Lalo v. Apple, Inc et al

Filing 142

MOTION to Dismiss Defendant Apple Inc.'s Motion to Dismiss Plaintiffs' First Consolidated Class Action Complaint Pursuant to Rules 12(b)(1), 12(b)(6) and 12(b)(7) filed by Apple, Inc. Motion Hearing set for 9/1/2011 01:30 PM in Courtroom 4, 5th Floor, San Jose before Hon. Lucy H. Koh. Responses due by 7/25/2011. Replies due by 8/1/2011. (Attachments: # 1 Proposed Order)(McCabe, James) (Filed on 6/20/2011)

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JAMES F. MCCABE (SBN 104686)
[e-mail]
MORRISON & FOERSTER LLP
425 Market Street
San Francisco, California 94105-2482
Telephone:
415.268.7000
Facsimile:
415.268.7522
BRYAN WILSON (SBN 138842)
[e-mail]
TERESA N. BURLISON (SBN 230854)
[e-mail]
MORRISON & FOERSTER LLP
755 Page Mill Road
Palo Alto, California 94304-1018
Telephone:
650.813.5600
Facsimile:
650.494.0792
Attorneys for Defendant
APPLE INC.

MICHAEL L. CHARLSON (Bar No. 122125)
[e-mail]
MAREN J. CLOUSE (Bar No. 228726)
[e-mail]
HOGAN LOVELLS US LLP
525 University Avenue, 4th Floor
Palo Alto, California 94301
Telephone:
650.463.4000
Facsimile:
650.463.4199
CHRISTOPHER WOLF (Admitted Pro Hac Vice)
[e-mail]
HOGAN LOVELLS US LLP
Columbia Square
555 Thirteenth Street, NW
Washington, DC 20004
Telephone:
202.637.5600
Facsimile:
202.637.5910
CLAYTON C. JAMES (Admitted Pro Hac Vice)
[e-mail]
HOGAN LOVELLS US LLP
One Tabor Center, Suite 1500
1200 Seventeenth Street
Denver, Colorado 80202
Telephone:
303.899.7300
Facsimile:
303.899.7333

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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In re iPhone Application Litigation

Case No.

CV-10-5878 LHK (PSG)

DEFENDANT APPLE INC.’S
MOTION TO DISMISS
PLAINTIFFS’ FIRST
CONSOLIDATED CLASS
ACTION COMPLAINT
PURSUANT TO RULES 12(b)(1),
12(b)(6) AND 12(b)(7)
Date:
Time:
Ctrm:
Judge:

September 1, 2011
1:30 p.m.
4, 5th Floor
Honorable Lucy H. Koh

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APPLE INC.’S MOTION TO DISMISS FIRST CONSOLIDATED CLASS ACTION COMPLAINT
CV-10-5878 LHK (PSG)
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NOTICE OF MOTION AND MOTION TO DISMISS

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FIRST CONSOLIDATED CLASS ACTION COMPLAINT

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PLEASE TAKE NOTICE THAT at 1:30 p.m. on September 1, 2011, or as soon thereafter

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as the matter may be heard by the Court, in the Courtroom of the Honorable Lucy H. Koh, located

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at the Robert F. Peckham Federal Building, 280 South First Street, Fifth Floor, San Jose,

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California, Defendant Apple Inc., through its attorneys of record, will, and hereby does, move the

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Court for an order dismissing Plaintiffs’ First Consolidated Class Action Complaint under Federal

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Rules of Civil Procedure 12(b)(1), 12(b)(6) and 12(b)(7) with prejudice.

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This Motion is based upon this Notice; the attached Memorandum of Points and

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Authorities; the accompanying Declaration of James F. McCabe and the exhibits thereto; the

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complete files and records of this action, the arguments of counsel, and such other matters that the

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Court properly may consider.

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APPLE INC.’S MOTION TO DISMISS PLAINTIFF’S FIRST CONSOLIDATED CLASS ACTION COMPLAINT
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TABLE OF CONTENTS

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Page
I.
II.
III.

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IV.

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V.
VI.

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INTRODUCTION .............................................................................................................. 1
ALLEGATIONS OF THE CONSOLIDATED COMPLAINT.......................................... 3
LEGAL STANDARDS....................................................................................................... 5
A.
Standing and Rule 12(b)(1)..................................................................................... 5
B.
Rule 8 and Rule 12(b)(6) ........................................................................................ 7
C.
Rule 9(b)’s Heightened Standard ............................................................................ 7
D.
Rule 19 and Rule 12(b)(7) ...................................................................................... 8
PLAINTIFFS’ LACK OF STANDING COMPELS DISMISSAL UNDER RULE
12(B)(1)............................................................................................................................... 8
A.
Plaintiffs Fail to Allege Concrete, Particularized Injuries-In-Fact ......................... 9
B.
Plaintiffs Fail to Allege Injury Fairly Traceable to Apple .................................... 11
PLAINTIFFS’ AGREEMENTS WITH APPLE BAR THEIR CLAIMS ........................ 12
PLAINTIFFS FAIL TO STATE CLAIMS FOR ADDITIONAL CLAIMSPECIFIC REASONS ...................................................................................................... 14
A.
Plaintiffs Fail to State a Claim Against Apple for Negligence ............................. 14
B.
Plaintiffs Fail To State A Claim Against Apple for Breach of the Covenant
of Good Faith and Fair Dealing ............................................................................ 16
C.
Plaintiffs Fail To State A Claim Against Apple for Violation of the California
Consumer Legal Remedies Act…………………………………………………..16
D.

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1.

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VII.

Plaintiffs fail to state a claim against Apple for common law
trespass to chattels..................................................................................... 20

4.

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Plaintiffs fail to state a claim against Apple under California Penal
Code Section 502 ...................................................................................... 19

3.

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Plaintiffs fail to state a claim against Apple under the Computer
Fraud and Abuse Act................................................................................. 17

2.

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Plaintiffs Fail To State a Claim Against Any Defendant On The Remaining
Causes of Action ................................................................................................... 17

Plaintiffs fail to state a UCL claim against Apple..................................... 20

THE COMPLAINT FAILS TO JOIN INDISPENSIBLE PARTIES ............................... 22
A.

Joinder of the App Developers is Mandatory Under Fed. R. Civ. P. 19(a) .......... 22

B.

The Required Joinder of the App Developers is Not Feasible and Dismissal
is Warranted under Fed. R. Civ. P. 19(b).............................................................. 23

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APPLE INC.’S MOTION TO DISMISS PLAINTIFF’S FIRST CONSOLIDATED CLASS ACTION COMPLAINT
CV-10-5878 LHK (PSG)

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TABLE OF AUTHORITIES

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Page(s)

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CASES

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Aas v. Super. Ct.,
24 Cal. 4th 627 (2000) ............................................................................................................ 15

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Am. Greyhound Racing, Inc. v. Hull,
305 F.3d 1015 (9th Cir. 2002)................................................................................................. 24
Amchem Prods., Inc. v. Windsor,
521 U.S. 591 (1997) .................................................................................................................. 6
Applied Equip. Corp. v. Litton Saudi Arabia Ltd.,
7 Cal. 4th 503 (1994) .............................................................................................................. 15
Arias v. Super. Ct.,
46 Cal. 4th 969 (2009) ............................................................................................................ 20
Ashcroft v. Iqbal,
129 S. Ct. 1937 (2009) .................................................................................................... 7, 9, 10
Augustine v. United States,
704 F.2d 1074 (9th Cir. 1983)................................................................................................... 6
Bedrosian v. Tenet Healthcare Corp.,
208 F.3d 220 (9th Cir. 2000)..................................................................................................... 7
Bell Atl. Corp. v. Twombly,
550 U.S. 544 (2007) .............................................................................................................. 7, 9
Birdsong v. Apple Inc.,
590 F.3d 955 (9th Cir. 2009)............................................................................................... 9, 20
Branch v. Tunnell,
14 F.3d 449 (9th Cir. 1994)....................................................................................................... 4
Cetacean Cmty v. Bush,
386 F.3d 1169 (9th Cir. 2004)............................................................................................... 5, 6
Claridge v. RockYou, Inc.,
No. C 09-6032 PJH, 2011 U.S. Dist. LEXIS 39145 (N.D. Cal., Apr. 11, 2011).................... 20

