Lalo v. Apple, Inc et al

Filing 160

REPLY (re 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) 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 byApple, Inc. (Wilson, Bryan) (Filed on 8/3/2011)

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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
REPLY BRIEF IN SUPPORT OF
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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CV-10-5878 LHK (PSG)
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TABLE OF CONTENTS

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Page
I.
II.
III.

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IV.
V.

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VI.
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INTRODUCTION .............................................................................................................. 1
THE PLAINTIFFS DO NOT HAVE STANDING ............................................................ 2
APPLE’S TERMS OF SERVICE ARE ENFORCEABLE ................................................ 3
A.
The Terms of Service Are Not Unconscionable ..................................................... 4
B.
Negligence Can Be Disclaimed .............................................................................. 6
THERE IS NO JOINT AND SEVERAL LIABILITY ....................................................... 7
PLAINTIFFS FAIL TO STATE CLAIMS FOR ADDITIONAL CLAIMSPECIFIC REASONS ........................................................................................................ 8
A.
Plaintiffs Fail to State a Claim Against Apple for Negligence ............................... 8
B.
The Plaintiffs Cannot State Covenant of Good Faith and Fair Dealing
Without Identifying The Purpose Of The Contract............................................... 10
C.
Referring to Unidentified “Apps Themselves” Does Not Fix the Consumer
Legal Remedies Act Claim ................................................................................... 11
D.
Plaintiffs Fail to State a Claim Against Apple Under the Computer Fraud
and Abuse Act ....................................................................................................... 11
E.
Plaintiffs Fail to State a Claim Against Apple Under California Penal Code
Section 502............................................................................................................ 12
F.
Plaintiffs Fail to State a Claim Against Apple for Common Law Trespass
to Chattels ............................................................................................................. 12
G.
Plaintiffs Fail to State a UCL Claim Against Apple ............................................. 13
IF THE APPS ARE NOT INDISPENSIBLE PARTIES, THEY SHOULD BE
DISMISSED WITH PREJUDICE .................................................................................... 13

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TABLE OF AUTHORITIES

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Page

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CASES

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A&M Produce Co. v. FMC Corp.,
135 Cal. App. 3d 473 (1982)..................................................................................................... 5

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Am. Motorcycle Ass’n v. Super. Ct.,
20 Cal.3d 578 (1978) ................................................................................................................ 8
Aron v. U-Haul Co.,
143 Cal. App. 4th 796 (2006) ................................................................................................... 5
Belton v. Comcast Cable Holdings, LLC,
151 Cal. App. 4th 1224 (2007) ............................................................................................. 5, 6
Berkley v. Dowds,
152 Cal. App. 4th 518 (2007) ................................................................................................... 8
Bolter v. Super. Ct.,
87 Cal. App. 4th 900 (2001) ..................................................................................................... 5
Cady v. Anthem Blue Cross Life & Health Ins. Co.,
583 F. Supp. 2d 1102 (2008)..................................................................................................... 2
Delgado v. Trax Bar & Grill,
36 Cal.4th 224 (2005) ............................................................................................................... 9
Doe v. MySpace, Inc.,
474 F.Supp.2d 843 (W.D. Tex. 2007)................................................................................. 9, 10
Ferrington v. McAfee, Inc.,
No. 10-CV-01455-LHK, 2010 WL 3910169 (N.D. Cal. Oct. 5, 2010) ................................ 3, 4

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Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.,
528 U.S. 167.............................................................................................................................. 2
Gardner v. Downtown Porsche Audi,
180 Cal. App. 3d 713 (1986)................................................................................................. 6, 7
Gavin W. v. YMCA of Metro. Los Angeles,
106 Cal. App. 4th 662 (2003) ................................................................................................... 7

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Graham v. Scissor-Tail, Inc.,
28 Cal.3d 807 (1981) ................................................................................................................ 4
Henrioulle v. Marin Ventures, Inc.,
20 Cal.3d 512 (1978) ................................................................................................................ 7
APPLE INC.’S REPLY RE MOTION TO DISMISS FIRST CONSOLIDATED CLASS ACTION COMPLAINT
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TABLE OF AUTHORITIES
(continued)

