On 01/03/2018 Freeman filed a Contract - Business lawsuit against Apple Inc. This case was filed in Santa Clara County Superior Courts, Downtown Superior Court located in Santa Clara, California. The Judge overseeing this case is Walsh, Brian C. The case status is Disposed - Dismissed.
Disposed - Dismissed
Santa Clara County Superior Courts
Downtown Superior Court
Santa Clara, California
Walsh, Brian C
Freeman, David Matthew
Superior Court of California
Fazio, Jeffrey Louis
Superior Court of CA, County of Santa Clara
Order Deeming Case Complex & Staying Discovery: Guidelines for Motions relating to Class Certification: Comment: and Staying Discovery and Responsive Pleading Deadline signed/BCW
Civil Lawsuit Notice: ADR CV-5003: Comment: Civil Lawsuit Notice (1st CMC set for 4/27/18 at 10am in D1; assigned to Hon. Brian C. Walsh)
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Declaration In Support:
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2018_01_03_15_57_33.pdf: Comment: COMPLEX
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Plaintiffs David Matthew Freeman, Andrew Yeganeh, Patricia Vega, and Connie Krueger, individually and on behalf of all others similarly situated allege as follows:
1. For more than five years, Defendant Apple Inc. (*Apple”) has known that the batteries it installs in its 1Phones are inordinately failure-prone, in that they cause 1Phones to (a) shut down suddenly and unexpectedly, even though the batteries were charged enough to last for hours under normal circumstances, and (b) lose their charge precipitously, for no apparent reason (the “Battery Defect).
2. Apple customers began complaining about the Battery Defect almost immediately after the 1Phone 5 was released in September 2012. Rather than informing 1ts customers that the problem existed, much less about its true nature and scope, Apple waited until August 2014—nearly two years after the iPhone 5 was Introduced to the market—to announce a program by which it would provide free replacement batteries in certain 1Phone 5 devices.
3. Apple represented that the Battery Defect was limited to iPhone 5 devices that were manufactured between September 2012 and January 2013—a population so small that customers would have to provide Apple with the serial number of the device to determine whether it was eligible for a replacement, and then only if Apple decided that the battery “needed” to be replaced.
4, Apple used the same approach to deal with nearly identical complaints by owners of the iPhone 6 and 6 Plus and, subsequently, the iPhone 6s and 6s Plus. Within weeks of their introduction to the market,! owners of 1Phone 6 devices began complaining that the devices were shutting down, despite having more than enough
of a battery charge to last for hours, for no apparent reason. But Apple 1ignored the
1 For the iPhone 6 and 6 Plus in September 2014, and for the iPhone 6s and 6s Plus in September 2015. problem with the iPhone 6, 6 Plus, and 6s Plus and focused exclusively on a small fraction of the 1Phone 6s devices 1t had sold (and continued to sell). As it did with the iPhone 5, Apple waited over a year to announce that, because “a very small number of 1Phone 6s devices may unexpectedly shut down,” Apple would conduct a program by which i1t would replace the batteries in the 1iPhone 6s free of charge. And, once again, Apple claimed that the problem affected an extremely small number of devices: those “within a limited serial number range that were manufactured between September and October 2015.72
5. As an increasing number of consumers continued to complain about batteries 1n 1Phones that were not included in the battery-replacement program shutting down, despite having a substantial amount of charge left in those batteries, there was speculation that Apple would expand the 1Phone 6s battery- replacement program.
6. Among those who complained about the problem was the inventor of the 1Pod, Tony Fadell, who commented on Twitter about his experience with the battery on his own iPhone shutting down despite having a significant amount of charge left in 1it: “It’s happening to me every other day—especially while using the mapping app. Have to always carry an external battery to revive it.”
(Emphasis added.)®> And in response to the suggestion that the problem might be
2 As 1t did with the 1Phone 5 battery-replacement program, Apple explicitly denied that there was any safety risk associated with the batteries it decided to replace in the 1Phone 6s program. Like the batteries that Apple installed in the 1Phone 5, however, a startlingly large volume of incidents involving batteries in the 1Phone 6 and 6s family of iPhones exploding and catching fire were reported in the media and i1n lawsuits by individuals and at least one insurance company. As discussed below, it appears that the reason 1Phone batteries shut down suddenly and unexpectedly was to prevent them from exploding and catching fire—which may have been laudable if Apple had not concealed the existence, nature, and scope of the Battery Problem from its customers. due to using GPS applications in cold weather, Mr. Fadell noted that “[iJt has never happened w any other iPhone for me in 9 yrs. Using GPS in the cold isn’t an excuse. Issue with battery/shutdown algorithms?!” (Emphasis added.)*
7. Mr. Fadell was not the only one who noticed a connection between the Battery Defect and iPhone software. Indeed, a single post about the issue on the Apple Support Communities website generated 33 pages of comments by owners of the iPhone—from the iPhone 5 to the iPhone 7—who noticed that their batteries began to drain at inordinately fast rates shortly after installing an updated version of the 1IPhone operating system (“10S”), version 10.
8. In another post on Apple’s website, which was titled “10S 10 painfully slow on 1Phone 6,” the author commented that it had “been a few days since I installed 10S 10 on my 64GB iphone 6 and it’s just so slow to the point that its becoming useless!’® The comment prompted 2,146 customers to indicate that they had experienced the same phenomenon. Complaints were so numerous that they were reported in the media.® Nonetheless, in January 2017, Apple stated publicly that 1t would not expand the battery-replacement program beyond the 1Phone 6s, claiming that there was no reason to do so.