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Clinton v. Babbitt,
180 F.3d 1081 (9th Cir. 1999)................................................................................................. 23
Duarte v. Zachariah,
22 Cal. App. 4th 1652 (1994) ................................................................................................. 15
APPLE INC.’S MOTION TO DISMISS FIRST CONSOLIDATED CLASS ACTION COMPLAINT
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eBay, Inc. v. Bidder’s Edge, Inc.,
100 F. Supp. 2d 1058 (N.D. Cal. 2000) .................................................................................. 20
Ferrington v. McAfee, Inc.,
No. 10-CV-01455-LHK, 2010 U.S. Dist. LEXIS 106600 (N.D. Cal. Oct. 5, 2010).......................8, 17
Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.,
528 U.S. 167 (2000) .................................................................................................................. 5
Hammond v. Bank of N.Y. Mellon Corp.,
No. 08 Civ. 6060 (RMB) (RLE), 2010 WL 2643307 (S.D.N.Y. June 25, 2010) ................... 15
In re Apple & ATTM Antitrust Litig.,
No. C 07-05152 JW, 2010 U.S. Dist. LEXIS 98270 (N.D. Cal. July 8, 2010)........... 18, 19, 20
In re Doubleclick, Inc., Privacy Litig.,
154 F. Supp. 2d 497 (S.D.N.Y. 2001)..................................................................................... 10
In re Facebook Privacy Litig.,
No. C 10-02389 JW, 2011 WL 2039995 (N.D. Cal. May 12, 2011) ................................ 19, 20
In re Gilead Scis. Sec. Litig.,
536 F.3d 1049 (9th Cir. 2008)............................................................................................. 7, 12
In re JetBlue Airways Corp., Privacy Litig.,
379 F. Supp. 2d 299 (E.D.N.Y. 2005) .............................................................................. 11, 21
In re Tobacco II Cases,
46 Cal. 4th 298 (2009) ............................................................................................................ 21
Jimenez v. Super. Ct.,
29 Cal. 4th 473 (2002) ............................................................................................................ 15
Kearns v. Ford Motor Co.,
567 F.3d 1120 (9th Cir. 2009) ................................................................................................................7, 8
Kinderstart.com, LLC v. Google, Inc.,
No. C06-2057 JF (RS), 2006 WL 3246596 (N.D. Cal. July 13, 2006)................................... 16

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Kline v. Coldwell, Banker & Co.,
508 F.2d 226 (9th Cir. 1974)............................................................................................. 23, 24
LaCourt v. Specific Media, Inc.,
No. SACV-10-1256-GW (JCGw), 2011 U.S. Dist. LEXIS 50543 (C.D. Cal.
Apr. 28, 2011) ............................................................................................................. 10, 11, 18
Ladd v. Cnty. of San Mateo,
12 Cal. 4th 913 (1996) ............................................................................................................ 14

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Lee v. Am. Nat’l Ins. Co.,
260 F.3d 997 (9th Cir. 2001)..................................................................................................... 6
Lierboe v. State Farm Mut. Auto. Ins. Co.,
350 F.3d 1018 (9th Cir. 2003)................................................................................................... 6
Lujan v. Defenders of Wildlife,
504 U.S. 555 (1992) ................................................................................................................... 5, 9, 11, 12
LVRC Holdings LLC v. Brekka,
581 F.3d 1127 (9th Cir. 2009)................................................................................................. 18
O’Shea v. Littleton,
414 U.S. 488 (1974) .................................................................................................................. 6
Pantoja v. Countrywide Home Loans, Inc.,
640 F. Supp. 2d 1177 (N. D. Cal. 2009) ................................................................................. 21
Pisciotta v. Old Nat'l Bancorp,
499 F.3d 629 (7th Cir. 2007)................................................................................................... 15
Rubio v. Capital One Bank,
613 F.3d 1195 (9th Cir. 2010)............................................................................................. 4, 12
Shropshire D/B/A Elmo Publ’g v. Canning,
Case No. 10-CV-01941, 2011 U.S. Dist. LEXIS 4025 (N.D. Cal. Jan. 11, 2011) ................... 8
Stollenwerk v. Tri-West Health Care Alliance,
254 Fed. Appx. 664 (9th Cir. 2007) ........................................................................................ 15
Thompson v. Home Depot, Inc.
No. C 07cv1058 IEG (WMc), 2007 U.S. Dist. LEXIS 68918 (S.D. Cal.
Sept. 18, 2007) ........................................................................................................................ 21
United States v. Hays,
515 U.S. 737 (1995) .................................................................................................................. 5
Warth v. Seldin,
422 U.S. 490 (1975) .............................................................................................................. 6, 9
Waste Mgmt. of N. Am., Inc. v. Weinberger,
862 F.2d 1393 (9th Cir. 1988)................................................................................................... 6
White v. Lee,
227 F.3d 1214 (9th Cir. 2000)................................................................................................... 5

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CV-10-5878 LHK (PSG)
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STATUTES

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18 U.S.C.§ 1030 ...................................................................................................................... 17, 19

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28 U.S.C.§ 2072(b) ......................................................................................................................... 6

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Cal. Bus. & Prof. Code
§ 17200...................................................................................................................................... 8
§ 17500.................................................................................................................................... 21
Cal. Civ. Code
§ 1750.................................................................................................................................. 8, 16
Cal. Civ. Code
§ 1770...................................................................................................................................... 17
Cal. Penal Code
§ 502................................................................................................................................. passim

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OTHER AUTHORITIES

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Fed. R. Civ. P. 8(a).................................................................................................................... 7, 17

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Fed. R. Civ. P. 9(b) ..................................................................................................................... 7, 8

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Fed. R. Civ. P. 12(b)(1)................................................................................................................. 12
Fed. R. Civ. P. 12(b)(6)................................................................................................................. 11
Fed. R. Civ. P. 12(b)(7)....................................................................................................... 8, 22, 24
Fed. R. Civ. P. 19(a).................................................................................................................. 8, 23
Fed. R. Civ. P. 19(b) ....................................................................................................... 8, 9, 22, 24
Fed. R. Civ. P. 23 ...................................................................................................................... 6, 23

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APPLE INC.’S MOTION TO DISMISS FIRST CONSOLIDATED CLASS ACTION COMPLAINT
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MEMORANDUM OF POINTS AND AUTHORITIES

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ISSUES PRESENTED

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1.

Whether Plaintiffs lack Article III standing;

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2.

Whether Plaintiffs’ agreements with Apple bar Plaintiffs’ claims;

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3.

Whether Plaintiffs fail to state any claim for which relief can be granted; and

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4.

Whether Plaintiffs fail to join necessary and indispensible parties.

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I.

INTRODUCTION

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This case against Apple Inc. (“Apple”) purports to be about the misuse of consumer

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information, yet Plaintiffs nowhere allege that Apple misused any consumer information. Rather,

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Plaintiffs seek to make Apple the guarantor of the practices of 85,000 third parties from whom

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consumers license more than 425,000 applications1 they freely choose to install on Apple mobile

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devices (“iOS Devices”). Furthermore, Plaintiffs have filed suit against Apple and others

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notwithstanding the fact that they have suffered no injury, and hence have no standing.

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In December 2010, a report appeared in the press asserting that six specific third-party

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applications (“apps”) that run on iOS Devices collected and made use of device-specific data

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without the device user’s consent. Only the app developers, not Apple, were reported to have

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collected and used such information. No actual harm to any mobile device or mobile device user

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was reported then, and none has been reported since.

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Starting within weeks and continuing until May 10, 2011, Plaintiffs filed seven putative

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class actions in this Court alleging that 13 named app developer defendants communicated device

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data to third party advertisers and analytics companies without the user’s consent. After the

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customary scuffle among the lawyers purporting to represent classes, the Court ordered that four

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of the cases be consolidated,2 and that a consolidated complaint be filed. (Order Adopting

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“There are several hundred thousand third-party apps available at the App Store.”
(Consolidated Complaint (Doc. 71) (“Comp.”) ¶ 39.)
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These four cases were: Lalo v. Apple Inc. et. al., CV-10-5878-LHK; Freeman, et. al. v.
Apple Inc. et. al., CV-10-5881-LHK; Chiu v. Apple Inc. et. al., CV-11-0407-LHK and Rodimer v.
Apple Inc., et. al., CV-11-0700-PSG.

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APPLE INC.’S MOTION TO DISMISS PLAINTIFF’S FIRST CONSOLIDATED CLASS ACTION COMPLAINT
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Stipulation to Consolidate Related Cases (Doc. 36).) However, the consolidated complaint omits

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the app developers entirely, the very parties Plaintiffs claim communicated device data without

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consent. Furthermore, the consolidated complaint is hopelessly vague: it fails to state which app

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or apps any plaintiff used, whether the apps included disclosures about data collection and the

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nature of those disclosures, what information the app developer collected or communicated, or to

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whom that information was communicated. It purports to state claims on behalf of all users of

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iOS Devices who have in the last two and one half years downloaded from Apple’s App Store

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any of the more than 425,000 apps available there. No limitation to apps that collect data. No

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limitation to (let alone assertion of liability against) app developers alleged to acquire information

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without consent. No limitation to apps that transmit data to mobile industry companies in

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violation of the license agreements and consents related to such apps.

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Furthermore, the consolidated complaint does not allege facts establishing the “injury-in-

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fact” required for this Court to have subject matter jurisdiction. Plaintiffs do not allege – nor

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could they – that the defendants’ supposed knowledge of information from Plaintiffs’ iOS

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Devices damaged those devices. Nor do Plaintiffs claim that such knowledge resulted in identity

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theft or any other harm – Plaintiffs’ or any one else’s. The possibility that an advertising or

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analytics company might in the future use information in a way that could harm Plaintiffs does

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not constitute “injury-in-fact.” In the absence of “injury-in-fact,” Plaintiffs lack standing, and the

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Court has no jurisdiction.