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Page
Ilkhchooyi v. Best,
37 Cal. App. 4th 395 (1995) ..................................................................................................... 4
In re Apple & ATTM Antitrust Litig.,
No. C 07-05152 JW, 2010 U.S. Dist. LEXIS 98270 (N.D. Cal. July 8, 2010)....................... 12
Invacare Corp. v. Sperry Corp.,
612 F. Supp. 448 (N.D. Ohio 1984).......................................................................................... 9
Kinderstart.com, LLC v. Google, Inc.,
No. C06-2057 JF (RS), 2006 WL 3246596 (N.D. Cal. July 13, 2006)................................... 10
Kinney v. United Healthcare Servs., Inc.,
70 Cal. App. 4th 1322 (1999) ................................................................................................... 5
McDonald v. Sun Oil Co.,
548 F.3d 774 (9th Cir. 2008)..................................................................................................... 7
Moreno v. Sanchez,
106 Cal.App.4th 1415 (2003) ................................................................................................. 10

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N. Am. Chemical Co. v. Sup. Ct.,
59 Cal.App.4th 764 (1997) ..................................................................................................... 10
O’Hare v. Mun. Res. Consultants,
107 Cal. App. 4th 267 (2003) ................................................................................................... 6
Pelletier v. Alameda Yacht Harbor,
188 Cal. App. 3d 1551 (1986)................................................................................................... 7

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Stirlen v. Supercuts, Inc.,
51 Cal. App. 4th 1519 (1997) ................................................................................................... 4
Tunkl v. Regents of the Univ. of Cal.,
60 Cal.2d 92 (1963) .................................................................................................................. 6

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STATUTES

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18 U.S.C.
§ 1030(g) ................................................................................................................................. 11

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California Penal Code
§ 502........................................................................................................................................ 12

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I.

INTRODUCTION
Plaintiffs made an ambitious strategic choice to file a Consolidated Complaint calculated

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to create maximum leverage against the defendants, and to overshadow any other plaintiff who

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might assert more focused claims. Having previously alleged that some App developers, without

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adequate consent, collect some information from devices running Apple Inc.’s (“Apple”) iOS

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operating system (“iOS Devices”) and communicate that information to third parties, Plaintiffs

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filed a Consolidated Complaint implying that all App developers collect all information from all

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App users and, without adequate consent, transfer all such information to third parties.

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Plaintiffs’ election to go “all in” had tactical implications: to avoid limiting the case to the

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practices of specific App developers, Plaintiffs named no App developer defendants. To avoid

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the problem that Apps have varying data collection practices and that the associated software

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license agreements have varying consents to data collection and retransmission, Plaintiffs failed

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to identify even a single App that they downloaded. And, to avoid limitation of the case to

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unauthorized transfers of items of information that might actually be sensitive, Plaintiffs failed to

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identify any item of information alleged to have been retrieved from their iOS Devices by an App

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developer and communicated to any defendant. Finally, the Consolidated Complaint (Doc. 71)

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(“Compl.”) does not even identify the devices that each defendant allegedly used.

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Plaintiffs’ strategy has failed. In service of ambition to seek certification of an overbroad

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class, Plaintiffs’ counsel so watered down the allegations as to the named Plaintiffs that the

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Consolidated Complaint fails to make sufficient allegations to give rise to federal court

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jurisdiction. Having treated Plaintiffs themselves as a relatively unimportant footnote to a case

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about “consumers,” counsel fails to allege, in a non-formulaic fashion, what it is that happened to

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Plaintiffs to injure them, and how that as yet unstated injury is fairly traceable to Apple.

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Plaintiffs are unable to defend the allegations found in the Consolidated Complaint.

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Instead, the Opposition seeks to rewrite it. It repeatedly misstates the Consolidated Complaint’s

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allegations. Motions to dismiss, though, are determined on what the Plaintiffs put into the

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Complaint, not on what they wish they’d put in. Most prevalently, the Opposition repeatedly

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asserts that the Consolidated Complaint alleges that Apple “caused” information to be transmitted
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to advertising and analytics companies. That is not what the Consolidated Complaint says. The

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Consolidated Complaint actually alleges only that Apple made it possible for the other defendants

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and the non-party App developers to obtain information from Plaintiffs’ devices. The

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Consolidated Complaint does not allege that Apple caused these things to happen. Since Apple

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did not cause anything thing to happen, even according to the allegations of the Consolidated

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Complaint, Apple cannot be liable.

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Many of the arguments that Plaintiffs make apply to all of the defendants equally, and

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Apple joins the Mobile Industry Defendants’ Reply In Support Of Motion To Dismiss First

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Consolidated Class Action Complaint (“MID Reply”). This brief addresses the arguments in

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Plaintiffs’ Opposition that are specific to Apple.

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II.