9. In other posts on Apple’s website, on other websites (e.g., Reddit), and in an array of news media reports, Apple customers complained that, after installing an 10S update, their iPhones began functioning so slowly that it became
next to impossible to use the devices for ordinary tasks such as text messaging and
4 Tony Fadell Twitter Comment, Dec. 1, 2016, https://[twitter.com/tfadell/status/804232051595640833.
5 1Phone Comment Thread, Sept. 16, 20160, https://discussions.apple.com/thread/7669667. making phone calls. Yet, when confronted with questions about whether updating 10S might be the cause of the problem, Apple representatives flatly denied that possibility and claimed that restoring factory settings (which deletes all the user’s data from the device) would solve the problem.
10. Apple’s statements about this issue were blatantly misleading. After independent laboratory testing revealed that 10S algorithms slowed 1Phone microprocessors—in an apparent effort to prevent the batteries from causing erratic operation and unexpected shutdowns—Apple admitted 1t had intentionally modified 108 for that purpose. Apple claimed to have done this for its customers’ benefit, but 1t could not legitimately deny the fact that Apple’s decision to surreptitiously modify 10S in this manner caused customers to purchase replacements for iPhones that they otherwise would not have replaced.
11. In response to public outrage over the revelation that Apple covertly modified 10S for the purpose of slowing their performance, Apple issued a more detailed statement regarding the matter, which included the following admissions:
About a year ago 1n 10S 10.2.1, we delivered a software update that
1mproves power management during peak workloads to avoid
unexpected shutdowns on iPhone 6, iPhone 6 Plus, iPhone 6s, iPhone 6s Plus, and iPhone SE. With the update, 10S dynamically manages the maximum performance of some system components when needed to prevent a shutdown. While these changes may go unnoticed,
In some cases users may experience longer launch times for apps and
other reductions in performance.
Customer response to 10S 10.2.1 was positive, as 1t successfully
reduced the occurrence of unexpected shutdowns. We recently
extended the same support for iPhone 7 and iPhone 7 Plus in 10S
(Emphasis added.)? 12. Apple not only concealed the existence of the Battery Defect from
consumers at the time consumers bought Affected 1Phones, it took affirmative, ongoing steps to continue to conceal the problem, including (1) attempting to mask the problem by modifying 10S to avoid the cost of replacing the batteries in all affected 1Phones, including those under warranty, and causing customers to buy replacements for those devices, (2) repeatedly making representations that each new model of the iIPhone was equipped with faster processors and batteries that lasted longer than their predecessors, and (3) explicitly denying that the Battery Defect affected any iPhones other than a small fraction of iPhone 6s devices that were manufactured between September and October 2015.
13. Apple knew that the Battery Defect was far more widespread than it represented in connection with its announcements about the 1Phone 5 and 6s battery-replacement programs. (Indeed, owners of iPhone 7, 7 Plus, 7s, and 7 Plus devices are complaining about the same problems that the owners of earlier models have experienced.) Yet Apple refused to expand those programs to include the other devices until it was forced to admit the true nature and scope of the problem just last week. Even then, however, Apple continues to ignore the fact that the Battery Defect also affects the 1iPhone 5, 5¢, and 5s. And although Apple has recently offered to replace the batteries for “anyone with an iPhone 6 or later,” it will do so only if the customer pays Apple $29 and only for those devices “whose battery needs to be replaced” (without identifying the criteria by which Apple will make that determination). In other words, Apple’s solution to the Battery Defect 1s to charge 1ts consumers to remedy it by paying to replace failure-prone batteries with other
failure-prone batteries.® 14. Plaintiffs bring this action individually and on behalf of a proposed Class composed of current and former owners of each of the iPhones whose batteries Apple itself has admitted have a problem; namely, the iPhone SE, 6, 6 Plus, 6s, 6s Plus, 7, and 7 Plus (collectively, “Affected iPhones”).? By this action, Plaintiffs seek, among other things, equitable relief; monetary relief in an amount that is sufficient to compensate Plaintiffs and the other Class members for damages caused by Apple’s unfair, unlawful, and fraudulent conduct; and punitive damages in an amount sufficient to punish Apple—the world’s wealthiest corporation—for engaging in that conduct.
15. Plaintiffs bring this action individually and on behalf of all others similarly situated to require Apple (a) to modify 10S in a manner that prevents it from slowing the performance of Affected 1Phones; (b) to provide owners of Affected 1Phones with notice that the slow performance of those devices is caused by modifications Apple made to 10S; (¢) to reimburse current owners of Affected 1Phones with the purchase price they paid for those devices; (d) to compensate current and former owners of Affected iPhones for the costs they incurred in attempting to repair or replace their Affected iPhones due to the Battery Defect and/or the slow performance caused by the 10S modification; (d) to provide current owners of Affected 1Phones with new batteries for those devices free of charge; and (e) to compensate former owners of Affected 1Phones for the cost of replacing those devices prematurely, for the diminished value of their devices caused by the Battery Defect and Apple’s attempts to conceal the Battery Defect, or, alternatively, to provide former owners with the opportunity to return their replacement iPhones in exchange for a refund together with the model of Affected 1Phone (with a new
16. David Matthew Freeman is a citizen of the State of California and a resident of Los Angeles, California, who purchased an iPhone 6 from Apple for personal use. Plaintiff Freeman’s 1Phone 6 freezes during messaging and while attempting to use the telephony features, shuts down suddenly and unexpectedly, and became slow and unresponsive after updating 10S. Plaintiff Freeman still owns his 1Phone 6 Plus. Had Plaintiff Freeman known what Apple knew about the Battery Defect and that it had modified 10S to conceal its existence, nature and scope—and/or to deceive customers into replacing their slow 1Phones with new ones—he would not have purchased an iPhone or would have paid significantly less for 1ts purchase.
