Davidson et al v. Apple, Inc.

Filing 103

Order by Hon. Lucy H. Koh granting in part and denying in part 87 Motion to Dismiss the Selected Claims in Plaintiffs' Third Amended Class Action Complaint.(lhklc3, COURT STAFF) (Filed on 7/25/2017)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

NORTHERN DISTRICT OF CALIFORNIA

10
SAN JOSE DIVISION

United States District Court
Northern District of California

11
12

THOMAS DAVIDSON, et al.,
Plaintiffs,

ORDER GRANTING IN PART AND
DENYING IN PART MOTION TO
DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED
CLASS ACTION COMPLAINT

Defendant.

13

Re: Dkt. No. 87

v.

14
15

Case No. 16-CV-4942-LHK

APPLE, INC.,

16
17

Plaintiffs bring this putative class action against Defendant Apple, Inc. (“Apple” or

18
19

“Defendant”), and allege violations of various state consumer fraud statutes, common law fraud,

20

and breach of express and implied warranty. See ECF No. 86 (Third Amended Class Action

21

Complaint, or “TACC”). Before the Court is Defendant’s motion to dismiss the TACC. ECF No.

22

87 (“Mot.”). Having considered the submissions of the parties, the relevant law, and the record in

23

this case, the Court hereby GRANTS in part and DENIES in part Defendant’s motion to dismiss.

24

I.

BACKGROUND

25

A.

Factual Background

26
27
28

Defendant is the designer, manufacturer, marketer, and seller of the iPhone smartphone.
1
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

TACC ¶ 25. The iPhone utilizes a touchscreen for users to interact with the device, and use of the

2

touchscreen is required to send text messages, capture video, browse the internet, and access

3

applications, among other functions. Id. ¶¶ 26, 28. Defendant released the iPhone 6 and iPhone 6

4

Plus on September 19, 2014. Id. ¶ 25. The iPhone 6 and 6 Plus both have a larger touchscreen

5

than Defendant’s prior iPhone models. Id. ¶ 30.

6

According to Plaintiffs, the iPhone 6 and 6 Plus “suffer from a material manufacturing

7

defect that causes the touchscreen to become unresponsive to users’ touch inputs” (hereinafter, the

8

“touchscreen defect”). Id. ¶ 43. Plaintiffs allege that the touchscreen defect is caused by a defect

9

in the iPhone’s external casing. Id. ¶ 45. Specifically, “[t]he materials used in the iPhone’s
external casing are insufficient and inadequate to protect their internal parts in light of reasonable

11
United States District Court
Northern District of California

10

and foreseeable use by consumers.” Id. Because of this, the internal components of the iPhones

12

are exposed to “increased external stress and physical harm” when a user uses the iPhone. Id. ¶

13

50. This increased external stress and physical harm causes the solder balls within the iPhone,

14

which adhere the iPhone’s touchscreen controller chips (“touch IC chips”) to the iPhone’s logic

15

board, to “crack and start to lose contact with the logic board,” which interrupts the electrical

16

contact between the touch IC chips and the logic board. Id. ¶ 52–53. As a result, “the iPhones are

17

incapable of recognizing when a user is touching the screen.” Id.

18

Plaintiffs allege that the “weakness in the external casing of the iPhones” that causes the

19

touchscreen defect also led to a different iPhone problem in which “numerous users were reporting

20

that their iPhones were bending in the days immediately following the release of the iPhones.” Id.

21

¶ 54. Plaintiffs refer to this “widely publicized” defect as “BendGate.” Id. ¶ 54. Plaintiffs allege

22

that the “iPhones do not need to be visibly bent for the touchscreen defect to occur because the

23

decreased strength and durability in the external casing causes the soldering on the touch IC chips

24

to fail even if the casing does not permanently bend or deform.” Id. ¶ 55.

25
26
27
28

Plaintiffs state that previous versions of the iPhones “implemented other logic board
designs that would mitigate, but not prevent, the Touchscreen Defect from occurring.” Id. ¶ 59.
2
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

Specifically, previous iPhone 5 designs incorporated either a “metal shield” or an “underfill” that

2

provided protection to the logic board. Id. ¶ 60–61. By contrast, the iPhone 6 and 6 Plus “do not

3

incorporate underfill or a shield over the logic board.” Id. ¶ 62.

4

Plaintiffs allege that Apple knew about the touchscreen defect at the time that Apple

5

released the iPhone on September 19, 2014. According to Plaintiff, a consumer posted on Apple’s

6

website about “iPhone 6 touchscreen problems” on September 18, 2014,” which is the day before

7

the iPhone 6 and 6 Plus were released to the public. Id. ¶ 54. Similarly, on November 22, 2014, a

8

user posted a thread on Apple’s website that their iPhone was not registering their touches. Id. ¶

9

66. Plaintiff alleges that other consumers responded to these threads and indicated that they
experienced similar issues. Id. ¶¶ 66–67. Plaintiffs allege that “[t]here are hundreds, if not more,

11
United States District Court
Northern District of California

10

complaints regarding the Touchscreen Defect on Apple’s website.” Id. ¶ 68. Plaintiffs also allege

12

that “[t]here are also numerous complaints on third-party websites detailing consumers’

13

experience with the Touchscreen Defect and Apple’s failure to remedy the Touchscreen Defect.”

14

Id. ¶ 69.

15

Moreover, Plaintiffs allege that “Apple conducts extensive pre-release durability testing,”

16

including “five methods of testing the iPhones” prior to release. Id. ¶ 71. Specifically, “Apple

17

uses a [1] ‘three-point bending test’ to test the iPhone’s ability to handle reasonable force;” [2] “a

18

‘pressure-point cycling test’ that expands substantial force on the iPhones’ display and casing;” [3]

19

“‘torsion testing,’ whereby an Apple engineer takes an iPhone and sits down thousands of times;”

20

and [5] “real-life user studies.” Id. ¶¶ 72–76. Plaintiffs allege that, “[t]hrough this extensive pre-

21

release testing that specifically evaluated the iPhones’ durability, Apple knew or should have

22

known of the Touchscreen Defect.” Id. ¶ 77. Plaintiffs also allege that Apple’s “decision to

23

forego protective casings and underfills on the iPhones would have immediately alerted [Apple] to

24

the failure of the internal components of the iPhones, including the touch IC chips.” Id. ¶ 77.

25

On September 25, 2014, shortly after the release of the iPhone 6 and 6 Plus, Apple issued a

26

statement regarding the durability and performance of the iPhone 6 Plus. Id. ¶ 79. This statement

27
28

3
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

was in response to “BendGate.” Id. ¶ 79. Specifically, Apple stated:

2

Our iPhones are designed, engineered, and manufactured to
be both beautiful and sturdy. iPhone 6 and iPhone 6 Plus feature a
precision engineered unibody enclosure constructed from machining
a custom grade of 6000 series anodized aluminum, which is
tempered for extra strength. They also feature stainless steel and
titanium inserts to reinforce high stress locations and use the
strongest glass in the smartphone industry. We chose these highquality materials and construction very carefully for their strength
and durability. We also perform rigorous tests throughout the entire
development cycle including 3-point bending, pressure point
cycling, sit, torsion, and user studies. iPhone 6 and 6 Plus meet or
exceed all of our high quality standards to endure everyday, real life
use.
With normal use a bend in iPhone is extremely rare and
through our first six days of sale, a total of nine customers have
contacted Apple with a bent iPhone 6 Plus. As with any Apple
product, if you have questions please contact Apple.

3
4
5
6
7
8
9
10

United States District Court
Northern District of California

11

Id. ¶ 79.
Plaintiffs allege that the above statement is false because the iPhones are not “sturdy” or

12
13

durable. According to Plaintiffs, Apple could have alerted consumers about the touchscreen

14

defect, but Apple failed to do so. Id. ¶¶ 98–105.

15

On November 18, 2016, Apple announced a customer service program related to the

16

touchscreen defect called the “Multi-Touch Repair Program.” Id. ¶ 119. Prior to the Multi-Touch

17

Repair Program, Apple charged approximately $349 for a refurbished iPhone when a consumer

18

complained of the touchscreen defect outside of Apple’s warranty. Id. Through Apple’s Multi-

19

Touch Repair Program, Apple has offered to repair consumers’ devices for $149 if the consumers’

20

iPhone is otherwise working, and the screen is not broken. Id. Through the program, Apple also

21

offers to reimburse consumers for amounts previously paid over $149. Id. ¶ 120. According to

22

Plaintiffs, Apple’s repair pursuant to the program is to “simply swap[] [the iPhone] out for

23

refurbished phones,” and the refurbished phones experience the same touchscreen defect. Id. ¶

24

122.

25

B.

26
27
28

Procedural History
On August 27, 2016, Plaintiffs Thomas Davison, Jun Bai, and Todd Cleary filed a putative
4

Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

class action complaint against Defendant that alleged causes of action under (1) California’s

2

Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750; (2) Unfair Competition Law

3

(“UCL”), Cal Bus. & Prof. Code § 17200; (3) False Advertisement Law (“FAL”), Cal. Bus. &

4

Prof. Code § 17500; (4) common law fraud; (5) negligent misrepresentation; (6) unjust

5

enrichment; (7) breach of implied warranty; (8) violation of the Magnusson-Moss Warranty Act

6

(“Magnusson-Moss Act”), 15 U.S.C. § 2301; and (9) violation of the Song-Beverly Consumer

7

Warranty Act (“Song-Beverly Act”), Cal. Civ. Code § 17290. See ECF No. 1.

8

On October 7, 2016, Plaintiffs filed a First Amended Class Action Complaint that added
several named Plaintiffs and added causes of action under the consumer fraud statutes of Illinois,

10

New Jersey, Florida, Connecticut, Texas, Colorado, Michigan, New York, and Washington. See

11
United States District Court
Northern District of California

9

ECF No. 20. On December 2, 2016, Plaintiffs filed a Second Amended Class Action Complaint

12

(“SACC”), which added a Utah Plaintiff and a cause of action under Utah’s consumer fraud

13

statute. Plaintiffs sought to represent a Nationwide Class of “All persons or entities in the United

14

States that purchased an Apple iPhone 6 or 6 Plus.” Alternatively, Plaintiffs sought to represent

15

state sub-classes. Id.

16

Given the breadth of the Plaintiffs’ action, the parties agreed at the November 30, 2016

17

initial case management conference to each select 5 causes of action—for a total of 10 causes of

18

action—to litigate for purposes of an initial round of motions to dismiss. See ECF No. 44. On

19

December 5, 2016, the parties selected (1) New Jersey Consumer Fraud Act (“NJCFA”), N.J. Stat.

20

Ann. § 56:8-1; (2) Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), Fla. Stat. §

21

501.201; (3) Washington Consumer Protection Act (“WCPA”), Wash. Rev. Code § 19.86.010; (4)

22

Illinois Consumer Fraud and Deceptive Trade Practices Act (“ICFDTPA”), Ill. Comp. Stat ¶ 505;

23

(5) Texas Deceptive Trade Practices Act (“TDTPA”), Tex. Bus. & Com. Code ¶ 17.41; (6)

24

Colorado Consumer Protection Act (“CCPA”), Colo. Rev. Stat. § 6-1-105; (7) common law fraud;

25

(8) breach of express warranty; (9) breach of implied warranty; (10) Magnusson-Moss Act. See

26

ECF No. 44, at 1–2. The parties did not select any California statutory claims. See id.

27
28

5
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

On January 6, 2017, Defendant filed a motion to dismiss the SACC. See ECF No. 54. On

1
2

February 3, 2017, Plaintiffs filed an opposition. ECF No. 58. On February 17, 2017, Defendant

3

filed a Reply. ECF No. 64.
On March 14, 2017, the Court dismissed all 10 of the selected claims with leave to amend.

4

See ECF No. 84; Davidson v. Apple, Inc., 2017 WL 976048 (N.D. Cal. Mar. 14, 2017). As an

6

initial matter, the Court noted that the Court would defer the choice of law inquiry until a later

7

state of the proceedings, when the choice of law issue had been properly briefed by the parties and

8

when the facts of the case were more fully developed. Id. Nonetheless, the Court noted that the

9

parties had selected common law claims to litigate for purposes of the motion to dismiss, but the

10

parties failed to specify which states’ common law applied to the selected common law claims,

11
United States District Court
Northern District of California

5

and the parties’ motion to dismiss briefing failed to set forth the elements of the common law

12

causes of action under the different states at issue. Id. at *4. Indeed, the parties largely relied on

13

California common law—even though the parties did not select any California statutes to

14

litigate—and the parties failed to address salient differences, if any, under the common law of the

15

different states at issue. Id. Accordingly, the Court stated that, for purposes of resolving

16

Defendant’s motion to dismiss the selected claims in the SACC, the Court would respond to the

17

arguments raised by the parties, but the Court would not “apply the common law of other states

18

without briefing.” Id. The Court ordered Plaintiffs to select one state’s common law for purposes

19

of litigating Plaintiffs’ breach of express and implied warranty claims, and ordered Defendant to

20

select one state’s common law for purposes of litigating Plaintiffs’ selected common law fraud

21

claim. Id. 1
The Court then turned to resolving Defendant’s motion to dismiss the SACC. First, the

22
23

Court held that Plaintiffs had adequately alleged Article III standing to bring claims for fraud. Id.

24
25
26
27
28

1

Again, the Court recognizes that a choice of law analysis is required to apply a state’s common
law on a classwide basis, but the Court defers this inquiry. See In re Sony Grand Wega KDFEA10/A20 Series Repair Projection HDTV Television Litig., 758 F. Supp. 2d 1077, 1097 (S.D.
Cal. Nov. 30, 2010) (“In a putative class action, the Court will not conduct a detailed choice-oflaw analysis during the pleading stage”).
6
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

at *5. However, the Court held that Plaintiffs had not adequately alleged Article III standing to

2

seek an injunction because Plaintiffs failed to allege any intent to purchase an iPhone again. Id. at

3

*6–7. Moreover, although Plaintiffs raised the existence of Apple’s Multi-Touch Repair Program

4

for the first time in their opposition, Plaintiffs did not allege in their SACC any intent to

5

participate in Apple’s Multi-Touch Repair program, and thus Plaintiffs failed to allege that

6

participation in Apple’s program conferred Article III standing on Plaintiffs to seek an injunction.

7

Id. at *7. The Court thus granted Apple’s motion to dismiss to the extent that Plaintiffs sought

8

injunctive relief.
The Court next addressed Plaintiffs’ claims for fraud under the (1) NJCFA; (2) FDUTPA;

10

(3) WCPA; (4) ICFDTPA; (5) TDTPA; (6) CCPA; and (7) common law. For all of these claims,

11
United States District Court
Northern District of California

9

Plaintiffs alleged both affirmative misrepresentation theories and fraudulent concealment theories.

12

The Court held that, for all of Plaintiffs’ claims for fraud, Plaintiffs had failed to meet Rule 9(b)’s

13

heightened pleading requirements. First, with regards to Plaintiffs’ claims premised on an

14

affirmative misrepresentation theory, the Court noted that Plaintiffs’ SACC referred to the content

15

of only Defendant’s September 25, 2014 statement regarding “BendGate.” However, Plaintiffs

16

failed to allege that any Plaintiffs were exposed to Defendant’s September 25, 2014 statement.

17

Thus, the Court held that Plaintiffs had failed to plead with particularity any fraud claim premised

18

on affirmative misrepresentations because Plaintiffs did not allege any affirmative statement to

19

which Plaintiffs were exposed or reviewed. Id.