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THE PLAINTIFFS DO NOT HAVE STANDING
There appears to be agreement about the legal standard to be applied. Plaintiffs must

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make allegations sufficient to show that they suffered injury-in-fact, as a result of something that

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was done by Apple. Plaintiffs must show that their injury is “fairly traceable” to Apple. Friends

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of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180. Plaintiffs may not sue

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a defendant, in this case Apple, against whom they have no individual claim. Cady v. Anthem

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Blue Cross Life & Health Ins. Co., 583 F. Supp. 2d 1102, 1105 (2008).

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Plaintiffs contend that they have made the necessary allegations. (Plaintiffs’ Opposition

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to Defendant’s Motion To Dismiss (Doc. 153) (“Opp.”) 8:10-9:4.) In fact they have not alleged

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sufficient facts to establish standing over any defendant, as discussed in the MID Reply. The

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Court can dismiss the Consolidated Complaint as to Apple without even reaching the broader

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issue, however, because the Consolidated Complaint says next to nothing about Apple. Indeed,

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the allegations upon which Plaintiffs primarily rely are not even made against Apple.

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In their Opposition, Plaintiffs first point to paragraphs 180-185 of the Consolidated

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Complaint as containing the allegations they claim defeat Apple’s motion. (Opp. 8:9-12.) These

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paragraphs do nothing more than assert legal conclusions. They do not include a single factual

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statement about how any Plaintiffs were harmed. They do not state any facts that suggest they

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suffered injury-in-fact by any defendant, much less Apple.
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Plaintiffs next point to paragraphs 84 and 91 of the Consolidated Complaint as examples

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of pleading injury-in-fact. (Opp. 8:13-15.) These paragraphs assert that personal information is

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“an asset of economic value.” This is not true, as shown in the MID Reply. Even if it were true,

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however, there is no allegation that Apple misappropriated any information. The

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misappropriation is alleged to have been done by the other defendants. Those allegations cannot

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confer standing as against Apple.

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Plaintiffs point also to paragraphs 74-89 of the Consolidated Complaint as allegations of

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injury. (Opp. 8:16-9:2.) Again, all of these allegations describe the actions of the Mobile

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Industry Defendants. They do not describe any actions of Apple and do not show how Apple

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may have caused any injury-in-fact.

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Finally, Plaintiffs point to paragraphs 3, 167, and 170-77 as the allegations that save their

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Complaint. (Opp. 9:2-4.) But these are simply the conclusory allegations that Plaintiffs make in

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support of their trespass claim. Plaintiffs do not recite any specific facts to support these bare

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conclusions, let alone any facts that state they have been injured or that these supposed injuries

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have anything do with the privacy violations on which their Complaint is based. To use

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Plaintiffs’ analogy, it is insufficient for Plaintiffs to allege that the harm they suffered was “a

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trifle.” They have to identify the trifle, allege facts sufficient to make a plausible showing that

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such a trifle exists, and make allegations that Apple caused it. The Consolidated Complaint does

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none of these things.

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III.

APPLE’S TERMS OF SERVICE ARE ENFORCEABLE

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It is a problem for Plaintiffs that Apple has fully and accurately described its policies and

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practices, and that it has clearly and fairly disclaimed liability for the actions of third parties. To

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get around this, Plaintiffs contend that the Court may not properly consider the various

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agreements on a motion to dismiss. But Plaintiffs acknowledge that the Court may consider

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documents the contents of which are referenced in the Consolidated Complaint and about which

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there is no “reasonable dispute.” Ferrington v. McAfee, Inc., No. 10-CV-01455-LHK, 2010 WL

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3910169, at *3 (N.D. Cal. Oct. 5, 2010). Plaintiffs do more than merely reference the contents of

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the agreements, especially the Terms of Service, in the Complaint—in fact, they repeatedly refer
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to the Terms of Service (Compl. ¶¶ 59, 110, 197), quote lines from the document (Id. ¶ 36), and

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even premise an entire cause of action on the existence of these agreements (Id. ¶¶ 201-202).

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Plaintiffs can hardly argue now that it is improper for the Court to review documents which they

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have referenced so frequently.

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Plaintiffs attempt to prevent the Court from reading these contracts by simply, and

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vaguely, “questioning their authenticity,” but this is not enough to create a real dispute. In

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Ferrington, upon which Plaintiffs rely, the plaintiffs created a reasonable dispute as to the

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authenticity of the documents by providing conflicting evidence—for example, the Court found

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that providing a materially different screenshot from the one defendants provided was enough to

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create a reasonable question as to the screen shot’s authenticity. 2010 WL 3910169, at *3.

