had a duty to disclose at the time they purchased their computers. Thus, complaints post-dating Plaintiffs' purchases cannot support Plaintiffs' claim for failure to disclose the alleged defect. Plaintiff Personette lacks standing for an additional reason: he did not buy the computer that contains the alleged defect. (TAC ¶ 71 (alleging that he received the computer as a replacement for another computer which had unspecified problems).) As a result, Personette cannot establish that he relied on any representation or omission by Apple in obtaining the computer at issue in this case. Tietsworth, 2009 U.S. Dist. LEXIS 98532, at *15.
7

Moreover, the "Jim Babcock" post is not even on an Apple website, but a site called "2-popforums." (See TAC ¶ 29 n.1.) Plaintiffs cannot plausibly argue that Apple obtained "exclusive knowledge" of a defect from a third party, public website.
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8

Repair Extension Program. Apple's REP also cannot demonstrate "exclusive knowledge" of a defect.8 This Court has recognized on at least two occasions that programs of this type cannot form the basis of liability for an alleged failure to disclose a defect. See Stearns v. Select Comfort Retail Corp., No. 08-2746 JF, 2009 U.S. Dist. LEXIS 48367, at *30 (N.D. Cal. June 5, 2009) (defendant's offer of refunds to customers did not support the theory that it had a plan to deceive plaintiffs); Tietsworth, 2009 U.S. Dist. LEXIS 98532, at *17 (allegation that defendant offered free upgrades of allegedly defective part was insufficient to establish fraud); cf Daugherty, 144 Cal. App. 4th at 837 n.6 (holding that a recall of some vehicles cannot be interpreted as a partial representation giving rise to a duty to disclose). Repair extension programs, refunds, and offers of free upgrades are a "standard business practice, serving many legitimate business purposes," and "to hold otherwise would create a perverse incentive for manufacturers not to provide consumers with refunds and upgrades when defects exist." Tietsworth, 2009 U.S. Dist. LEXIS 98532, at *17 (citation and quotations omitted). In addition, the REP was only for 15-inch PowerBook G4 models manufactured during certain weeks. As set forth above, such a program cannot be used as evidence of a defect. Nor does it suggest the existence or knowledge of an issue with other units not covered by the program. To the contrary, the REP contravenes any claim that Apple had "exclusive knowledge" of an alleged product defect and improperly concealed its existence. Rather, the REP shows that when Apple becomes aware of a possible issue, it takes action to address it. Had there been an issue with the memory slots of PowerBook G4s not covered by the REP, Apple would have taken action as to those products as well. Apple's REP cannot be the basis of the UCL claim here. Moreover, Plaintiffs have made allegations regarding Apple's REP from the very beginning of this case, and this Court has never found them sufficient to state a UCL claim (or any other claim). The TAC includes no new allegations that demonstrate otherwise.

The TAC incorrectly claims that Apple sold the REP to customers. (See TAC ¶ 50.) The REP was free. (See TAC Ex. A at 2 ("The repairs outlined in this program, including shipping charge for a Mail-In repair where available, was [sic] covered at Apple's cost.").)
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Allegations of Anonymous Witnesses. The TAC adds several allegations regarding supposed statements by purported former Apple employees. While artfully drafted, a close reading of these allegations demonstrates that they fail to provide any meaningful detail about Apple's alleged "exclusive knowledge" of any defect. They are insufficient to establish a duty to disclose here. The TAC provides no detail whatsoever regarding these purported witnesses. It identifies them only as "former employees." (See TAC, ¶¶ 30, 32-33, 58.) The TAC does not state who these employees are or even how many of them there are. It does not identify their positions or job responsibilities at Apple. The TAC alleges only that these purported ex-employees "worked for Apple during the time period G4 PowerBooks were marketed," carefully avoiding any allegation that these purported ex-employees investigated any purported defect, made or read any reports about it, or otherwise have any personal knowledge of it. Indeed, the TAC does not allege that these individuals were involved with the PowerBook G4 in any way. In short, the TAC supplies nothing that could demonstrate that these witnesses have any basis for making these allegations.9 Courts routinely dismiss complaints based on such unfounded allegations. See Higginbotham v. Baxter Int'l, Inc., 495 F.3d 753, 756-57 (7th Cir. 2007) (refusing to consider statements of confidential witnesses on motion to dismiss because such sources could be lying or nonexistent); Ind. Elec. Workers' Pension Trust Fund IBEW v. Shaw Group, Inc., 537 F.3d 527, 535 (5th Cir. 2008) ("courts must discount allegations from confidential sources."); Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 996 (9th Cir. 2009) (because confidential sources were "simply not positioned to know the information alleged, many report only unreliable hearsay, and others allege conclusory assertions of scienter," they were deemed "not reliable"). At a minimum, courts require that the complaint describe the confidential witnesses with sufficient detail to establish their reliability and personal knowledge. Zucco, 552 F.3d at 995
9