20

Second, with regards to Plaintiffs’ claims premised on a fraudulent omission theory, the

21

Court held that Plaintiffs had failed to plead with particularity any fraud claim premised on

22

fraudulent omissions because Plaintiffs had failed to plead “that they reviewed or were exposed to

23

any information, advertisements, labeling, or packaging by Defendant,” and thus Plaintiffs had

24

failed to plead that they encountered or were exposed to any material through which Defendant

25

could have made a fraudulent omission. Id. Accordingly, the Court granted Defendant’s motion

26

to dismiss Plaintiffs’ claims for fraud under the NJCFA, FDUTPA, WCPA, ICFDTPA, TDTPA,

27
28

7
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

CCPA, and common law. Id. at *10.

2

Finally, the Court turned to Plaintiffs’ warranty claims. The Court applied California law

3

to Plaintiffs’ warranty claims because the parties briefed only California law. Id. The Court held

4

that, with regards to Plaintiffs’ breach of express warranty claim, Plaintiffs had failed to state a

5

claim because Plaintiffs alleged only a defect in the iPhone’s design, and Apple’s express

6

warranty did not cover defects in design. Id. Moreover, the Court held that, for all but two

7

Plaintiffs, Plaintiffs had failed to allege that the touchscreen defect manifested within Apple’s one-

8

year warranty period. Id. at *12. The Court rejected Plaintiffs’ argument that Defendant’s one-

9

year duration provision was unconscionable. Id. For similar reasons, the Court rejected Plaintiffs’
limited warranty claim under California law because the Court held that Defendant properly

11
United States District Court
Northern District of California

10

disclaimed limited warranties and because Defendant’s limited warranty disclaimer was not

12

unconscionable. Id. The Court also dismissed Plaintiffs’ Magnusson-Moss Act claim, which was

13

dependent on Plaintiffs’ other warranty claims. Id.

14

Thus, the Court dismissed all 10 selected causes of action with leave to amend. Id.

15

On March 21, 2017, in response to this Court’s order, the parties filed an amended joint list

16

of causes of action to litigate for purposes of the second round motions to dismiss. ECF No. 85.

17

Plaintiffs elected to litigate their common law breach of warranty claims under Illinois law. Id. at

18

2. Defendant elected to litigate its common law fraud claim under Pennsylvania law. Id.

19

On April 4, 2017, Plaintiffs filed the TACC. TACC ¶¶ 8–20. Plaintiffs alleged in the

20

TACC that, prior to their purchase, Plaintiffs viewed a variety of information from Apple, such as

21

Apple’s press releases about the iPhone, Apple’s key note address about the iPhone, and television

22

commercials about the iPhone. See id. Immediately after their purchase—and within the time

23

window for returning their iPhone free of charge—Plaintiffs reviewed the iPhone box and

24

information within the box. See id. Further, either prior to their purchase or within the time

25

window in which they could have returned their iPhones free of charge, all Plaintiffs viewed

26

Apple’s September 25, 2014 “BendGate” statement. See id.

27
28

8
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

At various points after Plaintiffs’ purchase, each of the named Plaintiffs experienced the

2

touchscreen defect at issue. Id. Below is a chart summarizing the relevant details of each of the

3

named Plaintiffs:

4
Name

State

Date of Purchase

6

Todd Cleary

California

October 25, 2014

7

Thomas Davidson

Pennsylvania

December 2014

August 2016

8

Adam Benelhachemi

Illinois

June 2015

December 2015

9

Michael Pajaro

New Jersey

September 25, 2014

July 2016

10

John Borzymowski

Florida

September 19, 2014

February 2016

11
United States District Court
Northern District of California

5

Brooke Corbett

Connecticut

February 2015

April 2016

12

Taylor Brown

Texas

November 2014

January 2016

13

Justin Bauer
Heirloom Estate
Services

Colorado

March 11, 2015

July 2015

Michigan

November 28, 2014

December 2015

Kathleen Baker

New York

September 26, 2014

June 2016

Matt Muilenberg

Washington

February 28, 2015

May 2016

William Bon

Washington

January 10, 2015

August 2016

Jason Petty

Utah

October 14, 2014

March 2016

14
15
16
17
18
19
20
21
22
23

Date of Malfunction
January 2016

Apple provided each of the Plaintiffs and Class Members with an express warranty that
warranted the iPhones “against defects in materials and workmanship when used normally in
accordance with Apple’s published guidelines for a period of ONE (1) YEAR from the date of
original retail purchase by the end-user purchaser.” Id. ¶ 106; see also ECF No. 55 (Request for
Judicial Notice, or “RJN”), Ex. A (“Limited Warranty”).2 Plaintiffs allege that they were

24
25
26
27
28

2

The Court took judicial notice of the Limited Warranty for purposes of Apple’s first motion to
dismiss, and the text of Apple’s Limited Warranty is set forth in this Court’s prior Order. See
Davidson, 2017 WL 976048, at *3, 11–13.
9
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

“surprised to learn that Apple is using the terms of the express warranty to deny warranty claims

2

related to the Touchscreen Defect.” TACC ¶ 108.
On April 18, 2017, Apple moved to dismiss the TACC. See Mot. On May 16, 2017,

3
4

Plaintiffs filed an opposition. ECF No. 93 (“Opp.”). On June 6, 2017, Apple filed a reply. ECF

5

No. 97 (“Reply”).

6

II.

LEGAL STANDARD

7

A.

Rule 12(b)(6)

8

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include “a
short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint

10

that fails to meet this standard may be dismissed pursuant to Rule 12(b)(6). Rule 8(a) requires a

11
United States District Court
Northern District of California

9

plaintiff to plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl.

12

Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff

13

pleads factual content that allows the court to draw the reasonable inference that the defendant is

14

liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility

15

standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a

16

defendant has acted unlawfully.” Id. (internal quotation marks omitted). For purposes of ruling

17

on a Rule 12(b)(6) motion, the Court “accept[s] factual allegations in the complaint as true and

18

construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St.

19

Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

20

The Court, however, need not accept as true allegations contradicted by judicially

21

noticeable facts, see Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and it “may look

22

beyond the plaintiff’s complaint to matters of public record” without converting the Rule 12(b)(6)

23

motion into a motion for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir.

24

1995). Nor must the Court “assume the truth of legal conclusions merely because they are cast in

25

the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per

26

curiam) (internal quotation marks omitted). Mere “conclusory allegations of law and unwarranted

27
28

10
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

inferences are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183

2

(9th Cir. 2004).

3

B.

Rule 9(b)
Claims sounding in fraud are subject to the heightened pleading requirements of Rule 9(b)

4

of the Federal Rules of Civil Procedure, which requires that a plaintiff alleging fraud “must state

6

with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b); see Kearns v. Ford

7

Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). To satisfy the heightened standard under Rule

8

9(b), the allegations must be “specific enough to give defendants notice of the particular

9

misconduct which is alleged to constitute the fraud charged so that they can defend against the

10

charge and not just deny that they have done anything wrong.” Semegen v. Weidner, 780 F.2d

11
United States District Court
Northern District of California

5

727, 731 (9th Cir. 1985). Thus, claims sounding in fraud must allege “an account of the time,

12

place, and specific content of the false representations as well as the identities of the parties to the

13

misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (per curiam)

14

(internal quotation marks omitted); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106

15

(9th Cir. 2003) (“Averments of fraud must be accompanied by the who, what, when, where, and

16

how of the misconduct charged.” (internal quotation marks omitted)). The plaintiff must also set

17

forth “what is false or misleading about a statement, and why it is false.” Ebeid ex rel. U.S. v.

18

Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (internal quotation marks omitted).

19

C.

Leave to Amend

20

If the Court determines that the complaint should be dismissed, it must then decide

21

whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave

22

to amend “should be freely granted when justice so requires,” bearing in mind that “the underlying

23

purpose of Rule 15 . . . [is] to facilitate decision on the merits, rather than on the pleadings or

24

technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation

25

marks omitted). Nonetheless, a court “may exercise its discretion to deny leave to amend due to

26

‘undue delay, bad faith or dilatory motive on part of the movant, repeated failure to cure

27
28

11
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

deficiencies by amendments previously allowed, undue prejudice to the opposing party . . . , [and]

2

futility of amendment.’” Carvalho v. Equifax Info. Servs., LLC, 629 F. 3d 876, 892–93 (9th Cir.

3

2010) (alterations in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).

4

III.

DISCUSSION

5

Defendant again moves to dismiss all 10 of the selected causes of action. Defendant

6

asserts that (1) Plaintiffs lack Article III standing to seek injunctive relief; (2) Plaintiffs’ claims for

7

fraud fail because Plaintiffs have failed to plead fraud with particularity; and (3) Plaintiffs’ claims

8

for breach of express and implied warranty fail because Defendant did not breach the Limited

9

Warranty and because Defendant disclaimed implied warranties. The Court considers each of
these arguments in turn.

11
United States District Court
Northern District of California

10

A.

Article III Standing to Seek Injunctive Relief

12

The Court first addresses Defendant's argument that Plaintiffs lack standing to seek

13

injunctive relief. Defendant contends that Plaintiffs lack Article III standing to seek an injunction

14

because Plaintiffs have failed to allege a sufficient likelihood of future injury. Def. Mot. at 14–15.

15

Article III standing requires that “(1) the plaintiff suffered an injury in fact, i.e., one that is

16

sufficiently ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical’;

17

(2) the injury is ‘fairly traceable’ to the challenged conduct, and (3) the injury is ‘likely’ to be

18

‘redressed by a favorable decision.’” Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th

19

Cir. 2007) (quoting Lujan v. Def. of Wildlife, 504 U.S. 555, 560–61 (1992)). “The standing

20

formulation for a plaintiff seeking prospective injunctive relief is simply one implementation of”

21

the general standing requirements. Id. at 985 (internal quotation marks omitted). To establish

22

standing for prospective injunctive relief, a plaintiff must demonstrate that he or she “has suffered

23

or is threatened with a concrete and particularized legal harm, coupled with a sufficient likelihood

24

that he will again be wronged in a similar way.” Id. (internal citations and quotations omitted).

25

“As to the second inquiry, [a plaintiff] must establish a ‘real and immediate threat of repeated

26

injury.’” Id. (quoting O'Shea v. Littleton, 414 U.S. 488, 496 (1974)). “[P]ast wrongs do not in

27
28

12
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

themselves amount to [a] real and immediate threat of injury necessary to make out a case or

2

controversy.” City of Los Angeles v. Lyons, 416 U.S. 95, 111 (1983).

3

In cases involving false or misleading product advertising, “where a plaintiff has no
intention of purchasing the product in the future, a majority of district courts have held that the

5

plaintiff has no standing to seek prospective injunctive relief.” Davidson v. Kimberly-Clark Corp.,

6

76 F. Supp. 3d 964, 970 (N.D. Cal. 2014). “This Court has consistently adopted the majority

7

position that a plaintiff must allege that he or she intends to purchase the products at issue in the

8

future to establish standing for injunctive relief.” Romero v. HP, Inc., 2017 WL 386237, at *9

9

(N.D. Cal. Jan. 27, 2017) (internal quotations and alterations omitted); see also Rahman v. Mott's

10

LLP, 2014 WL 325241, at *10 (N.D. Cal. Jan. 29, 2014) (“[T]he Court agrees with defendant that

11
United States District Court
Northern District of California

4

to establish standing, plaintiff must allege that he intends to purchase the products at issue in the

12

future.”).

13

In the Court’s prior order granting Defendant’s motion to dismiss the SACC, the Court

14

held that Plaintiff had failed to allege standing to seek prospective injunctive relief because the

15

SACC “contain[ed] no allegations that any of the named Plaintiffs intend to purchase an iPhone 6

16

or 6 Plus in the future.” Davidson, 2017 WL 976048 at *7. Further, although Plaintiffs raised for

17

the first time in their opposition that Plaintiffs were eligible to participate in Apple’s “Multi-Touch

18

Repair Program,” this Court held that “the SACC remains devoid of any allegations regarding

19

Plaintiffs’ intent to participate in the program,” and thus Plaintiffs had failed to allege “‘a real and

20

immediate threat of injury.’” Id. (quoting Lyons, 416 U.S. at 111).

21

In Plaintiffs’ TACC, as with Plaintiffs’ SACC, Plaintiffs do not allege any intent to

22

purchase an iPhone in the future. See generally TACC. However, several Plaintiffs allege an

23

intent to participate in Apple’s Multi-Touch Repair Program in the future. Through Apple’s

24

Multi-Touch Repair Program, which Apple announced on November 18, 2016, Apple has offered

25

to “repair” an iPhone 6 Plus device for $149. Id. ¶ 199. Plaintiffs allege that Apple is not

26

“repairing” iPhone 6 Plus devices under this program, but is rather “swapping them out for

27
28

13
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

refurbished phones” that experience the same touchscreen defect. Id. ¶ 122. Accordingly,

2

Plaintiffs allege that the Multi-Touch Repair Program is essentially an offer from Apple to sell

3

Plaintiffs a refurbished iPhone that may experience the same defect as Plaintiffs’ original iPhone.

4

Id.

5

Apple does not contest that an alleged intent to participate in the Multi-Touch Repair

6

Program is sufficient to confer standing for prospective injunctive relief. See Mot. at 14–15.

7

Apple contends, however, that Plaintiffs have nonetheless failed to adequately allege standing

8

because Plaintiffs condition their participation in the Multi-Touch Repair Program on future

9

circumstances that may not occur, and because Plaintiffs’ request for injunctive relief is truly a
request for monetary relief. Id. Accordingly, the Court turns to examine Plaintiffs’ specific

11
United States District Court
Northern District of California

10

allegations, and whether these allegations are sufficient to allege Article III standing for injunctive

12

relief.

13

As an initial matter, Plaintiffs Davidson, Borzymowski, Muilenburg, and Petty do not

14

allege an intent to participate in the Multi-Touch Repair Program, and thus these Plaintiffs have

15

not alleged a threat of future injury sufficient to confer standing. See TACC ¶¶ 9, 18, 10.

16

Moreover, Plaintiff Corbett alleges that she already participated in the Multi-Touch Repair

17

Program, and Corbett does not allege future intent to participate in the Program. Id. ¶ 13. Thus,

18

Corbett has also not alleged a threat of future injury sufficient to confer standing. In addition,

19

Plaintiffs state in their opposition that Plaintiff Bon is currently not pursuing his claim for

20

injunctive relief at this time, and thus the Court finds that Plaintiff Bon also does not have

21

standing to pursue injunctive relief. See Opp. at 3 n.1.

22

Finally, the Court finds that Plaintiff Pajaro has not alleged standing to seek injunctive

23

relief. Pajaro alleges only that he “may participate in Apple’s ‘Multi-Touch Repair Program’ [] if

24

this lawsuit is unsuccessful for the sole purpose of receiving a functional device to resell.” Id. ¶ 11

25

(emphasis added). This allegation is not sufficient to confer standing to seek an injunction. Pajaro

26

has in effect alleged that he only intends to purchase a refurbished iPhone from Apple through the

27
28

14
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

Multi-Touch Repair Program if Pajaro loses this lawsuit. Pajaro does not allege any other intent to

2

purchase an iPhone in the future. Thus, Pajaro has alleged that, if this lawsuit is successful, Pajaro

3

does not have an intent to purchase any product from Apple in the future. However, the Court can

4

only issue an injunction preventing future deceptive advertisement if this lawsuit is successful. If

5

Pajaro intends to purchase a product from Apple in the future only if the Court does not issue an

6

injunction at the conclusion of this lawsuit, then Pajaro cannot possibly have standing to seek

7

prospective injunctive relief.