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Plaintiffs could have done the same—if they believe that the contract they have quoted in their

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Complaint is so different from the one defendants have provided, they easily could have provided

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a copy of it. They have not provided any such conflicting evidence because there is none. In

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fact, they have been careful to avoid identifying any evidence, and have not stated any factual

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basis for their challenge to the documents’ authenticity. Since Plaintiffs’ simple “questioning” is

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clearly insufficient in light of the complete lack of evidence to create a reasonable dispute about

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the authenticity of the agreements, the Court may properly consider them.

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A.

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Plaintiffs claim that the iTunes Terms of Service is unconscionable. The Opposition

The Terms of Service Are Not Unconscionable

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begins by implying that because the Terms of Service may be a contract of adhesion, they are

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automatically unenforceable. This is not the case. An adhesive contract is “fully enforceable

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according to its terms unless . . . it was unduly oppressive or unconscionable under applicable

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principles of equity.” Stirlen v. Supercuts, Inc., 51 Cal. App. 4th 1519, 1530 (1997); Graham v.

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Scissor-Tail, Inc., 28 Cal.3d 807, 819-20 (1981). Plaintiffs still must prove that the contract was

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both procedurally and substantively unconscionable. Plaintiffs have done neither.

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To satisfy the first prong, procedural unconscionability, Plaintiffs must allege the presence

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of both oppression—more specifically, the lack of negotiation and “an absence of meaningful

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choice”—and surprise. Ilkhchooyi v. Best, 37 Cal. App. 4th 395, 409 (1995). But Plaintiffs
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cannot claim they were oppressed because they did have meaningful choices: they could have not

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purchased apps, they could have not purchased an iPhone (or whatever iOS Device they may

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have bought—the Consolidated Complaint does not say), or they could have purchased a different

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company’s phone or device. The market for any of these devices is highly competitive, with

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many alternative choices. “The availability of alternative sources from which to obtain the

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desired service defeats any claim of oppression, because the consumer has a meaningful choice.”

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See, e.g., Belton v. Comcast Cable Holdings, LLC, 151 Cal. App. 4th 1224, 1245 (2007); Aron v.

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U-Haul Co., 143 Cal. App. 4th 796, 809 (2006).

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Plaintiffs are not similarly situated to the plaintiffs in the cases upon which they try to

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rely. There is no pressure to purchase an iOS Device equivalent to the pressure of having to sign

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an employment agreement in order to remain employed, for example. See, e.g., Bolter v. Super.

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Ct., 87 Cal. App. 4th 900, 907 (2001); Kinney v. United Healthcare Servs., Inc., 70 Cal. App. 4th

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1322, 1329 (1999). Products like the iOS Devices are not necessities, and contract terms that

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relate to nonessential services cannot be oppressive as a matter of law. Belton, 151 Cal. App. 4th

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at 1245-46.

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Plaintiffs have also failed to allege the second prong, that they were surprised by these

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terms. To the contrary, Plaintiffs open their Complaint by citing two very public statements from

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Apple’s top management that allegedly told the world that Apple “has maintained control of how

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the devices work, how consumers use them, and what happens when consumers use them.”

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(Compl. ¶ 1.) This is the opposite of surprise. Plaintiffs cannot argue out of one side of their

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mouths that they relied on Apple’s statements that it controlled everything about the devices and

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then argue out of the other side that they were surprised by Apple’s Terms of Service.

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As to the form of the written policies, the element of surprise might be satisfied where the

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provisions are written in inconspicuous typeface, on the back of a printed sheet, or are presented

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in circumstances where the plaintiff has time pressure to read and agree to the terms. See, e.g.,

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Kinney, 70 Cal. App. 4th at 908; A&M Produce Co. v. FMC Corp., 135 Cal. App. 3d 473, 490

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(1982). This is not the case here. The relevant terms are conspicuous, and some are even bolded,

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in italics, and in all caps. Plaintiffs are under no time pressure to accept these terms. Plaintiffs’
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only objection is that the documents are “lengthy.” (Opp. 18:26.) However, the complaint that

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the disclaimers are lengthy is by no means a surprise, given that only a limited amount of text can

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be displayed on an iPhone, or any other iOS Device, at any one time. Since Plaintiffs have not

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adequately pled oppression or surprise, they have not adequately pled procedural

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unconscionability.

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The Consolidated Complaint also fails to plead substantive unconscionability adequately.