17. Andrew Yeganeh 1s a citizen of the State of California and a resident of Los Angeles, California, who purchased an i1Phone 6 for personal use before replacing it with a new 1Phone 6 that he obtained from Apple less than a year ago, after he experienced problems with his previous iPhone. Plaintiff Yeganeh’s current 1Phone 6 restarts on its own, freezes while attempting to use messaging and telephony applications, quits while in use, and frequently operates so slowly that it becomes impracticable to use (e.g., the letters on screen within messages appear enlarged when switching over to the messaging app, and when dictating messages, making it extremely difficult to use these functions when sending messages.) Additionally, the functionality of the Sir1 feature diminished greatly since updating 10S, which causes various malfunctions and, intermittently, no function at all). Had Plaintiff Yeganeh known what Apple knew about the Battery Defect and that it had modified 10S to conceal 1ts existence, nature and scope—and/or to deceive customers into replacing their slow 1Phones with new ones—he would not have purchased an
1Phone or would have paid significantly less for its purchase. 18. Patricia Vega 1s a citizen of the State of California and a resident of Los Angeles, California, who purchased an 1Phone 6 for personal use before replacing i1t with an 1iPhone X at a cost of more than $1,000. Plaintiff Vega’s 1Phone 6 began operating slowly after updating 10S, and began to drain the battery until it ultimately now does not retain a charge (no matter how long it 1s left charging). When Plaintiff Vega attempts to start her iPhone 6, it remains on for a few minutes, then shuts down again. Had Plaintiff Vega known what Apple knew about the Battery Defect and that i1t had modified 10S to conceal its existence, nature and scope—and/or to deceive customers into replacing their slow 1Phones with new ones—she would not have purchased an iPhone or would have paid significantly less for its purchase.
19. Connie Krueger 1s a citizen of the State of California and a resident of Banning, California, who purchased an iPhone 6, which had a battery that began discharging more rapidly over time, until it ultimately would not hold a charge at all. Plaintiff Krueger replaced her iPhone 6 with a new 1Phone 7 from AT&T, which she continues to own. Like previous 1Phones she has owned, Plaintiff Krueger’s 1Phone 7 has performed unusually slowly since updating 10S, intermittently making it difficult if not impossible to use certain applications, and the battery has trouble holding a charge. Had Plaintiff Krueger known what Apple knew about the Battery Defect and that it had modified 10S to conceal its existence, nature and scope—and/or to deceive customers into replacing their slow 1Phones with new ones—she would not have purchased an 1Phone or would have paid significantly less for its purchase.
20. Apple Inc. (“Apple”), 1s a corporation that was created under the laws
of the State of California, and has its principal place of business in Cupertino, and the world’s third-largest mobile phone manufacturer. There are currently over one billion Apple products in active use worldwide.
21. Plaintiff 1s unaware of the true names and capacities of Does 1 through 20 and sues them by fictitious names. Plaintiff will amend this Complaint to include these Doe defendants’ true names and capacities when they are ascertained. Each Doe defendant is responsible in some manner, including without limitation, as aiders and abettors, for the conduct alleged in this Complaint.
22. At all times mentioned in this Complaint, each and every defendant was an agent, representative, or employee of each and every other defendant and in doing the things alleged in this Complaint, each and every defendant was acting within the course and scope of such agency, representation or employment and was acting with the consent, permission and authorization of each of the remaining defendants. Each defendant’s actions alleged in this Complaint were ratified and approved by the other defendants and their respective officers, directors, or managing agents. Each and every defendant 1s a citizen of the State of California.
23. Venue is proper in this County pursuant to California Civil Code section 1780(d), because the conduct alleged in this Complaint emanated from Apple’s headquarters in Cupertino, California.
24. This Court has subject matter jurisdiction over all causes of action alleged in this Complaint pursuant to the California Constitution, Article VI, § 10, and 1s a Court of competent jurisdiction to grant the relief requested.
25. Plaintiffs, the other Class members, and Apple are all citizens of the State of California.
26. The 1Phone 1s an Internet and multi-media-enabled “smartphone”
designed and marketed by Apple. Apple introduced the original iPhone for sale in 27. Shortly after Apple introduced the original i1Phone, technology reporters complained that, like the 1Pod, the 1Phone battery was designed to not be removed by the consumer. See, e.g., Dan Frommer, “Why You May Not Want an 1Phone,” Forbes (July 11, 2007) (*the 1iPhone’s rechargeable battery is sealed inside 1ts case. That’s what Apple does already with 1ts 1Pod devices, presumably to save space”’) (available online at https:/www.forbes.com/2007/06/08/iphone-problems- apple-tech-wireless-cx_df 0611iphonemain.html#5789811b7bfb).
28. In response to claims that the 1iPhone’s battery would last for only 400 charges—which amounts to roughly two years of use—Greg Joswiak, who was then (and still 1s) Apple’s Vice President of Product Marketing, responded quickly and unequivocally:
“After 400 complete cycles, the iPhone’s battery still has 80
percent of its charged capacity,” Joswiak said. “And by a complete
charge cycle, I mean completely draining the battery, a full chemical cycle.” In other words, using a little battery and then putting your iPhone back in its dock doesn’t count as a charge cycle. If
you use a quarter of your 1Phone’s battery and then re-charge it,
Joswiak said, that’s the equivalent of a quarter of a charge cycle.