Plaintiffs may argue that they are not required to disclose these alleged ex-employees' identities. Even if that were true, this argument does not excuse Plaintiffs' failure to specify these individuals' positions and job responsibilities, or to otherwise provide any detail suggesting that they have personal knowledge of the information alleged.
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(complaint must identify witness's position in the company and otherwise describe the witness with sufficient particularity "to support the probability that the person in the position occupied by the source would possess the information alleged"). The TAC utterly fails to meet this requirement. In any event, the alleged practices that these anonymous witnesses describe do not establish Apple's exclusive knowledge. The purported ex-employees claim that Apple executives monitored customer call center operations and website comments to "determine whether Apple products had recurring problems arising from a design or manufacturing defect." (TAC ¶ 32; see also TAC ¶¶ 58-59 (ex-employee claim that Apple executives monitored the number of complaints by consumers whose computers were not included in the REP).) Even if true, this allegation does not demonstrate knowledge of a defect. First, this allegation begs the question of whether anything about the call center operations or website posts establishes the existence of an alleged defect. As set forth above, Plaintiffs have not alleged that the call center reports indicated the existence of a defect, nor do their allegations regarding the posts demonstrate the existence of a defect. Accordingly, whether or not the call center operations or posts were "monitored" by Apple cannot demonstrate knowledge of a defect. Moreover, even if executives were monitoring customer calls and website posts, that shows, at most, that they were aware of customer complaints. But this Court has already held that awareness of customer complaints is insufficient to create a duty to disclose. Berenblat II, 2009 U.S. Dist. LEXIS 46052, at *27; see also Oestreicher, 544 F. Supp. 2d at 967; Long, 2007 U.S. Dist. LEXIS 79262, at *3-4; Daugherty, 144 Cal. App. 4th at 828. Finally, the TAC does not indicate whether the alleged monitoring ever focused on the PowerBook G4 or did so while the product was still being sold. Internal Articles. The claims of former employees that Apple prepared internal articles regarding the memory slot (TAC ¶ 54) also fail to demonstrate Apple had exclusive knowledge of a defect here. Conspicuously absent from the TAC is any allegation stating that the purported articles concluded that a defect existed. Indeed, the TAC says absolutely nothing about the contents of these purported articles. It also fails to provide any detail regarding when these
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supposed articles were issued, or who prepared or received them. At best, these allegations suggest only that articles existed. But the alleged existence of articles created at an unknown time by unknown persons, whose contents are not specified, cannot demonstrate Apple's exclusive knowledge of a purported defect.10 In sum, the TAC's allegations do not establish Apple's alleged exclusive knowledge of a defect, and cannot establish a duty to disclose here.11 c. Plaintiffs Fail to Allege Facts Demonstrating Apple's Active Concealment of a Defect.

Plaintiffs allege that Apple also had a duty to disclose because it actively concealed the purported defect. (TAC ¶ 112.) As a matter of law, concealment cannot be a basis for liability where the product operated properly for the term of its warranties (as the computers did here). See Clemens, 534 F.3d at 1025-26; Long, 2007 U.S. Dist. LEXIS 79262, at *4; Oestreicher, 544 F. Supp. 2d at 966; Morgan, 2009 U.S. Dist. LEXIS 57528, at *11-12; Bardin, 136 Cal. App. 4th at 1275. Assuming, arguendo, that active concealment could be a basis for liability--which it cannot--the TAC fails to allege facts sufficient to establish Apple's concealment of a defect. Plaintiffs again cite to message board posts, Apple's REP, and allegations of purported former employees, but none can establish concealment here.