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Plaintiffs would have to allege facts to show truly oppressive terms in order to satisfy this

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requirement. See O’Hare v. Mun. Res. Consultants, 107 Cal. App. 4th 267, 273 (2003). They

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have not done so. Even if the terms are one-sided, when determining substantive

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unconscionability, courts also look to whether the terms “are such an extreme departure from

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common business practice.” Belton, 151 Cal. App. 4th at 1247. Yet Plaintiffs have not alleged

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that Apple’s Terms of Service are so grossly out of line with common industry practice as to

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shock the conscience. In fact they have alleged nothing about industry practice. In light of the

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total lack of procedural unconscionability, Plaintiffs would need to allege much more in order to

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claim adequately that the terms of service are unconscionable.

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B.

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Apple’s disclaimer of liability for negligence is not contrary to public policy, and is

Negligence Can Be Disclaimed

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enforceable. Plaintiffs cite a list of characteristics of contracts that implicate public policy from

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Tunkl v. Regents of the Univ. of Cal., 60 Cal.2d 92, 102 (1963), a critical one of which is that the

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defendant “is engaged in performing a service of great importance to the public, which is often a

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matter of practical necessity for some members of the public.” Id. at 98-99 (emphasis added).

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The essence of this factor is whether or not the service is an optional item that consumers can live

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without or something that they need so much that they do not have a choice but to accept

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undesirable liability disclaimers. Gardner v. Downtown Porsche Audi, 180 Cal. App. 3d 713, 718

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(1986).

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Apps and mobile devices are completely optional products, certainly not matters of

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practical necessity to anyone. And Plaintiffs’ failure to identify any specific Apps, much less

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name their developers as defendants, again defeats their argument that Apps somehow are
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necessities. Without identifying the Apps that Plaintiffs allegedly used, or even hinting at what

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services those Apps provided, Plaintiffs are not in any position to argue that they are either of

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great importance to the public or matters of practical necessity. Nor do Plaintiffs attempt to

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provide any facts showing that any specific Apps ever were necessary to any of them personally.

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A footnote in the Opposition attempts to avoid this problem by citing Paragraph 37 of the

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Consolidated Complaint, which alleges that “Apple mobile devices and Apps are now used by

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many consumers in almost all facets of their daily lives.” (Compl. ¶ 37; Opp. 21:27, fn. 20.) The

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answer to this is, so what? This motion must be decided based on what Plaintiffs allege about

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their own experience, not vague generalities about the activities of some unspecified consumers.

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There are no such allegations about these Plaintiffs. The Consolidated Complaint alleges only

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that they downloaded and used Apps. (Compl. ¶¶ 8-13.) The Consolidated Complaint says

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nothing about the devices Plaintiffs used, the Apps they downloaded, or what Plaintiffs did with

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those Apps, much less facts showing that the Apps somehow were crucial and necessary for their

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lives. The examples from the cases upon which Plaintiffs rely—automobile repair (Gardner, 180

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Cal. App. 3d at 719), child care (Gavin W. v. YMCA of Metro. Los Angeles, 106 Cal. App. 4th

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662, 675 (2003)), residential leasing (Henrioulle v. Marin Ventures, Inc., 20 Cal.3d 512, 519

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(1978)), even yacht harbors (Pelletier v. Alameda Yacht Harbor, 188 Cal. App. 3d 1551, 1555

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(1986))—have nothing to do with anything set forth in the Complaint, even if it could be argued

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that these are examples of required services for some portion of the population.

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IV.

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THERE IS NO JOINT AND SEVERAL LIABILITY
Since the various agreements bar all of Plaintiffs’ claims against Apple, Plaintiffs attempt

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to sidestep the problem by alleging that Apple is jointly and severally liable for all of the claims

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against the Mobile Industry Defendants. However, Apple cannot be held liable for the acts of

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third parties under this theory for a variety of reasons. First, none of the statutory causes of action

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provide a right of action for joint and several liability nor even mention it. Had Congress or the

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California Legislature intended to permit joint and several liability for these statutes, they would

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have included it in the text of these statutes. See McDonald v. Sun Oil Co., 548 F.3d 774, 780

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(9th Cir. 2008) (“The preeminent canon of statutory interpretation requires us to presume that

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[the] legislature says in a statute what it means and means what it says there.”).

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Additionally, Apple cannot be held liable for any of the claims because Plaintiffs have not

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alleged that Apple caused them any harm. Joint and several liability requires that each defendant

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be a proximate cause of the Plaintiffs’ injuries, such that it would be improper to apportion

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liability amongst them. See Am. Motorcycle Ass’n v. Super. Ct., 20 Cal.3d 578, 587 (1978).