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Even if it could be said that Plaintiffs have alleged “injury-in-fact,” the complaint should

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still be dismissed: numerous contracts to which Plaintiffs agreed disclaim any liability against

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Apple for the conduct of third parties, including the app developers and advertising and analytics

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companies with which the app developers do business.

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In addition, Plaintiffs fail adequately to allege one or more elements of each of the

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asserted claims. For example, the negligence claim fails adequately to allege duty or

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compensable damage, the Computer Fraud and Abuse Act and California Penal Code Section 502

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claims fail adequately to allege Apple’s unauthorized access to Plaintiffs’ devices, and the

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California Unfair Competition Law claim fails adequately to allege any loss of “money or

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property” as a result of Apple’s alleged conduct.

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Moreover, by overreaching to encompass all apps available in the App Store, Plaintiffs

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have implicated the interests of 85,000 app developers, making them necessary parties to the

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litigation. The sheer number of such necessary parties makes their joinder infeasible. Since

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Plaintiffs have adequate alternatives to filing a grossly overblown case, this complaint should be

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dismissed.

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II.

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ALLEGATIONS OF THE CONSOLIDATED COMPLAINT
As to their personal connection to the allegations of the complaint, Plaintiffs allege only

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that they “use mobile devices manufactured by [Apple] that operate using Apple’s proprietary

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operating system, iOS” (Comp., ¶ 8), and that each plaintiff “downloaded and used numerous free

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and paid apps from the App Store.” (Id. ¶ 9 (Lalo); ¶ 10 (Freeman); ¶ 11 (Chiu); ¶ 12 (Rodimer);

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¶ 13 (Parsley).) The complaint does not identify even a single app allegedly downloaded by any

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plaintiff or the developer of any app downloaded by any plaintiff.

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The thrust of most of Plaintiffs’ claims is that the “Tracking Defendants” (hereinafter

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referred to as “Mobile Industry Defendants”) are alleged to have obtained personal information

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about Plaintiffs without their consent. However, Plaintiffs do not allege any direct relationship

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whatsoever between Apple and the Mobile Industry Defendants. Instead, the complaint focuses

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on the Mobile Industry Defendants’ ties to the absent app developers, alleging that the Mobile

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Industry Defendants acquire information from them, not from Apple: “the [Mobile Industry

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Defendants], through the apps [developers] with whom they had entered into relationships and

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to whom they had provided code, have continued to acquire details about consumers and to track

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consumers on an ongoing basis . . .” (Id. ¶ 67) (emphasis added). The conduit for device

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information is alleged to be the app: “When users download and install the apps on their

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iDevices, the [Mobile Industry Defendants’] code accesses personal information on those devices

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. . .” (Id. ¶ 63) (emphasis added). Further, “[s]ome [Mobile Industry Defendants] pay app

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developers to include code that causes banner ads to be displayed when users run the apps.” (Id.

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¶ 64) (emphasis added).
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The complaint repeatedly asserts the legal conclusion that Apple is “jointly and severally

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liable” for the alleged conduct of the Mobile Industry Defendants. (Id. ¶ 133 (Computer Fraud

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and Abuse Act); ¶ 157 (Cal. Penal Code § 502); ¶ 178 (Trespass to Chattels); ¶ 195 (California

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Unfair Competition Law). However, Plaintiffs provide no factual allegations that might support

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holding Apple liable for the Mobile Industry Defendants’ conduct. The only factual allegation

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even remotely linking Apple and mobile industry companies (not the Mobile Industry Defendants

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specifically) is that Apple “designs its mobile devices to be readily accessible to ad networks and

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Internet metrics companies to track consumers and access their personal information.” (Id. ¶ 6.)

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As for Apple’s own conduct, Plaintiffs allege that Apple designed the iOS, and that Apple

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runs the App Store, exercising some control over the subject matter and code content of the apps

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sold there. (Id. ¶¶ 1-7, 26-60, 65-66, 70-73.) Plaintiffs also allege that Apple has a privacy

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policy, and that the Mobile Industry Defendants’ alleged receipt of device information violates

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that policy. (Id. ¶ 197.) However, Plaintiffs do not allege that a violation of Apple’s privacy

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policy amounts to the violation of any law.

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The Complaint refers to, but does not quote, several agreements that are material to the

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case.3 Plaintiffs state that only “iDevices” – which they define as “mobile devices . . . that

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operate using the . . . operating system software known as iOS” (id. ¶ 32) – may be licensed to

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use its iOS software. (Id. ¶ 27.) The iOS Software License Agreements (“User SLAs”) for the

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iPad, iPod touch and iPhone devices are attached as Exhibits A, B, C, D and E to the Declaration

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of James F. McCabe (“McCabe Decl.”) filed herewith. As more fully described below, each of

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the User SLAs provides that Apple does not “warrant or endorse and [does] not assume and will

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not have any liability or responsibility” to customers or any person for third-party services or

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materials. (Id., Exs. A-E at ¶ 5(c) (emphasis added)). Plaintiffs also allege that “[a]pps may only

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be obtained from Apple’s App Store” (Comp., ¶ 32), refer to “a click-through agreement required

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In ruling on a motion to dismiss, the Court may consider documents specifically referred
to in the complaint and whose authenticity no party questions, even if the documents are not
physically attached to the complaint. Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir. 1994),
overruled on other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119, 1127 (9th Cir.
2002); see also Rubio v. Capital One Bank, 613 F.3d 1195, 1199 (9th Cir. 2010).

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to create a user App Store account,” (id. ¶ 36) and claim that the Mobile Industry Defendants’

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activities “were in conflict with the privacy policies and/or terms of use of the Apple App

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[S]tore.” (Id. ¶ 77.) These references are to the App Store Terms of Service, a copy of which is

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attached as Exhibit F to the McCabe Declaration. As described more fully below, the App Store

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Terms of Service specifically state that “Apple does not warrant and will not have any liability or

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responsibility for any third-party materials or websites.” (McCabe Decl., Ex. F, Section C,

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“Third Party Materials” at p. 10 (emphasis added).) Plaintiffs also purport to describe substantive

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terms of Apple’s Privacy Policy. (Comp., ¶ 197.) A copy of Apple’s Privacy Policy is attached

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as Exhibit G to the McCabe Declaration. That policy provides, in part, that “Information

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collected by third parties, which may include such things as location data or contact details, is

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governed by their privacy practices.” (Id. at 3 (emphasis added).)

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III.

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LEGAL STANDARDS
A.

Standing and Rule 12(b)(1)

“A suit brought by a plaintiff without Article III standing is not a ‘case or controversy,’

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and an Article III federal court there-fore lacks subject matter jurisdiction over the suit.”

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Cetacean Cmty v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004), citing Steel Co. v. Citizens for a

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Better Env’t, 523 U.S. 83, 101 (1998). Since a challenge to standing is a challenge to the Court’s

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subject matter jurisdiction, it is “properly raised in a motion under Federal Rule of Civil

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Procedure 12(b)(1).” White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000).

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The burden is on the plaintiff “clearly to allege facts demonstrating that he is a proper

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party to invoke judicial resolution of the dispute.” United States v. Hays, 515 U.S. 737, 743

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(1995) (citations omitted). “[T]o satisfy Article III’s standing requirements, a plaintiff must show

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(1) he has suffered an ‘injury-in-fact’ that is (a) concrete and particularized and (b) actual or

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imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged

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action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will

26

be redressed by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC),

27

Inc., 528 U.S. 167, 180-81 (2000); Lujan v. Defenders of Wildlife, 504 U.S. 555, 561-62 (1992).

28

Congress lacks the power to enact statutes conferring jurisdiction on a district court in the absence
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1

of Article III standing.” Cetacean Cmty, 386 F.3d at 1174–75.4 The allegation of a statelaw claim,

2

without more, does not establish injury-in-fact. See Lee v. Am. Nat’l Ins. Co., 260 F.3d 997,

3

1001-02 (9th Cir. 2001) (“[A] plaintiff whose [unfair business practices] cause of action is

4

perfectly viable in state court under state law may nonetheless be foreclosed from litigating the

5

same cause of action in federal court, if he cannot demonstrate the requisite injury” for Article III

6

purposes).

7

The fact that Plaintiffs claim to represent a class does not alter their burden to establish

8

individual standing and to plead adequately individual claims. See Amchem Prods., Inc. v.

9

Windsor, 521 U.S. 591, 612-13 (1997) (“Rule 23’s requirements must be interpreted in keeping

10

with Article III constraints, and with the Rules Enabling Act, which instructs that rules of

11

procedure ‘shall not abridge, enlarge or modify any substantive right’”) (quoting 28 U.S.C.