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The TAC also provides no allegations that would establish that these purported ex-employees received the articles, read them, or that these purported ex-employees have any personal knowledge of them at all.
11

The TAC also alleges "[o]n information and belief" that "Apple's engineers and quality assurance personnel developed information about the defect before and during the period when consumers complained about it." (TAC ¶ 113.) This statement is vague, wholly conclusory, and unsupported by any facts in the TAC. The fact that it is pled "on information and belief" does not exempt the statement from the requirements of Iqbal, Twombly, and Rule 9(b). See, e.g., Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1268 (11th Cir. 2009) (allegation on information and belief failed to provide sufficient factual content to satisfy Iqbal); Centeno v. Doe, No. 1-0801435-FJM, 2009 U.S. Dist. LEXIS 118739, at *6-7 (E.D. Cal. Dec. 3, 2009) (statement on information and belief was conclusory and unsupported by facts and thus insufficient to state a claim against defendant under Iqbal). This allegation meets none of those requirements. Moreover, this Court has found similar allegations insufficient to state a UCL claim. See Long, 2007 U.S. Dist. LEXIS 79262, at *3-4, 24 (rejecting UCL claim where defendant's engineers allegedly learned of the problem through defendant's call center, factory failures, field failures, internal tests, and repair reports, and had repeated internal discussions regarding the problem).
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Message Board Posts. The message board posts cited in the TAC do not demonstrate Apple's concealment of a defect. Plaintiffs also cited posts in the SAC to support their claim that Apple was misleading customers regarding the problem. (See, e.g., SAC ¶ 31.) This was insufficient to create a duty to disclose in the SAC, Berenblat II, 2010 U.S. Dist. LEXIS 46052, at *23-24, and it is also insufficient in the TAC. Third-hand hearsay statements from anonymous individuals regarding what Apple purportedly told them cannot establish concealment. Moreover, even if customer posts could demonstrate concealment--which they cannot-- the posts alleged in the TAC do not do so. Many of the posts are simply complaints that a particular user's computer was malfunctioning or allege lack of notice of the REP.12 (See, e.g., TAC ¶¶ 36, 60-61, 65.) These posts cannot establish concealment by Apple. Other posts, if true, simply allege that Apple accurately stated that there was no product defect. (See TAC ¶ 35 ("Eric Gore"), ¶ 36 ("BellBucci," "bob").) Another post does not relate to the existence of a defect at all, but relates Apple's alleged disbelief that the user's particular computer was experiencing a problem. (TAC ¶ 36 ("Lillian").) Yet another post discusses the use of an improper memory card as the problem. (TAC ¶ 36 ("Deb Trazino").) The accuracy of this diagnosis is substantiated by the experience of "Jim Babcock," who installed a different memory card and experienced no more problems, suggesting that the problem was with the memory card, not the computer. (See Klestoff Decl., Ex. A.) A final post states only that Apple said they did not have any "complaints" about the issue. (TAC ¶ 36 ("Keith Parr").) This is not a denial of any defect. Even if it could be interpreted as such, the post is dated two years after Apple stopped selling PowerBooks, and thus cannot demonstrate concealment at the time of sale.13 Plaintiffs also rely on a post alleging deletion of the message board posts. (TAC ¶ 41.) The Court has already held that this post is insufficient to support Plaintiffs' claim of concealment. Berenblat II, 2010 U.S. Dist. LEXIS 46052, at *27-28. Furthermore, as set forth in In fact, the REP was prominently disclosed on Apple's main support page.