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Plaintiffs’ only allegation about Apple is that Apple improperly designed iOS. (Compl. ¶¶ 58, 61,

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67.) Plaintiffs never specify the causal connection between Apple’s actions and the harm they

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purportedly suffered. Apple cannot share liability when Plaintiffs have not alleged that Apple

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caused any of the harm.

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V.

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PLAINTIFFS FAIL TO STATE CLAIMS FOR ADDITIONAL CLAIM-SPECIFIC
REASONS

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A.

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Plaintiffs’ response to the motion to dismiss their negligence claim is another example of

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Plaintiffs Fail to State a Claim Against Apple for Negligence

Plaintiffs arguing points that are not in the Complaint.
To state a claim for negligence, Plaintiffs must plead specific acts or omissions Apple

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committed that constitute a proximate cause of the injury. Berkley v. Dowds, 152 Cal. App. 4th

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518, 527-28 (2007). Plaintiffs did not allege that Apple caused anything, only that Apple’s

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alleged negligent design of iOS somehow allowed the other defendants to “acquire personal

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information without consumers’ knowledge or permission . . .” (Compl. ¶ 115.) This is not

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enough. Nothing in the Complaint ever articulates a nexus between the design of Apple’s

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platform (or the information it supposedly caches) and the alleged misappropriation of or

23

devaluation of personal data. Plaintiffs have therefore failed to plead the causation element of a

24

standard negligence claim, and their claim must be dismissed.

25

Plaintiffs also have failed to allege facts sufficient to support the essential element of duty.

26

Indeed, the Complaint never even identifies the applicable standard of care. Plaintiffs cannot now

27

try and remedy this omission by dedicating five pages of largely unsupported argument to

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discussing the standard of care they want to apply. If it is not in the Complaint, it cannot defeat a

2

motion to dismiss.

3

In any event, Apple’s policies and practices as alleged in the Complaint do satisfy the

4

ordinary standard of care to which Apple, like other software developers, is held. See e.g.,

5

Invacare Corp. v. Sperry Corp., 612 F. Supp. 448, 451 (N.D. Ohio 1984). The Complaint

6

provides that Apple reviews Apps that are available in the App Store (¶ 38), and submits Apps

7

through a “rigorous approval process” (¶ 41). As discussed in Apple’s moving papers, Apple’s

8

Terms of Service also specifically advise iOS Device users that third party services, such as Apps,

9

may collect information, and encourage users to familiarize themselves with the third party’s

10

privacy policy. (Doc.142, §5.) Based on Plaintiffs own pleadings, therefore, Apple satisfies the

11

applicable standard of care.

12

Plaintiffs’ efforts to expand Apple’s zone of responsibility beyond the ordinary standard

13

of care is without merit. The universal rule, as stated in the Delgado case relied upon by

14

Plaintiffs, is that “there is no duty to act to protect others from the conduct of third parties.”

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Delgado v. Trax Bar & Grill, 36 Cal.4th 224 at 235 (2005). Plaintiffs’ attempt to shoehorn into

16

an exception to this rule by claiming Apple has a “special relationship” with its customers is a

17

lark. (Opp. 47:3-48:1). There is no basis for extending standard premises liability law into online

18

activity and, tellingly, Plaintiffs do not cite a single case for support. (Id.). Further, at least one

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district court has held exactly the opposite. See Doe v. MySpace, Inc., 474 F.Supp.2d 843, 851

20

(W.D. Tex. 2007). In Doe, the mother of a minor who was sexually assaulted by someone she

21

met on the social networking website MySpace sued MySpace for, among other things,

22

negligence. Granting MySpace’s motion to dismiss the plaintiff’s negligence claim for the lack

23

of duty, the court ruled:

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The Court declines to extend premises liability cases to the internet
context particularly where, as here, the Defendant provides its
service to users for free. Plaintiff has cited no case law indicating
that the duty of a premises owner should extend to a website as a
“virtual premises.”

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Id. (emphasis added)1 Plaintiffs’ analysis under premises liability law should be rejected.
Plaintiffs’ reliance on service provider cases is equally off base. (Opp., 44:7-17) (citing

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N. Am. Chemical Co. v. Sup. Ct., 59 Cal.App.4th 764, 774 (1997) and Moreno v. Sanchez, 106

4

Cal.App.4th 1415, 1435 (2003).) Each of these cases is factually distinct. Moreno analyzes the

5

independent tort duty of home inspectors that arises from the California Business & Professions

6

Code. See Moreno 106 Cal.App.4th at 1435. North American Chemical is not even a duty case

7

but, rather, stands for the proposition that a service provider—in that case a packaging and

8

shipping company—has a common law duty to perform service contracts with care. See N. Am.