8
9

Accordingly, the Court GRANTS Defendant’s motion to dismiss Plaintiffs’ Davidson,
Borzymowski, Muilenburg, Petty, Bon, Corbett, and Pajaro’s requests for injunctive relief. The
Court dismisses these Plaintiffs’ request for injunctive relief with prejudice because the Court

11
United States District Court
Northern District of California

10

previously afforded Plaintiffs leave to amend to adequately allege standing to seek injunctive

12

relief, and Plaintiffs have failed to do so. Thus, the Court finds that granting Plaintiffs an

13

additional opportunity to amend the complaint would be futile, cause undue delay, and unduly

14

prejudice Defendants by requiring Defendants to file repeated motions to dismiss. See

15

Leadsinger, 512 F.3d at 532. The Court turns to the remaining Plaintiffs’ allegations.

16

Unlike the Plaintiffs discussed above, Plaintiffs Brown and Baker allege intent to

17

participate in the Multi-Touch Repair Program. TACC ¶¶ 14, 17. Further, Plaintiffs Cleary,

18

Benelhachemi, Bauer, and Heirloom Estate Services allege that they intend to participate in the

19

Multi-Touch Repair Program “if Apple indicates that the defect in [their] current iPhone[s] is not

20

present in the refurbished iPhone [they] will receive through the program.” Id. ¶¶ 8, 10, 15, 16.

21

According to Defendant, Plaintiffs’ Cleary, Benelhachemi, Bauer, and Heirloom Estate Services’s

22

allegations are insufficient to confer Article III standing because these Plaintiffs condition their

23

participation in the Multi-Touch Repair Program on Apple providing Plaintiffs with a non-

24

defective iPhone, which is a future event that may not occur. See Mot. at 14–16. Thus, Defendant

25

argues, Plaintiffs have failed to allege “a real and immediate threat of injury.” Lyons, 416 U.S. at

26

111. However, for the reasons discussed below, the Court finds that Plaintiffs’ allegations are

27
28

15
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1
2

sufficient to satisfy Article III.
In Lilly v. Jamba Juice Company, et al., 2015 WL 1248027, at *5 (N.D. Cal. Mar. 18,
2015), the Court concluded that the plaintiffs’ alleged “willingness to consider a future purchase”

4

of defendant’s smoothie product was sufficient to confer standing to enjoin defendant’s allegedly

5

deceptive labeling of the product. The Court reasoned that “[t]he harms Plaintiffs seek to avoid by

6

bringing this litigation are not just the harms related to purchasing or consuming a mislabeled

7

product, but also the harm of being a consumer in the marketplace who cannot rely on the

8

representations made by [defendant] on [its] product labels.” Id. Absent prospective injunctive

9

relief, the plaintiffs “could never rely with confidence on product labeling when considering

10

whether to purchase [defendant’s] product,” and thus the Court held that it was sufficient that

11
United States District Court
Northern District of California

3

plaintiffs alleged they “would consider spending [their] money to purchase [defendant’s] products

12

if [defendant’s products] were labeled correctly in the future.” Id.

13

Following Lilly, the Court in Coe v. General Mills, Inc., 2017 WL 476407, at *2 (N.D. Cal.

14

Feb. 6, 2017), found plaintiffs’ allegations sufficient to allege Article III standing for injunctive

15

relief where the plaintiffs alleged a willingness to consider purchasing Cheerios Protein in the

16

future if Cheerios Protein “matched its labeling.” The Court in Coe followed the reasoning in

17

Lilly and held that the harm alleged by plaintiffs was that, “unless the manufacturer or seller [was]

18

enjoined from making the same misrepresentation[s]” about Cheerios Protein again, Plaintiffs

19

could not rely on defendant’s representations about Cheerios Protein in considering whether to

20

buy Cheerios Protein in the future. Id. at *2 (quoting Lilly, 2015 WL 1248027, at *4).

21

Accordingly, the Court in Coe held that Plaintiffs adequately alleged Article III standing by

22

alleging willingness to consider a future purchase of Cheerios Protein because an injunction

23

preventing the defendant from future false labeling would address plaintiffs’ harm, which was

24

sufficiently imminent and certain to occur. Id.; see also Anderson v. SeaWorld Parks & Ent’mt,

25

Inc., 2016 WL 4076097, at *4 (N.D. Cal. Aug. 1, 2016) (finding plaintiffs adequately alleged

26

standing for prospective injunctive relief where plaintiffs alleged she “may consider purchasing

27
28

16
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

tickets to SeaWorld San Diego again in the future if SeaWorld’s practices were to evolve” and if

2

SeaWorld were to be honest about its practices).
Under the reasoning of Lilly and Coe, the Court finds that Plaintiffs have adequately

3
4

alleged Article III standing to enjoin Defendants’ allegedly fraudulent representations and

5

omissions about the iPhone. At present, Plaintiffs do not know “whether it makes sense to spend

6

[their] money on” a refurbished iPhone through Apple’s Multi-Touch Repair Program because,

7

absent an injunction, Plaintiffs “suspect a continuing misrepresentation” from Defendant about the

8

iPhone. Lilly, 2015 WL 1248027, at *4. An injunction preventing Defendant from future false

9

representations and omissions about the touchscreen defect would redress Plaintiffs’ ongoing
injury. See id. (“Without injunctive relief, Lilly could never rely with confidence on

11
United States District Court
Northern District of California

10

[Defendant’s] product labeling when considering whether to purchase Defendants’ product.”).

12

Accordingly, the Court finds that the Plaintiffs who have alleged an intention to participate in

13

Apple’s Multi-Touch Repair Program, or a willingness to consider future participation in the

14

Multi-Touch Repair Program, have alleged sufficient standing to seek injunctive relief. Id.
Apple further argues that Plaintiffs Brown, Baker, Cleary, Benelhachemi, Bauer, and

15
16

Heirloom Estate Services do not have standing to seek injunctive relief because these Plaintiffs

17

also allege that they “intend[] to recoup any amounts paid under the [Multi-Touch Repair

18

Program] through this lawsuit.” See, e.g., TACC ¶10; see Mot. at 15–16. According to Apple,

19

these allegations demonstrate that Plaintiffs’ claims for injunctive relief “are thinly-disguised

20

claims for monetary recovery” and thus Plaintiffs lack standing. Id. However, this allegation is

21

not fatal to Plaintiffs’ Article III standing to seek prospective relief. Plaintiffs do not allege that

22

Plaintiffs’ intent to participate in the Multi-Touch Repair Program is contingent on Plaintiffs’

23

ability to recover money paid to Apple. See, e.g., TAC ¶ 10. Accordingly, Plaintiffs’ allegations

24

do not impact the Article III analysis of whether Plaintiffs have alleged “a sufficient likelihood

25

that [they] will again be wronged in a similar way.” Lyons, 461 U.S. at 111.3 Moreover, although

26
27
28

3

Defendant’s citation, Lucas v. Breg, Inc., 212 F. Supp. 3d 950, 972 (S.D. Cal. 2016), does not
17

Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

Plaintiffs’ allegations that they “intend[] to recoup any amounts paid under the [Multi-Touch

2

Repair Program] through this lawsuit” may show that Plaintiffs have an adequate remedy at law

3

for certain forms of injunctive relief—such as an injunction that Defendant repair Plaintiffs’

4

iPhones—that issue is not briefed by the parties and is not presently before the Court. As

5

discussed above, under Lilly and Coe, the Court concludes that Plaintiffs have adequately alleged

6

Article III standing to enjoin Defendant from future false representations and omissions. Thus, the

7

Court DENIES Defendant’s motion to dismiss insofar as Defendant moves to dismiss Plaintiffs’

8

Brown, Baker, Cleary, Behelhachemi, Bauer, and Heirloom Estate Services requests for injunctive

9

relief.

10

United States District Court
Northern District of California

11

B.

Fraud Claims
The Court next turns to address Plaintiffs’ consumer fraud claims. As relevant to the

12

instant motion to dismiss, Plaintiffs bring claims under the (1) NJCFA, N.J. Stat. Ann. § 56:8-1;

13

(2) FDUTPA, Fla. Stat. § 501.201; (3) WCPA, Wash. Rev. Code § 19.86.010; (4) ICFDTPA, Ill.

14

Comp. Stat. § 505; (5) TDTPA, Tex. Bus. & Com. Code § 17.41; (6) CCPA, Colo. Rev. Stat. § 6-

15

1-105; and (7) common law fraud under Pennsylvania law.

16

As with the prior motion to dismiss, the parties largely do not address the different

17

elements of these various fraud causes of action. Rather, Defendant argues generally that all of

18

Plaintiffs’ fraud claims fail because Plaintiffs have failed to meet Rule 9(b)’s heightened pleading

19

requirements. Defendant makes arguments under specific elements of the causes of action at issue

20

with regards to only two of Plaintiffs’ claims: (1) the NJCFA and (2) common law fraud under

21

Pennsylvania law.

22
23

Accordingly, in resolving the instant motion to dismiss, the Court first discusses
Defendant’s generalized arguments about Plaintiffs’ fraud claims and whether Plaintiffs have met

24
25
26
27
28

support Defendant’s argument. The Court in Breg found that because Plaintiffs sought primarily
monetary relief, as opposed to injunctive relief, class certification was improper under Rule
23(b)(2) of the Federal Rules of Civil Procedure. “Class certification under Rule 23(b)(2) is
appropriate only where the primary relief sought is declaratory or injunctive.” Id. That issue is
not presently before the Court at this stage of the litigation.
18
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

Rule 9(b)’s heightened pleading requirements for pleading fraud. The Court then turns to address

2

Defendant’s arguments about the specific elements of the NJCFA and Pennsylvania common law.

3
4

1. Plaintiffs’ Fraud Claims in General
First, the Court addresses Defendant’s generalized arguments about Plaintiffs’ fraud claims

5

and whether Plaintiffs have satisfied Rule 9(b)’s heightened pleading requirements for pleading

6

fraud. Plaintiffs do not dispute that each of their claims for fraud are subject to Rule 9(b)’s

7

heightened pleading requirements. See Opp. at 13.

8
9

For each of Plaintiffs’ consumer fraud claims, Plaintiffs assert that Defendant engaged in
fraud by (1) “representing that the iPhones have characteristics, uses, benefits, and qualities which
they do not have”; and (2) “conceal[ing] or not disclos[ing]” information that a “reasonable

11
United States District Court
Northern District of California

10

consumer would have considered [] to be important in deciding whether to purchase Apple’s

12

iPhones or pay a lesser price.” See TACC ¶¶ 168–76 (ICFDPA); ¶¶ 185–94 (NJCFA); ¶¶ 195–17;

13

¶¶ 218–32 (TDTPA); ¶¶ 233– 40 (CCPA); ¶¶ 260–67 (WCPTA); ¶¶ 268–72 (common law fraud).

14

Defendant argues that Plaintiffs claims must be dismissed because Plaintiffs have not adequately

15

pled either their affirmative misrepresentation claims or their fraudulent omission claims. The

16

Court addresses each below.

17
18

a. Affirmative Misrepresentations
Plaintiffs allege with respect to each of their fraud claims that Defendant committed fraud

19

by making affirmative misrepresentations about the characteristics and qualities of the iPhones.

20

See, e.g., ¶ 189 (“Apple has engaged in unfair and deceptive trade practices, including

21

representing that the iPhones have characteristics, uses, benefits, and qualities which they do not

22

have.”). In stating a claim for fraud premised on false representations, “[t]o satisfy Rule 9(b),

23

Plaintiff[s] must allege the ‘who, what, where, when, and how’ and the ‘specific content of the

24

false representations.’” Coleman-Anacleto v. Samsung Elecs. Am., Inc., 2016 WL 4729302, at *14

25

(N.D. Cal. Sept. 12, 2016) (quoting Swartz, 476 F.3d at 764).

26
27
28

This Court granted Defendant’s motion to dismiss Plaintiffs’ selected affirmative
19
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

misrepresentation claims in the SACC because Plaintiffs alleged the “specific content” of only one

2

statement—the September 25, 2014 statement that Apple issued in response to “BendGate”—but

3

Plaintiffs did not allege that any Plaintiff was exposed to the September 25, 2014 statement. See

4

Davidson, 2017 WL 976048, at *7. The Court held that “[i]n the absence of any allegations that

5

Plaintiffs encountered a representation made by Defendant—let alone what those representations

6

were, when they were made, and why they were false—Plaintiffs ha[d] failed to plead with

7

particularity any affirmative misrepresentation claim.” Id. at *8. The Court did not reach the

8

question of whether the September 25, 2014 statement contained actionable misrepresentations.

9

Id.
In their TACC, Plaintiffs allege that all Plaintiffs reviewed Apple’s September 25, 2014

11
United States District Court
Northern District of California

10

statement. Plaintiffs state that they are pursuing their affirmative misrepresentation claims only

12

with regards to the September 25, 2014 statement. See Opp. at 18 (stating that Plaintiffs are

13

“pursuing [] misrepresentation claim[s] only for the September 25, 2014 BendGate press release”).

14

Defendant moves to dismiss Plaintiffs’ affirmative misrepresentation claims because, according to

15

Defendant, Defendant’s September 25, 2014 statement does not contain any actionable

16

misrepresentations. See Mot. at 19. For the reasons discussed below, the Court agrees with

17

Defendant. The Court first sets forth the text of Defendant’s September 25, 2014 statement, and

18

then turns to address whether Plaintiff has alleged with particularity that the September 25, 2014

19

statement contains actionable misrepresentations.

20
21
22
23
24
25
26
27
28

As stated above, Apple made the following statement on September 25, 2014, in response
to widespread reports that the iPhone 6 was bending, which Plaintiffs label “BendGate”:
Our iPhones are designed, engineered, and manufactured to
be both beautiful and sturdy. iPhone 6 and iPhone 6 Plus feature a
precision engineered unibody enclosure constructed from machining
a custom grade of 6000 series anodized aluminum, which is
tempered for extra strength. They also feature stainless steel and
titanium inserts to reinforce high stress locations and use the
strongest glass in the smartphone industry. We chose these highquality materials and construction very carefully for their strength
and durability. We also perform rigorous tests throughout the entire
development cycle including 3-point bending, pressure point
20
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

cycling, sit, torsion, and user studies. iPhone 6 and 6 Plus meet or
exceed all of our high quality standards to endure everyday, real life
use.
With normal use a bend in iPhone is extremely rare and
through our first six days of sale, a total of nine customers have
contacted Apple with a bent iPhone 6 Plus. As with any Apple
product, if you have questions please contact Apple.

