In Re: Apple iPhone 3G and 3GS MMS Marketing and Sales Practices Litigation

Filing 140

MOTION to Dismiss Franklin First Amended and Supplemental Complaint by Defendant AT&T Mobility LLC. Motion Hearing set for 10/14/2010 09:30 AM before Judge Carl Barbier. (Attachments: # 1 Memorandum in Support, # 2 Proposed Order)(Reference: 10-18)(Sooy, Kathleen) Modified text on 8/11/2010 (sek, ).

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA IN RE: APPLE iPHONE 3G AND 3GS "MMS" MARKETING AND SALES PRACTICES LITIGATION THIS DOCUMENT RELATES TO: CASE NO. 09-704 (S.D. ALA.) FRANKLIN, Plaintiff, v. APPLE INC., et al., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

CIVIL ACTION MDL NO: 2116 SECTION "J" JUDGE BARBIER MAGISTRATE JUDGE WILKINSON

MEMORANDUM IN SUPPORT OF MOTION OF AT&T MOBILITY LLC TO DISMISS FIRST AMENDED AND SUPPLEMENTAL COMPLAINT Plaintiff spins his straightforward contract with AT&T Mobility LLC ("ATTM") into a long list of claims, ranging from fraud and violation of Alabama consumer laws, to breach of the covenant of good faith and fair dealing and even unjust enrichment, in his First Amended and Supplemental Complaint ("Amended Complaint" or "FAC"). None of plaintiff's claims survive

scrutiny under Federal Rules of Civil Procedure 9(b) and 12(b)(6),1 and therefore should be dismissed for the following deficiencies. First, the Federal Communications Act ("FCA") expressly preempts plaintiff's claims, which are all brought under state law. Plaintiff's claims are a challenge to the sufficiency of ATTM's wireless network and the fairness of ATTM's rates for wireless service. The FCA reserves issues of network capacity and wireless rates for federal regulation and control and bars state law claims in these areas. Second, plaintiff fails to state claims for violation of Alabama's Deceptive Trade Practices Act ("DTPA") and for common law fraud and misrepresentation because plaintiff does not plead the allegations that support these fraud-based claims with the specificity required under Rule 9(b). These claims are also defective because plaintiff fails to allege the essential elements for each of these claims, such as a cognizable misrepresentation or omission and plaintiff's actual reliance. Plaintiff's DTPA claim also fails because plaintiff does not sufficiently plead conduct prohibited by the DTPA and because plaintiff has not complied with the pre-litigation demand requirements of the DTPA. Third, plaintiff fails to state claims for breach of an express or implied contract because plaintiff does not allege that ATTM explicitly agreed that it would provide MMS capability on

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ATTM concurrently files its motion to compel arbitration of plaintiff's claims. ATTM respectfully submits that the Court should decide its motion to compel arbitration before reaching this motion ­ and may wish to defer motion to dismiss briefing ­ because the arbitration motion raises the threshold issue of whether plaintiff may pursue his claims against ATTM in this forum. If the Court ultimately determines that plaintiff may pursue his claims against ATTM in this forum, then this motion should be heard.

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the iPhone 3G or 3GS, and because both the existence and explicit terms of its wireless service contract preclude plaintiff's breach of implied contract claim. Fourth, plaintiff fails to state a breach of warranty claim because ATTM clearly and expressly disclaimed all warranties, express or implied, in its wireless service contract with plaintiff. It also fails to the extent that it is based on the messaging plans provided by ATTM, because under Alabama law, such warranties are available only against a seller of goods. In addition, plaintiff does not plead the requisite facts to establish a claim for breach of an implied warranty. Fifth, plaintiff's claim for breach of the implied covenant of good faith and fair dealing fails because there is no such cause of action under Alabama law. Finally, plaintiff's unjust enrichment claim fails because it is barred by the existence of an express contract between ATTM and plaintiff. BACKGROUND I. Procedural History On December 3, 2009, the Judicial Panel for Multidistrict Litigation, pursuant to 28 U.S.C. § 1407, centralized 12 putative class actions in this District for coordinated pretrial proceedings. D.E. 1. Since that time, an additional 12 actions have been transferred to this multidistrict litigation. On April 1, 2010, plaintiffs filed a proposed "exemplar complaint," entitled "First Amended Complaint" (D.E. 50), which essentially merged two actions ­ Sterker v. Apple Inc., Case No. 09-4242, filed in the Northern District of California, and Williams v. Apple Inc., Case No. 09-6914, filed in the Central District of California ­ into a single putative nationwide class action. Plaintiffs' proposed exemplar complaint did not address the other 21 individual actions then pending in the multidistrict litigation. On May 28, 2010, after briefing by the parties, this 3

Court ordered that plaintiffs' proposed exemplar complaint be stricken from the record. D.E. 66. The Court also ordered plaintiffs in all of the pending actions to file amended complaints by June 4, 2010. Id. This multidistrict litigation currently comprises 20 putative class actions brought by 24 plaintiffs against Apple Inc. ("Apple") and ATTM in 13 different states across the country.2 On June 4, 2010, amended complaints were filed in 16 actions.3 D.E. 67-82. The amended complaints allege putative statewide classes, except for the amended complaints filed in the Sterker action, which alleges a putative nationwide class against Apple and a putative statewide class against ATTM, and in Goette v. Apple Inc., Case No. 4:09-CV-1480, filed in the Eastern District of Missouri, which alleges a putative nationwide class against Apple and ATTM. II. Factual Allegations, Putative Classes And Causes of Actions A. Factual Allegations

The core allegation in plaintiff's Amended Complaint is that Apple and ATTM misrepresented the availability of a single feature of the iPhone 3G and 3GS known as Multimedia Messaging Services ("MMS"). The iPhone is a mobile phone, an iPod music player, and an Internet communications device, with e-mail, web browsing, and text messaging

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Four of the actions have been voluntarily dismissed: Pietrangelo v. Apple Inc., Case No. 09cv-1992 (N.D. Ohio); Kamarian v. Apple Inc., Case No. 09-cv-6590 (C.D. Cal.); Williams v. Apple Inc., Case No. 09-6914 (C.D. Cal.); and Gros v. Apple Inc., Case No. 09-cv-08006 (E.D. La.). D.E. 86-89.
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Amended complaints have not been filed in four actions: Carr v. Apple Inc., Case No. 09-cv1996 (N.D. Ohio); Tran v. Apple Inc., Case No. 09-4048 (N.D. Cal.); Molina v. Apple Inc., Case No. 09-cv-2032 (S.D. Cal.); and West v. Apple Inc., Case No. 1:10-cv-01370 (D.N.J.), which was transferred into this MDL proceeding on June 11, 2010. D.E. 85. The parties have agreed to and are working on a different schedule for briefing the responsive pleadings in those actions for submission to the Court.