Jason Snell, “The Truth About iPhone Battery Lifespan,” Macworld (July 12, 2007) (emphasis added) (available online at https://www.macworld.com/article/1058916/smartphones/iphonebattery.html).
29. Since 2007, Apple has introduced a series of new 1Phone models, including the Affected 1Phones (i.e., iPhone SE, iPhone 6, iPhone 6 Plus, iPhone 6s, 1Phone 6s Plus, 1iPhone 7, iPhone 7 Plus, iPhone 7s, and 1Phone 7 Plus). Plaintiffs are informed and believe that, at the time 1t sold each Affected 1Phone, Apple knew or had reason to know that the batteries it installed in Affected iPhones were inordinately failure-prone—in that they were designed and/or manufactured in a manner that caused Affected 1Phones to shut down suddenly and unexpectedly even
when battery levels were at 50% or higher, caused battery levels to drop suddenly processor speeds—but intentionally concealed the Battery Defect from the consuming public.
30. Rather than curing the Battery Defect by providing a free battery replacement for all Affected iPhones, Apple sought to mask the existence, nature, and scope of the Battery Defect by modifying the 1Phone operating system (“10S”) so that 1t reduces Affected 1Phones’ processing speeds in an effort to prevent their batteries from causing erratic operation and unexpected shutdowns.
31. But modifying 10S not only allowed Apple to conceal the true nature and scope of the Battery Defect and to avoid expending time, money, and effort on correcting 1t, Apple’s decision to modify 10S instead had an added benefit to Apple: the modified 10S would slow the performance of Affected iPhones, which would serve to compel consumers to replace them with new 1Phones—just as some of the named Plaintiffs did.
32. Nearly a year after customers started complaining about shut downs— 1n August 2014—Apple announced a recall program for the 1iPhone 5 battery, which “may suddenly experience shorter battery life or need to be charged more frequently,” but claimed that the problem affected only “a very small percentage” of 1Phone 5 devices; those sold between September 2012 and January 2013 bearing certain serial numbers. See, e.g., Michael Rougeau, “Apple Will Replace Your Crummy 1Phone 5 Battery,” TechRadar (Aug. 26, 2014); Andrew Cunningham, “Apple Announces Battery Replacement Program for the 1iPhone 5,” Ars Technica (Aug. 22, 2014) (available online at https://arstechnica.com/gadgets/2014/08/apple- announces-battery-replacement-program-for-the-iphone-5/).
33. Despite claiming that a very limited number of iPhone 5 batteries were affected, however, 1n early 2015 Apple extended the battery-replacement program Program Extended into January 2016,” 9 to 5 Mac (March 5, 2015) (available online at https://9tobmac.com/2015/03/05/iphone-5-battery-program-extended/).10
34. In September 2014—a month after it decided to extend the battery- recall program for the iPhone 5—Apple introduced the 1Phone 6 and 6 Plus and claimed that those products had superior battery life, notwithstanding that they were equipped with new chips would yield even greater processing speeds.
35. Indeed, Apple claimed that the battery life of the iPhone 6 and 6 Plus was 1mproved because the chips performed longer and faster than those in the 1Phone 5: “With second generation 64-bit desktop-class architecture, the all-new A8 chip offers faster performance and is more energy efficient, delivering higher sustained performance with greater battery life.” Press Release, “Apple Announces 1Phone 6 & 1Phone 6 Plus—The Biggest Advancements in 1Phone History” (Sept. 8, 2014) (emphasis added).
36. Like the iPhone 5, however, iPhone 6 owners began complaining that their devices were shutting down and that the batteries rapidly lost their charge
almost immediately after Apple introduced those devices to the market.!1
10 Plaintiffs are informed and believe that avoiding the fallout from battery- related safety risks may have led Apple to extend the iPhone 5 recall program. See, e.g., Chanel Adams, “Apple Extends 1Phone 5 Faulty Battery Replacement Program Into January, 2016, Inquisitr (March 9, 2015) (noting “the many incidents occurring with exploding 1iPhone 5 devices” and that replacing the battery can reduce the risk of “having your iPhone explode or catch fire”); Chris Matyszczyk, “Man Blames Third-Degree Burns on Exploding 1iPhone,” C/Net (March 1, 2015) (available online at https://www.cnet.com/news/man-blames-3rd-degree-burns-on- exploding-iphone-at-wake/); Buster Hein, Burning iPhone Forces Plane to Make Emergency Evacuation,” Cult of Mac (Aug. 18, 2014) (available online at https://www.cultofmac.com/291864/iphone-5-catches-fire-mid-flight-causes- emergency-evacuation/); Jordan Kahn, “This is What an iPhone 5 Looks Like When Its Battery Catches Fire and Explodes,” 9 to 5 Mac (Feb. 22, 2014) (available online at ); (available online at https://9to5mac.com/2014/02/22/this-1s-what-an-iphone-5s- looks-like-when-its-battery-catches-fire-and-explodes/). 37. In April 2016, Apple announced that, for the first time since Apple began selling iPhones in 2007, the company sold fewer iPhones than it had sold in the same quarter the previous year: iPhone sales dropped 16 percent in the first quarter of the year, and 32 percent from the last quarter of 2015. See Brian Barrett, “Apple’s 1Phone Sales Just Fell for the First Time—It Won’t Be the Last,” Wired (April 26, 2016) (available online at https:/www.wired.com/2016/04/iphone-sales- decline/). Those statistics were significant. The 1Phone 1s “so critical to Apple’s balance sheet that its fall led to a 13 percent drop in the company’s revenue.” Id. (emphasis added). And although Apple still saw room for growth in China, analysts observed that “Apple’s not going to double their sales anymore.” Id.