26 27 28

13

Moreover, the TAC does not allege Plaintiffs saw any of these posts or were otherwise deceived by them. Further, many of the posts are dated after Plaintiffs' purchases and after Apple stopped selling the PowerBook G4. (See, e.g., TAC ¶ 36 (posts dated October 2006­February 2008).) Thus, the posts cannot establish that Apple actively concealed a defect from Plaintiffs.
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Apple's prior briefs, the posts were restored ten days after they were taken down. Thus, the message board posts in the TAC cannot establish active concealment by Apple. To the contrary, these posts exist to this day, negating any inference of concealment. Repair Extension Program. To further support their claim of concealment, Plaintiffs allege that the REP--which only covered 15-inch PowerBook G4s manufactured during certain weeks--created the "false impression that the defect was less widespread than it actually was." (TAC ¶ 112.) But Plaintiffs point to nothing which suggests that there was an issue with any products not covered by the REP. Rather, the only reasonable inference from the REP is that when Apple became aware of an issue, Apple took action and fixed it. Moreover, this Court has clearly rejected Plaintiffs' argument. See Tietsworth, 2009 U.S. Dist. LEXIS 98532, at *17; Stearns, 2009 U.S. Dist. LEXIS 48367, at *30. Every complaint in this case has included allegations regarding the REP, and this Court has never found the REP sufficient to create a duty to disclose. Finally, Plaintiffs do not allege that they saw the REP before they purchased their computers. Indeed, with the arguable exception of Laura Miller, none of the Plaintiffs could have seen the REP, because it post-dated their purchases. Thus, the REP cannot establish Apple's concealment of any defect here. Allegations of Anonymous Witnesses. Plaintiffs also seek to rely on vague, generalized allegations attributed to unknown and unidentified former employees. They do not establish active concealment here. According to these anonymous witnesses, Apple's "policy and practice" was to limit information provided to customers and to withhold facts regarding the purported defect. (TAC ¶ 30.) However, the TAC offers no specific facts to support this allegation. It does not indicate how the unidentified witnesses learned of the supposed policy. The TAC does not even allege that the anonymous ex-employees were involved in any way with the PowerBook G4. Nor does the TAC offer any specific facts about the supposed policy, how it was communicated, how it was implemented, when it was in place, or any other facts. The allegations are thus completely lacking in the "who, what, when, where, and how" to alleged a fraud-based claim.

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In any event, these contentions cannot demonstrate concealment here. Allegations regarding a supposed "policy and practice" to withhold facts regarding a purported defect are insufficient to create a duty to disclose. Hovsepian v. Apple, Inc., No. 08-5788 JF (PVT), 2009 U.S. Dist. LEXIS 117562, at *8 (N.D. Cal. Dec. 17, 2009) (allegation that "Apple has responded by implementing a corporate policy of concealing and uniformly denying in all public forums the existence of the Defect" did not establish a duty to disclose); see also Long, 2007 U.S. Dist. LEXIS 79262, at *4 (dismissing UCL claim where plaintiff alleged that defendant "publicly denied" that there was any defect in its products). Further, as a matter of law, these allegations cannot establish "active concealment." See Daugherty, 144 Cal. App. 4th at 828 (alleging that defendant "failed to warn" consumers of the alleged defect); Oestreicher, 544 F. Supp. 2d at 967 (alleging that defendant "failed to inform" consumers of the alleged problem); Morgan, 2009 U.S. Dist. LEXIS 57528, at *18 (alleging that defendant "fail[ed] to disclose" alleged defect). The only other allegation in the TAC that seeks to establish active concealment falls far short of doing so. The TAC alleges that unidentified ex-employees claim that Apple's "MO was they never wanted you to tell the customer about defects, what it affects ­ just say you're having a problem, we'll cover it this time." (TAC ¶ 33.) In addition to sharing all the same inadequacies as the "policy and practice" allegations, the only reasonable inference from this claim is that Apple's practice was to repair customers' problems. Moreover, the alleged practice is akin to the offers of free upgrades and refunds that Tietsworth and Stearns held could not create a duty to disclose. Tietsworth, 2009 U.S. Dist. LEXIS 98532, at *17; Stearns, 2009 U.S. Dist. LEXIS 48367, at *30. In sum, none of the allegations in the TAC establish active concealment. And, as discussed supra, active concealment cannot be a basis for liability here as a matter of law. C. Plaintiffs Have Not Pled Their UCL Claim with Sufficient Particularity.