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capabilities. FAC ¶ 27. MMS enhances the basic text feature of Standard Messaging Services ("SMS") by enabling users to send pictures and videos in addition to standard text. See id. ¶ 28. In June 2007, Apple launched the original iPhone, known as the iPhone 2G. FAC ¶ 29. In July 2008, Apple launched the second generation iPhone 3G. Id. ¶ 30. In June 2009, Apple launched the third generation iPhone 3GS. Id. ¶ 37. Plaintiff alleges that Apple and ATTM falsely "advertised that MMS was a feature included with the iPhone 3G and 3GS and AT&T's messaging service plans" when in fact the MMS feature was disabled on the iPhone 3G and 3GS. FAC ¶ 9. As to ATTM, plaintiff alleges that in October 2007, following the iPhone 2G's June 29, 2007 launch, ATTM marketed and sold an unlimited texting plan called "Messaging Unlimited," which included text, picture, video, and instant messaging, to all of its customers, including iPhone customers. Id. ¶ 29. He further alleges that in June 2008, in anticipation of the launch of the iPhone 3G, ATTM announced the "iPhone 3G pricing plans," which were the same plans offered to all of its customers, including non-iPhone customers. Id. ¶ 32. Plaintiff's theory is that ATTM falsely represented that MMS was available on the iPhone 3G and 3GS by marketing and selling the same unlimited messaging plans to all of its customers, including non-iPhone customers with mobile phones that had MMS capability.4

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Plaintiff also alleges that at an unspecified time after the July 2008 launch of the iPhone 3G, ATTM published a statement on the Answer Center of its website acknowledging that customers who were sent an MMS message and who owned a non-MMS capable device would receive a text message instead of an MMS message, and would be required to view the MMS message from an ATTM website. FAC ¶ 35.

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According to plaintiff's allegations, the first time ATTM specifically advertised that the iPhone had MMS capability was on June 10, 2009, when ATTM purportedly advertised on its website that the iPhone 3GS had MMS functionality. FAC ¶ 42. Although plaintiff also alleges that Apple and ATTM had in-store displays and/or videos that showed the iPhone sending photos via text messaging, he provides no specific details regarding when those displays and/or videos appeared in stores, instead vaguely alleging that they did so "[a]t certain times during the class period." See id. ¶ 45. Plaintiff alleges that, contrary to Apple's and ATTM's purported representations about the availability of MMS on the iPhone 3G and 3GS, MMS was not available on either the iPhone 3G or iPhone 3GS until late September 2009. See FAC ¶¶ 52, 61. According to plaintiff, the unavailability of MMS was the result of deficiencies in ATTM's network. Plaintiff alleges that as the defendants were about to launch the iPhone 3G, "AT&T realized that its entire network would be overloaded if millions of new iPhone users began texting pictures on the 3G iPhone" because sending pictures requires more network capacity than written text messages. Id. ¶ 4. Plaintiff also alleges that "AT&T's network was unable to provide the service of texting pictures until it upgraded its network." Id. ¶ 6; see also id. ¶ 5 ("AT&T needed to build up its network to support this new capacity and that would take time."). ATTM, plaintiff alleges, "intentionally barred iPhone users from having the same [MMS] ability [as non-iPhone users] given its network limitations." Id. ¶ 7; see also id. ¶ 76 ("Defendants failed to disclose that they would not allow Plaintiff to text pictures because AT&T's network would be over-burdened."); ¶¶ 114(i), 123(i), 127(i) ("AT&T had not upgraded its network to support MMS, and therefore, MMS would be unavailable on iPhones until the network was upgraded").

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Plaintiff also complains about the amount charged by ATTM for its Messaging Unlimited plan, alleging that ATTM "charged the same price for each of its messaging plans and bundles to iPhone users as it charged to all other wireless service subscribers with cellular phones other than the iPhone." FAC ¶ 88; see also id. ¶ 10 (ATTM "charged Class members the same price as customers with different phones which support MMS service."). B. The Putative Classes

Plaintiff Clyde Bernard Franklin is an Alabama resident and alleges he purchased an iPhone 3G from Apple and a service plan from ATTM in Mobile, Alabama in September 2008. FAC ¶ 13. Plaintiff alleges he later purchased an iPhone 3GS on December 24, 2009. Id. ¶ 16.5 Plaintiff was required at purchase to enter "a two-year contract for service through AT&T." Id. ¶ 54. Plaintiff purports to bring his claims against ATTM and Apple on behalf of a statewide class of "[a]ll Alabama residents who purchased an iPhone 3G or 3GS from AT&T Mobility L.L.C. or Apple, Inc. from July 11, 2008 to September 25, 2009," and a sub-class of "[a]ll Alabama residents who purchased an iPhone and a text messaging plan from AT&T from July 11, 2008 to September, 2009." Id. ¶ 61. C. Causes Of Action

The Amended Complaint asserts nine causes of action: (1) violation of Alabama's Deceptive Trade Practices Act, Ala. Code §§ 8-19-1, et seq.; (2) breach of contract with respect to ATTM's messaging plans; (3) breach of express and/or implied warranty; (4) breach of the implied covenant of good faith and fair dealing; (5) unjust enrichment; (6) breach of contract; (7)

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As a matter of logic, none of plaintiff's claims can be based on his purchase of an iPhone 3GS on December 24, 2009, which is three months after the end of the class period. See FAC ¶ 61.

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fraud; (8) misrepresentation of material fact; and (9) oppression, fraudulent, wantonness, and malice. FAC ¶¶ 70-128. Plaintiff asserts these causes of action against both Apple and ATTM, except he asserts against solely ATTM the cause of action for breach of contract with respect to ATTM's messaging plans. Id. Plaintiff alleges he has been injured in two ways: (1) he paid more for his iPhone 3G than he should have, because MMS was not available on the iPhone 3G; and (2) he paid for a messaging service plan that included MMS even though MMS was not available on his iPhone 3G. See, e.g., FAC ¶¶ 6, 10, 17. He seeks compensatory and punitive damages. Id. ¶¶ 130-33. LEGAL STANDARDS I. Rule 12(b)(6) Standards To survive a motion to dismiss under Rule 12(b)(6), the complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009); In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). Although a plaintiff need not present detailed factual allegations, "a plaintiff's obligation to provide the `grounds' of his `entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (alteration omitted). In ruling on ATTM's motion to dismiss, the Court should "not accept as true conclusory allegations, unwarranted factual inferences, or legal conclusions." Arias-Benn v. State Farm Fire & Cas. Ins. Co., 495 F.3d 228, 230 (5th Cir. 2007). Instead, the Court should assess only well-pleaded allegations and dismiss all claims that fail to state plausible claims for relief. See id. II. Applicable Law Where, as here, a plaintiff asserts state common law claims in federal multidistrict litigation founded on diversity jurisdiction, the transferee court must apply the substantive law, 8

including choice of law rules, of the state in which the transferor court sits. See Ferens v. John Deere Co., 494 U.S. 516, 523 (1990); In re Korean Air Lines Disaster of Sept. 1, 1983, 932 F.2d 1475, 1496 (D.C. Cir. 1991) ("When a case is transferred pursuant to 28 U.S.C. § 1407(a) by the Panel on Multi-District Litigation, the transferee court must apply the choice of law rules of the states where the transferor courts sit."); 15 Charles A. Wright, et al., Federal Practice and Procedure, §§ 3866, 4506 (3d ed. 2009). The Court should apply Alabama law in determining whether plaintiff in this action has stated plausible claims under Rule 12(b)(6). Plaintiff acknowledges that he is a party to "an exclusive two year wireless service agreement with AT&T." FAC ¶ 85. Plaintiff's wireless service agreement with ATTM includes a choice of law provision stating that all "claims arising out of or relating to any aspect of the relationship between [ATTM and consumer], whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory," are governed by the law of the state of the billing address. Rives Decl., filed in support of ATTM's Motions to Compel Arbitration Pursuant to the Federal Arbitration Act ("ATTM's Motions to Compel Arbitration"), ¶ 3 & Ex. 1 ("The law of the state of your billing address shall govern this Agreement except to the extent that such law is preempted by or inconsistent with applicable federal law." (emphasis added)).6 Plaintiff has an Alabama billing address. Mahone-Gonzalez Decl., filed in support of ATTM's Motions to Compel Arbitration, ¶ 12 & Exs. 18-20.