12

§ 2072(b)). A class action must be dismissed unless at least one named plaintiff can establish the

13

requisite case or controversy. See O’Shea v. Littleton, 414 U.S. 488, 494 (1974); Lierboe v. State

14

Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1023 (9th Cir. 2003). Similarly, a named plaintiff’s

15

claim must be dismissed if the plaintiff fails to allege facts supporting his own claim; it is

16

insufficient to allege that some member of the class, other than the plaintiff, has the claim. See

17

Warth v. Seldin, 422 U.S. 490, 501 (1975) (stating that, in order to satisfy Article III, “the

18

plaintiff . . . must allege a distinct and palpable injury to himself, even if it is an injury shared by a

19

large class of other possible litigants.”).

20

On a motion to dismiss for lack of standing, “no presumptive truthfulness attaches to

21

plaintiff’s allegations, and the existence of disputed material facts will not preclude the court from

22

evaluating for itself the merits of jurisdictional claims.” Augustine v. United States, 704 F.2d

23

1074, 1077 (9th Cir. 1983).

24
25
26
27

4

“Absent injury, a violation of a statute gives rise merely to a generalized grievance but
not to standing.” Waste Mgmt. of N. Am., Inc. v. Weinberger, 862 F.2d 1393, 1397-98 (9th Cir.
1988) (internal citations omitted).

28
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1
2

B.

Rule 8 and Rule 12(b)(6)

The United States Supreme Court has, over the last several years, clarified Rule 8’s

3

requirement that a complaint set out “a short and plain statement showing that the pleader is

4

entitled to relief.” See Fed. R. Civ. P. 8(a)(2); Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009); Bell Atl.

5

Corp. v. Twombly, 550 U.S. 544 (2007). Twombly and Iqbal require a two-step analysis. See

6

Iqbal, 129 S. Ct. at 1949. First, a court must consider only the factual allegations of the

7

complaint − neither its legal conclusions nor its bare recitation of the elements of a claim − in

8

determining whether the plaintiff has made a plain statement of the grounds of her entitlement to

9

relief. See Fed R. Civ. P. 8(a)(2); Twombly, 550 U.S. at 555 (“a plaintiff’s obligation to provide

10

the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a

11

formulaic recitation of the elements of a cause of action will not do”); Iqbal, 129 S. Ct. at 1949

12

(providing Rule 8 “demands more than an unadorned, the-defendant-unlawfully-harmed-me

13

accusation”). However, a court need not accept as true “allegations that contradict matter

14

properly subject to judicial notice or by exhibit” or “allegations that are merely conclusory,

15

unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536

16

F.3d 1049, 1055 (9th Cir. 2008). Second, if the plaintiff has alleged sufficient facts to bear out

17

the elements of the claim, the Court must then consider whether the adequately pleaded facts state

18

a “plausible,” rather than a merely “possible” claim. See Iqbal, 129 S. Ct. at 1950; Twombly, 550

19

U.S. at 555.

20
21
22

A court may resolve a contract claim on a motion to dismiss if the terms of the contract
are unambiguous. See Bedrosian v. Tenet Healthcare Corp., 208 F.3d 220, at *1 (9th Cir. 2000).
C.

Rule 9(b)’s Heightened Standard

23

Federal Rule of Civil Procedure 9(b) imposes a heightened pleading standard on allegations of

24

fraud: “In alleging fraud or mistake, a party must state with particularity the circumstances constituting

25

fraud or mistake.” Fed. R.Civ. P. 9(b). When allegations sound in fraud, plaintiffs must plead the “who,

26

what, when, where and how” of the alleged misconduct, including particular misrepresentations on which

27

they supposedly relied. See Kearns v. Ford Motor Co., 567 F.3d 1120, 1125-26 (9th Cir. 2009).

28

Plaintiffs’ claims for alleged violations of the following statutes sound in fraud and are subject to
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1

Rule 9(b): the Consumer Legal Remedies Act, Cal. Civ. Code § 1750 et seq. (“CLRA”); and the Unfair

2

Competition Law, Cal. Bus. & Prof. Code § 17200, et seq (“UCL”). See Kearns, 567 F.3d at 1125-26

3

(Rule 9(b) applies to CLRA and UCL claims that “allege a unified course of fraudulent conduct” and

4

therefore sound in fraud); Ferrington v. McAfee, Inc., No. 10-CV-01455-LHK, 2010 U.S. Dist. LEXIS

5

106600, at *13-15 (N.D. Cal. Oct. 5, 2010) (citing Marolda v. Symantec Corp., 672 F. Supp. 2d 992, 997,

6

1004 (N.D. Cal. 2009) and holding CLRA and UCL claims are subject to the Rule 9(b) pleading

7

requirements when fraud is alleged).

8

D.

9

Rule 19 and Rule 12(b)(7)

Federal Rule of Civil Procedure 12(b)(7) authorizes the Court to dismiss an action if a

10

plaintiff has failed “to join a party under Rule 19.” Fed. R. Civ. P. 12(b)(7); see also Shropshire

11

D/B/A Elmo Publ’g v. Canning, Case No. 10-CV-01941, 2011 U.S. Dist. LEXIS 4025, at *19-20

12

(N.D. Cal. Jan. 11, 2011) (Koh, J.) (dismissing complaint for, among other things, failure to join

13

necessary and indispensible parties). Rule 19(a) provides, inter alia, that a person “must be

14

joined as a party” if “in that person’s absence, the court cannot accord complete relief among

15

existing parties.” Elmo Pub’g, 2011 U.S. Dist. LEXIS 4025, at *19 (quoting Fed. R. Civ. P.

16

19(a).) In determining whether a party is “necessary” under Rule 19(a), a court must also

17

consider whether the absent party has a “legally protected interest in the subject of the suit.” Id.

18

at *20 (quoting Shermoen v. U.S., 982 F.2d 1312, 1317 (9th Cir. 1992). If the required person

19

cannot be joined, then “the court must determine whether, in equity and good conscience, the

20

action should proceed among the existing parties or should be dismissed.” Id. (quoting Fed. R.

21

Civ. P. 19(b).) The Rule 19 inquiry is “fact specific,” and the party seeking dismissal has the

22

burden of persuasion. See id. (citing Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir.

23

1990).)

24

IV.

25

PLAINTIFFS’ LACK OF STANDING COMPELS DISMISSAL UNDER RULE
12(B)(1).

26

Plaintiffs fail adequately to plead two essential elements of Article III standing: (i) a

27

concrete and particularized injury-in-fact (ii) that is fairly traceable to the alleged actions of

28
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1

Apple. See Lujan, 504 U.S. at 560-61. The Court therefore lacks subject matter jurisdiction over

2

this action, and it must be dismissed pursuant to Rule 12(b)(1).

3

A.

4

Plaintiffs Fail to Allege Concrete, Particularized Injuries-In-Fact.

To assess whether Plaintiffs have adequately alleged standing, the Court must separate

5

Plaintiffs’ allegations as to their own claims from their allegations as to others, Warth, 422 U.S. at

6

499, exclude “labels and conclusions . . . [and] formulaic recitation[s] of the elements of a cause

7

of action,” Twombly, 550 U.S. at 555, and, as to the remaining allegations, consider whether they

8

establish a “plausible” basis for standing. See Iqbal, 129 S. Ct. at 1950; Twombly, 550 U.S. at

9

555.

10

Plaintiffs’ allegations as to themselves are that they use iOS Devices running iOS (Comp.,

11

¶ 8), that they downloaded apps from the App Store (id. ¶¶ 8-13), that they consider certain

12

information on their iOS Devices to be confidential (id. ¶¶ 74, 79-80), and that they have not

13

expected, received notice of, or consented to its collection. (Id. ¶¶ 76.) Plaintiffs also make

14

conclusory allegations that the Mobile Industry Defendants misappropriated or diminished the

15

value of their “personal”5 information (id. ¶¶ 84, 93-94). But the allegations about the actual

16

collection of information, its value, and pricing of apps are made only on behalf of “consumers”

17

and “users” generally (id. ¶¶ 61-68-72, 75, 81, 85-92), not the named plaintiffs. Plaintiffs allege

18

that these practices were visited upon someone, but they do not allege that they were visited upon

19

Plaintiffs. And they allege that users were injured – but never claim that they themselves were

20

injured. In addition, Plaintiffs’ two theories of injury – misappropriation of information and

21

diminution of its value – is predicated on the Mobile Industry Defendants’ receipt of information,

22

yet they nowhere allege that any of these defendants received their personal information.

23

Plaintiffs therefore fail to allege injury to themselves. See Birdsong v. Apple Inc., 590 F.3d 955,

24

960-61 (9th Cir. 2009) (plaintiffs fail to allege Article III injury where “the plaintiffs plead a

25
26
27

5

Apple does not concede that any information found on any iOS Device is “personal” to
the device user. For example, each iOS Device has a unique device identifier (“UDID”), akin to a
serial number. (Comp., ¶ 58(i)). A UDID is no more personal to an iPhone user than a VIN
number is to the driver of an automobile.