38. Analysts attribute the decline in 1IPhone sales in part to improvements made by Apple’s competitors, which began offering competitive alternatives at much lower prices. Id. Analysts also observed that “[p]eople are holding onto their smartphones longer ... [a]s a function of getting better, smartphones now also last longer. If you can postpone shelling out for a new phone, why wouldn’t you?” Id.
39. There were other reasons consumers were less eager than they had previously been to buy the next-generation iPhone. As one technology journalist observed, “It’s harder to come up with a sort of whiz-bang, must-have feature that’s
on a phone.” Mike Cetera, “6 Reasons Not to Buy the 1iPhone 6s,” US News & World Report (Sept. 10, 2015) (quoting C/Net senior writer, Marguerite Reardon) (available online at https:/money.usnews.com/money/blogs/my-money/2015/09/10/5- reasons-not-to-buy-the-iphone-6s). The same article noted that people were buying smartphones without lengthy contracts with carriers, which led them to keep their current devices for longer periods of time. Id.
40. To persuade consumers to buy the 1Phone over less expensive smartphones sold by 1ts competitors and to replace their old iPhones with new ones, Apple’s touts each new iteration of the 1Phone as the latest and greatest smartphone, with specific emphasis on the 1Phone’s faster processors and purportedly longer battery life. Thus, Apple made even more brazenly false claims about battery life and processing speeds when it introduced the iPhone 6s and 6s Plus.
41. In a press release dated September 9, 2015, Apple represented that those devices had an even faster, more advanced chip and even better battery life:
Live Photos, 3D Touch and other advancements in the new 1Phones are
powered by the Apple-designed A9 chip, the most advanced chip
ever in a smartphone, delivering faster performance and great
battery life. . . .
A9, Apple’s third-generation 64-bit chip powers these innovations with
70 percent faster CPU and 90 percent faster GPU performance
than the A8, all with gains in energy efficiency for great battery
life. The A9 chip and 10S 9 are architected together for optimal
performance where i1t matters most, in real world usage. M9, Apple’s
next-generation motion coprocessor, is embedded into AJY, allowing more features to run all the time at lower power, including “Hey Siri,” without iPhone needing to be plugged in. Press Release, “Apple Introduces the 1Phone 6s & 1Phone 6s Plus,” (Sept. 9, 2015) (available online at https:/www.apple.com/mnewsroom/2015/09/09Apple-Introduces- 1Phone-6s-1Phone-6s-Plus/) (emphasis added). 42. Notwithstanding Apple’s representations that its faster, more powerful
processors resulted in “great battery life,” Apple knew that the actual performance problems that led Apple to conduct—and then extend—the battery recall program it conducted for the 1Phone 5. As before, complaints began to pour into Apple’s website within days after Apple released the 1iPhone 6s. See, e.g., “1Phone 6s turned off for no reason and it’s hard to turn on or even plug it in with computer,” Apple Support Communities (Sept. 29, 2015) (https://discussions.apple.com/thread/7249096). Even though the 1Phone 6s and 6s Plus were released only four days earlier (on September 25, 2015), 655 other owners indicated that they had the same experience. Id.
43. Despite such complaints, Apple did nothing to rectify the problems created by the Battery Defect until after the China Consumer Association announced in November 2016 that it was investigating complaints that Chinese customers were complaining about that their 1iPhone 6, 6 Plus, 6s, and 6s Plus were shutting down despite the batteries having 50 to 60 percent of their charge. See, e.g., Anand Nrayanswami, “Apple Registers Increasing Issues of iPhone 6 Battery Fire in China,” PC Tablet (Dec. 7, 2016) (available online at https://pc- tablet.com/apple-issues-iphone-6-battery-fire-chinese-consumer/).12
44. In November 2016, Apple announced that it was conducting another battery-replacement program—this time for a small number of 1iPhone 6s devices
that were manufactured in September and October 2015——claiming that the problem was due to “a battery component that was exposed to controlled ambient air longer than 1t should have been before being assembled into battery packs. As a result, these batteries degrade faster than a normal battery and cause unexpected shutdowns to occur.” James Vincent, “Apple Blames Exposure to ‘Ambient Air” for 1Phone 6S Battery Failures,” The Verge (Dec. 6, 2016) (available online at https://www.theverge.com/2016/12/6/13853280/apple-iphone-6s-battery-problems- fix-explanation).
45. Plaintiffs are informed and believe that Apple’s representation that the Battery Defect was caused by a small number of battery components being exposed to “controlled ambient air” was false. See, e.g., Gordon Kelly, “Apple Warned 1Phones Have a Serious Problem,” Fortune (Dec. 2, 2016) (available online at https://www.forbes.com/sites/gordonkelly/2016/12/02/china-iphone-battery-warning- to-apple/ - 424a3cce2221) (“Apple may be famed for its Reality Distortion Field, but, as Increasing numbers of 1Phones fall victim to a serious Battery Defect I first reported last week, the Chinese government has dismissed Apple’s attempts to downplay the situation and attacked the company for failing to ‘meet basic consumer needs for normal wireless communication™).