1
2
3
4
Id. ¶ 79.
5
6
7
8
9
10

Plaintiffs allege that this statement is false because the iPhone is not “sturdy,” is not made
with “high-quality” materials, and is not “durable.” TACC ¶¶ 81–86. Further, Plaintiffs allege
that this statement is false because Apple’s “‘stainless steel and titanium inserts [used] to reinforce
high stress locations’ failed to reinforce the high stress location near the” touch IC chips because
the iPhones experience the touchscreen defect. Id. ¶ 82. Plaintiffs also contend that Apple’s
statement that it is “extremely rare” for an iPhone to bend is false because all iPhones bend, even

11
United States District Court
Northern District of California

if not visibly, and this bending places stress on the touch IC chips which causes the touchscreen
12
defect. Id. ¶ 81. However, for the reasons discussed below, the Court agrees with Defendant that
13
Plaintiffs have failed to allege that the September 25, 2014 statement contains an actionable
14
misrepresentation.
15
16

First, most of the terms identified by Plaintiffs as “false” are “mere puffery, incapable of
being labeled true or false.” Deburro v. Apple, Inc., 2013 WL 5917665, at *4 (W.D. Tex. Oct. 31,

17
2013). Under each of the selected fraud causes of action, courts have held that statements that are
18
mere puffery are not actionable as misrepresentations. See, e.g., id. (dismissing claim under
19
TDTPA because statements were mere puffery); Glass v. BMW of N.A., LLC, 2011 WL 6887721,
20

at *6 (D.N.J. 2011) (NJCFA) (same); Barbara’s Sales, Inc. v. Intel Corp., 227 Ill. 2d 45, 73 (Ill.

21
2007) (ICFDTPA) (same); Babb v. Regal Marine Indus., Inc., 2014 WL 690154 (Wash. Ct. App.
22
2014) (WCPA) (same); Koch v. Kaz USA, Inc., 2011 WL 2610198, at *5 (D. Colo. 2011) (CCPA)
23
(same).
24
25

Here, Plaintiffs allege that Defendant misrepresented that the iPhones are made with “highquality” materials, and misrepresented that the iPhones are “durable,” and “sturdy.” TACC ¶¶ 81–

26
86. Courts across the country have held that these terms or substantially similar terms are non27
28

21
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

actionable puffery. See Vitt v. Apple Comp., Inc., 469 F. App’x 605, 607 (9th Cir. 2012) (finding

2

“durable,” “rugged,” “built to withstand reasonable shock,” and “high performance” to be non-

3

actionable puffery); Saltzman v. Pella Corp., 2007 WL 844883, at *4 (N.D. Ill. Mar. 20, 2007)

4

(finding “durable” and “manufactured to high quality standards” to be puffery); Anunziato v.

5

eMachines, Inc., 402 F. Supp. 2d 1133, 1141 (C.D. Cal. Nov. 10, 2005) (finding term “high-

6

quality” to be “non-actionable puffery”); Intermountain Stroke Center, Inc. v. Intermountain

7

Health Care, Inc., 2014 WL 1320281, at *5 (D. Utah Mar. 31, 2014) (describing term “high-

8

quality” to be a “paradigmatic example[] of puffery”); Koch, 2011 WL 2610198, at *5 (finding

9

“durable” and “quality construction for long lasting performance” to be puffery). Accordingly,
Plaintiffs cannot base their fraudulent misrepresentation claims on Defendant’s statements that the

11
United States District Court
Northern District of California

10

iPhones are made with “high-quality” materials, that they are “durable,” or that they are “sturdy.”
Second, to the extent that Apple made statements of fact about the iPhone in the September

12
13

25, 2014 statement—such as the fact that the iPhones are made with “stainless steel and titanium

14

inserts” to reinforce “high stress locations”—Plaintiffs do not allege that the iPhones are not made

15

with any of these specific materials or components. See TACC ¶¶ 81–86. Rather, Plaintiffs allege

16

that Apple’s September 25, 2014 statement is false because, according to Plaintiffs, the stainless

17

steel and titanium inserts do not sufficiently reinforce the iPhone because the iPhones suffer from

18

the touchscreen defect. Id. ¶ 82.4 However, that some iPhones suffered from the touchscreen

19

defect does not demonstrate that Apple made any misrepresentation of fact in stating that the

20

iPhones were made with certain materials and components. “It would be false [for Apple] to

21

represent the [iPhone] has [titanium inserts] when it does not have [titanium inserts]. It is not false

22

to represent the [iPhone] has [titanium inserts] when it in fact has them,” even if those titanium

23

inserts may fail. See Deburro, 2013 WL 5917665, at *5. Thus, Plaintiffs have not sufficiently

24
25
26
27
28

4

Similarly, Plaintiffs allege that the iPhone’s enclosure is not actually tempered for “extra
strength” because of the touchscreen defect. TACC ¶ 86. However, the crux of Plaintiffs’
allegation is not that Apple does not, in fact, temper the enclosure for extra strength, but rather that
the enclosure is not tempered for sufficient strength given the touchscreen defect. See id.
22
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

alleged that Apple made misrepresentations in the September 25, 2014 statement about the

2

iPhone’s materials and components.

3

Finally, to the extent that Plaintiffs allege that Apple misrepresented that it is “extremely

4

rare” for an iPhone to bend, this is also not an actionable misrepresentation. According to

5

Plaintiffs, Apple’s statement that it is “extremely rare” for an iPhone to bend is a

6

misrepresentation about the touchscreen defect because Plaintiffs allege that all iPhones are made

7

with insufficient material and all iPhones bend, even if not visibly, which places stress on the

8

touch IC chips and causes the touchscreen defect. Id. ¶¶ 81–86. However, for several reasons,

9

Plaintiffs have not alleged an actionable misrepresentation based on Apple’s statement that it is

10

United States District Court
Northern District of California

11

“extremely rare” for an iPhone to bend.
As an initial matter, Apple’s statement that it was “extremely rare” for an iPhone to bend

12

was made in the context of Apple’s statement that “through [Apple’s] first six days of sale, a total

13

of nine customers have contacted Apple with a bent iPhone 6 Plus.” Id. ¶ 79. Plaintiffs do not

14

allege that Apple falsely represented that only nine customers contacted Apple in their first day of

15

sale. Id. Moreover, Apple made the statement that it was “extremely rare” for an iPhone to bend

16

in the context of the “BendGate” controversy in which consumers complained that iPhones visibly

17

bent. Id. ¶¶ 54–55. Accordingly, Apple’s September 25, 2014 statement was not addressing the

18

circumstance alleged by Plaintiffs that all iPhones bend in subtle and non-visible ways that cause

19

the touchscreen defect. Id. ¶ 55. Indeed, Apple made no representations about the touchscreen or

20

the touchIC chips in its September 25, 2014 statement. “In order to be deceived” by a

21

representation, “members of the public must have had an expectation or an assumption about the

22

matter in question.” Punian v. Gillette Co., 2016 WL 1029607, at *15 (N.D. Cal. Mar. 15, 2016)

23

(internal quotation marks omitted). Because Apple’s September 25, 2014 statement did not

24

mention the touchscreen or touchscreen components at all, no reasonable consumer reading

25

Apple’s September 25, 2014 statement would have had any expectations or assumptions about the

26

iPhone’s touchscreen. Accordingly, the Court concludes that Apple’s statement that it is

27
28

23
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

“extremely rare” for an iPhone to bend is not an actionable misrepresentation in the context of this

2

case. Deburro, 2013 WL 5917665 (dismissing claim because the representations that plaintiff

3

pointed to did not make any representations about the allegedly defective component itself, even

4

though it made generic comments about the product); see also Tatum v. Chrysler Corp., 2011 WL

5

1253847, at *4 (D.N.J. 2011) (finding general representations about a car to be non-actionable in

6

the context of a claim alleging false representations about the car’s braking system).

7

Thus, because Plaintiffs have failed to identify an actionable misrepresentation in the

8

September 25, 2014 statement—and because this statement is the only statement that forms the

9

basis of Plaintiffs’ affirmative misrepresentation claims—the Court GRANTS Defendant’s motion
to dismiss the selected fraud causes of action to the extent that Plaintiffs base those causes of

11
United States District Court
Northern District of California

10

action on Defendant’s alleged affirmative misrepresentations. The Court dismisses these claims

12

with prejudice because the statements on which Plaintiffs base this claim are, as a matter of law,

13

not actionable misrepresentations. See Punian, 2016 WL 1029607, at *17 (granting motion to

14

dismiss with prejudice where the court concluded the statements were, as a matter of law, “either

15

not likely to mislead a reasonable consumer or [] nonactionable puffery”). In addition, this Court

16

previously dismissed with leave to amend Plaintiffs’ affirmative misrepresentations claims in the

17

SACC, and Plaintiffs have again failed to sufficiently allege affirmative misrepresentation claims

18

in Plaintiffs’ TACC. Thus, the Court finds that granting Plaintiffs an additional opportunity to

19

amend the complaint would be futile, cause undue delay, and unduly prejudice Defendants by

20

requiring Defendants to file repeated motions to dismiss. See Leadsinger, 512 F.3d at 532. The

21

Court next addresses Plaintiffs’ claims for fraudulent omissions.

22
23

b. Fraudulent Omissions
Plaintiffs also allege that Defendant committed fraud by “conceal[ing] or not disclos[ing]”

24

that the iPhone’s touchscreens were defective. See, e.g., TACC ¶ 172. According to Plaintiffs, a

25

“reasonable consumer would have considered [the touchscreen defect] to be important in deciding

26

whether to purchase Apple’s iPhones or pay a lesser price,” and thus Defendant’s failure to

27
28

24
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

disclose the defect is actionable fraud. See, e.g., TACC ¶ 172.

2

This Court dismissed Plaintiff’s fraudulent omission claims in its prior Order because the

3

Court found that Plaintiffs failed to meet the heightened pleading requirements of Rule 9(b). The

4

Court disagreed with Defendant that Rule 9(b) required Plaintiffs to specifically “identify ‘where

5

the omitted information should or could have been revealed’ or “‘provide representative samples

6

of advertisements, offers, or other representations’” that contained omitted information.

7

Davidson, 2017 WL 976048, at *9 (quoting Marolda v. Symantec Corp., 672 F. Supp. 2d 992,

8

1002 (N.D. Cal. 2009)). Nonetheless, the Court held, Plaintiffs had failed to plead with

9

particularity their fraudulent omission claims because Plaintiffs’ SACC failed to allege that
Plaintiffs “reviewed or were exposed to any information, advertisements, labeling, or packaging

11
United States District Court
Northern District of California

10

by Defendant” prior to purchasing their iPhones. Id. Accordingly, because Plaintiffs failed to

12

allege that they encountered any representation of Defendant that omitted information about the

13

touchscreen defect, Plaintiffs had failed to “provide Defendants with the ‘who, what, when, and

14

where’ of Defendant’s allegedly fraudulent omissions, as required by Rule 9(b).” Id. (quoting

15

Kearns, 567 F.3d at 1127).

16

In the TACC, unlike the SACC, Plaintiffs allege that, either prior to purchase or

17

immediately after their purchase and within the 14-day window in which Plaintiffs could have

18

returned their iPhone for a full refund, Plaintiffs reviewed iPhone advertisements, iPhone

19

packaging and information inside of that packaging, and Apple’s press releases about the iPhone.

20

Id. ¶¶ 8–34. In addition, Plaintiffs also allege that, immediately after purchase and within the 14-

21

day window in which Plaintiffs could have returned their iPhone for a full refund, Plaintiffs each

22

performed the initial set-up process on their iPhones, and this set-up process exposed Plaintiffs to

23

further information about the iPhone. Id. ¶ 35. According to Plaintiffs, none of these sources of

24

information from Defendant contained information about the touchscreen defect, even though

25

these sources contained other disclosures about the iPhone. Id. ¶¶ 31–32 (describing how Apple

26

disclosed on its iPhone packaging that the iPhone’s battery may eventually need replacement and

27
28

25
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

that the iPhone’s formatted storage capacity is less than the storage capacity stated on the

2

packaging). Further, Plaintiffs allege that, although Defendant regularly made software and other

3

updates available to consumers through the iPhone interface, Defendant never disclosed to

4

Plaintiffs information about the touchscreen defect in any of these updates. Id. ¶¶ 98–102.

5

The Court finds that these allegations are sufficient to cure the deficiencies identified by
the Court in its prior order. Unlike the TACC, Plaintiffs have sufficiently alleged the information

7

about the iPhone to which Plaintiffs were exposed either prior to their purchase or immediately

8

after their purchase and within the time window in which they could have returned their iPhone for

9

a full refund. Plaintiffs allege that none of these sources contained relevant information about the

10

touchscreen defect, even though Apple disclosed through these sources other limitations about the

11
United States District Court
Northern District of California

6

iPhone. This Court has found similar allegations sufficient to allege the “who, what, when, and

12

where” of a Defendant’s fraudulent omission, as required by Rule 9(b). See Phillips v. Ford, 2015

13

WL 4111448, at *12 (N.D. Cal. July 7, 2015) (Philips II) (finding Plaintiffs had alleged fraudulent

14

omission claim with particularity where the “Plaintiffs allege that Ford’s ‘television

15

advertisements concerning the vehicles,’ ‘material concerning the Fusion on Ford’s website,’

16

‘window sticker[s],’ and ‘brochure concerning the Fusion’ did not include relevant information

17

about the EPAS system and its possible failures.’”). Specifically, Plaintiffs have alleged the

18

“who” (Apple); the “what” (knowing about yet failing to disclose to customers, at the point of sale

19

or otherwise, that the iPhone’s touchscreen was defective); the “when” (from the time of sale of

20

the first iPhone through the present day); and the “where” (the various channels through which

21

Apple sold and advertised the iPhone, and the channels through which Apple communicated to

22

consumers through the iPhone immediately after Plaintiffs’ purchase and within the 14-day

23

window in which Plaintiffs could have returned their iPhone for a full refund). See Velasco v.

24

Chrysler Grp., LLC, 2014 WL 4187796, at *5 (C.D. Cal. Aug. 22, 2014) (“Plaintiff has identified

25

the ‘who’ (Chrysler); the ‘what’ (knowing about yet failing to disclose to consumers, at the point

26

of sale or otherwise, [the defect]); the ‘when’(from the time of sale of the first Class Vehicle until

27
28

26
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

the present day); and the ‘where’ (the various channels through which Chrysler sold the vehicles,

2

including the authorized dealers where Plaintiffs’ purchased their vehicles)” (internal citations

3

omitted)).
Defendant’s arguments to the contrary are not persuasive. Defendant contends that the

4
5

information that Plaintiffs allegedly reviewed did not contain any information about the

6

touchscreen specifically, and thus cannot form the basis of Plaintiff’s fraudulent omission claim.

7

See, e.g., Mot. at 18–19. However, Plaintiffs allege that they reviewed materials from Apple that

8

described the features of the iPhone 6, illustrated the touchscreen, and demonstrated how to use

9

the touchscreen to operate the iPhone. See, e.g., TACC ¶¶ 37–42. Plaintiffs allege that none of
these materials disclosed the touchscreen defect and that, had the touchscreen defect been

11
United States District Court
Northern District of California

10

disclosed to Plaintiffs, Plaintiffs would not have bought an iPhone or would have paid less for

12

their iPhone. Id. ¶ 97. The case law discussed above does not suggest that Rule 9(b) requires any

13

further specificity to state a fraudulent omission claim. See MacDonald v. Ford Motor Co., 37 F.