28
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1

potential risk of hearing loss not to themselves, but to other unidentified iPod users who might

2

choose to use their iPods in an unsafe manner.”) (emphasis in original). Thus, the allegations of

3

Plaintiffs’ actual experience do not “contain sufficient factual matter, accepted as true, to ‘state a

4

claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct. at 1949 (quoting Twombly, 550

5

U.S. at 570).

6

Judge Wu, in the Central District of California, recently held that plaintiffs making

7

allegations very similar to those here failed to establish Article III standing. See LaCourt v.

8

Specific Media, Inc., No. SACV-10-1256-GW (JCGx), 2011 U.S. Dist. LEXIS 50543, at *7-10

9

(C.D. Cal. Apr. 28, 2011). In Specific Media, the plaintiffs accused an online third party ad

10

network, Specific Media, of installing on their computers “Flash Cookies” to circumvent internet

11

user privacy controls and track internet use without user knowledge or consent. See id. at *2-3.

12

As here, the Specific Media plaintiffs described the defendant’s practices in general terms and

13

failed to allege that Specific Media ever actually tracked the named plaintiffs. See Id. at *8.

14

Also, as here, the Specific Media plaintiffs failed to allege that they ascribed any value to their

15

“personal” information. See Id. at *12. Further, like the consolidated complaint, the plaintiffs in

16

Specific Media alleged as “injury” theoretical postulations as to loss of the value of information

17

about their browsing history, but failed to offer any “particularized example” of the application of

18

such concepts to the plaintiffs. Id. at *11-12. The court did not credit those conclusory

19

allegations: “Plaintiffs do not explain how they were ‘deprived’ of the economic value of their

20

personal information simply because their unspecified personal information was purportedly

21

collected by a third party.” Id. at *12. The court concluded that the Specific Media plaintiffs had

22

not adequately alleged a factual basis for Article III standing. Id. at *15, 21.

23

Even if Plaintiffs had adequately alleged that a Mobile Industry Defendant had acquired

24

information from any of the Plaintiffs’ devices – which they did not – that allegation does not

25

establish an “economic loss” sufficient to create an injury-in-fact. See In re Doubleclick, Inc.,

26

Privacy Litig., 154 F. Supp. 2d 497, 525 (S.D.N.Y. 2001) (granting Rule 12(b)(6) motion to

27

dismiss CFAA claim against online advertiser accused of using “cookies” to collect user data for

28

lack of damages because while “demographic information is valued highly . . . the value of its
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1

collection has never been considered an economic loss to its subject.”); see also In re JetBlue

2

Airways Corp., Privacy Litig., 379 F. Supp. 2d 299, 327 (E.D.N.Y. 2005) (finding airline’s

3

disclosure of passenger data to third party in violation of airline’s privacy policy had no

4

compensable value). While the court in Specific Media did not reach this specific issue, it

5

signaled approval of Doubleclick. Specific Media, 2011 U.S. Dist. LEXIS 505043 at *14 (stating

6

Doubleclick’s reasoning “suggests that the question of Plaintiffs’ ability to allege standing is a

7

serious one . . .”).

8

Plaintiffs have not, and cannot, assert a “concrete and particularized” injury-in-fact to

9

satisfy the gateway requirement of constitutional standing. See Lujan, 504 U.S. at 560. Their

10
11
12

claims therefore should be dismissed, as the Court lacks subject matter jurisdiction.
B.

Plaintiffs Fail to Allege Injury Fairly Traceable to Apple.

Beyond their failure as to injury-in-fact, Plaintiffs have not alleged any causal connection

13

between Apple and the purported injury of having user personal data devalued. See Lujan, 504

14

U.S. at 560-61 (citations omitted). This is fatal to their claims. To establish standing, the alleged

15

injury must be “fairly . . . trace[able] to the challenged action of the defendant, and not . . . the

16

result [of] the independent action of some third party not before the court.” Id. (citations

17

omitted) (emphasis added).

18

As noted, the only injury alleged by Plaintiffs is the wrongful acquisition of information

19

from their iOS Devices, which is alleged either to have conferred a benefit on the Mobile Industry

20

Defendants (Comp., ¶ 94) or to have devalued Plaintiffs’ personal information. (Id. ¶ 93.)

21

Plaintiffs do not allege that Apple acquired or transferred such information; they allege only that

22

unnamed app developers and the Mobile Industry Defendants worked together to collect it using

23

apps. Apple’s only purported role in the allegedly improper transfer of information is that it

24

allegedly “designed” a platform in which the Mobile Industry Defendants and the absent app

25

developers can engage in harmful acts. (Id. ¶¶ 58, 61, 67.) The Complaint also contains some

26

conclusory allegations about Apple’s platform causing “users’ iDevices to maintain, synchronize,

27

and retain detailed, unencrypted location history files.” (Id. ¶¶ 125, 140.) Yet nothing in the

28

complaint ever articulates a nexus between the design of Apple’s platform (or the information it
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1

supposedly caches) and the alleged misappropriation of or devaluation of personal data. Plaintiffs

2

thus have not met their burden of proving that the purported injury-in-fact is “fairly . . .

3

trace[able] to the challenged action of [Apple].” Lujan, 504 U.S. at 560-61. For this independent

4

reason, the complaint should be dismissed under Rule 12(b)(1).

5

V.

6

PLAINTIFFS’ AGREEMENTS WITH APPLE BAR THEIR CLAIMS.
Dismissal of the case under Rule 12(b)(1) would end the Court’s inquiry. Should the

7

Court find that Plaintiffs have alleged an injury-in-fact that is fairly traceable to Apple, the Court

8

must consider whether Plaintiffs have adequately alleged facts supporting each element of the

9

pleaded claims. The plaintiffs have acknowledged through their allegations the existence of

10

several agreements between themselves and Apple, and the Court properly may consider those

11

agreements on a motion to dismiss. See Rubio, 613 F.3d at 1199; In re Gilead Scis. Sec. Litig.,

12

536 F.3d at 1055. The Court should dismiss all claims against Apple with prejudice.

13

All of Plaintiffs’ claims against Apple are based on one of two footings, either the Mobile

14

Industry Defendants’ receipt and use of device information through the operation of apps, or

15

Apple’s design of iOS. Claims of the first type are unambiguously barred by the App Store

16

Terms of Service. Claims of the second type are unambiguously barred by the User SLAs

17

applicable to various iOS Devices.

18

Plaintiffs seek to hold Apple liable on the first type of claim because Apple allegedly

19

failed to prevent app developers and Mobile Industry Defendants from transferring device

20

information without adequate consent. Plaintiffs allege that iOS Device apps are only available

21

through Apple’s App Store (Comp., ¶ 35), and that Apple requires that apps meet certain

22

guidelines before being made available through the App Store. (Id. ¶ 38.) Plaintiffs seek to

23

imply from Apple’s maintenance of the App Store and app developer guidelines a generalized

24

warranty of unimpeachable developer and third party conduct in the operation of all of the

25

425,000 apps available there. However, the App Store Terms of Service unambiguously disclaim

26

any such warranty: Under the heading “THIRD-PARTY MATERIALS,” the agreement states:

27
28

You agree that Apple is not responsible for examining or evaluating the content or
accuracy and Apple does not warrant and will not have any liability or responsibility for
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1
2

any third-party materials or websites, or for any other materials, products, or services of
third parties.

3

(McCabe Decl., Ex. F at p. 10) (emphasis added). Plaintiffs agreed, when creating an App Store

4

user account (Comp., ¶ 36), that Apple would have no liability for apps, developed by others, that

5

Plaintiffs might later choose to install. This does not leave Plaintiffs without a remedy, though,

6

since the agreement continues:

7
8
9

The Application Provider of each Third-Party Product is solely responsible for that
Third-Party Product, the content therein, any warranties to the extent such warranties
have not been disclaimed, and any claims that you or any other party may have relating
to that Third-Party Product.

10

(McCabe Decl., Ex. F, “License of Mac App Store and App Store Products,” at p.12) (emphasis

11

added). Simply put, if Plaintiffs do not like what their third party app does, they can sue the

12

third-party app developer. Apple is not even partially responsible for the app developer’s

13

conduct: “[t]he Application Provider . . . is solely responsible.” (Id.)

14

In service of their first theory, Plaintiffs selectively quote the privacy policy section of the

15

App Store Terms of Service to suggest that Apple has a duty to guarantee that app developers and

16

companies with whom they do business will not misuse information about App Store users.

17

(Comp., ¶ 36.) While Plaintiffs allude to the iOS software license agreements (Comp., ¶¶ 2, 27,

18

110), Plaintiffs fail to disclose that those agreements specifically advise iOS Device users that

19

third party services, such as apps, may collect information, and thus such collection is governed

20

by the third party’s privacy policy. (McCabe Decl., Exs. A-E, §4(b)) Plaintiffs also fail to note

21

the disclaimer of liability found in the App Store agreement:

22
23
24
25

APPLE SHALL USE REASONABLE EFFORTS TO PROTECT INFORMATION
SUBMITTED BY YOU IN CONNECTION WITH THE [APP STORE] SERVICE[S],
BUT YOU AGREE THAT YOUR SUBMISSION OF SUCH INFORMATION IS AT
YOUR SOLE RISK, AND APPLE HEREBY DISCLAIMS ANY AND ALL LIABILITY
TO YOU FOR ANY LOSS OR LIABILITY RELATING TO SUCH
INFORMATION IN ANY WAY.