46. As Fortune also pointed out, “[ijn the face of overwhelming pressure from users and a stark warning from China’s Consumer Association government watchdog, Apple has gone on record and admitted battery problems are more widespread than it initially claimed.” Gordon Kelly, “Apple Admits 1iPhones Have a Problem,” Fortune (Dec. 6, 2016) (available online at https://[www.forbes.com/sites/gordonkelly/2016/12/06/apple-admits-iphone-battery- problems/#124f3e4c7eed). In that same report, Fortune observed that Apple’s decision was not only a result of bowing to pressure from China: it appeared to be the result of Apple recognizing the true scope of the problem and its sheer magnitude, which resulted in Apple attempting to address the Battery Defect by Despite an extremely cautious statement, Apple says it will now take a course of action which strongly suggests it knows full well that more than “a small number” (a phrase it has used 3x in its last two statements) of iPhones are experiencing problems: it will release a new version of iOS specifically to diagnose battery performance:
“This will allow us to gather information over the coming weeks which may potentially help us 1mprove the algorithms used to manage battery performance and shutdown. If such improvements can be made, they will be delivered in future software updates.” Yes, Apple 1s going to try and fix this in software and the fact this option 1s even on the table 1s encouraging given the immense logistical effort and cost Samsung endured (potentially $17BN) when it had to recall all Galaxy Note 7 models (a handset whose brief time on sale meant it had shipped only a tiny fraction of
the units of all these iPhones). But we're clearly not at that stage yet.
Id. (emphasis added).13
47. Despite Apple’s recognition that it had an enormous battery problem, Apple made even more bombastic representations about battery life when it announced the 1Phone 7 and 1Phone 7 Plus. Specifically, Apple told the consuming public that those devices were equipped with “the best battery life ever in an 1Phone.” Press Release, “Apple Introduces 1Phone 7 & 1Phone 7 Plus, The Best, Most Advanced 1Phone Ever” (Sept. 7, 2016) (available online at https://www.apple.com/newsroom/2016/09/apple-introduces-iphone-7-iphone-7- plus/). Apple went on to make other, equally hyperbolic claims in the same press release:
More Performance & Battery Life
The new custom-designed Apple Al0 Fusion chip features a new architecture that powers these innovations, making i1t the most powerful chip ever in a smartphone, while also getting more time between charges with the longest battery life ever in an iPhone. The A10 Fusion’s CPU now has four cores, seamlessly integrating two high-performance cores that run up to two times faster than iPhone 6, and two high-efficiency cores that are capable of running at just one-fifth the power of the high-performance cores. Graphics performance is also more powerful, running up to three times faster than iPhone 6 at as little as half the power, enabling a new level of gaming and professional apps.
Id. (emphasis added).
48. Plaintiffs are informed and believe that, notwithstanding the promises Apple made about the robustness, speed, and capabilities of the batteries it installed in Affected 1Phones, Apple knowingly equipped and sold those devices with inordinately failure-prone batteries that would become incapable of delivering the promised performance during their useful life. Specifically, over time (i.e., often in less than a year), the batteries in Affected 1Phones became unable to handle the speeds at which the 1iPhone’s microprocessors functioned. Consequently, the devices would perform erratically, their batteries would precipitously lose their charge, and would shut down suddenly and unexpectedly, even when the battery levels were
high.14 49. Plaintiffs are informed and believe that, to reduce the frequency of sudden shutdowns and to mask the existence of the Battery Defect, Apple modified 1ts 10S software in a manner that slowed processing speeds to the point where Affected 1Phones were unable to perform ordinary functions. Plaintiffs are informed and believe that Apple’s modification of 10S slowed the performance of all Affected 1Phones, not just those whose battery had degraded to the point of becoming barely functional.
50. Plaintiffs are further informed and believe that Apple began these modifications with an “upgrade” to 10S 10.2.1, which Apple urged consumers to install affect 1Phones for entirely different reasons, including “bug fixes and
1mprov[ing] the security of your iPhone or 1iPad.” See Apple.com, Download 10S 10 -
10S 10.3.3 Information (available online at https://support.apple.com/kb/DL1893?viewlocale=en_US&locale=en_US) (10S 10.2.1 . . . also 1improves power management during peak workloads to avoid
unexpected shutdowns on 1Phone.”).
51. Plaintiffs are informed and believe that modifying 10S not only allowed Apple to conceal the true nature and scope of the Battery Defect and to avoid the expense and negative publicity that a recall of the batteries in all Affected 1Phones would entail, modifying would slow the performance of Affected iPhones to the point where consumers would be compelled to replace them with new iPhones—just as some named Plaintiffs did.
52. This 1s not mere speculation. Recently, a company that performed laboratory testing of Affected 1iPhones proved that Apple had modified 10S in this manner.,
53. After denying the existence of the Battery Defect since before it conducted the battery-replacement program for the iPhone 5 in 2012, Apple recently admitted that it modified 10S in a manner that slowed the performance of Affected Our goal 1s to deliver the best experience for customers, which includes overall performance and prolonging the life of their devices. Lithium-ion batteries become less capable of supplying peak current demands when in cold conditions, have a low battery charge or as they age over time, which can result in the device unexpectedly shutting down to protect its electronic components.
Last year we released a feature for iPhone 6, 1iPhone 6s and 1Phone SEto smooth out the instantaneous peaks only when needed to prevent the device from unexpectedly shutting down during these conditions. We've now extended that feature to 1Phone 7 with 10S 11.2, and plan to add support for other products in the future.