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Because the Amended Complaint expressly refers to the ATTM wireless service agreement between plaintiff and ATTM, the Court may consider the agreement in deciding this motion to dismiss without converting it into a motion for summary judgment. In re Katrina Canal Breaches Litig. 495 F.3d 191, 205 (5th Cir. 2007) ("Documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's (continued...)

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Alabama courts have "long recognized the right of parties to an agreement to choose a particular state's laws to govern an agreement." Polaris Sales, Inc. v. Heritage Imports, Inc., 879 So. 2d 1129, 1133 (Ala. 2003) (quoting Cherry, Bekaert & Holland v. Brown, 582 So. 2d 502, 506 (Ala. 1991)); see also Ex parte HealthSouth Corp., 974 So. 2d 288, 295 (Ala. 2007). Because plaintiff's claims here indisputably arise out of, and relate to, his relationship with ATTM, the choice of law provision applies to all of his claims. Thus, plaintiff's claims are governed by Alabama law. ARGUMENT I. Plaintiff's Claims Against ATTM Are Preempted By The Federal Communications Act. ATTM is a wireless service provider, and therefore its right to enter a market for wireless service, the capacity of its wireless network, and the rates it charges for wireless service are subject to exclusive federal regulation and control under the Federal Communications Act ("FCA"). See 47 U.S.C. §§ 201, 308-09, 332(c)(3)(A). The FCA completely preempts the application of state law to wireless carriers such as ATTM with respect to the regulation of rates and the terms and requirements for market entry. 47 U.S.C. § 332(c)(3)(A); Bastien v. AT&T Wireless Servs., Inc., 205 F.3d 983, 989 (7th Cir. 2000); see also Tex. Office of Pub. Util. v. FCC, 183 F.3d 393, 432 (5th Cir. 1999) ("States . . . can never regulate rates and entry requirements for [wireless] providers.").

(continued) complaint and are central to her claim."); see also Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000) (same).

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Section 332 of the FCA provides that "no State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service." 47 U.S.C. § 332(c)(3)(A). In applying this preemption clause, courts have universally recognized that the FCA preempts all state law claims, regardless of how fashioned, that would require resolution of issues reserved for federal regulation, including such issues as "the type and adequacy of technology that a wireless service provider . . . must use in order to enter or serve a particular market," Aubry v. Ameritech Mobile Commc'ns, Inc., No. 00-75080, 2002 WL 32521813, at *3 (E.D. Mich. June 17, 2002), "the manner in which a mobile service carrier charges customers for its services," Brodie v. Telecorp Commc'ns Inc., 2002-942 (La. App. 5 Cir. 12/30/02), 836 So. 2d 646, 648, and whether the "services provided . . . were not worth the amount of the [rate charged]," Gilmore v. Sw. Bell Mobile Sys., 156 F. Supp. 2d 916, 925 (N.D. Ill. 2001). Preemption does not depend on the form or title of the causes of action at issue, but instead on "the nature of the claims" asserted and the extent to which those claims challenge federally regulated rates or practices. Bastien, 205 F.3d at 989 (consumer fraud and contract claims preempted where "complaint would directly alter the federal regulation of tower construction, location and coverage, quality of service and hence rates for service"); accord Iberia Credit Bureau, Inc. v. Cingular Wireless, 668 F. Supp. 2d 831, 842 (W.D. La. 2009) (recognizing that "in specific cases" the FCA preempts state law breach of contract and inadequate disclosure claims). In Bastien, the plaintiff entered a service contract with AT&T Wireless Services ("AWS"), and sued after it became dissatisfied with the quality of AWS's service. Bastien, 205 F.3d at 985. The plaintiff asserted state law claims for breach of contract and statutory consumer

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fraud, alleging that AWS "signed up subscribers without first building the cellular towers and other infrastructure necessary to provide reliable cellular service and other infrastructure necessary to provide reliable cellular connections." Plaintiff also alleged that AWS "continued marketing and selling its telephones and telephone service, without regard to the fact that it knew that it could not deliver what it was promising," and that AWS "conceal[ed] the material fact that it did not have the capacity to handle the volume of its cellular calls." Id. The court found that while the plaintiff's claims "appear more like traditional state law claims, they are all founded on the fact that [AWS] had not built more towers and more fully developed its network at the time Bastien tried to use the system." Id. at 989. The court held that the plaintiff's state law claims were expressly preempted by § 332 (c)(3)(A) of the FCA because they improperly "tread directly on the very areas reserved to the FCC: the modes and conditions under which [AWS] may begin offering services . . . as well as the rates and conditions that can be offered for the new service." Id. The fact that the plaintiff included allegations that AWS misrepresented and fraudulently concealed the insufficiency of its network did not alter the court's analysis, because even those allegations, the court concluded, constituted a veiled challenge to the FCC's approval of AWS's schedule for building towers and establishing service. Id. at 989-90. Likewise, in pending multidistrict litigation In re Apple iPhone 3G Prods. Liab. Litig., No. 5:09-md-02045 JW, slip op. at 9 (N.D. Cal. Apr. 2, 2010), the United States District Court for the Northern District of California recently held that California state law claims for fraud, consumer fraud and breach of warranty against ATTM relating to sales and performance of the iPhone 3G are preempted by the FCA because plaintiffs' "core allegation [was] that Defendants knew . . . the network was not sufficiently developed . . . and that Defendants deceived Plaintiffs

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into paying higher rates for a service that Defendants knew they could not deliver." The court held that because "plaintiffs' claims are an attack on ATTM's rates and 3G market entry, [they] therefore tread on ground reserved by the FCA." Id. Here, as in Bastien and In re Apple iPhone 3G Prods. Liab. Litig., plaintiff's state law claims against ATTM improperly tread on ground reserved to federal law because they are based on allegations that ATTM's network was not sufficiently developed to support MMS for the iPhone 3G and iPhone 3GS, and that ATTM's rates for unlimited messaging on the iPhone 3G and iPhone 3GS were too high. In particular, the resolution of plaintiff's claims here turn on allegations regarding the sufficiency of ATTM's network. Plaintiff alleges, for example, that "AT&T needed to build up its network to support [MMS] and that would take time," "AT&T's network was unable to provide the service of texting pictures until it upgraded its network," and ATTM concealed the fact that "AT&T had not upgraded its network to support MMS." FAC ¶¶ 5-6, 114, 123, 127. Plaintiff essentially asks this Court to evaluate whether ATTM adequately developed its network to provide MMS on the iPhone 3G and 3GS. See In re Apple iPhone 3G Prod. Liab. Litig., No. 5:09-md-02045 JW, slip op. at 12 (claims preempted where "Plaintiffs directly allege . . . that Defendants do not have the infrastructure necessary to provide [sufficient] level of service."). In addition, plaintiff's claims call for a determination as to the reasonableness of ATTM's rates. Plaintiff alleges that "[e]ven though the [MMS] function was disabled, AT&T charged Class members the same price as customers with different phones which support MMS," "iPhone users had to pay for MMS if they wanted unlimited AT&T messaging plans," and "AT&T charged the same price for each of its messaging plans and bundles to iPhone users as it charged to all other wireless service subscribers with cellular phones other than the iPhone." FAC ¶¶ 10,