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Chemical Co., 59 Cal.App.4th at 774. North American Chemical is not relevant.

10

Finally, Plaintiffs’ argument that Apple’s purported control over the App Store effectively

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saddles it with a “Good Samaritan” duty to act with reasonable care ignores the very disclaimers

12

Apple places in its Terms of Service. (Opp. 46: 15-47:2.) The explicit disclaimers preclude the

13

argument that any customer “reasonably relied” upon Apple’s actions “to his or her detriment.”

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(Id., 46:18-21.) And nothing in the Complaint supports the theory that Apple’s purported control

15

of the App Store “increased the risk of harm to another.” (Id.) To the contrary, on this point,

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Plaintiffs allege Apple designed the iOS platform too permissively because it supposedly enables

17

App developers to access customer data. (Compl. ¶115.)

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B.

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The Plaintiffs Cannot State Covenant of Good Faith and Fair Dealing
Without Identifying The Purpose Of The Contract

20

Despite their earlier objections that Apple cannot rely on its agreements with them,

21

Plaintiffs attempt to save their covenant claim by arguing that Apple committed “intentional acts

22

designed to thwart direct benefits of Plaintiffs’ contract with Apple.” (Opp. 50:23-24.) What

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they do not and cannot explain, however, is what benefits they were supposedly deprived of. If

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they are arguing that the contracts somehow obligated Apple to monitor and police the actions of

25

the Mobile Industry Defendants, that is exactly the opposite of what the contracts say. Indeed,

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Plaintiffs’ description of Kinderstart.com, LLC v. Google, Inc., No. C06-2057 JF (RS), 2006 WL

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1

It is undisputed that iTunes membership and access to the App Store is free.

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3246596, at *12 (N.D. Cal. July 13, 2006)—that it “stands for the proposition that a party does

2

not have to take actions which are not required by the contract in order to satisfy its implied

3

covenant of good faith and fair dealing”—makes exactly this point. (Opp. 50:12-14.) Absent an

4

allegation of what the implied contract terms are, and what it is that Apple allegedly did to breach

5

these specific terms, there can be no breach of any implied covenant.

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C.

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8
9

Referring to Unidentified “Apps Themselves” Does Not Fix the Consumer
Legal Remedies Act Claim

Plaintiffs’ only answer to the case law holding that software is not a good or a service is to
argue, without citing any authority, that “the very nature of the Apps themselves can be

10

considered ‘services’ under the CLRA.” (Opp. 41:2-3.) Additionally, Plaintiffs’ contention

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about “the Apps themselves” must be disregarded because “the Apps themselves” are not a part

12

of this lawsuit. Plaintiffs specifically decided to dismiss the App developers from the case when

13

they filed their Consolidated Complaint, and of course must now argue that they need not be

14

parties. Beyond that, the Consolidated Complaint does not even refer to or describe any specific

15

Apps. There is no basis for the Court to make any analysis of the “nature” of unidentified Apps

16

that are not named in the Consolidated Complaint, even if such an analysis were otherwise

17

proper. If “the Apps themselves” matter, Plaintiffs should have said something about them in the

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complaint.

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D.

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Plaintiffs Fail to State a Claim Against Apple Under the Computer Fraud and
Abuse Act

Apple showed in its moving papers that the only CFAA allegation against Apple is that it

22

negligently designed its iOS software, and that negligent design of computer software or

23

hardware is specifically excluded from claims under the CFAA. 18 U.S.C. § 1030(g). Plaintiffs

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do not address this in their Opposition. Instead, they describe at length their allegations against

25

the Mobile Industry Defendants, not Apple. They again argue only that Apple’s design somehow

26

allowed the Mobile Industry Defendants to violate the CFAA. This claim is barred by section

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1030(g) and must be dismissed for that reason.

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The Complaint also fails to show that there was no authorization. To explain away the

2

fact that Plaintiffs intentionally downloaded the software, Plaintiffs attempt to make an untenable

3

distinction between the relevant software and particular code within that software, but they do so

4

without providing any legal authority demonstrating that this is a valid distinction. (Opp.

5

31:18-20.) Since Plaintiffs concede that they “knowingly downloaded Apple software,” they

6

cannot argue that the transmission of iOS upgrades is without authorization. In re Apple & ATTM

7

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

8

2010).

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E.