26

(McCabe Decl., Ex. F, “Disclaimer of Warranties; Liability Limitations”, at p. 11) (emphasis

27

added). All of Plaintiffs’ injuries are alleged to arise from the further dissemination of

28

information Plaintiffs submitted to app developers through their iOS Devices. Those claims are
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1

entirely foreclosed by Plaintiffs’ agreement, made in connection with establishing their App Store

2

accounts, that Apple would have no liability related to submitted information or for third party

3

conduct.

4

As to Plaintiffs’ claims based on the design of iOS (leaving device information

5

“accessible” to apps (Comp., ¶ 117) and maintaining a cache of location data (id., ¶¶ 58(d), 117,

6

125,140)), those are barred by the iOS software license agreements. iOS users agree that they use

7

iOS at their “SOLE RISK”. (McCabe Decl., Exs. A-E, §7.2.) Furthermore, the User SLAs

8

disclaim all warranties as to the software, express or implied, (Id., § 7.3) and specifically disclaim

9

that the software will be error free. (Id., §7.4.) Both the App Store Terms of Service and the

10

User SLAs limit Apple’s liability for “damages . . . arising out of or related to [the user’s] use of

11

the [iOS Device] software, however caused, regardless of the theory of liability (contract, tort, or

12

otherwise), and even if Apple has been advised of the possibility of such damages.” (McCabe

13

Decl., Exs. A-E, §8; See also Ex. F, p. 11.)

14

Because each of the theories of liability that Plaintiffs seek to assert against Apple is

15

barred by Plaintiffs’ agreements with Apple, the complaint should be dismissed as to Apple with

16

prejudice.

17

VI.

18
19

PLAINTIFFS FAIL TO STATE CLAIMS FOR ADDITIONAL CLAIM-SPECIFIC
REASONS.
The Court may dismiss the case in its entirety on either of the two grounds described

20

above (viz, lack of Article III standing and/or Apple’s agreements barring Plaintiffs’ claims), or

21

on the basis of Plaintiffs’ failure to join indispensible parties, discussed below at Section VI. In

22

addition to these “case-wide” bases for dismissal, there are claim-specific defects as well. These

23

independently require dismissal of the claim for failure to state a claim.

24
25

A.

Plaintiffs Fail to State a Claim Against Apple for Negligence.

While Plaintiffs do not allege which law governs their tort claims, California law as to

26

negligence is conventional. “The elements of a cause of action for negligence are well

27

established. They are ‘(a) a legal duty to use due care; (b) a breach of such legal duty; [and] (c)

28

the breach as the proximate or legal cause of the resulting injury.’” Ladd v. Cnty. of San Mateo,
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1

12 Cal. 4th 913, 917 (1996) (quoting Evan F. v. Hughson United Methodist Church, 8 Cal. App.

2

4th 828, 834 (1992) (italics in original).

3

Here, Plaintiffs make only the conclusory allegation that “Apple owed a duty to

4

Plaintiffs.” (Comp., ¶ 114.) This conclusion is not supported by any allegation of fact. Indeed,

5

the suggestion of a duty of care seems to be grounded on relationships between Apple and its

6

customers that are explicitly governed by contracts that explicitly disclaim the sort of duty

7

Plaintiffs seek to assert. Tort law may not be used to supplant private contractual agreements: the

8

failure to perform a contractual duty is never a tort, unless that failure involves an independent

9

legal duty. See Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 514-15 (1994).

10

In addition, the complaint fails to allege either breach of a duty or causation of harm. As

11

noted above, the complaint contains no allegation that any information from any of Plaintiffs’ iOS

12

Devices was communicated to anyone, much less that Apple caused any such communication.

13

Plaintiffs also do not adequately allege injury. An “appreciable, nonspeculative, present

14

injury is an essential element of a tort cause of action.” Aas v. Super. Ct., 24 Cal. 4th 627, 646

15

(2000), superseded by statute on other grounds as stated in Rosen v. State Farm Gen. Ins. Co., 30

16

Cal. 4th 1070, 1079-80 (2003); see also Duarte v. Zachariah, 22 Cal. App. 4th 1652, 1661-62

17

(1994) (actual damage in “the sense of ‘harm’ is necessary to a cause of action in negligence;

18

nominal damages are not awarded”). Allegations of “some future, anticipated harm” from an

19

electronic breach of user data and the resulting potential for identity theft are insufficient to state

20

a negligence claim. See Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 638-40 (7th Cir. 2007); see

21

also Stollenwerk v. Tri-West Health Care Alliance, 254 Fed. Appx. 664 (9th Cir. 2007)

22

(dismissing claim where plaintiffs alleged only risk of identity theft); Hammond v. Bank of N.Y.

23

Mellon Corp., No. 08 Civ. 6060 (RMB) (RLE), 2010 WL 2643307, at *1 (S.D.N.Y. June 25,

24

2010) (collecting cases rejecting argument that threat of identity theft is enough to defeat a

25

dispositive motion).

26

What is more, the type of vague “injury” alluded to in the complaint is not a type

27

compensable on a claim of negligence, since Plaintiffs do not allege damage to property. See

28

Jimenez v. Super. Ct., 29 Cal. 4th 473, 483 (2002) (citing Aas, 24 Cal. 4th at 636 (“In actions for
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1

negligence, a manufacturer’s liability is limited to damages for physical injur[y]; no recovery is

2

allowed economic loss alone.”).

3

The complaint thus fails to state a claim against Apple for negligence.

4

B.

5
6

Plaintiffs Fail To State A Claim Against Apple for Breach of the
Covenant of Good Faith and Fair Dealing.

In their Seventh Cause of Action, Plaintiffs refer to Apple’s Privacy Policy and App Store

7

agreement and characterize them as “promises” to “protect users’ privacy.” (Comp., ¶ 197.)

8

Plaintiffs further characterize the agreement as affording Apple discretion in the “protection of

9

users’ privacy.” (Id. ¶ 201.) Plaintiffs then claim that Apple abused that discretion by

10

“deliberately, routinely, and systematically mak[ing] Plaintiffs’ personal information available to

11

third parties.” (Id.). In other words, Plaintiffs contend that Apple breached an implied term of the

12

App Store agreement and the Privacy Policy. As shown above, though, the express terms of

13

Apple’s agreements with Plaintiffs (and with its users generally) disclaim liability for the

14

information privacy practices of the app developers with whom users do business. A party cannot

15

use the implied covenant of good faith and fair dealing to deny to another party specific contract

16

benefits for which such party bargained. See Kinderstart.com, LLC v. Google, Inc., No. C06-

17

2057 JF (RS), 2006 WL 3246596, at *3 (N.D. Cal. July 13, 2006) (finding no violation of implied

18

covenant where parties’ website agreement disclaimed referral warranties). The complaint thus

19

fails to state a claim for breach of the implied covenant of good faith and fair dealing.

20

C.

21
22

Plaintiffs Fail to State a Claim Against Apple for Violation of
the California Consumer Legal Remedies Act.

Plaintiffs purport to plead a claim against Apple under the CLRA (Cal. Civ. Code §§ 1750

23

et seq.). Plaintiffs do not link any specific conduct to the claim; they simply string together

24

fragments of statutory language describing supposed “violations” of the Act. (Comp., ¶ 180.)

25

The lack of specificity and truncation of the statutory language is understandable: were Plaintiffs

26

any more specific, it would be obvious on the face of the complaint that Plaintiffs have stated no

27

claim.

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1

Every one of Plaintiffs’ claims against Apple reduces to a complaint about software:

2

either the software sold by app developers through the App Store or iOS 4, the operating system

3

for iOS Devices. The complaint about the apps is that they channel some unspecified “consumer”

4

information to unspecified Mobile Industry Defendants. The complaint about iOS 4 is that it is

5

“designed” to allow mobile industry companies to “access” device information. But the CLRA

6

provides civil remedies for specific conduct in the sale of “goods” or “services.” Cal. Civ. Code

7

§ 1770. And, as this Court has held, software is neither a “good” nor a “service” within the

8

meaning of the CLRA. See Ferrington, 2010 U.S. Dist. LEXIS 106600 at *52-58. Plaintiffs thus

9

fail to state a CLRA claim against Apple.

10
11

D.

Plaintiffs Fail To State a Claim Against Any Defendant On The
Remaining Causes of Action.