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60, 88. Thus, resolution of plaintiff's claims will require proof that he was injured because he paid too much for his messaging plan. See Gilmore, 1156 F. Supp. 2d at 925 (fraud claim based on allegations that wireless carrier charged a fee for which no services were provided was preempted because resolution of claim "would require proof that any services provided in return were not worth the amount of the Fee"); see also In re Apple iPhone 3G Prod. Liab. Litig., No. 5:09-md-02045 JW, slip op. at 9 (fraud claim that wireless carrier charged for 3G service but delivered 2G service "implicated the reasonableness of [the carrier's] rates" and was preempted). Because their resolution "would enmesh the court[] in a determination of the reasonableness of a rate charged" and would require the Court "to determine the infrastructure appropriate for market entry," Fedor v. Cingular Wireless Corp., 355 F.3d 1069, 1073 (7th Cir. 2004) (referencing Bastien), plaintiff's claims clearly trespass into areas preempted by the FCA.7 II. Plaintiff's DTPA And Fraud Claims Fail Under Rule 9(b) And State Law. A. Plaintiff's Fraud-Based Claims Do Not Meet Rule 9(b) Standards.

The Fifth Circuit requires that all federal and state law claims "resting on allegations of fraud" meet the heightened pleading standards of Federal Rule of Civil Procedure 9(b). Williams v. WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir. 1997). To comply with Rule 9(b), a complaint

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The Ninth Circuit recently issued an opinion drawing a line between claims that are preempted by § 332 and claims that are not. See Shroyer v. New Cingular Wireless Servs., Inc., 606 F.3d 658, 662-63 (9th Cir. 2010). In Shroyer, the Ninth Circuit distinguished Bastien, reasoning that the claims in Bastien ran afoul of § 332 because they sought a determination that the network infrastructure was insufficient and did not justify the rates, but that the Shroyer claims fell outside § 332 because they did not implicate the network infrastructure or rates. Id. The claims against ATTM in this case are akin to the claims the Seventh Circuit found preempted in Bastien, because plaintiff seeks a determination that ATTM failed to adequately build out its network to offer MMS on the iPhone 3G and 3GS, and given its inability to provide MMS, charged unreasonable rates.

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must specify the alleged fraudulent statements, identify the speaker, state when and where the statements were made, and explain why the statements are fraudulent. Id. The Fifth Circuit holds to a strict interpretation of Rule 9(b), Nathenson v. Zonagen, Inc., 267 F.3d 400, 412 (5th Cir. 2001), and has long relied on Rule 9(b) as "a tool to weed out meritless fraud claims sooner than later," Bonvillain v. La. Land & Exploration Co., No. 99-3540, 2010 WL 1293808, at *8 (E.D. La. Mar. 29, 2010). Plaintiff's DTPA and fraud claims, which plaintiff redundantly pleads both as a claim for common law fraud and a claim for "Misrepresentation of Material Fact" under Code of Alabama § 6-5-101, directly "rest[ ] on allegations of fraud."8 The allegations underlying these claims fall far short of meeting Rule 9(b)'s requirements. First, plaintiff's allegations often improperly lump Apple and ATTM together as "defendants" instead of attributing each alleged misrepresentation to an identified "speaker." For example, plaintiff alleges that "Defendants' marketing campaign promoted the iPhone operating on AT&T 3G and 3GS networks by promising the latest in mobile technology capable of everything other mobile devices could do, including [MMS]." FAC ¶ 9; see also id. ¶¶ 12, 15, 26, 38, 51, 76, 77, 114, 121, 123, 128. By improperly grouping Apple and ATTM together, plaintiff fails to make the required identification of the alleged source for each alleged

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While plaintiff also purports to state an independent claim for "Oppression, Fraudulent, Wantonness, [and] Malice" under Code of Alabama § 6-11-20, this section does not create a stand-alone cause of action, but merely identifies the claims under which a plaintiff may obtain punitive damages and defines the requirements for obtaining such damages. See Bennitt v. Bennitt, 348 B.R. 820, 808 (N.D. Ala. 2006) ("[T]he statute was not designed to create a right to punitive damages which did not otherwise exist."); see also Ala. Code § 6-11-28 ("Nothing contained in this article shall be construed to grant or create a cause of action or right to recover punitive damages."). Accordingly, this claim should be dismissed as a matter of law.

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misrepresentation. Williams, 112 F.3d at 179 (fraud allegations insufficient where plaintiff did not "demonstrate which statements were fraudulent and attributable to each" defendant). Second, plaintiff does not allege when or where each alleged misrepresentation occurred. For example, plaintiff alleges that "[a]t certain times during the class period," ATTM had instore displays that showed a video demonstrating the iPhone 3GS with an MMS feature. FAC ¶ 45. Plaintiff's vague pleading conspicuously does not specify whether plaintiff purchased his iPhone before or after the displays allegedly were set up in ATTM's stores, whether they appeared in the store in which plaintiff purchased his iPhone 3G, or whether plaintiff ever saw or heard them. Third, plaintiff fails to specify the actual content of any alleged misrepresentations by ATTM. Plaintiff alleges, for instance, that "[o]n June 10, 2009, AT&T continued to falsely promote the iPhone and its messaging service by advertising on its website . . . that the iPhone 3G-S had MMS functionality." FAC ¶ 42. This is the sole allegation in the entire Amended Complaint that ties ATTM to an alleged representation about MMS functionality on the iPhone purportedly made on a specific date, but it fails under Rule 9(b) because it is pled in conclusory fashion. Plaintiff does not fill in any details about what the purported website text stated, where it appeared or why it was false. The Amended Complaint is replete with similar conclusory allegations about "misrepresentations" and "omissions" that do not provide any of the substance, details or context required by Rule 9(b). See id. ¶¶ 9, 30, 38, 40, 42, 51, 76, 77, 114, 123, 128. Moreover, plaintiff cannot have relied on any alleged statements made by ATTM on June 10, 2009, when he purchased his iPhone 3G in September 2008, nine months earlier. Further, plaintiff does not provide allegations required by Rule 9(b) identifying the misrepresentations on which plaintiff relied. Instead, plaintiffs offers general, conclusory