14

Supp. 3d 1087, 1096 (N.D. Cal. 2014) (“Plaintiffs adequately allege the ‘who what when and

15

how,’ given the inherent limitations of an omission claim. In short, the ‘’who’ is Ford, the ‘what’

16

is its knowledge of a defect, the ‘when’ is prior to the sale of Class Vehicles, and the ‘where’ is the

17

various channels of information through which Ford sold Class Vehicles.”).5
Defendant also alleges that Plaintiffs cannot state a fraudulent omission claim because

18
19

Plaintiffs fail to allege that Defendant had knowledge of the touchscreen defect such that

20

Defendant was required to disclose the touchscreen defect. See Reply at 10. Defendant’s

21

argument is not well taken. Defendant did not raise this argument in its original motion to dismiss

22
23
24
25
26
27
28

5

Defendant also contends that several Plaintiffs allege that they did not encounter materials from
Defendant—such as their iPhone box or Apple’s September 25, 2014 statement—until after
Plaintiffs’ purchase. However, Plaintiffs allege that they reviewed this material immediately after
their purchase and within the 14-day window in which they could have returned the iPhone for a
full refund. See, e.g., TAC ¶12. Plaintiffs allege that they did not return their iPhone during the
14-day return period because of the materials that they reviewed. Id. Indeed, Defendant itself
relies on Plaintiffs’ ability to return their iPhones for a refund with regards to Plaintiffs’ breach of
warranty claims, discussed further below.
27
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

the SACC, and Defendant did not raise this argument in its opening brief in support of its motion

2

to dismiss the TACC. See Mot. Defendant raises this argument for the first time in its Reply, and

3

thus the Court is not required to consider it. See Ind. Towers of Wash. v. Wash., 350 F.3d 925, at

4

929 (9th Cir. 2003) (explaining that the Ninth Circuit has “held firm against considering

5

arguments that are not briefed” in a party’s opening brief).

6

Nonetheless, even if this Court were to consider Defendant’s argument that it lacked
knowledge of the touchscreen defect at the time of Plaintiffs’ purchases, the Court is not

8

persuaded. Plaintiffs allege that Defendant performs “pre-release durability testing” on its iPhones

9

prior to releasing them to the public. TACC ¶ 71. Plaintiffs describe the details of this pre-release

10

testing, and Plaintiffs explain how this testing would have alerted Apple to the defect in this case.

11
United States District Court
Northern District of California

7

Specifically, Plaintiffs allege that Apple performs bending and pressure-point cycling tests, that

12

Apple uses “torsion testing,” and that Apple uses “sit tests” and “real-life user studies.” Id. ¶¶ 72–

13

76. Plaintiffs allege that these methods are designed to test the durability of the iPhone in real-life

14

user scenarios, and Plaintiffs allege that these tests would have alerted Apple to the fact that the

15

iPhone’s external casing was not strong enough to protect the touch IC chips. Id. ¶ 77. Plaintiffs

16

further allege that consumers began reporting problems with the touchscreen on Apple’s website

17

beginning on September 18, 2016—the day before the iPhone 6 was released to the public—and

18

that consumers continued to complain to Apple and on third-party forums about this problem soon

19

after the release. Id. ¶¶ 65, 67. Plaintiffs also allege that Apple’s decision to forego using a

20

“metal shield” or an “underfill” on the iPhone 6—which Apple used in prior versions of the

21

iPhone—should have alerted Apple to the fact that the external casing of the iPhone 6 was

22

insufficiently durable to protect the touch IC chips. Id. ¶ 77.

23

District courts across the country have found similar allegations sufficient to adequately

24

allege a Defendant’s knowledge of a defect. See, e.g., In re Porsche Cars N. Am., Inc., 880 F.

25

Supp. 2d 801, 816 (S.D. Ohio 2012) (finding, in multi-district litigation involving thirty-two

26

claims—including claims under the consumer fraud statutes of Florida, Illinois, Texas, Colorado,

27
28

28
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

and Washington—that plaintiffs had adequately alleged knowledge of the defect where plaintiffs

2

alleged that Porsche received complaints from owners, had access to data from dealers, had access

3

to pre-release testing data, and that Porsche made decisions in designing the vehicle that would

4

have alerted Porsche to the defect); see also Kowalsky v. Hewlett-Packard Co., 2011 WL

5

3501715, at *4–5 (N.D. Cal. Aug. 10, 2011) (finding plaintiff adequately alleged knowledge of

6

defect where plaintiff alleged that HP used “certain testing procedures on [its printer] that would

7

have uncovered the alleged defect and that consumers complained of the defect”).

8

Accordingly, the Court finds that Plaintiffs have satisfied Rule 9(b) with regards to

9

Plaintiffs’ selected fraud causes of action to the extent that Plaintiffs base those causes of action on
Defendant’s alleged fraudulent omissions. Thus, the Court DENIES Defendant’s motion to

11
United States District Court
Northern District of California

10

dismiss those claims for failure to satisfy Rule 9(b). However, Defendant also raises independent

12

reasons to dismiss Plaintiffs’ causes of action under the NJCFA and Pennsylvania common law

13

fraud. Thus, the Court next addresses those claims.
2. New Jersey Consumer Fraud Act

14
15

Defendant contends that Plaintiffs have failed to state a claim under the NJCFA because

16

the only New Jersey Plaintiff, Pajaro, alleges that the touchscreen defect manifested on his iPhone

17

approximately 22 months after Pajaro purchased his iPhone. Apple’s Limited Warranty warrants

18

“against defects in materials and workmanship when used normally in accordance with Apple’s

19

published guidelines for a period of ONE (1) YEAR from the date of original retail purchase by

20

the end-user purchaser.” See Limited Warranty 1. According to Defendant, because Pajaro

21

experienced the defect well after the 1-year Limited Warranty period expired, Pajaro cannot state a

22

NJCFA claim under New Jersey law. For the reasons discussed below, the Court agrees with

23

Defendant.

24

In order to state a claim under the NJCFA, “a plaintiff must allege three elements: (1)

25

unlawful conduct”; (2) “an ascertainable loss”; and (3) “a causal relationship between the

26

defendant’s unlawful conduct and the plaintiffs’ ascertainable loss.” Int’l Union of Operating

27
28

29
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

Eng. Local No. 68 Welfare Fund v. Merck & Co., Inc., 929 A.2d 1076, 1086 (N.J. 2007) (internal

2

quotation marks omitted). In evaluating claims brought pursuant to the NJCFA, “[s]everal courts

3

have held that a manufacturer’s alleged failure to inform a consumer of a defect that becomes

4

apparent after the life of a warranty issued by the manufacturer cannot be the basis for an NJCFA

5

omissions-based claim against the manufacturer.” Velasco, 2014 WL 4187796, at *11. This is

6

because “a plaintiff cannot demonstrate ‘ascertainable loss’ under the NJCFA where the allegedly

7

defective [] component outperforms its warranty period.” In re Porsche Cars N.A., Inc., 880 F.

8

Supp. 2d at 857 (applying New Jersey law).6
This rule derives from the New Jersey Court of Appeal’s decision in Perkins v.

9

DaimlerChrysler Corp., which held that “[a] defendant cannot be found to have violated the CFA

11
United States District Court
Northern District of California

10

when it provided a part—alleged to be substandard—that outperforms the warranty provided.”

12

890 A.2d 997, 1004 (N.J. App. Div. 2006). The Court in Perkins stated that “the failure of a

13

manufacturer or seller to advise a purchaser that a part of a vehicle may breakdown or require

14

repair after the expiration of the warranty period cannot constitute a violation of the [NJ]CFA.”

15

Id. Accordingly, district courts evaluating NJCFA claims have applied Perkins to dismiss claims

16

where the product “continued to perform beyond” the express warranty. Duffy v. Samsung Elecs.

17

Am., Inc., 2007 WL 703197, at *8 (D.N.J. Mar. 2, 2007) (“[B]ecause Plaintiff’s microwave

18

continued to perform beyond the period in which Samsung was contractually bound to repair or

19

replace any defective part, Plaintiff cannot maintain a [NJ]CFA claim. To recognize Plaintiff’s

20
21
22
23
24
25
26
27
28

6

Defendant argues that the manifestation of the defect after the warranty period goes to
Defendant’s duty to disclose the defect, and thus the “unlawful conduct” element, as opposed to
the “ascertainable loss” element. See Mot. at 24. Although Defendant’s duty-to-disclose analysis
has some support in the case law, see Alban v. BMW of N.Am., 2010 WL 3636253, at *10 (D.N.J.
Sept. 8, 2010), other cases applying New Jersey law persuasively explain that a defect manifesting
outside of the warranty period is relevant to the “ascertainable loss” element, and the Court
follows these cases. See, e.g., In re Porsche Cars N.A., Inc., 880 F. Supp. 3d at 857–58
(distinguishing the “unlawful conduct” element from the “ascertainable loss” element in the
context of defendant’s argument that plaintiff could not state a claim because the defect
manifested outside of the warranty period); see also Chiarelli v. Nissan N.A., Inc., 2015 WL
5686507, at *16 (same). Although the fact that the defect manifested outside of the warranty
period may also affect Defendant’s duty to disclose the defect, the Court need not address the
“unlawful conduct” element to dismiss Plaintiffs’ NJCFA claim.
30
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

claim would essentially extend the warranty period beyond that to which the parties agreed.”);

2

Grodzitsky v. Am. Honda Motor Co., Inc., 2013 WL 2631326, at *9 (C.D. Cal. June 12, 2013)

3

(“Plaintiffs do not, and cannot, allege that the Window Regulatory Defect occurred during the

4

warranty period; thus, they cannot state a claim under New Jersey’s CFA.”).

5

Plaintiffs argue that the instant case is distinguishable from Perkins because Plaintiffs are

6

alleging that Defendant knew of the Touchscreen Defect but failed to disclose this information. Pl.

7

Opp. at 26–28. According to Plaintiffs, “[c]ourts around the country have permitted consumer

8

fraud claims to proceed under similar allegations.” Id. at 28 (quoting BK Trucking Co. v. Paccar,

9

Inc., 2016 WL 3566723, at *9 (D.N.J. June 30, 2016)). However, the case relied upon by
Plaintiffs for this proposition does not discuss Perkins or the “ascertainable loss” requirement. See

11
United States District Court
Northern District of California

10

BK Trucking Co., 2016 WL 3566723, at *9 (discussing a defendant’s duty to disclose but not

12

discussing or addressing the “ascertainable loss” element and how it applies outside of the

13

warranty period). Contrary to Plaintiffs’ assertion, district courts applying Perkins have rejected

14

the argument “that the Perkins rule does not apply where the defendant concealed defects.” In re

15

Porsche, 880 F. Supp. 2d at 857 (surveying New Jersey cases and finding plaintiffs’ argument

16

“that the Perkins rule does not apply where the defendant concealed defects” to be “against the

17

weight of authority”); Chiarelli v. Nissan N.A., Inc., 2015 WL 5686507, at *16 (E.D.N.Y. Sept. 25

18

2015) (“[P]erform[ing] a careful review of Perkins and the relevant case law” and concluding that

19

“an allegation that a defendant concealed or knew about a latent defect may go toward whether the

20

defendant engaged in an unlawful act (i.e., a materially misleading omission), but does not affect

21

whether the plaintiff has adequately alleged an ascertainable loss”).

22

Accordingly, based on the discussion in Perkins concerning the NJCFA’s ‘ascertainable

23

loss’ element,” Plaintiffs cannot state a claim under the NJCFA because the only New Jersey

24

Plaintiff experienced the touchscreen defect after the expiration of the 1-year Limited Warranty

25

period. Chiarelli, 2015 WL 5686507, at *16. Thus, the Court GRANTS Defendant’s motion to

26

dismiss Plaintiffs’ NJCFA claim. The Court grants Defendant’s motion to dismiss with prejudice

27
28

31
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

because, since Pajaro’s defect manifested outside of the warranty period, leave to amend the

2

NJCFA claim would be futile. Grozitsky, 2013 WL 2631326, at *9 (dismissing NJCFA claim

3

with prejudice because “Plaintiffs do not, and cannot, allege that the [defect] occurred during the

4

warranty period.”); see also Chiarelli, 2015 WL 5686507, at *16 n.16 (dismissing NJCFA claim

5

with prejudice because defect manifested outside of the warranty period, which “render[ed]

6

amendment futile”).

7

In addition, the Court also grants Defendant’s motion to dismiss with prejudice because

8

Defendant raised this same NJCFA argument in its motion to dismiss the SACC. See ECF No. 54,

9

at 19–20. Thus, at the time that Plaintiffs filed the TACC, Plaintiffs were on notice of
Defendant’s NJCFA argument, and yet Plaintiffs kept the same New Jersey plaintiff and asserted

11
United States District Court
Northern District of California

10

the same NJCFA allegations in the TACC. Accordingly, the Court finds that granting Plaintiffs

12

leave to amend the NJCFA claim in a fourth amended class action complaint would be futile,

13

cause undue delay, and unduly prejudice Defendant. See Leadsinger, 512 F.3d at 532 (“[L]eave to

14

amend may be denied if the moving party has acted in bad faith, or if allowing amendment would

15

unduly prejudice the opposing party, cause undue delay, or be futile.”).

16
17

3. Pennsylvania Common Law Fraud
Defendant next moves to dismiss Plaintiffs’ claim for common law fraud under

18

Pennsylvania law. According to Defendant, this claim must be dismissed because Defendant had

19

no duty to disclose the alleged defect, and because Plaintiffs’ claim is barred by the economic loss

20

doctrine. The Court need not discuss whether Defendant had a duty to disclose the defect because

21

the Court finds that, under Pennsylvania law, Plaintiffs’ Pennsylvania common law claim is barred

22

by the economic loss doctrine.

23

“The economic loss doctrine ‘prohibits plaintiffs from recovering in tort economic losses

24

to which their entitlement flows only from a contract.’” Werwinski v. Ford Motor Co., 286 F.3d

25

661, 670 (3d Cir. 2002) (quoting Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604,

26

618 (3d Cir. 1995)). “The economic loss doctrine originated in the products liability context and

27
28

32
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

rests on the notion that ‘the need for a remedy in tort is reduced when the only injury is to the

2

product itself and the product has not met the customer’s expectations, or, in other words, that the

3

customer has received insufficient product value.” Whitaker v. Herr Foods, Inc., 198 F. Supp. 3d

4

476, 487 (E.D. Pa. 2016) (internal quotation marks omitted). “Where the customer’s injury is

5

based upon and flows from the purchaser’s loss of the benefit of his bargain and his disappointed

6

expectations as to the product he purchased, the harm sought to be redressed is precisely that

7

which a warranty action does address.” Id. (internal quotations and alterations omitted).

8
9

In Werwinski v. Ford Motor Company, 285 F.3d 661, 670 (3d Cir. 2002), the Third Circuit
considered the question of whether Pennsylvania’s economic loss doctrine barred actions for
intentional fraud under either Pennsylvania common law or Pennsylvania’s Unfair Trade Practices

11
United States District Court
Northern District of California

10

and Consumer Protection Law (“UTPCPL”). The Third Circuit recognized that the Supreme

12

Court of Pennsylvania and Pennsylvania appellate courts had yet to resolve the issue in a

13

published opinion. Id. Predicting how the Supreme Court of Pennsylvania would rule on the

14

issue, the Third Circuit in Werwinski found that the economic loss doctrine applied to bar both

15

plaintiffs’ common law fraudulent concealment claim and plaintiffs’ statutory claim under the

16

UTPCPL. Id.

17

The Third Circuit’s decision in Werwinski, however, has generated some “controversy.”