Shara Tibiken, “Apple admits slowing older 1Phones, says it’s to prevent battery 1ssues,” C/Net (Dec. 20, 2017) (available online at https://www.cnet.com/news/apple- slows-down-older-iphone-battery-issues/#ftag=CAD-09-10aai5b).
54. To underscore the purported benefits of this purported “feature,” Apple focused exclusively on the number of shutdowns it purportedly prevented. Despite these supposed “benefits,” however, Apple said nothing about the fact that the 10S modification also slowed the performance of Affected iPhones until after the 10S modification was discovered during independent laboratory testing. “The statement from Apple came 1n response to a report from earlier this week from Primate Labs, the company behind the Geekbench processor benchmark software. John Pool, the founder of the organization, said . . . that processors in 1Phones slow down and decrease in performance as batteries age and lose capacity. Poole explained that users expect their phones to perform the same regardless of how old the battery is, but his tests indicated that wasn’t the case.” Id.
55. In response to widespread public outcry, Apple then announced that it would replace the batteries in all Affected iPhones except the iPhone 5 series, but only if 1ts customers paid Apple $29 for the replacement. According to Apple, “when a chemically aged battery 1s replaced with a new one, 1IPhone performance returns
to normal when operated in standard conditions.” See “A Message to Our Customers https://[www.apple.com/iphone-battery-and-performance/).1> But this statement appears to be contradicted by Apple’s own actions: it already modified the 10S to slow down all Affected Phones, regardless of the battery’s age, resulting in diminished value to all Affected Phones.
56. Additionally, Apple cannot escape liability for its fraudulent conduct by foisting the cost of replacing the batteries on consumers by forcing them to pay Apple for new batteries Apple would have had to replace for free had it not taken steps to deny and hide the existence of the Battery Defect.
57. Plaintiffs bring this class action pursuant to California Code of Civil Procedure section 382 and California Civil Code section 1781, individually and on behalf of all others similarly situated.
58. The Class that Plaintiffs seek to represent is defined as follows: All citizens of the State of California (who also reside in the State of California) who (a) own an Affected 1Phone or (b) owned an Affected 1Phone and replaced it with a new device (the “Class”).
59. Plaintiffs also seek to represent a Subclass that includes each member of the proposed Class described in Paragraph 59, above, who 1s a “consumer,” as that term 1s defined by California Civil Code section 1761(d), or purchased “goods” or “consumer goods,” as those terms are defined by California Civil Code sections 1761(a) and 1791(a), respectively (the “Consumer Subclass”). Each of the named Plaintiffs in
this action 1s a consumer for purposes of Section 1761(d). 60. Excluded from the Class are Apple, its subsidiaries, affiliates, officers, directors, and employees and persons who have settled with and validly released Apple from separate, non-class legal actions against Apple based on the conduct alleged herein.
61. Plaintiffs are informed and believe that the proposed Class comprises millions of members. The Class 1s, therefore, so numerous and geographically dispersed that joinder of all members in one action is impracticable.
62. Apple has acted with respect to Plaintiffs and the other members of the proposed Class in a manner generally applicable to each of them. There 1s a well- defined community of interest in the questions of law and fact involved, which affect all Class members. The questions of law and fact common to the Class predominate over the questions that may affect individual Class members, including the following:
a. whether Apple modified 10S in a manner that slowed the performance of Affected 1Phones;
b. whether the representations Apple has made about the nature and scope of the Battery Defect are false;
c. whether Apple made false representations about the nature and scope of the Battery Defect for the purpose of concealing it and avoiding the expense of recalling and replacing the batteries in Affected 1Phones;
d. whether Apple modified the 10S in the Affected Phones to escape 1ts warranty obligations for the Battery Defect;
e. whether Apple used the 10S modification to profit from Plaintiffs and the other Class members by inducing them to buy new replacements for their Affected 1Phones;
f. whether Apple 1s subject to liability for fraudulently concealing g. whether Apple is subject to liability for violating the Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code §§ 1750, et seq.;
h. whether Apple’s conduct has violated the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200, et seq.;
1. whether Apple has been unjustly enriched as a result of its fraudulent conduct, such that it would be inequitable for Apple to retain the benefits conferred upon it by Plaintiffs and the other Class members;
]- whether Plaintiffs’ claims satisfy the criteria for class certification under California Civil Code sections 382 and 1781;
k. whether compensatory or consequential damages should be awarded to Plaintiffs and the other Class members;
1. whether punitive damages should be awarded to Plaintiffs and the other Class members;
m. whether restitution should be awarded to Plaintiffs and the other Class members; and
n. whether other, additional relief 1s appropriate, and what that relief should be.
63. Plaintiffs’ claims are typical of the claims of the other Class members they seek to represent in this action.
64. Plaintiffs will fairly and adequately represent and protect the interests of the other Class members, and do not have interests that are antagonistic to or in conflict with those they seek to represent.
65. Plaintiffs have retained counsel who have extensive experience in the prosecution of class actions and other forms of complex litigation.
66. In view of the complexity of the issues and the expense that an individual plaintiff would incur if he or she attempted to obtain relief from a large, transnational corporation such as Apple, the separate claims of individual Class of the individual Class members’ claims, few, if any, Class members could afford to seek legal redress for the wrongs complained of in this Complaint.