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allegations that plaintiff "relied on representations made in Defendants' uniform campaign of untrue and/or misleading marketing when choosing to purchase the iPhone 3G, 3Gs." FAC ¶ 77; see also id. ¶¶ 14-15. This may be in part because plaintiff bought his iPhone 3G in September 2008, nine months before June 10, 2009, when he alleges ATTM first mentioned "MMS" and "iPhone" together in an advertisement. While plaintiff attempts to create an air of specificity by alleging that "[h]e complained to Apple and AT&T about the inability to send pictures by text message, and he was told that the ability to do so would be coming soon" (FAC ¶ 16), even this allegation is far too vague to give rise to actionable fraud. Plaintiff does not specify which of the defendants he actually spoke with, the identity of the person he allegedly spoke with, the date of this exchange or why this statement was false. See Sullivan v. Leor Energy, LLC, 600 F.3d 542, 551 (5th Cir. 2010) (fraud allegations insufficient absent details regarding who made statements and when they occurred); Williams, 112 F.3d at 179 ("[P]laintiffs must also set forth an explanation as to why the statement or omission complained of was false or misleading." (internal quotations omitted)). Moreover, plaintiff could not have relied on this alleged statement in purchasing an iPhone because it occurred after he bought his iPhone 3G. Id. ¶ 16. Plaintiff' Amended Complaint puts forward the type of meritless fraud claims built on "mere speculation and conclusory allegations" that Rule 9(b) is intended to weed out. Pinero v. Jackson Hewitt Tax Servs. Inc., 594 F. Supp. 2d 710, 719-20 (E.D. La. 2009) (internal quotation marks omitted). B. Plaintiff Does Not Attribute Any Actionable Misrepresentations Or Fraudulent Omissions To ATTM.

Plaintiff's DTPA and fraud claims are based on the same three conclusory allegations: (1) defendants represented that MMS was a feature on the iPhone 3G and 3GS; (2) defendants

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failed to disclose that MMS would not be available on the iPhone 3G and 3GS unless and until ATTM upgraded its network; and (3) defendants failed to disclose that iPhone 3G and 3GS customers would be charged ATTM's standard messaging plan rates regardless of the fact that MMS was temporarily unavailable. FAC ¶¶ 76, 80, 114, 123. These claims are also fatally flawed because plaintiff's allegations do not identify any actionable affirmative misrepresentations or fraudulent omissions attributable to ATTM. 1. Alleged Statements Are Non-Actionable Statements Of Opinion.

Throughout the Amended Complaint, plaintiff alleges that defendants' marketing campaigns led plaintiff to believe that the iPhone was "revolutionary," "the latest in mobile technology" and the "leader in graphics." FAC ¶¶ 5, 9, 26, 76. Plaintiff relies on defendants' alleged superlatives as a basis for his claims that he "reasonably expected" that the iPhone 3G would include MMS. Id. ¶¶ 15, 76. Such statements of opinion are not actionable as misrepresentations. In order to state a claim under the DTPA based on purported misrepresentations, plaintiff must allege that defendants made statements that have a "tendency to mislead and deceive a substantial portion of the purchasing public." Feil v. F.T.C., 285 F.2d 879, 881 (9th Cir. 1960).9 To state a claim for fraud, plaintiff must identify a specific false representation of material fact. Wade v. Chase Manhattan Mortgage Corp., 994 F. Supp. 1369,

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This is the standard federal courts have adopted for pleading "deceptive acts or practices in or affecting commerce" prohibited under § 5(a)(1) of the Federal Trade Commission Act ("FTCA"), 15 U.S.C. § 5(a)(1). The Alabama legislature intended that "great weight shall be given" to the federal courts' interpretation of § 5(a)(1) of the FTCA in construing and applying Code of Alabama § 8-19-5, which similarly prohibits "deceptive acts or practices in the conduct of any trade or commerce." Ala. Code § 8-19-6.

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1378 (N.D. Ala. 1997). Statements that amount to mere opinion, however, will not support a claim under either theory. Fincher v. Robinson Bros. Lincoln Mercury, Inc., 583 So. 2d 256, 259 (Ala. 1991); see also Bellsouth Adver. & Publ'g Corp. v. Lambert Publ'g, 45 F. Supp. 2d 1316, 1320 (S.D. Ala. 1999). Such statements include "vague and subjective claims of product superiority" typically found in advertising and upon which no reasonable consumer would rely. Bellsouth Adver. & Publ'g Corp., 45 F. Supp. 2d at 1320. Both federal and state courts in Alabama have recognized that statements such as "top-ofthe-line," "luxury," "biggest and best" and "fine working order" are statements of opinion and thus not actionable as fraud or a deceptive advertising. See Cork v. Marriot Int'l, Inc., 426 F. Supp. 2d 1234, 1245-46 (N.D. Ala. 2006); McGowan v. Chrysler Corp., 631 So. 2d 842, 846 (Ala. 1994); Russell v. Wilson, 991 So. 2d 745, 749 (Ala. Civ. App. 2008). Alleged statements that the iPhone is "revolutionary," "the latest in mobile technology" and the "leader in graphics" fall squarely within the definition of non-actionable opinion, because they are not factual and, at best, are subjective opinions and are not likely to deceive the average consumer. See, e.g., Mount Sinai Med. Ctr. v. Heidrick & Struggles, Inc., 188 F. App'x 966, 968 (11th Cir. 2006) (defendants' statements that it was the "world's premier provider of executive level search and leadership" and would "partner with [plaintiff] . . . to build the best leadership team in the world" were non-actionable statements of opinion). 2. Plaintiff's Allegations That ATTM Marketed An Unlimited Messaging Plan Are Not Actionable Misrepresentations.

ATTM's representations regarding its unlimited messaging plans cannot form the basis of a DTPA or fraud claim. Plaintiff's DTPA and fraud claims are based on allegations that during the class period, ATTM advertised an unlimited messaging plan that included MMS. FAC ¶¶ 7, 9, 10, 29, 32, 38, 40, 58, 59, 75-77, 114, 123. Plaintiff's theory seems to be that consumers were

19

deceived into believing that the iPhone 3G and iPhone 3GS supported MMS because the ATTM advertisements he points to, which did not mention or refer to the iPhone, promoted an unlimited messaging plan that was available on other phones with MMS capability sold by ATTM. The allegations that string this strained theory together do not include any statements that are either actually false or likely to mislead a substantial number of reasonable consumers. See Wellnx Life Scis. Inc. v. Iovate Health Scis. Research In., 516 F. Supp. 2d 270, 284 (S.D.N.Y. 2007) ("The plaintiff must show either (1) that the challenged advertisement . . . is literally false," or "(2) that the advertisement . . . is likely to mislead or confuse consumers." (internal quotation marks omitted)). As plaintiff acknowledges, the ATTM advertisements he references in his Amended Complaint were general, non-device-specific promotions for its unlimited messaging plans. FAC ¶ 7 ("AT&T promoted and sold unlimited texting plans to all it[s] customers . . . ."). Plaintiff does not allege that these advertisements made any reference to the iPhone or the availability of MMS on the iPhone. Id. ¶¶ 7, 29. Plaintiff also acknowledges that when ATTM announced the messaging plan rates for the iPhone 3G in June 2008, ATTM made no reference to or promises regarding the availability of MMS. Id. ¶ 32. Based on these facts, a reasonable consumer exposed to ATTM's messaging plan advertisements would not be deceived into believing that every feature advertised by ATTM is available on every phone ATTM offers. See, e.g., Andre Strishak & Assocs., P.C. v. Hewlett Packard Co., 752 N.Y.S.2d 400, 409-10 (App. Div. 2002) (printer manufacturer did not engage in deceptive practice by failing to disclose on printer box that free ink cartridge was not the "large size" provided with prior models). Consumers purchasing wireless service and consumer electronics recognize that service options vary among devices, and that each device has its own

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strengths and weaknesses in terms of options. See, e.g., Consumer Advocates v. Echostar Satellite Corp., 8 Cal. Rptr. 3d 22, 29-30 (Ct. App. 2003) ("The common experience of television watchers since the beginning of television is that no television delivery system is perfect."). 3. Plaintiff's DTPA And Fraud Claims Based On Alleged Material Omissions Fail Because ATTM Had No Duty To Disclose.