18

See Montanez v. HSBC Mortg. Corp., 876 F. Supp. 2d 504, 518 n. 16 (E.D. Pa. 2012). After

19

Werwinski was decided, the Pennsylvania Superior Court in Knight v. Springfield Hyundai held

20

that the economic loss doctrine did not bar the plaintiff’s statutory UTPCPL claim. 81 A.3d 940,

21

952 (Penn. Supp. Ct. 2013) (“[T]he economic loss doctrine is inapplicable and does not operate as

22

a bar to Knight’s UTPCPL claims”); Dixon v. Nw. Mutual, 146 A.3d 780, 790 (Penn. Supp. Ct.

23

2016) (“Dixon’s UTPCPL claim is not barred by the economic loss doctrine”); see also Zwiercan

24

v. Gen. Motors Co., 2002 WL 31053838 (Penn. Ct. Com. Pl. 2002) (reasoning that the purpose of

25

the UTPCPL was “to be liberally construed to prevent unfair or deceptive practices,” and thus the

26

economic loss doctrine did not apply to bar statutory claims). In light of the Pennsylvania

27
28

33
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

Superior Court’s decision in Knight, federal courts applying Pennsylvania law have divided over

2

whether Werwinski remains controlling or persuasive authority with regards to the application of

3

Pennsylvania’s economic loss doctrine. Compare Whitaker, 198 F. Supp. 3d at 489 (following the

4

Third Circuit’s Werwinski opinion and holding that the economic loss doctrine barred the

5

UTPCPL claim); Doll v. Ford Motor Co., 814 F. Supp. 2d 526, 551 (D. Md. 2011) (“While this

6

Court recognizes the considerable debate over the validity of the Third Circuit’s decision [in

7

Werwinski], the Court cannot ignore [Werwinski’s] pronouncement of Pennsylvania law.”), with

8

Kantor v. Hiko Energy, LLC, 100 F. Supp. 3d 421, 427–28 (E.D. Pa. 2015) (holding that

9

Werwinski no longer had “vitality” after the Pennsylvania Superior Court’s decision in Knight).

10

However, although it may be a close question whether the economic loss doctrine applies

United States District Court
Northern District of California

11

to bar statutory fraud claims under the UTPCPL in light of Knight, the instant issue is whether the

12

economic loss doctrine applies to bar Plaintiffs’ common law fraud claim under Pennsylvania law.

13

In Knight, the Pennsylvania Superior Court explicitly recognized that “[t]he claims at issue in this

14

case are statutory claims brought pursuant to the UTPCPL.” Knight, 81 A.3d at 952 (emphasis

15

added). Similarly, in Zwiercan, the Pennsylvania Court of Common Pleas held that the economic

16

loss rule did not apply to bar the plaintiffs’ UTPCPL claim because “[t]o apply the economic loss

17

doctrine to bar the Plaintiffs’ statutory claim here would frustrate the intent of the UTPCPL.”

18

Zwiercan, 2002 WL 31053838, at *7 (emphasis added). Indeed, the federal district courts that

19

have departed from Werwinski have largely done so only with regards to UTPCPL claims. See,

20

e.g., Landau v. Viridian Energy PA LLC, 223 F. Supp. 3d 401, 414 (E.D. Pa. Nov. 30, 2016)

21

(departing from Werwinski and holding the economic loss doctrine did not bar UTPCPL claim

22

because “the uniform practice of the Pennsylvania courts ha[s] been to ignore the economic loss

23

doctrine in their application of the UTPCPL” (emphasis added)); O’Keefe v. Mercedes-Benz, USA,

24

LLC, 214 F.R.D. 266, 275 (E.D. Pa. 2003) (holding the economic loss doctrine did not bar

25

UTPCPL claims). These federal courts have emphasized that the Pennsylvania legislature enacted

26

the UTPCPL with a remedial purpose in mind, and that the UTPCPL was a statute “in derogation

27
28

34
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

of common law.” O’Keefe, 214 F.R.D. at 275. These rationales do not apply to claims for

2

common law fraud.
Moreover, to the extent that Pennsylvania state law remains unclear as to whether the

4

economic loss doctrine bars claims for common law fraud, a federal court sitting in diversity

5

“should opt for the interpretation that restricts liability, rather than expands it, until the Supreme

6

Court of Pennsylvania decides differently.” Werwinski, 286 F.3d at 680; see also Home Valu, Inc.

7

v. Pep Boys, 213 F.3d 960, 965 (7th Cir. 2000) (holding that where the Court is “faced with two

8

equally plausible interpretations of state law,” the Court “generally choose[s] the narrow

9

interpretation which restricts liability, rather than the more expansive interpretation which creates

10

substantially more liability”). Accordingly, the Court agrees with Defendant that Pennsylvania’s

11
United States District Court
Northern District of California

3

economic loss doctrine applies to Plaintiffs’ claim for common law fraud.

12

Nonetheless, Plaintiffs contend, even if the economic loss doctrine does apply, Plaintiffs

13

argue that their claim for common law fraud falls under an exception to the economic loss

14

doctrine. See Opp. at 24. Specifically, in Werwinski, the Third Circuit recognized an exception to

15

the economic loss doctrine for a fraud claim “where the [fraud claim] arise[s] independently of the

16

underlying contract.” Werwinski, 286 F.3d at 676. Specifically, “a claim for fraudulent

17

misrepresentation remains viable” despite the economic loss rule “when a party makes a

18

representation extraneous to the contract.” Whitaker, 198 F. Supp. 3d at 490 (internal quotation

19

marks and alterations omitted). According to Plaintiffs, their fraud claim is “extraneous” to

20

Defendant’s warranty about the iPhone because Plaintiffs allege that Defendant made

21

misrepresentations about the iPhone which induced Plaintiffs’ purchase. See Opp. at 24.

22

However, Plaintiffs allege that Apple made material misrepresentations and omissions

23

“regarding the quality, durability, and other material characteristics” of the iPhone. TACC ¶ 97.

24

Courts applying Pennsylvania law have recognized that fraudulent representations and omissions

25

that “concern the specific subject matter of the contract or warranty, such as the quality or

26

characteristics of the goods sold” are intrinsic, rather than extrinsic, to the contract or warranty

27
28

35
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

and the economic loss rule applies. Whitaker, 198 F. Supp. 3d at 490; see also Werwinski, 286

2

F.3d at 678 (finding fraud claim to be “clearly . . . not ‘extraneous’ to, [Plaintiffs’] breach of

3

warranty claims” because Plaintiffs’ fraud claim “relate[d] to the quality or character of the goods

4

sold”). Plaintiffs’ claimed economic losses “flow from [Plaintiffs] loss of the benefit of

5

[Plaintiffs’] bargain and [Plaintiffs’] disappointed expectations as to the products [Plaintiffs]

6

purchased.” Whitaker, 198 F. Supp. 3d at 490. Thus, under Pennsylvania law, the economic loss

7

doctrine applies to bar Plaintiffs’ Pennsylvania common law claim for fraud. Werwinski, 286 F.3d

8

at 678 (finding economic loss rule applied to bar claim that Ford concealed information about

9

allegedly defective transmission components); Whitaker, 198 F. Supp. 3d at 490 (holding
economic loss rule applied to bar Pennsylvania common law fraud claim that Defendant falsely

11
United States District Court
Northern District of California

10

represented qualities of food products, which induced Plaintiffs to buy the goods).
Accordingly, the Court GRANTS Defendant’s motion to dismiss Plaintiff’s common law

12
13

claim for fraud under Pennsylvania law. Because the economic loss doctrine bars Plaintiffs’

14

claims as a matter of law, the Court dismisses this claim with prejudice. Berkery v. Verizon

15

Comm’ns Inc., 658 F. App’s 172, 174 (3d Cir. 2016) (noting that, because the economic loss

16

doctrine applied, “the District Court was correct to dismiss [the claim] with prejudice”).

17

C.

18

Warranty Claims
The Court next turns to Plaintiffs’ warranty claims. For purposes of the instant motion to

19

dismiss, Plaintiffs bring claims for (1) breach of express warranty under Illinois law; (2) breach of

20

implied warranty under Illinois law; and (3) violation of the Magnusson-Moss Act. The Court

21

addresses each below.

22
23

1. Illinois Breach of Express Warranty
First, Defendant moves to dismiss Plaintiffs’ claim for breach of express warranty under

24

Illinois law. To state a claim for breach of express warranty under Illinois law, Plaintiff “must

25

allege the terms of the warranty, the failure of some warranted part, a demand upon the defendant

26

to perform under the warranty’s terms, a failure by the defendant to do so, compliance with the

27
28

36
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

terms of the warranty by the plaintiff, and damages measured by the terms of the warranty.”

2

Schiesser v. Ford Motor Co., 2017 WL 1283499, at *2 (N.D. Ill. Apr. 6, 2017) (internal quotation

3

marks omitted).

4

The express warranty at issue is Defendant’s Limited Warranty, which provides: “Apple

5

warrants the Apple-branded iPhone . . . against defects in materials and workmanship when

6

used normally in accordance with Apple’s published guidelines for a period of ONE (1) YEAR

7

from the date of original retail purchase by the end-user purchaser.” Limited Warranty, at 1 (bold

8

emphasis added).

9

In the Court’s prior order dismissing Plaintiffs’ claims in the SACC, the Court dismissed
Plaintiffs’ claim for breach of express warranty because the Court held that Plaintiffs had failed to

11
United States District Court
Northern District of California

10

allege that Defendant breached a term of the Limited Warranty. Davidson, 2017 WL 976048, at

12

*11. Applying California law—which was the only law briefed by the parties—the Court held

13

that Defendant’s Limited Warranty covered only defects in “material and workmanship,” and not

14

defects in design. Id. The Court held that the touchscreen defect, as alleged by Plaintiffs in the

15

SACC, was a design defect. Id. Moreover, the Court found that all but two Plaintiffs experienced

16

the Touchscreen Defect after the 1-year time limitation in Defendant’s Limited Warranty expired,

17

and Plaintiffs who experienced the touchscreen defect after the expiration of the Limited Warranty

18

could not bring a breach of express warranty claim. Id. at *12. The Court rejected Plaintiff’s

19

argument that the 1-year time limitation in Defendant’s Limited Warranty was unconscionable.

20

Id. Specifically, the Court held that a time limit was not, by itself, unconscionable, and that

21

Plaintiffs did not adequately allege that the Limited Warranty was procedurally or substantively

22

unconscionable. Id.at *13.

23

Defendant moves to dismiss Plaintiffs’ breach of express warranty claim under Illinois law

24

on the same grounds that Defendant moved to dismiss Plaintiffs’ breach of express warranty claim

25

in the SACC. See Mot. at 26–27. Specifically, Defendant argues that Plaintiffs have failed to

26

allege that Defendant failed to perform under the warranty because the Limited Warranty does not

27
28

37
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

cover design defects, and Plaintiffs have alleged only a design defect. Id. at 26–27. Further,

2

Defendant argues that, for all but two Plaintiffs, Plaintiffs’ breach of express warranty claim is

3

barred because Plaintiffs did not experience the touchscreen defect within the 1-year Limited

4

Warranty period. Id. at 27. Plaintiffs contend, however, that they have adequately alleged a

5

manufacturing defect, not a design defect. See Opp. at 30. Moreover, Plaintiffs argue, even if the

6

warranty limitations apply to bar Plaintiffs’ breach of express warranty claim, Plaintiffs can

7

nonetheless assert a breach of warranty claim because the limitations in Defendant’s Limited

8

Warranty are unconscionable. Id. at 30–34. The Court first addresses Defendant’s argument that

9

Plaintiffs have failed to allege that Defendant did not perform under the warranty. The Court then

10

addresses Plaintiffs’ argument that the warranty limitations in Defendant’s Limited Warranty are

11
United States District Court
Northern District of California

1

unconscionable.

12
13

a. Whether Defendant Failed to Perform Under the Limited Warranty
Defendant argues that it did not breach the Limited Warranty because Defendant had no

14

obligation under the terms of the warranty to fix the touchscreen defect. Specifically, Defendant

15

argues that the alleged touchscreen defect is not covered by the terms of the Limited Warranty.

16

Defendant also argues that, for all but two Plaintiffs, the touchscreen defect manifested outside of

17

the 1-year Limited Warranty period, and Plaintiffs cannot state a breach of express warranty claim

18

if the touchscreen defect manifested outside of the limited warranty period.

19

As an initial matter, the Court agrees with Defendant that, for all but two Plaintiffs,

20

Defendant had no obligation under the Limited Warranty to fix the touchscreen defect because all

21

Plaintiffs except for Plaintiffs Benelhachemi and Bon allege that the touchscreen defect

22

manifested outside of the 1-year Limited Warranty period. Under Illinois law, “[b]ecause express

23

warranties are contractual in nature, the language of the warranty itself controls and dictates the

24

rights and obligations of the parties to it.” Evitts v. DaimlerChrysler Motors Corp., 834 N.E.2d

25

942, 949 (Ill. App. Ct. 2005). “Illinois law holds that express warranties of limited duration cover

26

only defects that become apparent during the warranty period.” Id. “To allow a customer to seek

27
28

38
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

damages for breach of an express warranty beyond the limits specified in that warranty would in

2

effect compel the manufacturer to insure all latent defects for the entire life of the product and

3

would place a burden on the manufacturer for which it did not contract.” Id. Accordingly, Illinois

4

“enforce[s] durational limits in express warranties.” Darne v. Ford Motor Co., 2015 WL

5

9259455, at *7 (N.D. Ill. Dec. 18, 2015).

6

Here, the Limited Warranty warrants against defects in materials and workmanship “for a

7

period of ONE (1) YEAR from the date of the original retail purchase by the end-user purchaser.”

8

Limited Warranty, at 1. Plaintiffs do not contest that only Benelhachemi and Bon allege that the

9

touchscreen defect manifested in their iPhone within the 1-year warranty period. Id. Accordingly,
for all Plaintiffs except Benelhachemi and Bon, the language of the Limited Warranty bars

11
United States District Court
Northern District of California

10

Plaintiffs’ claims for breach of express warranty.

12

Nonetheless, Plaintiffs contend that although the Limited Warranty’s 1-year period applies

13

to bar the claims of all Plaintiffs except Benelhachemi and Bon, the Limited Warranty’s 1-year

14

durational limitation does not apply because the entire Limited Warranty is unconscionable. Prior

15

to addressing Plaintiffs’ unconscionability argument, the Court first addresses Defendant’s

16

additional argument that the breach of warranty claims of all Plaintiffs, including Plaintiffs

17

Benelhachemi and Bon, are barred because the Limited Warranty does not cover the touchscreen

18

defect because it is a defect in design.

19

As set forth above, Defendant’s Limited Warranty states that Defendants warrant “against

20

defects in materials and workmanship.” Limited Warranty, at 1. Applying Illinois law, courts

21

have recognized that an express warranty covering defects in “material or workmanship” does not

22

cover defects in design. See Voelker v. Porsche Cars N.A., Inc., 353 F.3d 516, 520, 526–27 (7th

23

Cir. 2003) (applying Illinois law and finding that, although the warranty covered defects in

24

“material or workmanship,” there was no indication that the warranty covered “defective design”

25

and thus plaintiffs could not allege a breach of warranty claim). This is substantially identical to

26

California law, which the Court applied in its prior order dismissing Plaintiffs’ breach of express

27
28

39
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

warranty claim under California law. Davidson, 2017 WL 976048, at *11 (citing California law

2

for the proposition that “[a]n express warranty covering ‘materials and workmanship’ does not

3

include design defects’” (quoting Clark v. LG Elecs. USA, Inc., 2013 WL 5816410, at *7 (S.D.