12

Plaintiffs have asserted several causes of action against both Apple and the Mobile

13

Industry Defendants. The Mobile Industry Defendants are filing concurrently a motion to dismiss

14

the complaint that addresses those overlapping claims. To avoid burdening the Court with

15

repetitive briefs, Apple joins in the Mobile Industry Defendants arguments as to (i) Plaintiffs’

16

failure to satisfy the pleading requirements of Rule 8(a) (section V(B) of the Mobile Industry

17

Defendants’ brief (“MID Brief”); (ii) the CFAA (MID Brief, section V(C)(1)); (iii) California

18

Penal Code §502 (MID Brief, section V(C)(2)); (iv) trespass to chattel (MID Brief, section

19

V(C)(3)); and (v) the UCL (MID Brief, sections V(A)(2) (standing) and V(C)(4).). Given the

20

different roles that Apple and the Mobile Industry Defendants are alleged by Plaintiffs to play, the

21

legal analysis as to the insufficiency of the complaint differs to some degree in some instances as

22

between Apple and the other defendants. Apple notes below those differences.

23
24
25

1.

Plaintiffs fail to state a claim against Apple under the
Computer Fraud and Abuse Act.

The Mobile Industry Defendants explain in their brief the structure and intended purposed

26

of the Computer Fraud and Abuse Act (18 U.S.C. §§ 1030, “CFAA”), a description in which

27

Apple joins. Apple further joins in the Mobile Industry Defendants’ argument that the complaint

28

fails to state a claim against those defendants under the CFAA since the complaint (a) is based
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only on use of information, not access to a device, (b) fails adequately to allege unauthorized

2

access to Plaintiffs’ devices, (c) fails adequately to allege harm, and (d) fails adequately to allege

3

damage in the jurisdictional amount to each of their computers. See Specific Media, 2011 U.S.

4

Dist. LEXIS 50543 at *17 n.4 (statute’s mention of aggregation of damage to multiple computers

5

solely in the context of government action may imply that in private plaintiff actions,

6

jurisdictional minimum applies on a computer-by-computer basis). Thus, even if the CFAA were

7

to provide for joint and several liability (which its plain statutory text does not), the complaint

8

would fail to state any basis on which Apple might be held liable for the conduct of such

9

defendants.

10

As to the non-derivative CFAA claim against Apple, the complaint only alleges that

11

“Apple’s design of the iDevice allows application developers to build apps that can easily access .

12

. . an unencrypted log of the user’s movements . . .” (Comp., ¶¶ 58, 58(d)) (emphasis added).

13

Plaintiffs claim that “Apple violated the CFAA in that it caused the transmission to users’

14

iDevices, either by native installation or iOS upgrade, of code that caused users’ iDevices to

15

maintain, synchronize and retain detailed, unencrypted location history files.” (Comp., ¶ 125.) In

16

other words, Plaintiffs allege that Apple violated the CFAA in its design of the iOS operating

17

system, and the installation of that operating system on iOS Devices.

18

The installation on or upgrade of iOS on user devices cannot be said to violate the CFAA:

19

any such claim requires “unauthorized” access to a device. See LVRC Holdings LLC v. Brekka,

20

581 F.3d 1127, 1132 (9th Cir. 2009). An OEM’s installation of an operating system is hardly

21

“unauthorized.” In addition, Plaintiffs nowhere allege that Apple intended, through its iOS

22

design, to permit unauthorized access to device information. In re Apple & ATTM Antitrust

23

Litig., No. C 07-05152 JW, 2010 U.S. Dist. LEXIS 98270, at *26 (N.D. Cal. July 8, 2010)

24

(“Voluntary installation runs counter to the notion that the alleged act was a trespass and to

25

CFAA’s requirement that the alleged act was ‘without authorization’ as well as [California Penal

26

Code § 502’s] requirement that the act was ‘without permission’”) (citations omitted). Plaintiffs

27

are thus limited to complaining that Apple violated that CFAA with a negligent design of the iOS.

28

(Comp., ¶ 117.) A negligent software design, though, cannot serve as the basis for a CFAA
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claim. The CFAA specifically provides that “[n]o cause of action may be brought under this

2

subsection for the negligent design or manufacture of computer hardware, computer software, or

3

firmware.” 18 U.S.C. § 1030(g).

4
5
6
7
8
9

For the reasons stated herein and in the Mobile Industry Defendants’ brief, the complaint
fails to state a CFAA claim against Apple.
2.

Plaintiffs fail to state a claim against Apple under
California Penal Code Section 502.

Once again, the Mobile Industry Defendants explain the legal standards applicable to a
claim under California’s Comprehensive Computer Data Access and Fraud Act, Cal. Penal Code

10

§ 502 (“Section 502”), an explanation in which Apple joins. Apple further joins in the Mobile

11

Industry Defendants’ argument that the complaint fails to state a claim against those defendants

12

under Section 502 since the complaint (a) fails adequately to allege “damage or loss,” and

13

(b) fails adequately to allege that any defendant accessed or used the iOS Devices “without

14

permission.” Thus, even if Section 502 were to provide for joint and several civil liability (which

15

it does not), the complaint would fail to state any basis on which Apple might be held liable for

16

the conduct of such defendants.

17

As with the CFAA claim, Plaintiffs contend that Apple violated Section 502 by causing

18

the transmission of code to users’ iOS Devices “that caused users’ iDevices to maintain,

19

synchronize, and retain detailed, unencrypted location history files.” (Comp., ¶ 140.) As with

20

the CFAA claim, an OEM’s installation of an operating system cannot be said to be done

21

“without permission,” an element of a violation of Section 502. See Cal. Penal Code § 502(c)(1)-

22

(7); In re Apple & ATTM Antitrust Litig., 2010 U.S. Dist. LEXIS 98270 at *26 (“Voluntary

23

installation runs counter to . . . [Section 502’s] requirement that the act was ‘without

24

permission.’”). Plaintiffs do not allege, nor could they, that to install iOS on their iOS Devices,

25

Apple had to “overcome[] technical or code-based barriers.” In re Facebook Privacy Litig., No.

26

C 10-02389 JW, 2011 WL 2039995, at *7-8 (N.D. Cal. May 12, 2011) (citing Facebook, Inc. v.

27

Power Ventures, Inc., No. C 08-05780-JW, 2010 WL 3291750, at *11 (N.D. Cal. July 20, 2010).)

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For the reasons stated herein and in the Mobile Industry Defendants’ brief, the complaint

2

fails to state a Section 502 claim against Apple.

3

3.

4
5

Plaintiffs fail to state a claim against Apple for common
law trespass to chattels.

In their trespass to chattels claim, Plaintiffs make the same undifferentiated allegations as

6

to all defendants. Apple joins in the Mobile Industry Defendants’ argument that the complaint

7

fails adequately to allege unauthorized interference with Plaintiffs’ possessory interest in their

8

iOS Devices and use causing damage. See eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d

9

1058, 1069-70 (N.D. Cal. 2000). Apple also notes that when a consumer voluntarily downloads

10

software − as Plaintiffs did here − the results of running that software on a computer device is an

11

authorized, non-trespassing use of personal property. See In re Apple & ATTM Antitrust Litig.,

12

2010 U.S. Dist. LEXIS 98270 at *26 (“Voluntary installation runs counter to the notion that the

13

alleged act was a trespass . . . ”).

14
15
16

For the reasons stated herein and in the Mobile Industry Defendants’ brief, the complaint
fails to state a claim against Apple for trespass to chattels.
4.

Plaintiffs fail to state a UCL claim against Apple.

17

As explained in the Mobile Industry Defendants’ brief, Plaintiffs lack standing to assert a

18

claim under the UCL, as they do not and cannot allege the loss of money or property. See Arias

19

v. Super. Ct., 46 Cal. 4th 969, 977-78 (2009) (“[A] private plaintiff may bring a representative

20

action under this law only if that plaintiff has ‘suffered injury in fact and has lost money or

21

property as a result of such unfair competition”); see also Birdsong, 590 F.3d at 960 (“[P]laintiffs

22

must show . . . that they suffered a distinct and palpable injury as a result of the alleged unlawful

23

or unfair conduct.”). Plaintiffs’ allegations concern the “loss” of “personal” information.

24

“However, personal information does not constitute property for purposes of a UCL claim.” In re

25

Facebook Priv. Litig, No. C 10-02389, slip op. at 11 (N.D. Cal. May 12, 2011); In re Zynga

26

Privacy Litig., C-10-04680, slip op. at 4 (N.D. Cal. June 15, 2011)(same); Claridge v. RockYou,

27

Inc., No. C 09-6032 PJH, 2011 U.S. Dist. LEXIS 39145, at *15-16 (N.D. Cal., Apr. 11, 2011)

28

(personally identifiable information obtained by hacker not “money” or “property” and not
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1

“lost”); Thompson v. Home Depot, Inc. No. C 07cv1058 IEG (WMc), 2007 U.S. Dist. LEXIS

2

68918, at *7-8 (S.D. Cal. Sept. 18, 2007) (personal information provided to defendant and used

3

by defendant for marketing purposes not “money or property” under the UCL); Cf. In re Jetblue

4

Airways Corp. Privacy Litig., 379 F. Supp. 2d 299, 327 (E.D.N.Y. 2005) (“There is . . . no

5

support for the proposition that an individual passenger's personal information has or had any

6

compensable value in the economy at large.”).