To assert a claim for fraudulent concealment, either as a predicate for a DTPA claim or as a stand-alone cause of action, plaintiff must allege facts establishing that ATTM had a duty to disclose the alleged omissions.10 A duty to disclose arises in commercial transactions when the parties are in a confidential relationship or the information is specifically requested. Ex parte Ford Motor Credit Co., 717 So. 2d 781, 786-87 (Ala. 1997); see also Shutter Shop, Inc. v. Amersham Corp., 114 F. Supp. 2d 1218, 1225 (M.D. Ala. 2000) ("Alabama law presumes that the parties are capable of handling their own affairs and guarding their interests by asking reasonably specific, direct questions."). Plaintiff alleges that ATTM did not disclose two facts: (1) that its network did not support MMS on the iPhone 3G and 3GS; and (2) that iPhone 3G and 3GS users paid the same

10

While not clear, plaintiff's fraud claim appears to incorporate an alternative claim for negligent misrepresentation. Plaintiff alleges "[d]efendants failed to exercise ordinary care in their advertising, marketing and sale of the iPhone 3G and messaging plans." FAC ¶ 115. Plaintiff cannot assert such a claim, however, because a negligent misrepresentation claim requires allegations of an affirmative representation and cannot be based on concealment. See Shields v. Washington Nat'l Ins. Co., 375 F. Supp. 2d 1346, 1350 (M.D. Ala. 2005). Additionally, the economic loss doctrine bars negligence and negligent misrepresentation claims. See, e.g., Vesta Fire Ins. Corp. v. Milam & Co. Const., Inc., 901 So. 2d 84, 106 (Ala. 2004) ("The economic-loss rule prevents tort recovery when a product damages itself, causing economic loss, but does not cause personal injury or damage.").

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amount for unlimited texting plans as non-iPhone mobile phone users whose mobile phones had MMS capability, during the time that MMS was not available on the iPhone 3G and 3GS. Plaintiff does not allege any facts establishing ATTM had a duty to disclose the allegedly omitted facts. Absent allegations of facts establishing a confidential relationship between ATTM and plaintiff, no such duty exists. Nor does plaintiff allege that ATTM ever made any affirmative representations that the iPhone 3G had MMS capability, and as to the iPhone 3GS, he does not allege that ATTM made such a representation until June 10, 2009, several months after he purchased his iPhone.11 Similarly, plaintiff does not allege that he inquired about the availability of MMS prior to purchasing his iPhone 3G in September 2008. Because plaintiff cannot establish a duty to disclose, he has not alleged and cannot allege any actionable fraudulent omissions. See Penmont, LLC v. Blue Ridge Piedmont, LLC, 607 F. Supp. 2d 1266, 1272 (M.D. Ala. 2009) (no duty to disclose absent confidential relationship or "specific and direct questions from the other party").

11

Plaintiff's allegations regarding statements about MMS on ATTM invoices and account statements of "certain Class members" other than plaintiff (FAC ¶¶ 56-57) fail, because they are irrelevant to the question of whether plaintiff has adequately pled his fraud-based claims, and because such statements would not likely mislead consumers regarding the capabilities of the iPhone because consumers would only have received such statements after they purchased an iPhone and subscribed to ATTM's service. Similarly, plaintiff's vague allegations about in-store displays in ATTM stores (id. ¶ 45) omits information regarding when such displays were set up in ATTM's stores, and for how long. Moreover, plaintiff does not allege that he saw, let alone relied upon, the in-store displays. Thus, even under Rule 8(a)'s less stringent pleadings standards, plaintiff's allegations lack facts sufficient to support a plausible inference that the instore displays could have misled plaintiff regarding the availability of MMS on the iPhone 3G or 3GS. See Twombly, 550 U.S. at 569.

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C.

Plaintiff's Failure To Plead Reliance Is Fatal.

To state a claim for fraud, plaintiff must allege actual and reasonable reliance on ATTM's alleged misrepresentations. Bourgeois v. Hughes, No. 2080981, 2010 WL 1655453, at *6 (Ala. Civ. App. 2010). Actual reliance requires that "the misrepresentation actually induced the injured party to change its course of action." Water Works Bd. v. AMBAC Fin. Group, Inc., No. 09-2296, 2010 WL 2506087, at *6 (N.D. Ala. Apr. 1, 2010). Reasonable reliance imposes duty on plaintiff to "exercise some measure of precaution to safeguard [his] interests." Reliance is not reasonable if the "purchaser . . . closes his eyes where ordinary diligence requires him to see." Bourgeois, 2010 WL 1655453, at *6. Here, plaintiff does not allege facts sufficient to establish actual and reasonable reliance. Plaintiff alleges, in boilerplate fashion, that he "reasonably relied upon the representations by Apple and AT&T and his general understanding of the `revolutionary' nature of the 3G to form his belief that his iPhone 3G had the ability to send picture messages by text." FAC ¶ 15. The Amended Complaint is devoid of any facts regarding which ATTM representations plaintiff relied upon, when they were made, and by whom. Plaintiff alleges that he purchased an iPhone 3G in September 2008. FAC ¶ 13. The Amended Complaint identifies an ATTM television commercial regarding its unlimited messaging plan that allegedly aired in October 2007 (id. ¶ 29), almost one year before plaintiff purchased his iPhone 3G. It strains credulity to suggest that plaintiff relied on a commercial ATTM aired in October of 2007 regarding its unlimited messaging plan that did not even mention the iPhone when he purchased an iPhone 3G in September 2008. Merely alleging that ATTM's advertisements were disseminated to the public does not establish actual reliance on plaintiff's part. See Water Works Bd., 2010 WL 2506087, at *6 (no actual reliance on public statements where plaintiff did not allege "when and how it became aware" of statements). 23

Contrary to plaintiff's conclusory allegations of reliance, it would have been impossible for him to have seen or heard any affirmative representations by ATTM that MMS was available on the iPhone 3G, given that the Amended Complaint states that defendants did not begin claiming that the iPhone had an MMS feature until March 2009 (FAC ¶ 39), six months after he purchased his iPhone 3G. D. Plaintiff's Failure To Plead A Causal Nexus Between The Alleged Misrepresentations And His Injuries Is Fatal To His DTPA Claim.

To state a claim under the DTPA, plaintiff must allege a causal nexus between ATTM's alleged fraudulent conduct and his injuries. Ala. Code § 8-19-10(a) (providing claim to consumer whose damages were caused by unlawful conduct). Therefore, plaintiff must allege that he saw or was exposed to the alleged misrepresentations in order to satisfy the basic elements of the DTPA. Billions v. White & Stafford Furniture Co., 528 So. 2d 878, 880 (Ala. Civ. App. 1988) (no claim under DTPA where plaintiff failed to allege "he suffered any monetary damages as a result" of violation). Plaintiff's allegations are woefully inadequate. As discussed above, plaintiff does not identify any specific statements or advertisements by ATTM that he was exposed to prior to purchasing his iPhone 3G. Furthermore, many of the purported representations regarding the availability of MMS on the iPhone in the Amended Complaint were allegedly made nearly a year before or several months after he purchased his iPhone 3G (see, e.g., FAC ¶¶ 29, 38, 72), making it either extremely implausible or impossible that those statements caused him to purchase an iPhone. Because there is no casual connection between ATTM's alleged wrongful conduct and plaintiff's alleged injury, plaintiff's DTPA claim cannot proceed.