4

Cal. Oct. 29, 2013)). In the Court’s prior order, the Court recognized that a “plaintiff’s chosen

5

language is not dispositive in determining whether the alleged defect is a defect in design or a

6

defect in ‘materials and workmanship.’” Id. (citing Troup v. Toyota Motor Corp., 545 F. App’x

7

668, 66–69 (9th Cir. 2014)). Analyzing Plaintiffs’ allegations, this Court concluded that Plaintiffs

8

had alleged, at bottom, that the touchscreen defect was the result of a design defect, not a

9

manufacturing defect. Id. This Court granted Plaintiffs leave to amend to allege facts suggesting
that the touchscreen defect was the result of a manufacturing defect. For the reasons discussed

11
United States District Court
Northern District of California

10

below, the Court finds that Plaintiffs still allege a design defect, not a manufacturing defect.

12

Plaintiffs allege in the TACC that “[t]he materials used in the iPhone’s external casing are

13

insufficient and inadequate to protect their internal parts,” and that “the external casing of the

14

iPhones is not sturdy, strong, or durable.” TACC ¶¶ 45, 47. Plaintiffs allege that, because the

15

material used in the external casing is not sturdy or durable, the touch IC chips are exposed to

16

“external stress and physical harm” when a user uses an iPhone. Id. ¶¶ 49–52. Because the touch

17

IC chips are exposed to external stress through everyday use, Plaintiffs allege that “the solder

18

balls” inside of the iPhone, which adhere the touch IC chips to the iPhone’s logic board, “crack

19

and start to lose contact with the logic board.” Id. ¶ 52. Plaintiffs allege that this causes the touch

20

IC chips to be “unable to recognize the user’s touches on the touchscreen because there is no

21

electrical contact between the touch IC chips and the logic board.” Id. ¶ 53. Plaintiffs allege that

22

previous iPhones incorporated either a “metal shield” or an “underfill” in the logic board’s design

23

to provide protection to the logic board in the event of structural stress. Id. ¶¶ 60–62. According

24

to Plaintiffs, these earlier designs mitigated against defects in the iPhones’ external casing. Id. ¶¶

25

60–62. By contrast, the iPhone 6 and 6 Plus do not incorporate either a metal shield or an

26

underfill. Id. ¶ 62.

27
28

40
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

The Court agrees with Defendant that the TACC, at bottom, alleges a defect in Defendant’s
design of the iPhone 6 and 6 Plus. “‘A manufacturing defect occurs when one unit in a product

3

line is defective, whereas a design defect occurs when the specific unit conforms to the intended

4

design but the intended design itself’” is defective. Cappellano v. Wright Med. Grp., Inc., 838 F.

5

Supp. 2d 816, 825 (C.D. Ill. Jan. 23, 2012) (quoting Salerno v. Innovate Surveillance Tech., Inc.,

6

932 N.E.2d 101, 108 (Ill. 2010)). “Generally speaking, manufacturing defects result from

7

qualities of a product not intended by the manufacturer.” Id. (internal quotation marks omitted).

8

The crux of Plaintiffs’ allegations in the TACC, as with Plaintiffs’ allegations in the SACC, is that

9

the iPhone 6 and 6 Plus “conform[ed] to [Apple’s] intended design” of the iPhone, but that

10

Apple’s chosen materials for constructing the iPhone are insufficient to protect the iPhone’s

11
United States District Court
Northern District of California

2

internal components. Cappellano, 838 F. Supp. 2d at 825; see TAC ¶¶ 45, 47 (“The materials

12

used in the iPhone’s external casing are insufficient and inadequate to protect their internal

13

parts.”). As numerous courts have recognized, a manufacturer’s choice of certain material to

14

construct a product is a “design decision,” not a defect in “materials and workmanship.” See, e.g.,

15

Troup, 545 F. App’x at 668–69 (finding that the “gravamen” of plaintiff’s complaint alleged only

16

a “design defect” because the plaintiff alleged that “the Prius’s defect resulted from the use of

17

resin to construct the gas tanks, which is a design decision”); Bruce Martin Const., Inc. v. CTB,

18

Inc., 735 F.3d 750, 754 (8th Cir. 2013) (finding plaintiff alleged a design defect, which was not

19

covered by warranty for “materials and workmanship,” where plaintiff alleged that the defendant’s

20

design called for the use of insufficient materials); Nelson v. Nissan N.A., Inc., 2014 WL 7331075,

21

at *3 (D.N.J. Dec. 19, 2014) (using materials that “were particularly susceptible to high heat is a

22

design defect, not a manufacturing defect”); Coba v. Ford Motor Co., 2016 WL 5746361, at *10

23

(D.N.J. Sept. 30, 2016) (finding plaintiff asserted a design flaw, not a manufacturing flaw, where

24

plaintiff stated that a vehicle’s fuel tanks coating was inadequate to withstand acid exposure).

25
26
27
28

Plaintiffs contend that the TACC alleges a manufacturing defect, and not a design defect,
because Plaintiffs allege that the TACC alleges that the iPhone has “unintended qualities”—
41
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

“screens that do not respond to touch commands.” Opp. at 22. However, the difference between a

2

manufacturing defect and a design defect is not whether the Defendant intended the defect itself.

3

Presumably, a manufacturer never intentionally designs a product to malfunction. Rather, as the

4

case law discussed above makes clear, a design defect is alleged where “the specific unit conforms

5

to the intended design but the intended design itself’” is inherently defective. Cappellano, 838 F.

6

Supp. 2d at 825 (emphasis added). Plaintiffs’ TACC does not contain any allegations that suggest

7

that the materials used in the iPhone are different from the materials that Defendant intended to

8

use in constructing the iPhone. Although Plaintiffs allege that the materials chosen by Defendant

9

are insufficient, Defendant’s choice to use those materials is still a design decision. See, e.g.,
Troup, 545 F. App’x at 668–69 (finding plaintiff alleged a “design defect” because the plaintiff

11
United States District Court
Northern District of California

10

alleged that “the Prius’s defect resulted from the use of resin to construct the gas tanks, which is a

12

design decision”); Bruce Martin Const., Inc., 735 F.3d at 754 (finding plaintiff alleged a design

13

defect where plaintiff alleged that the defendant’s design called for the use of insufficient

14

materials).

15

In sum, the Court agrees with Defendant that the Limited Warranty does not cover the

16

touchscreen defect because the Limited Warranty applies to only defects in materials and

17

workmanship, and the touchscreen defect, as alleged by Plaintiffs, is a defect in design. This

18

applies to bar the express warranty claims of all Plaintiffs. In addition, as discussed above, for all

19

but Plaintiffs Benelhachemi and Bauer, Plaintiffs’ express warranty claims are barred for the

20

additional reason that the touchscreen defect manifested outside of the Limited Warranty’s 1-year

21

durational period. Nonetheless, Plaintiffs argue, Plaintiffs may still bring a breach of express

22

warranty claim because the limitations contained within Defendant’s Limited Warranty are

23

unconscionable. The Court addresses this argument below.

24
25
26
27
28

b. Whether the Limited Warranty is Unconscionable
Plaintiffs argue that, even if the touchscreen defect is a design decision not covered by the
Limited Warranty, and even though all but two Plaintiffs experienced the defect outside of the
42
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

Limited Warranty’s 1-year durational period, Plaintiffs can nonetheless state a breach of warranty

2

claim under Illinois law because the Limited Warranty’s warranty limitations are unconscionable.

3

Under Illinois law, “[a] court can invalidate a contract if it is either procedurally or

4

substantively unconscionable.” Schiesser v. Ford Motor Co., 2016 WL 6395457, at *3 (N.D. Ill.

5

Oct. 28, 2016). “Procedural unconscionability refers to both a situation where a term is so

6

difficult for a plaintiff to find or understand that he cannot have been aware he was agreeing to it

7

and also to a plaintiff’s lack of bargaining power or lack of meaningful choice.” Id. (internal

8

quotation marks omitted). “Substantive unconscionability refers to those terms which are

9

inordinately one-sided in one party’s favor.” Razor v. Hyundai Motor Am., 854 N.E. 2d 607, 622

10

United States District Court
Northern District of California

11

(Ill. 2006).
As an initial matter, Plaintiffs argue that because they have raised the issue of

12

unconscionability in their TACC, “Illinois law mandates that” the Court hold a hearing on

13

unconscionability so that Plaintiffs can present evidence. Opp. at 31 (emphasis added).

14

According to Plaintiffs, Illinois law provides that “[w]hen it is claimed or appears to the court that

15

the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable

16

opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in

17

making the determination.” 810 Ill. Comp. Stat. Ann. 5/2-302(2) (emphasis added). Plaintiffs

18

thus argue that the Court must give Plaintiffs an opportunity to “present evidence” as to the

19

Limited Warranty’s “commercial setting, purpose and effect.” See Opp. at 31–32.

20

However, contrary to Plaintiffs’ argument, federal courts have recognized that this

21

provision of Illinois law does not supersede federal pleading requirements, which require plaintiffs

22

to adequately allege a plausible claim for relief. See Darne v. Ford Motor Co., 2015 WL

23

9259455, at 7 n. 9 (N.D. Ill. 2015) (rejecting argument that, under Illinois law, it was “premature

24

to decide the unconscionability question on a motion to dismiss” and addressing the “adequacy of

25

the allegations of unconscionability”); see also Stravropoulos v. Hewlett-Packard Co., 2014 WL

26

2609431, at *3 (N.D. Ill. June 9, 2014) (assessing whether the plaintiff “passed the pleadings

27
28

43
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

threshold for unconscionability”); Al Maha Trading & Contracting Holding Co. v. W.S. Darley &

2

Co., 936 F. Supp. 2d 933, 943 (N.D. Ill. 2013) (granting motion to dismiss because plaintiff failed

3

to adequately allege unconscionability under Illinois law). Accordingly, the Court addresses

4

whether Plaintiffs have adequately alleged that the Limited Warranty is unconscionable.

5

Plaintiffs seek to hold the warranty limitations in Defendant’s Limited Warranty

6

unconscionable because Defendants “knowingly sold a defective product without informing

7

consumers about the defect.” TACC ¶ 291. However, although some district courts applying

8

Illinois law have found this allegation alone sufficient to allege unconscionability, see, e.g.,

9

Stravropoulos, 2014 WL 2609431, at *3, other cases applying Illinois law suggest that a
defendant’s alleged knowledge of a defect is but one factor to consider in determining whether

11
United States District Court
Northern District of California

10

limitations in a warranty provision are unconscionable. See, e.g., Darne, 2015 WL 9259455, at *5

12

(rejecting unconscionability argument even though plaintiff alleged that Ford knew the engine had

13

major defects); McCabe v. Daimler AG, 948 F. Supp. 2d 1347, 1358 (N.D. Ga. 2013) (applying

14

Illinois law and finding no support for the proposition “that a warranty’s time and mileage

15

limitations may be rendered unconscionable simply because a manufacturer knowingly sells a

16

defective product”); see also Am. Licorice Co. v. Total Sweeteners, Inc., 2014 WL 5396214, at

17

*11 (N.D. Cal. Oct. 22, 2014) (applying Illinois law and refusing to find substantive

18

unconscionability merely because defects were latent because “[t]he breadth of such a holding

19

would be sweeping”). The Court finds this latter line of cases more persuasive, and thus considers

20

Plaintiffs’ allegations of Defendant’s knowledge of the defect together with Plaintiffs’ additional

21

allegations.

22

Here, although Plaintiffs allege that Defendant knew about the touchscreen defect at the

23

time of sale, this factor does not weigh heavily in favor of finding substantive unconscionability in

24

this case. Defendant’s Limited Warranty “acknowledg[es] the possibility of latent defects”

25

because the Limited Warranty covers defects in materials and workmanship for a period of only

26

one year. Schiesser, 2017 WL 1283499, at *3 (N.D. Ill. Apr. 6, 2017); Darne, 2015 WL 9259455,

27
28

44
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

at *8 (noting that, in providing a limited warranty, “Ford expressly acknowledged that parts of its

2

vehicles might be defective”). Plaintiffs do not allege that Defendant made any changes to its

3

usual Limited Warranty because of the touchscreen defect. See Skeen v. BMW of N.A., LLC, 2014

4

WL 283628, at *14 (D.N.J. 2014) (finding plaintiff adequately alleged substantive

5

unconscionability under Illinois law because, in addition to alleging knowledge, the plaintiff

6

alleged the defendant “manipulated the warranty terms to avoid paying for” the defect (emphasis

7

added); Schiesser, 2017 WL 1283499, at *3 (finding lack of substantive unconscionability where

8

there was no allegation that the durational limitations in the warranty were made “too short to

9

discover the Defect”). Accordingly, even though Plaintiffs allege that Defendant knew of the
defect, this alone does not weigh heavily in favor of finding that the Limited Warranty is

11
United States District Court
Northern District of California

10

“inordinately one-sided” in favor of Defendant such that the Limited Warranty is substantively

12

unconscionable. Razor, 854 N.E. 2d at 622.

13

Plaintiffs also argue that the Limited Warranty is substantively unconscionable because

14

“[c]onsumers reasonably expect that smartphones will remain operable for at least two years when

15

not subject to abuse or neglect because the overwhelming majority of smartphone users are

16

required to sign service contracts with cellular carriers for two-year periods.” TACC ¶ 144

17

(emphasis added). However, this also does not show that Apple’s Limited Warranty is

18

substantively unconscionable. At bottom, Plaintiffs allege only that Plaintiffs believe that Apple’s

19

1-year warranty is unfair because Plaintiffs have developed expectations based on cellular service

20

contracts that Plaintiffs have entered into with separate cellular carriers. Courts have repeatedly

21

emphasized that it is not appropriate for courts to rewrite the express terms of a warranty simply

22

because of a consumer’s unilateral expectations about a product. See Sw. Eng’g, Inc. v. Yeomans

23

Chicago Corp., 2009 WL 3720374 (S.D. Cal. Nov. 3, 2009) (applying Illinois law and declining

24

to find substantive unconscionability merely because the Plaintiff was “unhappy with the terms it

25

agreed to at the outset,” noting that the Court should not “upset[] the parties’ allocation of risk and

26

loss”); Seifi v. Mercedes-Benz USA, LLC, 2013 WL 5568449, at *5 (N.D. Cal. Oct. 9, 2013) (“A

27
28

45
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

theory that would allow unilateral consumer expectations based on the practices of other car

2

manufacturers to unwind the express terms of the durational limits here would render substantive

3

unconscionability analysis unworkable.”). To hold Apple’s Limited Warranty substantively

4

unconscionable simply because Plaintiffs expect their iPhones to last the length of their cellular

5

service contracts “would place a burden on [Apple] for which it did not contract.” Evitts, 834 N.E.

6

2d at 950. In sum, the Court disagrees with Plaintiffs that their expectations based on Plaintiffs’

7

separate cellular service contracts render Apple’s Limited Warranty substantively unconscionable.

8
9

The Court also finds that Plaintiffs have failed to allege that Apple’s Limited Warranty is
procedurally unconscionable. Plaintiffs allege that the Limited Warranty is procedurally
unconscionable because Plaintiffs were “provided with a link to [Apple’s] warranty” in the iPhone

11
United States District Court
Northern District of California

10

box after sale. Id. ¶ 107. Plaintiffs rely on the Supreme Court of Illinois’s opinion in Razor v.