7

As also explained in the Mobile Industry Defendants’ brief, Plaintiffs have not plausibly

8

alleged that Apple engaged in any unlawful business practice: Plaintiffs have failed to state a

9

claim as to each statute invoked as a cause of action in the complaint. See Pantoja v.

10

Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1190-91 (N. D. Cal. 2009) (dismissing

11

UCL claim because court “has dismissed all of Plaintiffs’ predicate violations.”). Plaintiffs’

12

attempt to invoke California Business & Professions Code section 17500 et seq. (the “False

13

Advertising Law”) as a predicate act for an “unlawful” UCL violation fares no better. Such

14

claims sound in fraud, and must be pleaded with particularity. Plaintiffs simply allege that

15

“Defendants” made “misleading statements relating to Defendants’ performance of services and

16

provision of goods” (Comp., ¶ 186), but fail to provide the particulars of even one such statement.

17

To state a UCL claim, a plaintiff must show that the economic injury was caused by the

18

unfair business practice or false advertising that is the gravamen of the claim. See In re Tobacco

19

II Cases, 46 Cal. 4th 298, 326 (2009). While the complaint describes with fanfare alleged

20

representations that may have been made to someone, it altogether fails to describe any reliance

21

by any named plaintiff on any representation whatsoever. The complaint simply does not connect

22

the terms of Apple’s Privacy Policy or purported statements to or in the media to anything that the

23

named plaintiffs themselves did. Plaintiffs thus fail adequately to allege the causation element of

24

a UCL claim. See In re Tobacco II Cases, 46 Cal. 4th at 306 (a plaintiff “proceeding on a claim

25

of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the

26

allegedly deceptive or misleading statements.”)

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1
2

VII.

THE COMPLAINT FAILS TO JOIN INDISPENSIBLE PARTIES
Another separate ground for dismissing Plaintiffs’ complaint is Plaintiffs’ failure to join

3

the app developers as necessary and indispensible parties. See Fed. R. Civ. P. 12(b)(7). Because

4

the joinder of tens of thousands of app developers is not feasible, and any judgment rendered in

5

the app developers’ collective absence would cause them and Apple great prejudice, the Court’s

6

dismissal should be without leave to amend. See Fed. R. Civ. P. 19(b).

7
8
9

A.

Joinder of the App Developers is Mandatory Under Fed. R. Civ.
P. 19(a).

The app developers constitute the veritable glue that holds the plaintiffs’ claims together,

10

and the plaintiffs admitted as much by originally naming a cherry-picked few of them as

11

defendants. While all app developers have been dropped as named defendants, the basic

12

allegations regarding them as a group have not. In the consolidated complaint, Plaintiffs portray

13

apps as the “conduit” through which user information flows from the iOS Devices to third party

14

advertisers and analytics companies. (Comp., ¶71; see also ¶¶63-64, 66-67.) They describe no

15

other point of access to iOS Devices or the user data resident on such devices except apps. (Id.)

16

In this respect, the contributing liability of app developers is implicit. (Id.)

17

Since Plaintiffs contend apps are the only way the Mobile Industry Defendants can access

18

iOS Devices, app developers have a legally protected interest in virtually all of Plaintiffs’ claims.

19

Specifically, Plaintiffs’ negligence claim (id. ¶115) (referring to “privacy-violating apps”), CFAA

20

claim (id. ¶122) (averring third parties accessed user data without authorization or exceeding

21

authorization), Section 502 claim (id. ¶¶ 139-148) (alleging third parties “knowingly and without

22

permission” accessed user iOS Devices), trespass to chattel claim (id. ¶163) (contending

23

defendants “accessed” and “caused the installation of code” on user iOS Devices), and derivative

24

UCL claim ((id. ¶¶ 183-193) (incorporating the foregoing alleged acts).

25

Further, because Plaintiffs seek an injunction against all defendants – including the

26

Mobile Industry Defendants, whose only access to iOS Devices is through apps – prohibiting

27

them from collecting or transmitting user data without consent, the Court cannot accord complete

28

relief among the existing parties without joining the app developers. (Id. Demand for Relief
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[“DFR”] ¶¶ C(i), C(v) and (F). It is axiomatic that the flow of user data from iOS Devices to third

2

party analytics and advertising companies cannot reasonably be addressed by any injunction that

3

excludes the one and only “conduit” through which that data flows. As a practical matter,

4

moreover, the requested injunction could affect the economic viability of specific apps. (Comp.,

5

¶64 (alleging “[s]ome [Mobile Industry Defendants] pay app developers to include code that

6

causes banner ads to be displayed when users run the apps.”)

7

Finally, Plaintiffs concede in their complaint that Apple’s policies permit app developers

8

to collect user data that is necessary to their app’s functionality. (Comp. ¶ 48.) Accordingly, if

9

Apple is restrained as requested by the plaintiffs, the contractual right of app developers to obtain

10

data necessary for their app’s functionality will be impaired. One whose contract rights could be

11

impaired in the resolution of the case is necessary. See Clinton v. Babbitt, 180 F.3d 1081, 1088

12

(9th Cir. 1999) (holding an attack on the terms of a negotiated agreement cannot be adjudicated

13

without jurisdiction over the parties to that agreement.)

14
15
16
17

The app developers are necessary and indispensible parties. See Fed. R. Civ. P. 19(a).
Their joinder therefore is mandatory under Rule 19(a). See Fed. R. Civ. P. 19(a)(1)(A) and (B)(i).
B.

The Required Joinder of the App Developers is Not Feasible and
Dismissal is Warranted under Fed. R. Civ. P. 19(b).

18

Joinder is not feasible, however, given the more than 85,000 app developers who have

19

authored the apps at issue. In any action involving multiple apps, the app developer (and very

20

likely Apple and the Mobile Industry Defendants) would have the right to defend based on the

21

actual data practices of the app (e.g., no information collected or transferred), any in-app user

22

prompts (e.g., “Velour Stylist wants to use your location information. Allow/Don't Allow.”), the

23

app-specific end user license agreement (e.g., “we can collect location information”), as well as

24

on actual expectations of app users as to device data use. See Kline v. Coldwell, Banker & Co.,

25

508 F.2d 226, 236 & n.8 (9th Cir. 1974) (stating that Rule 23 does not “foreclose the right of each

26

defendant to assert his defenses before a jury if one is requested”); see also Walmart Stores, Inc.

27

v. Dukes, No. 10-277, slip op. at 27 (U.S. June 20, 2011) (holding “a class cannot be certified on

28

the premise that Wal-Mart will not be entitled to litigate its statutory defenses to individual
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1

claims.”) Issues of liability would be differentiated at the app level, as well as at the class

2

member level. The trial of an action requiring proof of the actual data practices and in-app

3

prompts of 425,000 apps and consideration of those apps’ end user license agreements would

4

without doubt be unmanageable. Kline, 508 F.2d at 236 (holding that the need for individualized

5

treatment of 2,000 defendants rendered the action unmanageable). It is thus infeasible to join the

6

parties necessary to resolution of the claims embraced by the complaint.

7

In “equity and good conscience,” this action cannot proceed against the existing

8

defendants. See Fed. R. Civ. P. 19(b). The factors to be considered in such a determination are

9

the extent to which a judgment rendered in the person’s absence would be prejudicial, the

10

efficacy of protective provisions in the judgment to lessen or avoid prejudice, whether a judgment

11

rendered in the person’s absence will be adequate, and whether the plaintiff will have an adequate

12

remedy if the action is dismissed for nonjoinder. See Id., see also, generally, Am. Greyhound

13

Racing, Inc. v. Hull, 305 F.3d 1015 (9th Cir. 2002). The analysis here is straightforward. The

14

first relevant factor overlaps to a large extent with the determination that the app developers are

15

necessary parties – they have an interest in the resolution of the case that could be impaired by a

16

judgment rendered without their participation. The fourth factor is, in these circumstances,

17

dispositive. There is nothing that compels Plaintiffs to bring a putative class action that purports

18

to involve every app available on the App Store. If any plaintiff has actually suffered an injury-

19

in-fact, they can file suit against those to whom their injury is fairly traceable. Joinder of one

20

implicated app developer would be feasible, and would be adequate to redress that plaintiff’s

21

grievance.

22

For the reasons discussed above, any judgment entered against Apple or the Mobile

23

Industry Defendants in the absence of the app developers will cause unavoidable prejudice. See

24

id. As a result, Rule 12(b)(7) compels complete dismissal of the plaintiffs’ complaint without

25

leave to amend.

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Dated: June 20, 2011

JAMES F. McCABE
BRYAN WILSON
TERESA BURLISON
MORRISON FOERSTER LLP
MICHAEL L. CHARLSON
MAREN J. CLOUSE
HOGAN LOVELLS US LLP

By:

/s/ James F. McCabe
JAMES F. McCABE
Attorneys for Defendant
APPLE INC.

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