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E.

Plaintiff Did Not Satisfy The Statutory Pre-Filing Demand Requirement For His DTPA Claim.

Plaintiff's DTPA claim also should be dismissed because plaintiff failed to comply with the DTPA's pre-filing demand requirement.12 The DTPA provides that "at least 15 days prior to the filing of any action under this section," a prospective plaintiff must file a "written demand" for relief that "reasonably describ[es] the unfair or deceptive act or practice relied upon and the injury suffered." Deerman v. Fed. Home Loan Mortgage Corp., 955 F. Supp. 1393, 1439-40 (N.D. Ala. 1997); Ala. Code § 8-19-10(e). A plaintiff's failure to comply with the statute's prefiling notice requirement is fatal to his claim. Id.; Givens v. Rent-A-Center, Inc., 720 F. Supp. 160, 162 (S.D. Ala. 1998) (plaintiff's DTPA claim dismissed for failure to provide notice required by § 8-19-10(e)). III. Plaintiff's Breach Of Contract Claim Should Be Dismissed. Plaintiff alleges that when purchasing his iPhone 3G, he was "required to enter into an exclusive two year wireless service agreement with AT&T," and that "[p]art of that two year service agreement for Class members included the purchase of messaging plans." FAC ¶ 85.13 His breach of contract claim rests on the allegation that ATTM "expressly and/or impliedly

12

In addition, plaintiff cannot pursue his DTPA claim on behalf of a class, as § 8-19-10(f) expressly prohibits him from doing so. Ex parte Exxon Corp., 725 So. 2d 930, 933 (Ala. 1998 ("Alabama law does not allow consumers to bring class actions based on deceptive trade practices.").
13

Plaintiff does not allege that he was required by ATTM to purchase a messaging plan. See FAC ¶ 85. Indeed, he acknowledges elsewhere in the Amended Complaint that a messaging plan is an option offered by ATTM in addition to "a basic phone service or phone and data service plan." Id. ¶ 23.

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promised Plaintiffs and Class members that the iPhone 3G and 3GS messaging plans included the ability to send pictures by text message." Id. ¶ 87; see also id. ¶¶ 108-09. In pleading his claim for breach of an express contract, plaintiff does not point to any contract term that was explicitly agreed to by the parties, and that ATTM breached. He has not pointed to, and cannot point to, any explicit promise made by ATTM ­ in his service agreement or messaging plan, or anywhere else ­ that MMS would be available on the iPhone 3G before late summer 2009. Thus, his breach of express contract claim fails as a matter of law. Plaintiff also fails to state a claim for breach of an implied contract. It is well settled under Alabama law that "the existence of an express contract generally excludes an implied agreement relative to the same subject matter." Vardaman v. Florence City Bd. of Educ., 544 So. 2d 962, 965 (Ala. 1989); see also Kennedy v. Polar-BEK & Baker Wildwood P'ship, 682 So. 2d 443, 447 (Ala. 1996) ("[U]nder Alabama law, claims of both an express and an implied contract on the same subject matter are generally incompatible."). Not only does the very existence of plaintiff's wireless service agreement and messaging plan preclude an implied contract between him and ATTM, the service agreement itself expressly bars an implied contract. Plaintiff's service agreement plainly states: This Agreement, the signature or rate summary sheet, the terms included in the rate brochure(s) describing your plan and services, terms of service for products and services not otherwise described herein that are posted on applicable AT&T websites, and any documents expressly referred to herein or therein, make up the complete agreement between [plaintiff] and AT&T and supersede any and all prior agreements and understandings relating to the subject matter of this Agreement. Rives Decl., filed in support of ATTM's Motions to Compel Arbitration, ¶ 3 & Ex. 1 (emphasis added). None of the documents referenced in this provision state that MMS would be available on the iPhone 3G or iPhone 3GS before late summer 2009. See id.; Mahone-Gonzalez Decl.,

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filed in support of ATTM's Motions to Compel Arbitration, ¶ 11 & Ex. 16; Mahone-Gonzalez Decl., filed in support of ATTM's Motions to Dismiss First Amended and Supplemental Complaint, ¶ 22 & Ex. 20. Plaintiff also fails to allege any facts from which a promise by ATTM to provide MMS service on the iPhone 3G or 3GS can be implied. Plaintiff's implied contract claim rests on allegations that "AT&T charged the same price for each of its messaging plans and bundles to iPhone users as it charged to all other wireless service subscribers with cellular phones other than the iPhone" but it "provided the picture messaging functionality" only to non-iPhone users. FAC ¶¶ 88-89. As a matter of logic, ATTM's conduct towards non-iPhone customers cannot constitute an implied promise to plaintiff, who as an iPhone user is differently situated. Nor has plaintiff alleged any course of conduct under which ATTM provided or otherwise impliedly promised MMS functionality to iPhone 3G or iPhone 3GS customers. In addition, plaintiff alleges that the "terms of that contract include the promises and affirmations of fact made by Defendants on the iPhone and AT&T labels, packaging materials, websites, advertisements and/or press releases, all of which created or constituted express warranties that became part of the basis of the bargain and part of a standardized contract" between plaintiff and defendants. FAC ¶ 109. Plaintiff's wireless service contract with ATTM expressly identifies the scope of the agreement between the parties, thus prohibiting plaintiff from importing or implying terms not agreed to by the parties. See Estes v. Monk, 464 So. 2d 103, 105 (Ala. Civ. App. 1985) ("The court must construe and enforce contracts as they are written. The court should not . . . make new contracts for the parties, nor should the court add to the terms of a contract words, terms, or conditions not contained in it."). Moreover, nowhere does plaintiff allege that ATTM promised, by way of its labels, packaging materials, websites,

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advertisements, or press releases, that MMS would be available on the iPhone 3G purchased by plaintiff in September 2008. IV. Plaintiff's Breach Of Warranty Claim Should Be Dismissed. A. The ATTM Terms Of Service Agreement Expressly Disclaims All Warranties.

Express disclaimers of warranty are valid and enforceable in Alabama. See Dairyland Ins. Co. v. Gen. Motors Corp., 549 So. 2d 44, 47-48 (Ala. 1989). Words or conduct may be construed to exclude an express warranty where reasonable. Ala. Code § 7-2-316 (1). Parties may exclude the implied warranty of merchantability so long as the disclaimer mentions merchantability and is conspicuous. Id. § 7-2-316 (2). Similarly, the implied warranty of fitness may be excluded if the exclusion is in writing and conspicuous. Id. Plaintiff's claim for breach of express and implied warranty is foreclosed by his ATTM Terms of Service agreement, which expressly disclaims the existence of any warranties, express or implied: AT&T MAKES NO WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, SUITABILITY, OR PERFORMANCE REGARDING ANY SERVICE OR GOODS. Rives Decl., filed in support of ATTM's Motions to Compel Arbitration, ¶ 3 & Ex. 1. This warranty disclaimer is conspicuously set forth in writing, in capital letters, in an agreement with plaintiff under the bold-faced heading, "SERVICE LIMITATIONS; LIMITATIONS OF LIABILITY." Id.

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B.

Plaintiff Fails To Plead Sufficient Facts For His Breach Of Implied Warranty Claim.

Under Alabama law, there are two types of warranties implied in every contract for a sale of goods: the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. Ala. Code §§ 7-2-314, -315. Such warranties are available only against a seller of goods. See id. (describing warranties in context of "goods"). Thus, plaintiff's warranty claim based on ATTM furnishing services under the messaging plan for his iPhone 3G (see, e.g., FAC ¶ 94) is barred. Further, plaintiff's warranty claim based on an ATTM sale of an iPhone 3G should also be dismissed because plaintiff fails to adequately plead breach of implied warranty of merchantability or fitness for particular purpose. Alabama law provides that goods are merchantable if they: "(a) [p]ass without objection in the trade under the contract description;" "(b) [i]n the case of fungible goods, are of fair average quality within the description;" "(c) [a]re fit for the ordinary purposes for which such goods are used;" "(d) [r]un, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved;" "(e) [a]re adequately contained, packaged, and labeled as the agreement may require;" and "(f) [c]onform to the promises or affirmations of fact made on the container or label if any." Ala. Code § 7-2-314. The only prong of § 7-2-314 that arguably could even apply to plaintiff's allegations is paragraph (f) ­ that on June 8, 2009, "the Apple packaging that came with the iPhone 3G claimed the availability of MMS." FAC ¶ 41. Plaintiff, however, cannot state a claim under paragraph (f), because plaintiff purchased his iPhone 3G in September 2008, well before that date. Thus, there are no facts alleged to support a breach of the implied warranty of merchantability.

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An implied warranty of fitness exists where "the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods." Ala. Code § 7-2315. "A `particular purpose' differs from the ordinary purpose for which the goods are used in that it envisages a specific use by the buyer which is peculiar to the nature of his business whereas the ordinary purposes for which goods are used are those envisaged in the concept of merchantability and go to uses which are customarily made of the goods in question." Id. cmt. 2. Here, plaintiff does not allege a particular purpose or specific use for the iPhone 3G that is different than the ordinary purpose of making and receiving calls, sending e-mails, browsing the web, and sending text messages. Plaintiff also does not allege that ATTM had any reason to know, at the time plaintiff bought his iPhone 3G, that plaintiff was relying on ATTM's skill or judgment to select a suitable mobile phone for his needs. Instead, plaintiff merely alleges that ATTM "expressly and/or impliedly promised Plaintiff that the iPhone 3G and 3GS and the messaging plans included MMS" and that "[i]n return for this promise, Plaintiff paid the Defendants." FAC ¶¶ 94-95. Therefore, plaintiff has not sufficiently plead a breach of an implied warranty for merchantability or fitness for a particular purpose. V. Alabama Law Does Not Support A Claim For Breach Of The Implied Covenant Of Good Faith And Fair Dealing. Plaintiff alleges that ATTM breached the implied covenant of good faith and fair dealing set forth in ATTM's wireless service agreement by, in bad faith, "promis[ing] to provide an iPhone and messaging service plan that included MMS, [and] charg[ing] for that functionality, knowing that during the class period [it] could not and/or would not provide MMS with the iPhone 3G, 3GS and messaging plans." FAC ¶ 100. Under Alabama law, however, "there is no

30

contractual cause of action for breach of an implied duty of good faith that nebulously hovers over the contracting parties." Lake Martin/Ala. Power Licensee Ass'n, Inc. v. Ala. Power Co., 601 So. 2d 942, 945 (Ala. 1992). The Alabama Supreme Court has "clearly and specifically held that a duty of good faith in connection with a contract is directive, not remedial, and that therefore an action will not lie for breach of such a duty." Tanner v. Church's Fried Chicken, Inc., 582 So. 2d 449, 452 (Ala. 1991); see also Gov't St. Lumber Co. v. AmSouth Bank, NA, 553 So. 2d 68, 72 (Ala. 1989). For these reasons, plaintiff's attempted claim for breach of the implied covenant of good faith and fair dealing cannot survive.14 VI. Plaintiff's Unjust Enrichment Claim Should Be Dismissed. Plaintiff asserts a claim for unjust enrichment, but there is no such cause of action where an express contract governs the parties' relationship and the same subject matter. White v. Microsoft Corp., 454 F. Supp. 2d 1118, 1133-34 (S.D. Ala. 2006). Under Alabama law, an unjust enrichment claim sounds in the nature of quasi-contract, as the law equitably implies a contract between the parties to prevent the unjust enrichment of a defendant at the expense of a plaintiff. See Am. Family Care, Inc. v. Fox, 642 So. 2d 486, 488 (Ala. Civ. App. 1994). Alabama courts have held that "where an express contract exists between two parties, the law generally will not recognize an implied contract regarding the same subject matter." Kennedy, 682 So. 2d at 447; see also Vardaman, 544 So. 2d at 965 ("[E]xistence of an express contract generally excludes an implied agreement relative to the same subject matter."); Callaway v. E.H.

14

That claim cannot survive under an alternate tort theory. Under Alabama law, "only insurance contracts give rise to a duty imposed by law on which a tort claim for bad faith performance can be based." Grant v. Butler, 590 So. 2d 254, 256 (Ala. 1991) (declining to extend tort of bad faith to general contract law).

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Smith Elec. Contractors, Inc., 814 So. 2d 893, 899 (Ala. Civ. App. 2001) (dismissing quasicontract claim based on valid, binding contract between the parties). Here, plaintiff alleges that he entered into "an exclusive two year wireless service agreement" with ATTM, and that ATTM breached the agreement by "failing to provide messaging service plans that included the ability to send picture messages." FAC ¶¶ 85, 91. In his unjust enrichment count, after incorporating the preceding allegations of the Amended Complaint, plaintiff merely adds conclusory, boilerplate allegations that ATTM has been unjustly enriched based on its "deceptive, misleading and unlawful conduct." See id. ¶¶ 102-03. The express contract between the parties cannot support both a breach of contract and an unjust enrichment claim. CONCLUSION ATTM respectfully requests that the Court dismiss plaintiff's Amended Complaint with prejudice as to ATTM. Dated: August 10, 2010 /s/ Kathleen Taylor Sooy Kathleen Taylor Sooy Tracy A. Roman CROWELL & MORING LLP 1001 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Telephone: [phone] Facsimile: [phone] Email: [e-mail] [e-mail] Gary J. Russo JONES, WALKER, WAECHTER, POITEVENT, CARRER, DENEGRE LLP 600 Jefferson Street, Suite 1600 Lafayette, Louisiana 70501 Telephone: [phone] Facsimile: [phone]

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Email: [e-mail] Attorneys for Defendant AT&T Mobility LLC

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CERTIFICATE OF SERVICE I hereby certify that on the 10th day of August, 2010, I electronically filed the foregoing with the Clerk of Court by using the CM/ECF system which will send a notice of electronic filing. /s/ Kathleen Taylor Sooy Kathleen Taylor Sooy

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