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11

Plaintiffs Fail to State a Claim Against Apple Under California Penal Code
Section 502

As with the CFAA claim, the Opposition attempts to explain how Plaintiffs have stated a

12

claim against the Mobile Industry Defendants, but almost entirely ignores Apple. Plaintiffs argue

13

that paragraphs 63-64 and 68-70 state claims against all of the defendants, but all but one make

14

allegations against only the Mobile Industry Defendants and not against Apple. The one that

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mentions Apple, paragraph 70, alleges only that Apple somehow controlled something that

16

caused the other defendants to violate the Penal Code. Plaintiffs do not cite any authority for the

17

implied assertion that Apple is somehow responsible for the alleged actions of the other

18

defendants. These limited allegations against Apple are insufficient, and this cause of action must

19

be dismissed.

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21
22

F.

Plaintiffs Fail to State a Claim Against Apple for Common Law Trespass to
Chattels

Plaintiffs have no real response to Apple’s motion to dismiss the trespass claim. The

23

cases relied upon by Plaintiffs have no application to any of the Complaint’s allegations against

24

Apple. There is no allegation that Apple used search robots or scraping devices, or accessed

25

computer systems without authorization, or sent bulk spam e-mails. The Opposition’s assertion

26

that the Complaint is sufficient because it alleges that “information was obtained by defendants

27

without consent” (Opp. 40:1-2) does not apply to Apple. There is no allegation that Apple

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obtained any information, only that Apple somehow made it possible for the other defendants to
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obtain information. Even if Plaintiffs could find a way around the conclusive authority cited by

2

the Mobile Industry Defendants, there are no allegations that are sufficient to support a claim

3

against Apple.

4

G.

5

There is no real dispute about the law that applies to the UCL claim. The issue is whether

Plaintiffs Fail to State a UCL Claim Against Apple

6

Plaintiffs have pled sufficient facts to state a claim under any prong of the UCL. The answer, as

7

described more fully in the MID Reply, is no. But the issue is even easier to resolve with respect

8

to Apple. Plaintiffs’ only response to the motion is that they allege that the defendants obtained

9

and disclosed their personal information. (Opp. 37:10-11; 39:11-12.) This is not true as to

10

Apple, though. The Consolidated Complaint alleges that the Mobile Industry Defendants

11

obtained and used that information. (Compl. ¶¶ 61-73.) It does not allege that Apple obtained or

12

used Plaintiffs’ personal information. Since Plaintiffs do not and cannot make such an allegation

13

against Apple, the claims against Apple must be dismissed even if Plaintiffs’ theory were

14

otherwise viable.

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VI.

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17

IF THE APPS ARE NOT INDISPENSIBLE PARTIES, THEY SHOULD BE
DISMISSED WITH PREJUDICE
It appears that Plaintiffs are trying to have it both ways with the Apps. On the one hand,

18

the App developers that were originally named in the individual actions are not named in the

19

Consolidated Complaint, but they were not formally dismissed, and Plaintiffs have reserved the

20

right to bring them back into the case. On the other hand, Plaintiffs insist (despite initially

21

naming several as defendants) that the App developers need not be part of the case. Plaintiffs

22

should either dismiss the App developers from the case with prejudice, or admit that they are in

23

fact necessary parties.

24

Plaintiffs argue that the App developers have no legally protected interest because any

25

such interest “could only arise from contracts between them and Apple.” (Opp. 12:4-7.)

26

Elsewhere in the Opposition, though, Plaintiffs argue that Apple controls the entire App system

27

and even is responsible for the App developers’ wrongdoing. Thus by controlling Apple,

28

Plaintiffs seek to control the App developers, and specifically to control the App developers’
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relationships with their customers. Of course the App developers have a protected interest;

2

Plaintiffs are just trying to affect those interests by suing Apple because it is a single, and

3

undoubtedly deeper, pocket.

4

Plaintiffs also argue that complete relief can be awarded without the App developers. A

5

brief review of the relief Plaintiffs are seeking shows that this is not the case. Among other things,

6

Plaintiffs are seeking an injunction preventing Apple from collecting and transferring users’

7

location information and requiring all defendants to provide users with the ability to deny consent

8

for further data collection. (Compl., Demand for Relief ¶ C.) Relief of that scope cannot be

9

awarded without participation of the App developers if it is to be enforceable.

10

If Plaintiffs truly believe that the App developers are not required to be part of this case,

11

they should dismiss the App developers from the case with prejudice. That would not prejudice

12

them, according to their arguments in the Opposition, and would prevent gamesmanship by

13

making sure Plaintiffs do not try to add them back in later.

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Dated: August 3, 2011

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

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By: /s/ Bryan Wilson
BRYAN WILSON
Attorneys for Defendant
APPLE INC.

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