12

Hyundai Motor America, 222 Ill. 2d 75 (Ill. 2006), in which the Supreme Court of Illinois found

13

limitations in a vehicle warranty to be procedurally unconscionable because the warranty was

14

“contained in the owner’s manual, which was placed in the glove compartment of the car, where it

15

was unavailable to the consumer until after she took delivery.” Id. at 101. However, Razor is

16

distinguishable from the instant case. The Razor court did not consider the circumstance where, as

17

here, the Limited Warranty unequivocally provides that “if you do not agree to the terms of the

18

warranty, do not use the product and return it . . . for a refund.” Limited Warranty, at 1; see In re

19

VTech Data Breach Litig., 2017 WL 2880102, at *8 (N.D. Ill. July 5, 2017) (describing Razor as

20

holding that a term unavailable to a consumer until after purchase “might be unconscionable,

21

especially if [the plaintiff] was not given an opportunity to review and reject that term by returning

22

the product without incurring financial loss” (emphasis added)). Contrary to Plaintiffs’ argument,

23

courts applying Illinois law have enforced provisions in contracts where the party “had an

24

opportunity to return the [product] after reading” the contract. Hill v. Gateway 2000, Inc., 105

25

F.3d 1147, 1148 (7th Cir. 1997); see also McNamara v. Samsung Telecommunications Am., LLC,

26

2014 WL 5543955, at *2 (N.D. Ill. Nov. 3, 2014) (refusing to find arbitration provision

27
28

46
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

unconscionable under Illinois law where plaintiff could return the product for a refund within 30

2

days of purchase). Plaintiffs do not dispute that they could return the iPhone without cost within

3

14 days of purchase if they were not satisfied with the terms of the Limited Warranty. See TACC

4

¶¶ 36, 88.

5

Moreover, Plaintiffs acknowledge that Apple’s Limited Warranty was available online

6

prior to and at the time of their purchase, and Plaintiffs do not allege that they did not or could not

7

review the Limited Warranty online prior to their purchase. See TACC ¶¶ 106–08 (providing

8

hyperlink to Apple’s Limited Warranty online); see Darne, 2015 WL 9259455, at *8 (finding

9

plaintiffs failed to allege procedural unconscionability under Illinois law where the plaintiffs did
not allege when they became aware of the warranty, whether the warranty induced their purchases,

11
United States District Court
Northern District of California

10

“or whether they learned about the warranty’s duration after completing their purchases”).

12

Further, although Apple “unilaterally drafted the terms of the warranty,” Plaintiffs had the option

13

of purchasing a different smartphone from a different smartphone manufacturer, and Plaintiffs do

14

not dispute that they had the option of purchasing an extended service plan to extend the duration

15

of the 1-year warranty. Darne, 2015 WL 9259455, at *8 (quoting Smith v. Ford Motor Co., 462 F.

16

App’x 660, 663–64 (9th Cir. 2011)). Accordingly, the Court finds that Plaintiffs have failed to

17

adequately allege that the Limited Warranty is procedurally unconscionable under Illinois law.

18

Based on the allegations in the TACC, the Court concludes that Plaintiffs have failed to

19

allege that Defendant’s 1-year Limited Warranty is unconscionable under Illinois law.

20

Accordingly, the limitations contained within the Limited Warranty are enforceable. Plaintiffs

21

cannot state a breach of express warranty claim because the Limited Warranty excludes defects in

22

design and Plaintiffs allege only a design defect claim. Thus, for all Plaintiffs, Plaintiffs cannot

23

allege that Defendant breached the express warranty. In addition, the Limited Warranty applies

24

for only 1-year, and for all but two Plaintiffs, the touchscreen defect manifested outside of the 1-

25

year Limited Warranty period. Thus, the Court GRANTS Defendant’s motion to dismiss

26

Plaintiffs’ selected breach of warranty claim under Illinois law. The Court grants Defendant’s

27
28

47
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

motion with prejudice. The Court dismissed Plaintiffs’ breach of warranty claim in this Court’s

2

prior order for the same reasons that the Court dismisses Plaintiffs’ instant breach of warranty

3

claim in the TACC. The Court provided Plaintiffs leave to amend to adequately allege either a

4

design defect or unconscionability of the Limited Warranty, and Plaintiffs have failed to do so.

5

Thus, the Court finds that granting Plaintiffs an additional opportunity to amend the complaint

6

would be futile, cause undue delay, and unduly prejudice Defendants by requiring Defendants to

7

file repeated motions to dismiss. See Leadsinger, 512 F.3d at 532.
2. Breach of Implied Warranty

8

Defendant also moves to dismiss Plaintiffs’ claim for breach of implied warranty.

10

Plaintiffs allege that “Apple provided Plaintiffs and the Class Members with an implied warranty

11
United States District Court
Northern District of California

9

that the iPhones and any parts thereof are merchantable and fit for the ordinary purposes for which

12

they were sold.” TACC ¶ 296. Plaintiffs allege that the iPhones “were not fit for their ordinary

13

and intended purpose” as smartphones, and thus Defendant breached the implied warranty that the

14

iPhones were of merchantable quality and fit for use.” Id. ¶ 299.

15
16

As the Court set forth in its prior Order, Apple’s disclaimer on implied warranties provides
as follows:

17

WARRANTY LIMITATIONS SUBJECT TO CONSUMER LAW

18

TO THE EXTENT PERMITTED BY LAW, THIS WARRANTY
AND THE REMEDIES SET FORTH ARE EXCLUSIVE AND IN
LIEU OF ALL OTHER WARRANTIES, REMEDIES AND
CONDITIONS, WHETHER ORAL, WRITTEN, STATUTORY,
EXPRESS
OR
IMPLIED. APPLE
DISCLAIMS
ALL
STATUTORY AND IMPLIED WARRANTIES, INCLUDING
WITHOUT
LIMITATION,
WARRANTIES
OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE AND WARRANTIES AGAINST HIDDEN OR
LATENT DEFECTS, TO THE EXTENT PERMITTED BY LAW.
IN SO FAR AS SUCH WARRANTIES CANNOT BE
DISCLAIMED, APPLE LIMITS THE DURATION AND
REMEDIES OF SUCH WARRANTIES TO THE DURATION OF
THIS EXPRESS WARRANTY AND, AT APPLE'S OPTION, THE
REPAIR OR REPLACEMENT SERVICES DESCRIBED BELOW.
SOME STATES (COUNTRIES AND PROVINCES) DO NOT
ALLOW LIMITATIONS ON HOW LONG AN IMPLIED
WARRANTY (OR CONDITION) MAY LAST, SO THE

19
20
21
22
23
24
25
26
27
28

48
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

LIMITATION DESCRIBED ABOVE MAY NOT APPLY TO
YOU.

1
2
3

Limited Warranty, at 1 (bold emphasis added).
In this Court’s order dismissing Plaintiffs’ breach of implied warranty claim in the SACC,

4

the Court applied California law—the only law briefed by the parties—and held that Plaintiffs

5

breach of implied warranty claim failed because Defendant’s Limited Warranty disclaimed all

6

implied warranties. Davidson, 2017 WL 976048, at *14. The Court held that, under California

7

law, a company may disclaim the implied warranty of merchantability so long as the disclaimer

8

‘mention[s] merchantability’ and is ‘conspicuous.’” Id. (quoting Minkler v. Apple, 65 F. Supp. 3d

9

810, 819 (N.D. Cal. 2014)). Further, a company may disclaim the implied warranty of fitness
under California law “as long as the disclaimer is in writing and ‘conspicuous.’” Id. This Court

11
United States District Court
Northern District of California

10

examined the case law and Apple’s Limited Warranty and concluded that the Limited Warranty

12

appropriately disclaimed implied warranties under California law because the disclaimer was in

13

writing, stated in clear language, and was in capitalized formatting on the second paragraph of the

14

Limited Warranty, which contrasted the disclaimer from the non-capitalized font on the same

15

page. Id. at *14–15.

16

Illinois law, like California law, “permits parties to exclude implied warranties at the time

17

of sale when certain conditions are met.” Great West Cas. Co. v. Volvo Trucks N.A., Inc., 2009

18

WL 588432, at *3 (N.D. Ill. Feb. 13, 2009). Specifically, “to exclude or modify the implied

19

warranty of merchantability or any part of it the language must mention merchantability and in

20

case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness,

21

the exclusion must be by a writing and conspicuous.” Id. (quoting 810 Ill. Comp. Stat. 5/2-

22

316(2)).

23

The implied warranty disclaimer in Apple’s Limited Warranty meets these standards. As

24

the Court explained in its prior Order, the implied warranty disclaimer is in writing and

25

“mention[s] merchantability.” Davidson, 2017 WL 976048, at *14. Moreover, under Illinois law,

26

as under California law, the implied warranty disclaimer is “conspicuous.” Great West Cas. Co.,

27
28

49
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

2009 WL 588432, at *3. Under the Uniform Commercial Code, which governs the sale of goods

2

in Illinois, conspicuous terms include “language in the body of a record or display in larger type

3

than the surrounding text, or in contrasting type, font or color to the surrounding text of the same

4

size, or set off from surrounding text of the same size by symbols or marks that call attention to

5

the language.” 810 Ill. Comp. Stat. 5/1-201(10)(B). The implied warranty disclaimer in the

6

Limited Warranty is located in the second paragraph of the first page of the Limited Warranty.

7

See Limited Warranty, at 1. The disclaimer is preceded by a heading and, unlike the subsequent

8

text on the same page, the disclaimer is in all capital letters. Id. “Illinois courts have ruled that

9

disclaimers printed in capital letters and set off from the surrounding text are conspicuous.” Great
West Cas. Co., 2009 WL 588432, at *3 (collecting cases). Accordingly, the Court finds that

11
United States District Court
Northern District of California

10

Defendant’s implied warranty “disclaimers were presented in a manner reasonably sufficient to

12

draw attention to them.” R.O.W. Window Co. v. Allmetal, Inc., 856 N.E.2d 55, 59–60 (Ill. Ct.

13

App. 2006).

14

Plaintiffs contend that, even assuming that the Limited Warranty’s implied warranty

15

disclaimer is conspicuous, the Limited Warranty’s implied warranty disclaimer is not enforceable

16

because the Limited Warranty is unconscionable. Pl. Opp at 28–29. Plaintiffs again argue that

17

“Illinois law mandates that Plaintiff should have the opportunity to offer evidence that any such

18

disclaimer was unconscionable.” Id. at 28. However, as discussed above with regards to

19

Plaintiffs’ breach of express warranty claim, federal courts have recognized that Plaintiffs must

20

plausibly allege unconscionability in the complaint before they are entitled to an evidentiary

21

hearing on unconscionability. See Darne, 2015 WL 9259455, at 7 n. 9 (rejecting argument that,

22

under Illinois law, it was “premature to decide the unconscionability question on a motion to

23

dismiss” and addressing the “adequacy of the allegations of unconscionability”); see also

24

Stravropoulos, 2014 WL 2609431, at *3 (assessing whether the plaintiff “passed the pleadings

25

threshold for unconscionability”). Plaintiffs’ allegations regarding the unconscionability of the

26

Limited Warranty for purposes of their implied warranty claim are the same as Plaintiffs’

27
28

50
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1

allegations with regards to their breach of express warranty claim. As set forth above, the Court

2

finds that Plaintiffs have not plausibly alleged that Apple’s Limited Warranty is unconscionable

3

under Illinois law. Accordingly, the implied warranty disclaimer contained within Defendant’s

4

Limited Warranty is enforceable, and the Court thus GRANTS Defendant’s motion to dismiss

5

Plaintiffs’ breach of implied warranty claim under Illinois law. The Court grants Defendant’s

6

motion with prejudice. The Court dismissed Plaintiffs’ breach of implied warranty claim in this

7

Court’s prior order for the same reasons that the Court dismisses Plaintiffs’ instant breach of

8

implied warranty claim in the TACC. The Court provided Plaintiffs leave to amend to adequately

9

allege that the implied warranty disclaimer was inconspicuous or unconscionable, and Plaintiffs
have failed to do so. Thus, the Court finds that granting Plaintiffs an additional opportunity to

11
United States District Court
Northern District of California

10

amend the complaint would be futile, cause undue delay, and unduly prejudice Defendants by

12

requiring Defendants to file repeated motions to dismiss. See Leadsinger, 512 F.3d at 532.
3. Magnusson-Moss Act

13

Finally, Defendant moves to dismiss Plaintiffs’ claim under the Magnusson-Moss Act. As

14
15

the Court explained in its prior order, “[t]he parties do not dispute that ‘claims under the

16

Magnusson-Moss Act stand or fall with [Plaintiffs’] express and implied warranty claims under

17

state law.’” Davidson, 2017 WL 976046, at *15 (quoting Clemens, 534 F.3d at 1022).

18

Accordingly, Plaintiffs' Magnusson-Moss Warranty Act claim based on Plaintiffs’ common law

19

breach of express and implied warranty claims under Illinois law is DISMISSED with prejudice.

20

IV.

CONCLUSION
For the foregoing reasons, Defendant’s motion to dismiss the TACC is GRANTED in part

21
22
23

and DENIED in part as follows:


Defendant’s motion to dismiss Plaintiffs’ requests for injunctive relief is GRANTED with

24

prejudice as to Plaintiffs Davidson, Borzymowski, Muilenburg, Petty, Bon, Corbett, and

25

Pajaro, and DENIED as to Plaintiffs Brown, Baker, Cleary, Benelhachemi, Bauer, and

26

Heirloom Estate Services.

27
28

51
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT

1



Defendant’s motion to dismiss Plaintiffs’ New Jersey Consumer Fraud Act; Florida

2

Deceptive and Unfair Trade Practices Act; Washington Consumer Protection Act; Illinois

3

Consumer Fraud and Deceptive Trade Practices Act; Texas Deceptive Trade Practices Act;

4

Colorado Consumer Protection Act; and common law fraud claims is GRANTED with

5

prejudice to the extent that these claims are premised on an affirmative misrepresentation

6

theory.

7



Defendant’s motion to dismiss Plaintiffs’ New Jersey Consumer Fraud Act; Florida

8

Deceptive and Unfair Trade Practices Act; Washington Consumer Protection Act; Illinois

9

Consumer Fraud and Deceptive Trade Practices Act; Texas Deceptive Trade Practices Act;
Colorado Consumer Protection Act; and common law fraud claims is DENIED to the

11
United States District Court
Northern District of California

10

extent that these claims are premised on a fraudulent omissions theory. However, the

12

Court GRANTS with prejudice Defendant’s motion to dismiss Plaintiffs’ claims for fraud

13

under the New Jersey Consumer Fraud Act and Pennsylvania common law.

14



Illinois law is GRANTED with prejudice.

15
16



19
20

Defendant’s motion to dismiss Plaintiffs’ claim for breach of implied warranty under
Illinois law is GRANTED with prejudice.

17
18

Defendant’s motion to dismiss Plaintiffs’ claim for breach of express warranty under



Defendant’s motion to dismiss Plaintiffs’ Magnusson-Moss Act claim based on Plaintiffs’
express and implied warranty claims under Illinois law is GRANTED with prejudice.

IT IS SO ORDERED.

21
22
23
24

Dated: July 25, 2017
______________________________________
LUCY H. KOH
United States District Judge

25
26
27
28

52
Case No. 16-CV-4942-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS THE SELECTED CLAIMS IN
PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT