Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 1 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ARTURO J. GONZÁLEZ (CA SBN 121490) AGonzalez@mofo.com PENELOPE A. PREOVOLOS (CA SBN 87607) PPreovolos@mofo.com TIFFANY CHEUNG (CA SBN 211497) TCheung@mofo.com ALEXIS A. AMEZCUA (SBN 247507) AAmezcua@mofo.com CHRISTOPHER L. ROBINSON (SBN 260778) ChristopherRobinson@mofo.com MORRISON & FOERSTER LLP 425 Market Street San Francisco, California 94105-2482 Telephone: (415) 268-7000 Facsimile: (415) 268-7522 ANNE M. CAPPELLA (SBN 181402) anne.cappella@weil.com WEIL, GOTSHAL & MANGES LLP 201 Redwood Shores Parkway Redwood Shores, CA 94065 Telephone: (650) 802-3000 Facsimile: (650) 802-3100 Attorneys for Defendant APPLE INC. 15 UNITED STATES DISTRICT COURT 16 NORTHERN DISTRICT OF CALIFORNIA 17 SAN JOSE DIVISION 18 19 20 21 22 23 THOMAS DAVIDSON, TODD CLEARY, ADAM BENELHACHEMI, MICHAEL PAJARO, JOHN BORZYMOWSKI, BROOKE CORBETT, TAYLOR BROWN, JUSTIN BAUER, HEIRLOOM ESTATE SERVICES, INC., KATHLEEN BAKER, MATT MUILENBURG, WILLIAM BON, and JASON PETTY, on behalf of themselves and all others similarly situated, 24 25 26 27 Plaintiffs, v. APPLE INC., Defendant. 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 Case No. 5:16-cv-04942-LHK DEFENDANT APPLE INC.’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFFS’ THIRD AMENDED CLASS ACTION COMPLAINT Date: Time: Dept.: Judge: July 13, 2017 1:30 p.m Courtroom 8 – 4th Floor Honorable Lucy H. Koh Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 2 of 36 1 TABLE OF CONTENTS 2 Page 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES ......................................................................................................... iii NOTICE OF MOTION AND MOTION TO DISMISS ................................................................ ix MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 1 I. INTRODUCTION .............................................................................................................. 1 II. FACTUAL BACKGROUND ............................................................................................. 2 A. Plaintiffs Identify No Representations Regarding the Touchscreen ....................... 2 B. Apple Offered a One-Year Limited Warranty and Expressly Disclaimed Any Implied Warranties .......................................................................................... 3 III. LEGAL STANDARD ......................................................................................................... 4 IV. ARGUMENT ...................................................................................................................... 4 A. Plaintiffs Lack Standing to Seek Injunctive Relief ................................................. 4 B. Plaintiffs’ Fraud Claims Fail As a Matter of law .................................................... 6 1. Plaintiffs Once Again Fail to Satisfy Rule 9(b)’s Particularity Requirements............................................................................................... 6 a. Plaintiffs Again Fail to Plead an Actionable Misrepresentation or Omission ....................................................... 6 (i) The September 9, 2014 Keynote ......................................... 7 (ii) The September 9, 2014 Press Release................................. 8 (iii) The September 25, 2014 Statement .................................... 9 (iv) Undated Commercial Advertisements ................................ 9 b. Plaintiffs’ Conclusory Allegations That They “Reviewed” or “Relied” on Certain Alleged Misrepresentations Are Insufficient Under Rule 9(b) ......................................................... 10 2. Plaintiffs’ Pennsylvania Common Law Fraud Claim (Count 15) Also Fails Because Apple Owed No Duty to Disclose the Alleged Defect, and the Claim Is Barred by the Economic Loss Doctrine ............ 12 3. Plaintiffs’ New Jersey Consumer Fraud Act Claim (Count 6) Fails for the Additional Reason That Apple Owed No Duty to Disclose an Alleged Defect Manifesting Outside the Warranty Period .................. 14 C. Plaintiffs’ Warranty Claims Fail As a Matter of Law ........................................... 15 1. Plaintiffs’ Express Warranty Claims Fail (Count 18) ............................... 15 a. Plaintiffs Still Do Not Allege a Manufacturing Defect Covered by Apple’s Warranty ...................................................... 16 b. The One-Year Warranty Period Bars Claims for Alleged Issues That Arose After the Warranty Expired ............................. 17 c. Plaintiffs Fail to Allege That Apple’s One-Year Limited Warranty Is Unconscionable ......................................................... 19 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 i Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 3 of 36 TABLE OF CONTENTS (continued) 1 Page 2 3 (i) 4 5 6 7 8 9 V. Plaintiffs Fail to Allege Procedural Unconscionability ............................................................. 19 (ii) Plaintiffs Fail to Allege Substantive Unconscionability ............................................................. 22 d. Plaintiffs’ Express Warranty Claims Fail for the Additional Reason That Plaintiffs Do Not Plead Compliance with the Warranty........................................................................................ 24 2. Plaintiffs’ Implied Warranty Claims Fail (Count 19) ............................... 24 3. Plaintiffs’ Magnuson-Moss Warranty Claim Also Fails (Count 20) ........ 25 CONCLUSION ................................................................................................................. 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 ii Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 4 of 36 1 2 TABLE OF AUTHORITIES 3 Page 4 5 6 7 8 9 10 11 12 13 14 Cases 2314 Lincoln Park W. Condo. Ass’n v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill. 2d 302 (1990) ...............................................................................................................22 A.H. Lundberg Assoc., Inc. v. TSI, Inc., No. C14-1160JLR, 2014 WL 5365514 (W.D. Wash. Oct. 21, 2014) ...................................8 n.6 Alban v. BMW of N. Am., No. 09-5398 (DRD), 2010 WL 3636253 (D.N.J. Sept. 8, 2010) ..............................................14 Arcand v. Brother Int’l Corp., 673 F. Supp. 2d 282 (D.N.J. 2009) ...........................................................................................15 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ......................................................................................................4, 12 n.10 Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100 (2005) .........................................................................................................11 n.9 15 16 17 18 19 Bates v. United Parcel Serv., Inc., 511 F.3d 974 (9th Cir. 2007).......................................................................................................4 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ....................................................................................................................4 Berenguer v. Warner-Lambert Co., No. 02-05242, 2003 WL 24299241 (Fla. Cir. Ct. July 31, 2003) .......................................11 n.9 20 21 22 23 24 25 26 27 28 Bess v. DirecTV, Inc., 381 Ill. App. 3d 229 (2008).......................................................................................................21 Bova v. City of Medford, 564 F.3d 1093 (9th Cir. 2009).....................................................................................................5 Brodsky v. Match.com, LLP, No. 3-09-CV-2066-F-BD, 2010 WL 3895513 (N.D. Tex. Sept. 30, 2010) ........................11 n.9 Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011).....................................................................................................6 Cappellano v. Wright Med. Grp., Inc., 838 F. Supp. 2d 816 (C.D. Ill. 2012) ........................................................................................16 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK iii Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 5 of 36 1 2 TABLE OF AUTHORITIES (continued) Page 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Castrol Inc. v. Pennzoil Co., 987 F.2d 939 (3d Cir. 1993) ..................................................................................................8 n.6 Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008).....................................................................................................4 Crawford v. Talk Am., Inc., No. 05-CV-0180-DRH, 2005 WL 2465909 (S.D. Ill. Oct. 6, 2005).........................................21 Darne v. Ford Motor Co., No. 13 C 03594, 2015 WL 9259455 (N.D. Ill. Dec. 18, 2015) ..............................19, 20, 22, 23 Deburro v. Apple, Inc., No. A-13-CA-784-SS, 2013 WL 5917665 (W.D. Tex. Oct. 31, 2013) ......................................9 Disher v. Tamko Bldg. Prods., Inc., No. 14-cv-740-SMY-SCW, 2015 WL 4609980 (S.D. Ill. July 31, 2015) ....................15, 18, 24 Dist. 1199P Health & Welfare Plan v. Janssen, L.P., 784 F. Supp. 2d 508 (D.N.J. 2011) .....................................................................................11 n.9 Drapeau v. Joy Techs., Inc., 447 Pa. Super. 560 (1996) ...................................................................................................11 n.9 Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604 (3d Cir. 1995) ........................................................................................................13 Evitts v. DaimlerChrysler Motors Corp., 359 Ill. App. 3d 504 (2005).................................................................................................17, 18 Garcia v. Medved Chevrolet, Inc., 263 P.3d 92 (Colo. 2011) ....................................................................................................11 n.9 Gidley v. Allstate Ins. Co., No. 09-3701, 2009 WL 4893567 (E.D. Pa. Dec. 17, 2009) ........................................8 n.6, 9 n.7 23 24 25 26 27 Gonzalez v. Comcast Corp., No. 10-cv-01010-LJO-BAM, 2012 WL 10621 (E.D. Cal. Jan. 3, 2012)....................................5 Great W. Cas. Co. v. Volvo Trucks N. Am., Inc., No. 08-CV-2872, 2009 WL 588432 (N.D. Ill. Feb. 13, 2009) .................................................24 Hasek v. DaimlerChrysler Corp., 319 Ill. App. 3d 780 (2001).......................................................................................................25 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK iv Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 6 of 36 1 2 TABLE OF AUTHORITIES (continued) Page 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Herskowitz v. Apple Inc., 940 F. Supp. 2d 1131 (N.D. Cal. 2013) ..............................................................................11, 12 Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir. 1997).......................................................................................20, 21, 22 In re Estate of Boyar, 2013 IL 113655 (2013) .............................................................................................................21 In re Takata Airbag Prods. Liab. Litig., No. 14-24009-CV, 2016 WL 5848843 (S.D. Fla. Sept. 21, 2016) ...........................................13 Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wash. 2d 59 (2007) ......................................................................................................11 n.9 Jackson v. Payday Fin., LLC, 764 F.3d 765 (7th Cir. 2014)...............................................................................................22, 23 Jeter v. Brown & Williamson Tobacco Corp., 113 F. App’x 465 (3d Cir. 2004) ..............................................................................................13 Karpowicz v. Gen. Motors Corp., No. 97 C 1390, 1998 WL 142417 (N.D. Ill. Mar. 26, 1998) ....................................................18 Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009)...................................................................................................11 Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1 (2006) ...................................................................................................................19 Koch v. Kaz USA, Inc., No. 09-cv-02976-LTB-BNB, 2011 WL 2610198 (D. Colo. July 1, 2011) ...........................8 n.6 Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361 (7th Cir. 1999).....................................................................................................20 23 24 25 26 27 Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir. 1993) ........................................................................................................14 Lou Bachrodt Chevrolet, Inc. v. Savage, 570 So. 2d 306 (Fla. 4th Dist. Ct. App. 1990) ......................................................................9 n.7 Lucas v. Breg, Inc., No. 15-cv-00258-BAS-NLS, 2016 WL 6125681 (S.D. Cal. Sept. 30, 2016) .............................6 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK v Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 7 of 36 1 2 TABLE OF AUTHORITIES (continued) Page 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Majdipour v. Jaguar Land Rover N. Am., LLC, No. 12-07849 (WHW)(CLW), 2015 WL 1270958 (D.N.J. Mar. 18, 2015) .............................14 Martin v. Ford Motor Co., 765 F. Supp. 2d 673 (E.D. Pa. 2011) ........................................................................................13 McGlinchy v. Shell Chem. Co., 845 F.2d 802 (9th Cir. 1988).......................................................................................................4 Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d 69 (1982) ...................................................................................................................22 Mount Sinai Med. Ctr. of Greater Miami, Inc. v. Heidrick & Struggles, Inc., 188 F. App’x 966 (11th Cir. 2006) .......................................................................................8 n.6 Muir v. Playtex Prods., LLC, 983 F. Supp. 2d 980 (N.D. Ill. 2013) ....................................................................................8 n.6 Nickerson v. Quaker Grp., No. A-6253-06T5, 2008 WL 2600720 (N.J. Super. July 3, 2008) .......................................9 n.7 Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964 (N.D. Cal. 2008), aff’d, 322 F. App’x 489 (9th Cir. 2009) ......................................................................................4 17 18 19 20 21 22 23 24 25 26 27 28 Omni USA, Inc. v. Parker-Hannifin Corp., No. H-10-4728, 2012 WL 1038642 (S.D. Tex. Mar. 27, 2012) ...........................................9 n.7 Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156 (Tex. 1995) .................................................................................................8 n.6 Publ’ns Int’l Ltd. v. Mindtree Ltd., No. 13 C 05532, 2014 WL 3687316 (N.D. Ill. July 24, 2014) ...........................................15, 22 Reid v. Unilever U.S., Inc., 964 F. Supp. 2d 893 (N.D. Ill. 2013) ....................................................................................9 n.7 Richardson v. Reliance Nat’l Indemn. Co., No. C 99-2952 CRB, 2000 WL 284211 (N.D. Cal. Mar. 9, 2000) .............................................6 Robinson v. Avis Rent A Car Sys., 106 Wash. App. 104 (2001) ..................................................................................................9 n.7 Rodio v. Smith, 123 N.J. 345 (1991)...............................................................................................................8 n.6 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK vi Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 8 of 36 1 2 TABLE OF AUTHORITIES (continued) Page 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Saltzman v. Pella Corp., No. 06 C 4481, 2007 WL 844883 (N.D. Ill. Mar. 20, 2007) ................................................8 n.6 Sanchez v. Ford Motor Co., No. 13-cv-01924-RBJ, 2014 WL 2218278 (D. Colo. May 29, 2014) ..................................9 n.7 Schiesser v. Ford Motor Co., No. 16-cv-00730, 2016 WL 6395457 (N.D. Ill. Oct. 28, 2016) .........................................23, 25 Semitekol v. Monaco Coach Corp., 582 F. Supp. 2d 1009 (N.D. Ill. 2008) ................................................................................24, 25 Slippery Rock Area Sch. Dist. v. Tremco, Inc., No. 15-1030, 2016 WL 3198122 (W.D. Pa. June 9, 2016).......................................................12 Stevenson v. Mazda Motor of Am., Inc., No. 14-5250 (FLW) (DEA), 2015 WL 3487756 (D.N.J. June 2, 2015) .............................11 n.9 T&M Solar & Air Conditioning, Inc. v. Lennox Int’l Inc., No. 14-cv-05318-JSC, 2015 WL 3638555 (N.D. Cal. June 11, 2015) .....................................11 Tatum v. Chrysler Grp. LLC, No. 10-cv-4269 (DMC) (JAD), 2011 WL 1253847 (D.N.J. Mar. 28, 2011) ........................8 n.6 Tokar v. Crestwood Imports, Inc., 177 Ill. App. 3d 422 (1988)...........................................................................................17, 18, 25 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003).....................................................................................................6 Voelker v. Porsche Cars N. Am., Inc., 353 F.3d 516 (7th Cir. 2003).....................................................................................................16 Voelker v. Porsche Cars N. Am., No. 02 C 4798, 2004 WL 2211603 (N.D. Ill. Sept. 29, 2004) ..................................................16 23 24 25 26 27 Wayne Merritt Motor Co. v. N.H. Ins. Co., No. 11-CV-01762-LHK, 2011 WL 5025142 (N.D. Cal. Oct. 21, 2011) ..................................12 Werdebaugh v. Blue Diamond Growers, No. 12-CV-2724-LHK, 2014 WL 2191901 (N.D. Cal. May 23, 2014)......................................5 Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002) ......................................................................................................13 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK vii Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 9 of 36 1 TABLE OF AUTHORITIES (continued) 2 Page 3 4 5 6 7 8 9 10 Zwiercan v. Gen. Motors Corp., No. 3235, 2003 WL 1848571 (Pa. Com. Pl. Mar. 18, 2003) ....................................................13 Statutes 15 U.S.C. § 2301, et seq. .......................................................................................................................1 n.1 § 2310(d)(1) ..............................................................................................................................25 Colo. Rev. Stat. § 6-1-105, et seq.. .............................................................................................1 n.1 Fla. Stat. § 501.201, et seq. .........................................................................................................1 n.1 11 Ill. Comp. Stat. § 505 ..................................................................................................................1 n.1 12 N.J. Stat. Ann. § 56:8-1 ...............................................................................................................1 n.1 13 Tex. Bus. & Com. Code § 17.41, et seq. .....................................................................................1 n.1 14 Wash. Rev. Code § 19.86.010 .....................................................................................................1 n.1 15 16 17 18 19 20 21 22 23 24 25 26 27 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK viii Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 10 of 36 1 NOTICE OF MOTION AND MOTION TO DISMISS 2 TO PLAINTIFFS AND THEIR ATTORNEYS OF RECORD: 3 PLEASE TAKE NOTICE THAT on July 13, 2017, at 1:30 p.m., or as soon thereafter as 4 the matter may be heard, in the United States District Court, Northern District of California, San 5 Jose Division, located at 280 South 1st Street, San Jose, CA 95113, Courtroom 8, before the 6 Honorable Lucy H. Koh, Defendant Apple Inc. (“Apple”) will and hereby does move to dismiss 7 plaintiffs Thomas Davidson, Todd Cleary, Adam Benelhachemi, Michael Pajaro, John 8 Borzymowski, Brooke Corbett, Taylor Brown, Justin Bauer, Heirloom Estate Services, Inc., 9 Kathleen Baker, Matt Muilenburg, William Bon, and Jason Petty’s (collectively, “Plaintiffs”) 10 Illinois Consumer Fraud and Deceptive Trade Practices Act (815 Ill. Comp. Stat. § 505) (Count 11 4), New Jersey Consumer Fraud Act (N.J. Stat. Ann. § 56:8-1) (Count 6), Florida Deceptive and 12 Unfair Trade Practices Act (Fla. Stat. § 501.201, et seq.) (Count 7), Texas Deceptive Trade 13 Practices Act (Tex. Bus. & Com. Code § 17.41, et seq.) (Count 9), Colorado Consumer Protection 14 Act (Colo. Rev. Stat. § 6-1-105, et seq.) (Count 10), Washington Consumer Protection Act 15 (Wash. Rev. Code § 19.86.010) (Count 14), Common Law Fraud (Count 15), Breach of Express 16 Warranty (Count 18), Breach of Implied Warranty (Count 19), and Breach of Written Warranty 17 under the Magnuson-Moss Warranty Act (15 U.S.C. § 2301, et seq.) (Count 20) claims (together 18 the “Selected Claims”) pursuant to Federal Rules of Civil Procedure 12(b)(1) for lack of standing 19 and 12(b)(6) for failure to state a claim upon which relief can be granted. 20 This motion is based upon this Notice of Motion and Motion, the Memorandum of Points 21 and Authorities in support thereof, the Request for Judicial Notice in Support of the Motion to 22 Dismiss filed concurrently herewith, the Declaration of Tiffany Cheung in Support of the Motion 23 to Dismiss filed concurrently herewith, all other pleadings and papers on file herewith, and such 24 other argument and evidence as may be presented to the Court. Dated: April 18, 2017 Respectfully submitted, 25 MORRISON & FOERSTER LLP By: /s/ Arturo González Arturo J. González 26 27 Attorneys for Defendant APPLE INC. 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 ix Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 11 of 36 1 2 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION 3 Plaintiffs’ Selected Claims alleged in their Third Amended Class Action Complaint 4 (“TACC”) fail for the same reasons they did before. Despite the opportunity to replead, plaintiffs 5 still do not allege the specific facts required to prove the required elements of any of their claims. The Court dismissed the Fraud Claims1 in plaintiffs’ Second Amended Class Action 6 7 Complaint (“SACC”) because plaintiffs did not allege exposure to or reliance on any 8 representation about the iPhone 6 or iPhone 6 Plus. In the TACC, plaintiffs offer identical or 9 near-identical conclusory allegations that all or virtually all of them “reviewed” (and in one 10 instance “relied on”) the same representations: the Keynote presentation introducing the phones; 11 two press releases; and three television commercials. But none of those alleged representations 12 mentions the touchscreen, let alone touts its durability or reliability. Moreover, each of the 13 alleged representations is either true (and plaintiffs offer no plausible allegation to the contrary), 14 or subjective and non-actionable. Further, notwithstanding plaintiffs’ boilerplate allegations of near-uniform exposure to the 15 16 representations, not a single named plaintiff offers any of the specifics required by Rule 9(b). 17 Plaintiffs do not allege when or where any of them saw any of the alleged representations, nor do 18 named plaintiffs allege how or why the alleged representations impacted their decision to 19 purchase an iPhone 6 or 6 Plus. These same pleading failures also doom plaintiffs’ omissions 20 21 22 23 24 25 26 27 28 1 On November 30, 2016, the Court issued a Case Management Order indicating that the parties shall select and “litigate a total of ten causes of action in [Apple’s] motion to dismiss.” (ECF No. 41 at 1.) In the Order Granting Motion to Dismiss All 10 Claims with Leave to Amend, the Court ordered the parties to file an amended selection of claims designating one state’s common law to apply for the selected common law claims. (Order (“Order”) at 8, ECF No. 84.) On March 21, the parties filed their Amended Joint List of Causes of Action. (ECF No. 85.) Thus, the ten causes of action addressed in this motion to dismiss are: Illinois Consumer Fraud and Deceptive Trade Practices Act (815 Ill. Comp. Stat. § 505) (Count 4), New Jersey Consumer Fraud Act (N.J. Stat. Ann. § 56:8-1) (Count 6), Florida Deceptive and Unfair Trade Practices Act (Fla. Stat. § 501.201, et seq.) (Count 7), Texas Deceptive Trade Practices Act (Tex. Bus. & Com. Code § 17.41, et seq.) (Count 9), Colorado Consumer Protection Act (Colo. Rev. Stat. § 6-1-105, et seq.) (Count 10), Washington Consumer Protection Act (Wash. Rev. Code § 19.86.010) (Count 14), Common Law Fraud under Pennsylvania law (Count 15) (the “Fraud Claims”), Breach of Express Warranty and Breach of Implied Warranty under Illinois law (Counts 18 and 19), and Breach of Written Warranty under the Magnuson-Moss Warranty Act (15 U.S.C. § 2301, et seq.) (Count 20) (the “Warranty Claims,” and together with the Fraud Claims, the “Selected Claims”). APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 1 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 12 of 36 1 claims—Rule 9(b) requires more than these generic, conclusory allegations. Despite the benefit 2 of a do-over, plaintiffs fail to allege a fraud claim under the laws of the Selected States. Plaintiffs’ TACC similarly fails to remedy the defects in the prior pleading of breach of 3 4 express warranty. The Court granted plaintiffs leave to amend the warranty claims to allege a 5 non-design based defect covered by Apple’s “materials and workmanship” warranty, and 6 plaintiffs have not even attempted to do so. Plaintiffs’ breach of express warranty claim must be 7 dismissed again for failure to allege a defect covered by Apple’s Limited Warranty. This claim 8 also again must be dismissed because alleged failures that arose beyond the one-year period are 9 barred. The Court recognized that the terms of Apple’s express warranty precluded plaintiffs’ 10 warranty claims, and plaintiffs have still not alleged any facts to avoid the fatal effect of these 11 terms on their claims. Plaintiffs’ allegations of unconscionability are duplicative of arguments the Court has 12 13 already rejected, and their selection of Illinois law does not change that result. Moreover, 14 plaintiffs now admit that they all reviewed the warranty document included in the box with their 15 new iPhones immediately after purchase, and they acknowledge the applicable 14-day return 16 period. Having admitted that they received and reviewed the warranty, and having agreed to the 17 warranty’s terms by using, and not returning, their devices, plaintiffs cannot plausibly allege they 18 were unaware of or surprised by the warranty’s terms. Plaintiffs’ failure to plausibly allege facts 19 establishing unconscionability likewise is fatal to their implied warranty claims, because Apple 20 expressly disclaimed all implied warranties. The TACC demonstrates that plaintiffs cannot sufficiently plead their Fraud Claims or 21 22 Warranty Claims. Accordingly, the TACC should be dismissed with prejudice. 23 II. FACTUAL BACKGROUND 24 A. 25 Like the SACC, plaintiffs’ TACC fails to point to a single misrepresentation with respect 26 to the iPhone 6 or iPhone 6 Plus touchscreen. Ten plaintiffs allege that they “reviewed” Apple’s 27 September 9, 2014 Keynote Address regarding the iPhone 6 and iPhone 6 Plus (TACC ¶¶ 8, 11- 28 19), seven plaintiffs allege that they “reviewed” an Apple Press Release dated September 9, 2014 Plaintiffs Identify No Representations Regarding the Touchscreen APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 2 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 13 of 36 1 announcing the release of the iPhone 6 and iPhone 6 Plus (id. ¶¶ 9, 11-14, 17, 19), and six 2 plaintiffs allege that they “reviewed . . . three commercials regarding the iPhones” (id. ¶¶ 11-12, 3 14-15, 17-18). Finally, all 13 plaintiffs assert in only a single conclusory allegation that he or she 4 “saw, and relied upon, Apple’s press release issued in response to ‘BendGate’ in deciding” to 5 purchase his or her iPhone (id. ¶¶ 8-10, 13-16, 18-20) or deciding not to return his or her device 6 (id. ¶¶ 11-12, 17). None of these representations touts or even discusses the touchscreen. 7 B. 8 9 10 11 12 13 14 15 16 Apple Offered a One-Year Limited Warranty and Expressly Disclaimed Any Implied Warranties As this Court has recognized, Apple’s iPhone 6 and iPhone 6 Plus came with a one-year Limited Warranty, which warrants “against defects in materials and workmanship” for a period of one year and expressly disclaims implied warranties. (Declaration of David R. Singh in Support of Apple Inc.’s Motion to Dismiss (“Singh Decl.”), ¶ 3, ECF No. 54-1; Ex. A, ECF No. 54-2.)2 Plaintiffs admit that the iPhone 6 and 6 Plus boxes include a summary of the iPhones’ warranty. (TACC ¶ 33.) All 13 named plaintiffs admit that they reviewed the documents contained in their iPhone boxes immediately after purchase. (Id. ¶¶ 8-20.) The in-the-box warranty summary referenced by plaintiffs begins: Apple One-Year Limited Warranty Summary Apple warrants the included hardware product and accessories against defects in materials and workmanship for one year from the date of original retail purchase. Apple does not warrant against normal wear and tear, nor damage caused by accident or abuse. 17 18 19 20 (Declaration of Tiffany Cheung in Support of Def. Apple Inc.’s Motion to Dismiss (“Cheung 21 Decl.”), ¶¶ 2-3, Exs. A, B.) The summary also states that a warranty claim is “[s]ubject to the full 22 terms and detailed information on obtaining service available at www.apple.com/legal/warranty.” 23 (Id.) Plaintiffs also now concede that they were given 14 days from purchase to return their 24 25 devices. (TACC ¶¶ 36, 88.) The Limited Warranty provides for this return period if the 26 2 27 28 In its March 14, 2017 Order, the Court granted Apple’s request for judicial notice of Apple’s One (1) Year Limited Warranty – iOS for Apple Branded Products (“Limited Warranty”) because the SACC necessarily relies on the documents. (Order at 4 n.2.) The TACC also references the warranty, and all of the plaintiffs assert an express warranty claim under the Limited Warranty. (TACC ¶¶ 284-94.) APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 3 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 14 of 36 1 purchaser does not agree to the terms of the warranty. (Singh Decl. Ex. A at 1.) 2 III. LEGAL STANDARD Under Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss should be granted if 3 4 the plaintiff is unable to articulate facts establishing a claim to relief which is “plausible on its 5 face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 6 544, 570 (2007)); Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008). A 7 pleading that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause 8 of action will not do.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). The complaint must allege facts which, when taken as true, raise more than a speculative 9 10 right to relief. Twombly, 550 U.S. at 555. The facts must “nudge[] [the] claims across the line 11 from conceivable to plausible.” Id. at 570. The Court need not accept as true conclusory 12 allegations or legal characterizations, nor need it accept unreasonable inferences or unwarranted 13 deductions of fact. See McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir. 1988); 14 Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 968 (N.D. Cal. 2008), aff’d, 322 F. App’x 15 489 (9th Cir. 2009). 16 IV. ARGUMENT 17 A. 18 Despite the additional opportunity to establish standing to pursue injunctive relief, 19 plaintiffs’ allegations still fall short. In the TACC, eight named plaintiffs3 claim that they “intend 20 to” or “may” participate in Apple’s Multi-Touch Repair Program (the “Repair Program”). 21 (TACC ¶¶ 8, 10-11, 14-17, 19.) However, the various caveats each plaintiff attaches to his or her 22 potential participation in the program—each conditioned on a future contingency—guarantee that 23 none is under a “real and immediate threat of repeated injury” as required to establish standing for 24 Article III injunctive relief. Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007) 25 (quoting O’Shea v. Littleton, 414 U.S. 488, 496 (1974)). Plaintiffs cannot establish Article III 26 standing to seek injunctive relief if their claims rest “upon contingent future events that may not 27 28 Plaintiffs Lack Standing to Seek Injunctive Relief 3 Plaintiffs Cleary, Benelhachemi, Pajaro, Brown, Bauer, Heirloom, Baker, and Bon. (TACC ¶¶ 8, 10-11, 14-17, 19.) APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 4 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 15 of 36 1 occur as anticipated, or indeed may not occur at all.” Bova v. City of Medford, 564 F.3d 1093, 2 1096 (9th Cir. 2009) (citation omitted). This is because “if the contingent events do not occur, 3 the plaintiff likely will not have suffered an injury that is concrete and particularized enough to 4 establish the first element of standing.” Id.; see also Gonzalez v. Comcast Corp., No. 10-cv- 5 01010-LJO-BAM, 2012 WL 10621, at *16 (E.D. Cal. Jan. 3, 2012) (plaintiffs’ claim that former 6 customers may someday become future customers was “an attenuated interest” that was “entirely 7 too speculative to confer any legitimate interest in injunctive relief”). Furthermore, of the eight plaintiffs who now claim a possible intention to participate in 8 9 Apple’s Repair Program, six condition their participation on future events that preclude them 10 from pleading the requisite threat of concrete injury. Plaintiffs Cleary, Benelhachemi, Bauer, and 11 Heirloom allege that they only intend to participate “if Apple indicates that the defect in his 12 current iPhone is not present in the refurbished iPhone he will receive through the program.” 13 (TACC ¶¶ 8, 10, 15-16.) Plaintiff Pajaro claims that he “may participate” in the Repair Program 14 “if this lawsuit is unsuccessful for the sole purpose of receiving a functional device to resell.” (Id. 15 ¶ 11.) Plaintiff Bon alleges he intends to participate “if the cost to participate is eliminated.” (Id. 16 ¶ 19.) Accordingly, by their own allegations, the contingencies identified by these six plaintiffs 17 will ensure they are not exposed to the risk of a future defect and/or associated costs, and thus 18 they fall short of establishing the likelihood of future injury required for Article III standing. See 19 Werdebaugh v. Blue Diamond Growers, No. 12-CV-2724-LHK, 2014 WL 2191901, at *9 (N.D. 20 Cal. May 23, 2014) (plaintiff lacked Article III standing to pursue injunctive relief because “there 21 is no likelihood of future injury to Plaintiff that is redressable through injunctive relief”). 22 The remaining two plaintiffs seeking injunctive relief, Brown and Baker, fail to establish 23 standing for injunctive relief because their injunctive relief claims are thinly-disguised claims for 24 monetary recovery. These plaintiffs claim that they intend to participate in the Repair Program 25 and “intend[] to recoup any amounts paid under the program through this lawsuit.” 4 (TACC 26 ¶¶ 14, 17.) Courts in this jurisdiction have consistently held that claims that ultimately seek 27 28 4 Plaintiffs Cleary, Benelhachemi, Bauer, and Heirloom also allege that they “intend[] to recoup any amounts paid under the program through this lawsuit.” (TACC ¶¶ 8, 10, 15-16.) APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 5 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 16 of 36 1 monetary relief cannot support Article III injunctive relief standing. See, e.g., Lucas v. Breg, Inc., 2 No. 15-cv-00258-BAS-NLS, 2016 WL 6125681, at *15 (S.D. Cal. Sept. 30, 2016). Plaintiffs fail 3 to plead Article III standing to seek injunctive relief because their allegations regarding their 4 intent to participate in the Repair Program are contingent on future events, rely on contingencies 5 that eliminate their risk of future or ongoing harm, and/or convert their injunctive relief claims 6 into monetary claims. Plaintiffs’ demand for injunctive relief should be dismissed with prejudice. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 B. Plaintiffs’ Fraud Claims Fail As a Matter of law 1. Plaintiffs Once Again Fail to Satisfy Rule 9(b)’s Particularity Requirements As this Court previously held in its Order dismissing plaintiffs’ Fraud Claims, Rule 9(b) requires plaintiffs to provide the “who, what, when, where, and how” of any misrepresentations underlying their claims. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (citation omitted). Critically, “plaintiff must set forth what is false or misleading about a statement, and why it is false.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (citation omitted). Conclusory allegations of fraud are not enough—plaintiffs must plead detailed and specific facts. See Richardson v. Reliance Nat’l Indemn. Co., No. C 99-2952 CRB, 2000 WL 284211, at *4 (N.D. Cal. Mar. 9, 2000) (“Plaintiff may not simply set forth conclusory allegations of fraud punctuated by a handful of neutral facts.” (quotations and citation omitted)). As set forth below, plaintiffs fall short of Rule 9(b)’s heightened standard because they fail to plead any actionable misrepresentation or omission. a. Plaintiffs Again Fail to Plead an Actionable Misrepresentation or Omission It is axiomatic that fraud requires some misrepresentation. Plaintiffs’ failure to allege 23 exposure to and reliance on any alleged misrepresentation in the SACC compelled the dismissal 24 of all of their affirmative misrepresentation claims. In doing so, the Court held that plaintiffs 25 failed to allege they were exposed to any representations relevant to the purported touchscreen 26 defect, “let alone what those representations were, when they were made, and why they were 27 false.” (Order at 15:22-23.) Plaintiffs’ failure to allege relevant and actionable 28 misrepresentations persists in the TACC. Plaintiffs still point to not one representation―or even APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 6 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 17 of 36 1 a partial representation―about the touchscreen. Instead, in an attempt to avoid another dismissal 2 of their claims, plaintiffs now purport to have “reviewed” (but in most cases not to have “relied 3 on”) a series of statements that make no reference to or representations about the touchscreen. 4 Identifying representations unrelated to the touchscreen cannot support a claim for any 5 misrepresentation or omission related to the alleged touchscreen defect. 6 (i) The September 9, 2014 Keynote Ten plaintiffs allege that they “reviewed” Apple’s Keynote Address at the Worldwide 7 8 Developer Conference on September 9, 2014 announcing the release of the iPhone 6 and iPhone 6 9 Plus (the “September 9, 2014 Keynote”).5 (TACC ¶¶ 8, 11-19.) But each statement plaintiffs 10 identify is unrelated to the iPhone 6 or iPhone 6 Plus touchscreen, and thus entirely irrelevant to 11 plaintiffs’ fraud claims about alleged touchscreen defects. Indeed, plaintiffs implicitly 12 acknowledge these statements are irrelevant to their touchscreen claims by failing to allege that 13 (1) any of these statements are false or misleading, or (2) any plaintiff was actually misled. In any event, the statements plaintiffs identify in the September 9, 2014 Keynote do not 14 15 support any allegation of fraud. Rather, they either are undisputedly true or are subjective 16 statements that contain no actionable misrepresentations of material fact. Plaintiffs cannot 17 plausibly claim that a statement in the September 9, 2014 Keynote regarding “the new Apple A8 18 chip that provides ‘up to 25% faster CPU performance, [and] up to 50% faster graphics 19 performance’” (see TACC ¶ 38) constitutes actionable fraud regarding the touchscreen. Not only 20 is this statement completely irrelevant to the touchscreen, it is also factually accurate, and 21 plaintiffs do not allege otherwise. The remaining statements plaintiffs identify in the September 22 9, 2014 Keynote are equally non-actionable because they are subjective descriptions relating to 23 the quality of the iPhone 6 and 6 Plus. References to the iPhone 6 and iPhone 6 Plus as “without 24 a doubt the best iPhones we’ve ever done,” and “truly the most beautiful phone[s] you have ever 25 seen” with a design that is “[i]ncredibly unique” (id.) cannot form the basis for fraud. These are 26 classic non-actionable statements of unquantifiable opinion—not misrepresentations of material 27 28 5 Plaintiffs Cleary, Pajaro, Borzymowski, Corbett, Brown, Bauer, Heirloom, Baker, Muilenburg, and Bon allege that they “reviewed” the September 9, 2014 Keynote. (TACC ¶¶ 8, 11-19.) APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 7 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 18 of 36 1 fact—that cannot support a claim for fraud under any of the laws of the Selected States.6 Finally, 2 a live demonstration by a third-party video game company with the presenter using the 3 touchscreen is hardly an affirmative representation by Apple regarding the touchscreen. 4 (ii) The September 9, 2014 Press Release Plaintiffs’ next purported misrepresentation is an Apple press release announcing the 5 6 iPhone 6 and iPhone 6 Plus, dated September 9, 2014 (the “September 9, 2014 Press Release”). 7 Again, plaintiffs do not allege any of the statements in the September 9, 2014 Press Release are 8 actually false or misleading, or that any plaintiff was in fact misled. Like the statements in the 9 September 9, 2014 Keynote, these statements as a matter of law cannot support plaintiffs’ 10 affirmative misrepresentation or omission claims because the statements are immaterial to the 11 alleged touchscreen defect, and do not refer even once to the touchscreen. As plaintiffs concede, 12 while the September 9, 2014 Press Release does tout certain features of the iPhone 6 and iPhone 6 13 Plus, the touchscreen is not one of them. (TACC ¶ 40.) Instead, the statements plaintiffs identify 14 refer to the “‘innovative technologies’ in the new iPhones,” including their “all-new dramatically 15 thin and seamless design” that will make the “most loved smartphone” “better in every way.” 16 17 18 19 20 21 22 23 24 25 26 27 28 6 See Muir v. Playtex Prods., LLC, 983 F. Supp. 2d 980, 989 (N.D. Ill. 2013) (non-actionable misrepresentation “typically consists of ‘subjective descriptions relating to quality,’ such as ‘high quality,’ ‘perfect,’ and ‘best’” (citation omitted)); Saltzman v. Pella Corp., No. 06 C 4481, 2007 WL 844883, at *4 (N.D. Ill. Mar. 20, 2007) (statements that products were “durable,” “manufactured to high quality standards” held puffery); A.H. Lundberg Assoc., Inc. v. TSI, Inc., No. C14-1160JLR, 2014 WL 5365514, at *6 (W.D. Wash. Oct. 21, 2014) (“By contrast, an actionable misrepresentation of fact is ‘quantifiable’ and ‘makes a claim as to the specific or absolute characteristics of the product.’” (citation omitted)); Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 163 (Tex. 1995) (describing a good or service as “superb,” “superfine,” or “one of the finest” was mere puffing, not misrepresentation of material fact); Mount Sinai Med. Ctr. of Greater Miami, Inc. v. Heidrick & Struggles, Inc., 188 F. App’x 966, 968-69 (11th Cir. 2006) (defendants’ description of itself as “world’s premier provider” was not a misrepresentation of material fact and could not be a basis for fraud); Tatum v. Chrysler Grp. LLC, No. 10-cv-4269 (DMC) (JAD), 2011 WL 1253847, at *4 (D.N.J. Mar. 28, 2011) (“advertisements” that “‘regaled’ consumers with ‘the concept that the Journey is a reliable, durable car’” held puffery); Rodio v. Smith, 123 N.J. 345, 350 (1991) (slogan “[y]ou’re in good hands” “is not a representation of fact,” and therefore could not be a material representation of fact); Koch v. Kaz USA, Inc., No. 09-cv-02976-LTB-BNB, 2011 WL 2610198, at *5 (D. Colo. July 1, 2011) (“I conclude that the use of statements ‘Durable;’ and ‘Quality Construction for Long Last Performance,’ viewed in context, likewise do not constitute unfair or deceptive trade practices as a matter of law.”); Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 945 (3d Cir. 1993) (“Puffery is distinguishable from misdescriptions or false representations of specific characteristics of a product. As such, it is not actionable.”); Gidley v. Allstate Ins. Co., No. 093701, 2009 WL 4893567, at *4 (E.D. Pa. Dec. 17, 2009) (“A defendant’s claim that amounts to mere puffery cannot establish a misrepresentation of a material fact.”). APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 8 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 19 of 36 1 (Id.) These subjective statements are not representations of fact. Under the laws of all of the 2 Selected States, even if these statements focused on or were related to the touchscreen (and they 3 are not), these subjective opinions cannot support affirmative misrepresentation or omission 4 claims. (See cases cited in n.6, above.) 5 (iii) The September 25, 2014 Statement In the SACC, none of the 13 named plaintiffs alleged that they read or relied on Apple’s 6 7 September 25, 2014 statement (the “September 25, 2014 Statement”) allegedly issued in response 8 to reports that the iPhone 6 and iPhone 6 Plus bend. In the TACC, all plaintiffs allege in identical 9 boilerplate that they read and relied on the statement. (TACC ¶¶ 8-20.) Plaintiffs, however, 10 cannot establish that the September 25, 2014 Statement supports an actionable misrepresentation 11 or omission claim about the alleged touchscreen defect; the statement does not mention the 12 touchscreen. It does not state a single fact about the touchscreen, tout its quality or durability, or 13 reference it at all. To state a claim for actionable misrepresentation under the laws of the Selected 14 States, plaintiffs must identify the affirmative misrepresentation of material fact on which they 15 relied.7 That Apple released a statement allegedly relating to whether or not the iPhone 6 or 16 iPhone 6 Plus bends does not state a claim for affirmative misrepresentation regarding the 17 touchscreen. See, e.g., Deburro v. Apple, Inc., No. A-13-CA-784-SS, 2013 WL 5917665, at *5 18 (W.D. Tex. Oct. 31, 2013) (dismissing DTPA claim because “[t]he representations Plaintiffs do 19 allege are either irrelevant, because they deal with aspects of the product not challenged in this 20 suit (e.g., storage capacity), or are simple puffery (e.g., ‘state of the art’)”). 21 (iv) Undated Commercial Advertisements Finally, six plaintiffs claim that they “reviewed . . . three commercials regarding the 22 23 24 25 26 27 28 7 Lou Bachrodt Chevrolet, Inc. v. Savage, 570 So. 2d 306, 308 (Fla. 4th Dist. Ct. App. 1990) (a plaintiff seeking to establish fraud in the inducement must prove, inter alia, “[a] misrepresentation of a material fact”); Omni USA, Inc. v. Parker-Hannifin Corp., No. H-10-4728, 2012 WL 1038642, at *6 (S.D. Tex. Mar. 27, 2012) (same); Reid v. Unilever U.S., Inc., 964 F. Supp. 2d 893, 908 (N.D. Ill. 2013) (same); Nickerson v. Quaker Grp., No. A-6253-06T5, 2008 WL 2600720, at *9 (N.J. Super. July 3, 2008) (same); Gidley, 2009 WL 4893567, at *4 (same); Sanchez v. Ford Motor Co., No. 13-cv-01924-RBJ, 2014 WL 2218278, at *5 (D. Colo. May 29, 2014) (same); Robinson v. Avis Rent A Car Sys., 106 Wash. App. 104, 116 (2001) (same). APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 9 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 20 of 36 1 iPhones.”8 (TACC ¶¶ 11-12, 14-15, 17-18.) Plaintiffs do not allege when or where these 2 commercials were released. Plaintiffs do not allege how or why the statements in the 3 commercials are false or misleading, nor do they allege any plaintiff was actually misled by any 4 of the three commercials. Nor could they. As plaintiffs’ allegations make clear, the commercials 5 they purport to have “reviewed” in no way make representations about the touchscreen. Plaintiffs 6 seek to avoid this fatal flaw with the strained allegations that the first commercial shows two 7 celebrities “navigating and discussing the iPhones’ camera features, presentation software, health 8 application, playing games, and shows them sending messages all using the touchscreen” and the 9 second shows the same celebrities “navigating and discussing the features of the health 10 application while using the touchscreen.” (TACC ¶ 41.) These passing images of the iPhone 6 or 11 iPhone 6 Plus do not come close to being affirmative misrepresentations regarding the 12 touchscreen, much less regarding its durability. Plaintiffs do not even attempt to link the 13 touchscreen to the third commercial, which simply shows a rotating image of the iPhone 6 or 14 iPhone 6 Plus without commentary. (Id. ¶ 42.) As with all of the other materials plaintiffs claim are “misrepresentations” of or show 15 16 “omissions” regarding the iPhone 6 or 6 Plus touchscreen, none of these commercials are actually 17 about the touchscreen. (Id. ¶ 41.) The commercials display the touchscreen—as any ad dis- 18 playing the iPhone would inevitably do—but as plaintiffs concede, they do not make references to 19 or representations about it. Instead, each addresses aspects of the iPhone 6 or 6 Plus completely 20 immaterial to the alleged touchscreen defect: camera features, software, applications, and a silent 21 display of the devices say nothing about the durability of the touchscreen. (Id. ¶¶ 41-42.) 22 b. Plaintiffs’ Conclusory Allegations That They “Reviewed” or “Relied” on Certain Alleged Misrepresentations Are Insufficient Under Rule 9(b) 23 Even if plaintiffs had managed to allege a single actionable misrepresentation—and they 24 25 have not—their Fraud Claims would still fail because plaintiffs have not sufficiently pled that 26 they were exposed to or relied on any allegedly misleading statement. Each of the Fraud Claims 27 28 8 Plaintiffs Pajaro, Borzymowski, Brown, Bauer, Baker, and Muilenburg claim they “reviewed . . . all three commercials.” (TACC ¶¶ 11-12, 14-15, 17-18.) APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 10 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 21 of 36 1 requires that plaintiffs actually be exposed to and rely upon an alleged misrepresentation, or that 2 the misrepresentation be a “proximate cause” of plaintiffs’ damages.9 Even with the benefit of a second try, plaintiffs still fail to adequately plead exposure to any 3 4 purported affirmative misrepresentation with sufficient particularity to satisfy Rule 9(b). Not a 5 single named plaintiff explains when or where he or she saw any alleged misrepresentations. This 6 is insufficient under Rule 9(b). Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). 7 Indeed, for the overwhelming majority of the alleged statements, plaintiffs do not even attempt to 8 explain how the alleged misrepresentations are false. T&M Solar & Air Conditioning, Inc. v. 9 Lennox Int’l Inc., No. 14-cv-05318-JSC, 2015 WL 3638555, at *2 (N.D. Cal. June 11, 2015) 10 (Under Rule 9(b), a plaintiff must “set forth what is false or misleading about a statement, and 11 why it is false.” (citation omitted)); Herskowitz v. Apple Inc., 940 F. Supp. 2d 1131, 1147 (N.D. 12 Cal. 2013) (“At the very least, to satisfy Rule 9(b)’s heightened pleading requirement, [plaintiff] 13 must allege with more particularity why these statements are false.”). 14 Plaintiffs’ attempt to allege the specific circumstances of their reliance on Apple’s purported 15 misrepresentations also falls far short of Rule 9(b)’s requirements. Indeed, with respect to five of 16 17 18 19 20 21 22 23 24 25 26 27 28 9 See Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100, 199 (2005) (“[I]n a cause of action for fraudulent misrepresentation brought under the [Illinois] Consumer Fraud Act, a plaintiff must prove that he or she was actually deceived by the misrepresentation in order to establish the element of proximate causation.”); Dist. 1199P Health & Welfare Plan v. Janssen, L.P., 784 F. Supp. 2d 508, 531 (D.N.J. 2011) (dismissing plaintiffs’ NJCFA claim where plaintiffs failed to plead that they “received a misrepresentation of fact from Defendants and relied on that misrepresentation”); Stevenson v. Mazda Motor of Am., Inc., No. 14-5250 (FLW) (DEA), 2015 WL 3487756, at *7 (D.N.J. June 2, 2015) (“[W]here a plaintiff makes an NJCFA claim based on a misrepresentation, the ‘causal nexus’ element may not be stated in ‘general and conclusory terms.’” (citation omitted)); Berenguer v. Warner-Lambert Co., No. 02-05242, 2003 WL 24299241, at *2 (Fla. Cir. Ct. July 31, 2003) (To state a cause of action under the Florida DUTPA, plaintiffs must plead “sufficient facts to show that [they have] been actually aggrieved by the unfair or deceptive act committed by the seller in the course of trade or commerce.” (quoting Shibata v. Lim, 133 F. Supp. 2d 1311, 1317 (M.D. Fla. 2000))); Brodsky v. Match.com, LLP, No. 3-09-CV-2066-F-BD, 2010 WL 3895513, at *2 (N.D. Tex. Sept. 30, 2010) (“Reliance is also an essential element of . . . violations of the [Texas Deceptive Trade Practices Act].”); Garcia v. Medved Chevrolet, Inc., 263 P.3d 92, 98 (Colo. 2011) (“Reliance often provides a key causal link between a consumer’s injury and a defendant’s deceptive practice [under the Colorado Consumer Protection Act].”); Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wash. 2d 59, 84 (2007) (A plaintiff asserting causes of action under the Washington Consumer Protection Act must establish that, “but for the defendant’s unfair or deceptive practice, the plaintiff would not have suffered an injury.”); Drapeau v. Joy Techs., Inc., 447 Pa. Super. 560, 574 (1996) (“In order to state a cause of action for common law fraud, plaintiff/appellant is required to establish he justifiably relied on the omission or misrepresentation.”). APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 11 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 22 of 36 1 the six alleged misrepresentations, plaintiffs do not even attempt to allege reliance at all. As for 2 the sole remaining representation, plaintiffs rely only on a single, conclusory, and unsupported 3 assertion of reliance. In the SACC, not a single plaintiff alleged that he or she saw or relied on 4 the September 25, 2014 Statement. Now, in the TACC, every plaintiff repeats the same identical 5 allegation that he or she “saw, and relied upon, Apple’s press release issued in response to 6 ‘BendGate’ in deciding” to purchase his or her iPhone 6 or iPhone 6 Plus (TACC ¶¶ 8-10, 13-16, 7 18-20) or deciding not to return his or her device (id. ¶¶ 11-12, 17). Plaintiffs’ rote repetition of 8 the same conclusory allegation is insufficient under Rule 9(b).10 See Herskowitz, 940 F. Supp. 2d 9 at 1148 (Conclusory allegation that plaintiff “did reasonably rely on those misrepresentations . . . 10 is not sufficient, in and of itself, to satisfy the heightened requirements of Rule 9(b).”). Because 11 plaintiffs rely only on a single unsupported allegation, they fail to explain how or why each 12 plaintiff justifiably relied on the alleged misrepresentations. Wayne Merritt Motor Co. v. N.H. 13 Ins. Co., No. 11-CV-01762-LHK, 2011 WL 5025142, at *12 (N.D. Cal. Oct. 21, 2011) (plaintiff 14 must plead with particularity how he relied on a misrepresentation, and why that reliance was 15 reasonable). Plaintiffs thus allege no facts to show where, when, why, or how they relied. 16 Plaintiffs simply cannot establish reliance on any alleged affirmative misrepresentation, much 17 less with the specificity required by Rule 9(b). Plaintiffs’ failure to allege the specifics—the 18 “when, where, why, and how” of their exposure to and reliance on the alleged statements— 19 similarly dooms their omissions claims. Plaintiffs allege nothing to explain why their purported 20 reliance on alleged representations that were unrelated to the iPhone 6 or iPhone 6 Plus 21 touchscreen could be the basis for an omissions claim regarding the touchscreen. 22 2. 23 Plaintiffs’ Pennsylvania Common Law Fraud Claim (Count 15) Also Fails Because Apple Owed No Duty to Disclose the Alleged Defect, and the Claim Is Barred by the Economic Loss Doctrine Under Pennsylvania law, to state a common law fraud omissions claim, plaintiffs must 24 25 allege that Apple had a duty to disclose the alleged touchscreen issue. Slippery Rock Area Sch. 26 Dist. v. Tremco, Inc., No. 15-1030, 2016 WL 3198122, at *8 (W.D. Pa. June 9, 2016) (“With 27 28 10 Indeed, such conclusory and repetitive allegations cannot even meet Rule 8’s requirements, let alone Rule 9(b)’s far stricter requirements. Iqbal, 556 U.S. at 679. APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 12 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 23 of 36 1 respect to an omission, a plaintiff must also prove the defendant had a duty to speak,” which 2 arises only if the parties have a fiduciary or confidential relationship.). Plaintiffs have not alleged 3 a fiduciary or confidential relationship with Apple, nor could they. See Jeter v. Brown & 4 Williamson Tobacco Corp., 113 F. App’x 465, 469 (3d Cir. 2004) (finding no confidential or 5 fiduciary relationship existed between product manufacturer and consumer). Where there is no 6 such relationship, a product manufacturer has no duty to disclose an alleged defect that arises 7 after the express warranty elapses unless it is a safety-related defect. Zwiercan v. Gen. Motors 8 Corp., No. 3235, 2003 WL 1848571, at *2 (Pa. Com. Pl. Mar. 18, 2003) (limiting duty to disclose 9 an omission to “serious and life threatening latent defects”). Because almost all of plaintiffs’ 10 purported issues with their iPhone 6 or 6 Plus have arisen post-warranty, and because none allege 11 a safety-related defect with their device, plaintiffs cannot state a claim for common law fraud 12 based on a purported “omission.” 13 Plaintiffs’ common law fraud claim is also separately and independently barred by 14 Pennsylvania’s economic loss doctrine, which “prohibits plaintiffs from recovering in tort 15 economic losses to which their entitlement flows only from a contract.” Duquesne Light Co. v. 16 Westinghouse Elec. Corp., 66 F.3d 604, 618 (3d Cir. 1995). Where a “plaintiff’s only alleged 17 damage is a diminution in the value of a product plaintiff has purchased, Pennsylvania law says 18 that plaintiff’s redress comes from the law of contract, not the law of tort.” Martin v. Ford Motor 19 Co., 765 F. Supp. 2d 673, 684 (E.D. Pa. 2011) (citation omitted). Plaintiffs do not allege any 20 personal injury or damage to other property (other than the diminution in value of their iPhones). 21 Plaintiffs’ damages flow exclusively from an alleged economic loss from the purchase of their 22 iPhone 6 or iPhone 6 Plus. (TACC ¶ 271.) The economic loss rule applies in precisely such 23 circumstances. Werwinski v. Ford Motor Co., 286 F.3d 661, 681 (3d Cir. 2002) (“[T]he district 24 court correctly applied the economic loss doctrine to appellants’ fraudulent concealment claims” 25 related to defective consumer products.); In re Takata Airbag Prods. Liab. Litig., No. 14-24009- 26 CV, 2016 WL 5848843, at *6 (S.D. Fla. Sept. 21, 2016) (“Pennsylvania’s economic loss rule bars 27 [Plaintiffs’] claims for fraudulent concealment.”); Martin, 765 F. Supp. 2d at 684 (dismissing 28 plaintiffs’ common law fraud claim because “the economic loss doctrine applies to bar tort claims APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 13 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 24 of 36 1 for purely economic loss even where plaintiff alleges an intentional tort such as fraud, if the 2 misrepresentation relates to the quality of the good sold”). 3 4 3. Plaintiffs’ New Jersey Consumer Fraud Act Claim (Count 6) Fails for the Additional Reason That Apple Owed No Duty to Disclose an Alleged Defect Manifesting Outside the Warranty Period 5 Plaintiffs’ New Jersey Consumer Fraud Act claim fails for the additional reason that 6 plaintiffs have failed to allege a duty to disclose the purported touchscreen issue. The sole New 7 Jersey plaintiff, Michael Pajaro, alleges he purchased his iPhone 6 Plus on September 25, 2014, 8 and claims that the alleged touchscreen issue manifested ten months after his warranty expired, in 9 July 2016. This time around, Pajaro adds the conclusory allegation that Apple had a “duty to 10 disclose” (TACC ¶¶ 187, 190), but offers no facts whatsoever to explain how or why any such 11 duty arose. This is insufficient as a matter of New Jersey law, which “will not imply a duty to 12 disclose, unless such disclosure is necessary to make a previous statement true or the parties share 13 a ‘special relationship.’” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1185 (3d Cir. 1993) 14 (citation omitted). Plaintiffs have failed to allege either. Plaintiffs have not offered a whole or 15 partial representation by Apple touting or even specifically referring to the iPhone 6 or 6 Plus 16 touchscreen, let alone a partial statement that would create a duty to disclose. Nor do plaintiffs 17 allege a special relationship between Pajaro and Apple. Plaintiffs cannot allege such a 18 relationship, as New Jersey has held that none exists between individual consumers and 19 manufacturers. See Majdipour v. Jaguar Land Rover N. Am., LLC, No. 12-07849 20 (WHW)(CLW), 2015 WL 1270958, at *8 (D.N.J. Mar. 18, 2015). 21 The fact that Pajaro’s alleged touchscreen issue manifested ten months after his warranty 22 expired further dooms plaintiffs’ New Jersey claim. New Jersey courts have expressly held that a 23 defendant is under no duty to disclose a latent defect that occurs outside the warranty period, 24 unless at the time of sale, Apple “knew with certainty that the product at issue or one of its 25 components would fail.” Alban v. BMW of N. Am., No. 09-5398 (DRD), 2010 WL 3636253, at 26 *10 (D.N.J. Sept. 8, 2010). Plaintiffs cannot clear this hurdle. Instead, plaintiffs rely on com- 27 plaints made on Apple’s website about the alleged touchscreen defect by a single individual a few 28 days before Pajaro’s September 25, 2014 purchase (TACC ¶ 65), and speculate without a single APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 14 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 25 of 36 1 supporting fact that Apple’s pre-release testing “should have alerted it” to the issue (id. ¶ 77). 2 Pure speculation and one individual’s posted complaints fall far short of the requisite certainty, 3 and require dismissal of plaintiffs’ New Jersey fraud claim. Arcand v. Brother Int’l Corp., 673 F. 4 Supp. 2d 282, 297 (D.N.J. 2009) (“Obviously, there can be no fraud, or reliance for that matter, if 5 the defendant was under no obligation to disclose the information in the first place.”). 6 7 C. Plaintiffs’ Warranty Claims Fail As a Matter of Law Plaintiffs have failed to remedy the fatal flaws in their express and implied warranty claims 8 as well. As in their previous complaint, plaintiffs’ express warranty claims still do not allege a 9 manufacturing defect that is covered by Apple’s “materials and workmanship” warranty. These 10 claims independently fail to the extent that plaintiffs allege issues that arose after the expiration of 11 the warranty period, and because plaintiffs do not allege they complied with the warranty’s terms. 12 Plaintiffs also cannot allege facts showing that Apple’s express warranty is unconscionable under 13 Illinois law. Plaintiffs’ implied warranty claims once again must be dismissed because Apple 14 properly disclaimed implied warranties, and, in any event, limited any implied warranties not 15 disclaimed to one year. Finally, plaintiffs’ Magnuson-Moss Warranty Act claim fails because 16 their underlying Illinois state warranty claims fail. 17 1. Plaintiffs’ Express Warranty Claims Fail (Count 18) 18 “To state a breach of express warranty claim, a plaintiff must allege the terms of the 19 warranty, the failure of some warranted part, a demand upon the defendant to perform under the 20 warranty’s terms, a failure by the defendant to do so, compliance with the terms of the warranty 21 by the plaintiff, and damages measured by the terms of the warranty.” Disher v. Tamko Bldg. 22 Prods., Inc., No. 14-cv-740-SMY-SCW, 2015 WL 4609980, at *3 (S.D. Ill. July 31, 2015) 23 (citation omitted). “Under Illinois law, because express warranties are contractual in nature, the 24 language of the warranty itself is what controls and dictates the obligations and rights of the 25 various parties.” Publ’ns Int’l Ltd. v. Mindtree Ltd., No. 13 C 05532, 2014 WL 3687316, at *3 26 (N.D. Ill. July 24, 2014) (citation omitted). 27 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 15 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 26 of 36 1 2 3 a. Plaintiffs Still Do Not Allege a Manufacturing Defect Covered by Apple’s Warranty The Court found that plaintiffs’ SACC, “at bottom, alleges a defect in Defendant’s design of 4 the iPhone 6 and 6 Plus.” (Order at 21:3-4.) The Court granted plaintiffs another opportunity to 5 allege a non-design based defect (id. at 22:7-10), but plaintiffs have failed to do so. Even under 6 plaintiffs’ selection of Illinois law, their express warranty claims must be dismissed again because 7 they cannot allege a manufacturing defect covered by Apple’s express warranty. 8 “Under Illinois law, to prove that Defendant breached the Limited Warranty, the Plaintiff 9 must first show that the [product] had a defect that is covered by the warranty.” Voelker v. 10 Porsche Cars N. Am., No. 02 C 4798, 2004 WL 2211603, at *5 (N.D. Ill. Sept. 29, 2004). 11 Plaintiffs still allege a design defect that is not covered by Apple’s “materials and workmanship” 12 warranty. A plaintiff who asserts a design defect fails to state a claim for breach of an express 13 warranty that covers “materials and workmanship.” See Voelker v. Porsche Cars N. Am., Inc., 14 353 F.3d 516, 520, 527 (7th Cir. 2003) (dismissing a claim for breach of express warranty under 15 Illinois law because the warranty at issue covered only “defect[s] in material and workmanship,” 16 not plaintiffs’ alleged design defect). 17 Under Illinois law, “[a] manufacturing defect occurs when one unit in a product line is 18 defective, whereas a design defect occurs when the specific unit conforms to the intended design 19 but the intended design itself renders the product unreasonably dangerous. . . . Generally 20 speaking, manufacturing defects result from qualities of a product not intended by the 21 manufacturer.” Cappellano v. Wright Med. Grp., Inc., 838 F. Supp. 2d 816, 825-26 (C.D. Ill. 22 2012). The scant additional details plaintiffs have added to their TACC only confirm that 23 plaintiffs allege solely a design defect. Plaintiffs’ allegations that “the decreased strength and 24 durability in the external casing causes the soldering on the touch IC chips to fail” (TACC ¶ 55) 25 constitute an alleged design defect, just as in the SACC. Paragraphs 59 to 62 of the TACC 26 continue to allege that the iPhone 6 and iPhone 6 Plus should have been designed differently. 27 Nowhere do plaintiffs allege that the iPhone 6 or 6 Plus deviated from Apple’s intended design. 28 Cappellano, 838 F. Supp. 2d at 826 (Plaintiff failed to establish a manufacturing defect where it APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 16 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 27 of 36 1 did “not come forward with any evidence that the hip prosthesis deviated in any way from 2 Defendants’ intended design.”). 3 Plaintiffs also have not narrowed their putative class. (See TACC ¶ 128.) As the Court 4 recognized, the fact that plaintiffs seek to represent a class of all purchasers of the iPhone 6 and 6 5 Plus “suggests that Plaintiffs are alleging an inherent defect in the iPhone’s design.” (Order at 6 21:23-24.) Because plaintiffs have failed to add any allegations regarding a non-design based 7 defect, they have failed to cure the deficiencies in the SACC. Plaintiffs do not allege any defect 8 covered by Apple’s Limited Warranty and fail to state a claim for breach of express warranty. 9 b. The One-Year Warranty Period Bars Claims for Alleged Issues That Arose After the Warranty Expired 10 11 “Illinois law holds that express warranties of limited duration cover only defects that 12 become apparent during the warranty period.” Evitts v. DaimlerChrysler Motors Corp., 359 Ill. 13 App. 3d 504, 511 (2005); see also Tokar v. Crestwood Imports, Inc., 177 Ill. App. 3d 422, 432 14 (1988) (“[P]laintiff cannot base an action for breach of express . . . warrant[y] limited to one year 15 after purchase on defects manifesting themselves after that period.”). This is true even if the 16 plaintiff alleges a “latent defect[].” See id. at 431 (concluding that “plaintiff could not recover for 17 allegedly latent defects in his auto which manifested themselves after Subaru’s warranty period”). The Court previously dismissed plaintiffs’ breach of express warranty claim for the 18 19 independent reason that for all but two plaintiffs, their alleged touchscreen issues arose outside of 20 the one-year Limited Warranty. (Order at 25.) Plaintiffs’ TACC does not change that fact. 21 Plaintiffs have added dates of purchase and dates of the alleged manifestation of issues for 22 plaintiffs Muilenburg and Bon, but like most of the other plaintiffs, both of their alleged issues 23 arose after the one-year warranty period had expired.11 (TACC ¶¶ 18, 19.) 24 11 25 26 27 28 With respect to the two plaintiffs Benelhachemi and Bauer, their allegations nonetheless fail to establish a breach of express warranty. With respect to Benelhachemi, Apple satisfied its warranty obligations. (See infra n.12.) As for Bauer, Bauer’s allegations suggest—but do not specifically allege—that he may have contacted Apple about an alleged touchscreen issue within the warranty period. Bauer alleges that he contacted Apple “in or about November 2015,” but does not say why he contacted Apple at that time. In a separate sentence, he alleges, “After requesting that Apple fix the Touchscreen Defect, Apple informed Mr. Bauer that Apple could not fix his iPhone . . . .” (TACC ¶ 15.) He does not allege when Apple informed him that it could not fix his iPhone. Particularly given that other plaintiffs specifically allege the dates or months APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 17 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 28 of 36 1 Plaintiffs’ labeling of the alleged touchscreen issue as a “latent defect[]” (id. ¶ 89) cannot 2 change the fact that their alleged issues arose after the expiration of Apple’s express warranty. 3 Illinois law is clear that a plaintiff cannot recover for even allegedly latent defects manifesting 4 outside the warranty period. See Tokar, 177 Ill. App. 3d at 432. “To allow a customer to seek 5 damages for breach of an express warranty beyond the limits specified in that warranty would in 6 effect compel the manufacturer to insure all latent defects for the entire life of the product and 7 would place a burden on the manufacturer for which it did not contract.” Evitts, 359 Ill. App. 3d 8 at 511; see also Karpowicz v. Gen. Motors Corp., No. 97 C 1390, 1998 WL 142417, at *4 (N.D. 9 Ill. Mar. 26, 1998) (“Case law uniformly holds that time-limited warranties do not protect buyers 10 against defects that existed before but are not discovered until after the expiration of the warranty 11 period.”). 12 Plaintiffs’ TACC makes the new argument that Apple “prevented purchasers from making 13 warranty claims to Apple during the period of the limited warranty” by issuing an alleged 14 misrepresentation in the September 25, 2014 Statement. (TACC ¶ 89.) This argument overlooks 15 the critical fact that the majority of the plaintiffs, by their own allegations, did not experience a 16 failure of their iPhone within the warranty period. Without a “failure of some warranted part,” 17 they did not have a warranty claim to make. Disher, 2015 WL 4609980, at *3. Apple could not 18 have “prevented” plaintiffs from making a claim they did not have. Moreover, two of the 19 plaintiffs, Benelhachemi and Bauer, in fact claim that they did make warranty claims within the 20 warranty period, undermining any argument that Apple “prevented” plaintiffs from making 21 claims. (TACC ¶¶ 10, 15.) 22 23 24 25 26 27 28 Plaintiffs’ breach of express warranty claims based on alleged issues that arose after the expiration of the one-year warranty must be dismissed.12 in which they made a warranty claim that was denied, Bauer’s evasive allegations cannot pass muster. 12 Even though plaintiff Benelhachemi alleges his issue first arose within a year, he exercised his claim under the Limited Warranty and received a replacement phone from Apple. (TACC ¶ 10.) Apple thus satisfied its obligation under the warranty. The replacement phone’s warranty period was either the remaining period of the one-year warranty on the original device or 90 days, whichever was longer. (See Singh Decl. Ex. A at 2.) Plaintiffs’ allegation in the TACC ¶ 125 is therefore misleading. When Benelhachemi attempted to make a warranty claim on his replacement phone, it was outside the warranty period. (TACC ¶ 10.) APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 18 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 29 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 c. Plaintiffs Fail to Allege That Apple’s One-Year Limited Warranty Is Unconscionable Plaintiffs again attempt to avoid the terms of the express warranty by alleging that it is unconscionable. (TACC ¶¶ 106-18.) To support this contention in the SACC, plaintiffs alleged that the terms are non-negotiable, that consumers expect a smartphone to last two years, and that Apple concealed the alleged touchscreen defect. Plaintiffs also argued in opposition to Apple’s motion to dismiss, though they did not allege, that the warranty was only provided after purchase. The Court found that these allegations and arguments were insufficient to establish that Apple’s warranty was unconscionable. The TACC fails to remedy this defect. Plaintiffs now all concede that they read the warranty in the box and were aware that they could return the product if they did not agree to the warranty. Plaintiffs’ sole new argument appears to be that they were deterred from returning their devices within the return period because of their reliance on Apple’s September 25, 2014 Statement. This argument is meritless. The return right allows consumers the opportunity to consider the warranty’s terms and return the product if they do not agree to these terms; the September 25, 2014 Statement has nothing to do with the terms of the warranty. In Illinois, “[a] finding of unconscionability may be based on either procedural or substantive unconscionability, or a combination of both.” Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1, 21 (2006). The Court previously found that plaintiffs failed to plead either substantive or procedural unconscionability in the SACC. (Order at 23-25.) Plaintiffs still fail to plead either prong of unconscionability in the TACC. 20 21 22 23 24 25 26 27 (i) Plaintiffs Fail to Allege Procedural Unconscionability “Procedural unconscionability refers to both a situation where a term is so difficult for a plaintiff to find or understand that he cannot have been aware he was agreeing to it and also to a plaintiff’s lack of bargaining power or lack of meaningful choice.” Darne v. Ford Motor Co., No. 13 C 03594, 2015 WL 9259455, at *7 (N.D. Ill. Dec. 18, 2015). Plaintiffs allege that Apple’s Limited Warranty is unconscionable because “[c]onsumers did not have the ability to negotiate the terms or length of the express warranty.” (TACC ¶ 118.) But “Illinois law does not void contracts where parties have unequal bargaining power, even if a 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 19 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 30 of 36 1 contract is a so-called ‘take-it-or-leave-it’ deal . . . .” Koveleskie v. SBC Capital Markets, Inc., 2 167 F.3d 361, 367 (7th Cir. 1999). Plaintiffs never allege that the Limited Warranty’s terms were 3 “so difficult . . . to find or understand” that they were not aware they were agreeing to them. 4 Darne, 2015 WL 9259455, at *7. Plaintiffs also cannot allege that they lacked meaningful 5 choice. Plaintiffs had the options of purchasing a smartphone from a third party or purchasing an 6 extended service plan to extend the duration of the one-year warranty. Such choices defeat any 7 claim of procedural unconscionability. See id. at *8 (“If the plaintiffs wanted additional coverage 8 beyond the ‘shorter period’ of the warranty, they had the option to purchase an extended 9 warranty; this provided the meaningful choice that is unavailable in a procedurally 10 unconscionable contract.”); id. (“no procedural unconscionability where plaintiff ‘was presented 11 with a meaningful choice, not just the option of purchasing a different vehicle from a different 12 manufacturer, but also the option of purchasing a different warranty with an extended durational 13 limit from Ford’” (quoting Smith v. Ford Motor Co., 462 F. App’x 660, 663-64 (9th Cir. 2011))). 14 Plaintiffs also had the option of returning their devices within 14 days if they did not agree 15 to the terms of the warranty. The Limited Warranty provides, in all capital letters at the top of the 16 first page: “IF YOU DO NOT AGREE TO THE TERMS OF THE WARRANTY, DO NOT USE 17 THE PRODUCT AND RETURN IT WITHIN THE RETURN PERIOD STATED IN APPLE’S 18 RETURN POLICY.” (Singh Decl. Ex. A at 1.) Plaintiffs themselves acknowledge the return 19 period. (TACC ¶ 36.) Illinois law will enforce contract terms provided after purchase as long as 20 the customer had an opportunity to read and reject them by returning the product. Hill v. 21 Gateway 2000, Inc., 105 F.3d 1147, 1150 (7th Cir. 1997) (“[A] vendor may propose that a 22 contract of sale be formed, not in the store (or over the phone) with the payment of money or a 23 general ‘send me the product,’ but after the customer has had a chance to inspect both the item 24 and the terms.”). In Hill, the Seventh Circuit enforced an arbitration clause in a statement of 25 terms included inside the box with a computer where the statement said the terms governed unless 26 the customer returned the computer within 30 days. Id. at 1148. Because the plaintiffs kept their 27 computer beyond the return period, the court found they accepted the terms, reasoning that 28 “[p]ractical considerations support allowing vendors to enclose the full legal terms with their APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 20 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 31 of 36 1 products.” Id. at 1149, 1150. Plaintiffs all admit they reviewed the in-the-box warranty terms 2 immediately following their purchases; there is no procedural unconscionability in plaintiffs’ 3 acceptance of the warranty terms by choosing to keep their devices beyond the return period. See 4 Bess v. DirecTV, Inc., 381 Ill. App. 3d 229, 237-39 (2008) (satellite TV subscriber bound by 5 terms not received until after purchase because agreement permitted customer to cancel service if 6 she did not accept terms); Crawford v. Talk Am., Inc., No. 05-CV-0180-DRH, 2005 WL 2465909, 7 at *5 (S.D. Ill. Oct. 6, 2005) (“A vendor, as master of the offer, may invite acceptance by 8 conduct, and may propose limitations on the kind of conduct that constitutes acceptance. A buyer 9 may accept by performing the acts the vendor proposes to treat as acceptance.” (quoting ProCD v. 10 11 Zeidenberg, 86 F.3d 1447, 1452 (7th Cir. 1996))). Moreover, as in the SACC, plaintiffs never allege that they did not receive pre-sale notice of 12 the warranty or that they could not access it online prior to or at the time of their purchase. 13 (Order at 23.) One of the plaintiffs, Benelhachemi, exercised his rights under the express war- 14 ranty, demonstrating that he was aware of the warranty and its terms. (TACC ¶ 10 (alleging that 15 Mr. Benelhachemi contacted Apple and received a replacement iPhone 6 Plus).) A party who 16 accepts the benefits of a contract cannot deny its validity. See In re Estate of Boyar, 2013 IL 17 113655, ¶ 40 (2013) (“[T]here is a general principle of equity which holds that once one accepts 18 some benefit, one cannot then challenge the validity of the thing by which the benefit was 19 conferred.”). 20 Plaintiffs now appear to allege that they did not return their iPhones within the return period 21 “in reliance on” Apple’s September 25, 2014 Statement. (TACC ¶ 88.) This argument misses the 22 point. Apple’s Limited Warranty expressly provides for a return if the consumer does not agree 23 to “the terms of the warranty.” (Singh Decl. Ex. A at 1 (emphasis added).) The point of the 24 return right is that purchasers can return their device if they do not agree to the warranty’s terms. 25 The review and return provision says nothing about whether the product will or may fail at some 26 later point. Plaintiffs admit they reviewed the one-year warranty’s terms and kept their devices. 27 Plaintiffs do not, and cannot, allege that their review of the September 25, 2014 Statement in any 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 21 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 32 of 36 1 way affected their ability to understand the terms of Apple’s Limited Warranty. Plaintiffs are 2 bound by the terms of the warranty. Hill, 105 F.3d 1147. 3 (ii) Plaintiffs Fail to Allege Substantive Unconscionability Under Illinois law, substantive unconscionability “examines the relative fairness of the 4 5 obligations assumed. . . . Indicative of substantive unconscionability are contract terms so one- 6 sided as to oppress or unfairly surprise an innocent party, an overall imbalance in the obligations 7 and rights imposed by the bargain, and significant cost-price disparity.” Jackson v. Payday Fin., 8 LLC, 764 F.3d 765, 778 (7th Cir. 2014) (citation omitted). As in the SACC, plaintiffs allege 9 unconscionability of the one-year term. The Court found that plaintiffs failed to show the one- 10 year duration created substantive unconscionability. The TACC adds no allegations that would 11 alter that conclusion. In Illinois, as is in California, a durational limit on a warranty is not, by itself, 12 13 unconscionable. Darne, 2015 WL 9259455, at *7 (“Illinois . . . enforce[s] durational limits in 14 express warranties.”). Like the SACC, the TACC alleges that consumers expect the iPhone to 15 “remain operable for at least two years.” (TACC ¶ 114.) Plaintiffs now allege various new 16 reasons why consumers have this expectation. (Id. ¶¶ 115-17.) These arguments are unavailing. 17 The contractual terms of the Limited Warranty govern, Mindtree Ltd., 2014 WL 3687316, at *3, 18 and consumer expectations do not. Illinois courts have recognized that “the rules of warranty 19 serve to limit the potentially far-reaching consequences that might otherwise result from imposing 20 tort liability for disappointed commercial or consumer expectations.” 2314 Lincoln Park W. 21 Condo. Ass’n v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill. 2d 302, 308 (1990) (citing Moorman 22 Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d 69, 78-80 (1982)). In any event, plaintiffs’ allegations 23 regarding consumer expectations are unpersuasive. Third-party financing plans and buy-back 24 options offered by carriers cannot negate the terms of the express warranty offered by Apple and 25 accepted by plaintiffs. It is also not clear how an allegation that only 25% of consumers 26 purchased smartphones with financing plans could establish the expectations of all purchasers.13 27 28 13 In addition, Apple’s European warranty term is irrelevant, particularly as plaintiffs have not alleged that they were aware of that warranty term. APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 22 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 33 of 36 1 At bottom, plaintiffs’ allegations are a misplaced attempt to avoid the terms of Apple’s express 2 written warranty, which all plaintiffs admit they received and reviewed. Plaintiffs’ allegations 3 about the duration of cellular telephone service plans or financing options cannot change the 4 clearly stated one-year warranty that has always applied to Apple’s iPhones. 5 Moreover, plaintiffs allege no factual allegations that the duration of Apple’s Limited 6 Warranty itself is “so one-sided as to oppress or unfairly surprise.” Jackson, 764 F.3d at 778 7 (citation omitted). See Darne, 2015 WL 9259455, at *8 (“As to substantive unconscionability, 8 the Amended Complaint does not include any facts supporting that the warranty is inordinately 9 one-sided in [Ford’s] favor. . . . There are no factual allegations that the time period or mile 10 duration was unreasonably short, other than the plaintiffs’ conclusory assertion [that] Ford knew 11 that the [engine] was defective and would fail repeatedly beyond the warranty period.” 12 (quotations and citations omitted)). Indeed, as in the SACC, plaintiffs’ allegations in the TACC 13 regarding Apple’s alleged “conceal[ment of] the Touchscreen Defect” cannot create substantive 14 unconscionability as a matter of law. (TACC ¶ 118.) See Schiesser v. Ford Motor Co., No. 16- 15 cv-00730, 2016 WL 6395457, at *3 (N.D. Ill. Oct. 28, 2016) (three-year warranty provision not 16 unconscionable despite allegations that Ford “had knowledge of the Defect since at least 2011 17 based on customer complaints posted on a message Board on the Ford website” but “never 18 notified Plaintiff of the Defect”); Darne, 2015 WL 9259455, at *8 (five-year, 100,000-mile 19 warranty not unconscionable despite plaintiffs’ allegations that Ford knew engine was defective). 20 Plaintiffs have added a new allegation that they “were all surprised to learn that Apple is 21 using the terms of the express warranty to deny warranty claims related to the Touchscreen 22 Defect.” (TACC ¶ 108.) Plaintiffs cannot plausibly allege they were “surprised” by the one-year 23 term of Apple’s Limited Warranty when they all allege that they reviewed the documents 24 contained in their iPhone boxes immediately after purchase (id. ¶¶ 8-20) and that the box included 25 an insert with the bolded words “Apple One-Year Limited Warranty Summary” (Cheung 26 Decl. ¶¶ 2-3, Exs. A, B). Plaintiffs cannot plausibly argue that they were unaware of, and 27 therefore surprised by, the warranty. 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 23 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 34 of 36 1 2 3 d. Plaintiffs’ Express Warranty Claims Fail for the Additional Reason That Plaintiffs Do Not Plead Compliance with the Warranty To establish a claim for Illinois breach of express warranty, plaintiffs must allege 4 compliance with the terms of the warranty. Disher, 2015 WL 4609980, at *3. As in the SACC, 5 plaintiffs fail to allege that their alleged touchscreen issues arose when the iPhone was “used 6 normally in accordance with Apple’s published guidelines.” (See Singh Decl. Ex. A at 1.) This is 7 a requirement to be covered by Apple’s Limited Warranty. For this additional reason, plaintiffs 8 fail to plead a breach of express warranty under Illinois law. 9 10 2. Plaintiffs’ Implied Warranty Claims Fail (Count 19) Plaintiffs’ implied warranty claims fail because Apple expressly disclaimed all implied 11 warranties. “Illinois law allows a party to disclaim the implied warranty of merchantability in 12 writing if the disclaimer is conspicuous and . . . mentions the term ‘merchantability . . . .’” 13 Semitekol v. Monaco Coach Corp., 582 F. Supp. 2d 1009, 1026 (N.D. Ill. 2008). Applying the 14 same standard under California law, the Court found that Apple’s disclaimer of implied 15 warranties was sufficiently conspicuous. (Order at 26-28.) 16 Apple’s warranty mentions the warranty of merchantability and is conspicuous. As the 17 Court noted, the disclaimer is located in the second paragraph of the first page of the warranty, 18 preceded by a heading, and in all capital letters, in contrast to the subsequent text. (Order at 27; 19 Singh Decl. Ex. A at 1.) “Illinois courts have ruled that disclaimers printed in capital letters and 20 set off from the surrounding text are conspicuous.” Great W. Cas. Co. v. Volvo Trucks N. Am., 21 Inc., No. 08-CV-2872, 2009 WL 588432, at *3 (N.D. Ill. Feb. 13, 2009). 22 To the extent plaintiffs intend to argue that Apple’s disclaimer of implied warranties was 23 unconscionable, those arguments fail for the same reasons their unconscionability arguments 24 regarding the express warranty fail. Moreover, the Court noted that the SACC “contains no 25 allegations that Plaintiffs did not see or understand the Limited Warranty’s implied warranty 26 disclaimer, or that Plaintiffs were surprised by the disclaimer’s terms.” (Order at 28:18-20.) The 27 TACC is likewise devoid of such allegations. 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 24 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 35 of 36 Finally, Apple’s Limited Warranty limits any implied warranties not disclaimed to the one- 1 2 year period of the express warranty. (Singh Decl. Ex. A at 1.) Durational limits on implied 3 warranties are enforceable in Illinois. Tokar, 177 Ill. App. 3d at 432 (“[P]laintiff cannot base an 4 action for breach of . . . implied warrant[y] limited to one year after purchase on defects 5 manifesting themselves after that period.”). As discussed above, plaintiffs do not allege at all (or 6 do not adequately allege) that Apple failed to honor a warranty claim during the one-year 7 warranty period. (See supra n.11.) Therefore, because Apple properly disclaimed all implied warranties, plaintiffs’ implied 8 9 warranty claim must again be dismissed. 10 3. Plaintiffs’ Magnuson-Moss Warranty Claim Also Fails (Count 20) Plaintiffs’ federal Magnuson-Moss claim fails for the same reasons that their Illinois 11 12 warranty claims fail. The Magnuson-Moss Warranty Act provides a federal private right of 13 action for state law warranty claims (15 U.S.C. § 2310(d)(1)), but does not expand those state law 14 rights. “The ability to sustain a cause of action under the Magnuson-Moss Act is dependent on 15 the existence of an underlying viable state-law warranty claim.” Schiesser, 2016 WL 6395457, at 16 *4; see also Hasek v. DaimlerChrysler Corp., 319 Ill. App. 3d 780, 794 (2001) (“[T]he elements 17 necessary to prove a cause of action under the [Illinois] UCC for breach of express warranty are, 18 in essence, the same under the Act.”); Semitekol, 582 F. Supp. 2d at 1024 (applying Illinois law to 19 Magnuson-Moss Warranty Act claim where Illinois law applied to underlying implied warranty 20 claim). Because plaintiffs’ Illinois state law express and implied warranty claims fail, their 21 Magnuson-Moss claim fails as well. 22 V. 23 24 CONCLUSION For the foregoing reasons, Apple respectfully requests that the Court dismiss plaintiffs’ Third Amended Class Action Complaint in its entirety with prejudice. 25 26 27 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 25 Case 5:16-cv-04942-LHK Document 87 Filed 04/18/17 Page 36 of 36 1 Dated: April 18, 2017 Respectfully submitted, MORRISON & FOERSTER LLP 2 3 By: /s/ Arturo González Arturo J. González 4 5 Attorneys for Defendant APPLE INC. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 APPLE’S MOTION TO DISMISS PLAINTIFFS’ TACC CASE NO.: 5:16-CV-04942-LHK sf-3756529 26