Plaintiffs' UCL claim fails for a second reason: it is not pled with particularity as required by Rule 9(b). The rule undisputedly applies to Plaintiffs' claim, and requires Plaintiffs to plead 27 the circumstances of Apple's alleged fraudulent conduct, as well as the "`who, what, when, 28
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where, and how'" of the conduct. Vess, 317 F.3d at 1106 (citation omitted); see also Kearns, 567 F.3d at 1127. Not one of Plaintiffs' allegations meets this requirement. The TAC re-pleads many of the same allegations that were pled in the SAC. These allegations were insufficient to satisfy Rule 9(b) in the SAC, and they are insufficient now. The TAC's new allegations also fail to provide the detail required to plead Plaintiffs' UCL claim with particularity. Message Board Posts. As in the SAC, the posts cannot satisfy Rule 9(b). They are mere third-hand party hearsay by message board users. Statements of such users cannot sufficiently plead knowledge, statements, or actions of Apple. Anyone can say anything on the internet. To allow an anonymous poster's claim regarding a statement of a defendant to satisfy the requirements of Rule 9(b) would eviscerate the rule. Even if posts could satisfy Rule 9(b) generally, the posts alleged in the TAC fail to provide the "who, what, when, where, and how" of the conduct. These posts do not satisfy Rule 9(b)'s requirements. Allegations of Anonymous Witnesses. The allegations of purported ex-employees also fail to provide the particularity required here. As established above, none of these individuals are identified with any detail whatsoever. The TAC does not identify their titles, job descriptions, or responsibilities, or provide any other information about them or their claims. The TAC does not indicate that they were involved with the PowerBook G4 in any capacity, much less a capacity that would give them personal knowledge regarding an alleged memory slot defect. These exemployee allegations cannot provide the particularity required by Rule 9(b). Zucco, 552 F.3d at 996. This Court expressly held that generalized allegations of exclusive knowledge and active concealment are insufficient to meet Rule 9(b). Hovsepian, 2009 U.S. Dist. LEXIS 117562, at *10. Generalized allegations are all that these ex-employee statements provide. Internal Articles. As stated above, the allegations regarding Apple's purported internal articles suggest, at best, that some articles might exist. They do not allege any other details regarding these purported articles: their contents, who wrote them, who received them, and when they were written. The allegations are not pled with any detail whatsoever, much less the detail required by Rule 9(b) to allege fraud.
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In sum, Plaintiffs have not pled their UCL claim with particularity, and the claim should be dismissed. This is the fourth time Plaintiffs have failed to sufficiently plead their claim, conclusively establishing that any further amendment would be futile. The claim should be dismissed with prejudice. II. PLAINTIFFS' UNJUST ENRICHMENT CLAIM FAILS

The TAC's unjust enrichment allegations are the same as those in the SAC, making the claim as fatally defective as it was in the SAC. First, "Under California law, a claim for unjust enrichment cannot stand alone as an independent claim for relief." Tietsworth, 2009 U.S. Dist. LEXIS 98532, at *42-43 (citing Jogani v. Superior Court, 165 Cal. App. 4th 901, 911 (2008)). Because Plaintiffs' other claims fail, their unjust enrichment claim fails as well. See Berenblat II, 2010 U.S. Dist. LEXIS 46052, at *29. Second, 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."). Plaintiffs have not attempted to remedy the defects that led to the previous dismissals of their unjust enrichment claim. The claim should be dismissed with prejudice. CONCLUSION As was true in their three prior complaints, Plaintiffs do not dispute that their computers functioned properly for the term of all applicable warranties. Accordingly, Plaintiffs' claims are barred by Daugherty and by the decisions of this Court. For the reasons stated herein, Plaintiffs' Third Amended Complaint should be dismissed with prejudice. // // // //
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Dated: June 28, 2010

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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