67. The Class is readily definable, and prosecution as a class action will eliminate the possibility of repetitious litigation and will provide redress for claims too small to support the expense of individual, complex litigation. Absent a class action, Class members will continue to suffer losses, Apple’s violations of law will be allowed to proceed without a full, fair, judicially supervised remedy, and Apple will retain sums received as a result of its wrongdoing. A class action will provide a fair and efficient method for adjudicating this controversy.
68. The prosecution of separate claims by individual Class members would create a risk of inconsistent or varying adjudications with respect to thousands of individual Class members, which would, as a practical matter, dispose of the interests of the Class members not parties to those separate actions or would substantially impair or impede their ability to protect their interests and enforce their rights.
70. Plaintiffs reallege and incorporate by reference each of the allegations contained in Paragraphs 1-70 of this Complaint.
71. As alleged more fully herein, at the time Apple sold Affected iPhones to Plaintiffs and Class members, Apple knew they were equipped with inordinately failure-prone batteries.
72. At all times relevant herein, Apple made misrepresentations of material fact to Plaintiffs and the other Class members as a means of concealing the true nature and scope of the Battery Defect, claiming that an “unknown” problem was causing only a small number of certain Affected 1Phones to shutdown unexpectedly, to render their batteries difficult if not impossible to charge, and for the device itself to malfunction when attempting to use applications.
73. Apple also falsely represented the nature and purpose of 10S “upgrades” (from 10S 10, if not earlier) while knowing, but not disclosing, that these “upgrades” substantially slowed the performance of Affected 1Phones; concealing the existence, nature and scope of the Battery Defect; and causing consumers to replace those devices with new 1Phones as a result of modifying 10S to purposefully slow their operation to the point of making Affected iPhones inordinately difficult, if not 1mpossible, to use for ordinary functions.
74. As alleged in Paragraphs 41-43 and 48-49, above, Apple also represented publicly that each new iPhone model’s processors were faster and more powerful and provided greater battery life. Apple knew were false when 1t made them,purpose of diminishing the possibility that the facts described in this Complaint (which are incorporated herein by reference) would be 75. Apple has concealed material facts from Plaintiffs and the other Class members, including but not limited to:
a. the existence, nature, and scope of the Battery Defect;
b. that updating Affected iPhones with a modified 10S that masks the existence, nature, and scope of the Battery Defect and also causes Affected 1Phones to perform substantially slower than 1s necessary for ordinary use;
c. that the Battery Defect could only be remedied by replacing the lithium-ion batteries and modifying 10Sslowing the processors in Affected 1iPhones;
d. that Apple concealed the foregoing facts from Plaintiffs and the other Class members as a means for Apple to avoid the expense involved with replacing failure-prone batteries under warranty and/or actually rectifying the Battery Defect and to compel consumers to buy new iPhones.
76. Apple had a duty to disclose these facts, regardless of the existence of privity (see, e.g., Cal. Civ. Code § 1711), by virtue of (a) Apple’s exclusive knowledge about the nature and scope of the Battery Defect, and that its modifications of 10S caused Affected 1Phones to perform poorly; (b) Apple’s awareness that Plaintiffs and the other Class members were not reasonably likely to discover these facts; (¢) Apple’s active concealment of those facts from Plaintiffs and the other Class members (by, among other things, making the false representations described above); and (c) Apple’s statutory and common-law obligations to disclose material information to the consumers who own or formerly owned Affected iPhones, as alleged herein. Plaintiffs and the other Class members would have acted differently had Apple disclosed this information to them and allowed them to make a fully-informed decision before they purchased a replacement for his Affected 1Phone.
77. The facts Apple has concealed from Plaintiffs and the other Class 78. Apple made misrepresentations of material fact in an effort to conceal the existence, nature, and scope of the Battery Defect and to prevent customers from becoming aware that Apple deliberately slowed the processing speed of Affected 1iPhones to mask the Battery Defect while causing customers to replace their Affected 1Phone by purchasing a new 1Phone. Plaintiffs and the other Class members would have either purchased a different phone or paid significantly less for their iPhones had Apple disclosed the omitted facts to them.
79. As a proximate result of Apple’s misrepresentations, concealment, and suppression of material facts, Plaintiffs and the other Class members have sustained damage by, among other things, bearing the cost of purchasing new Affected iPhones (or paying significantly more than they were worth due to the Battery Defect and Apple’s attempt to conceal 1t by slowing the phones down); bearing the cost of repairs due to the Battery Defect and/or problems resulting from the slow performance caused by the 10S modification; and bearing the cost of purchasing replacements for Affected 1Phones as a result of the Battery Defect and/or the slow performance caused by the 10S modification.
80. Because Apple engaged in the conduct alleged herein deliberately and with willful and malicious 1ntent, Plaintiffs and the other Class members are entitled to an award of punitive damages, the total amount of which shall be proven at trial.
(Unfair and Deceptive Acts and Practices in Violation of the Consumers Legal Remedies Act)
81. Plaintiffs reallege and incorporate by reference the allegations contained in preceding paragraphs 1-70 of this Complaint.
82. This claim for relief is brought pursuant to the CLRA. Plaintiffs and the other members of the Consumer Subclass are “consumers,” as that term 1s defined by Civil Code section 1761(d), because they bought Affected iPhones for personal, family, 83. Plaintiffs and the other members of the Consumer Subclass have engaged 1n a “transaction” with Apple, as that term 1s defined by Civil Code section 1761(e).
84. The conduct alleged in this Complaint constitutes unfair methods of competition and unfair and deceptive acts and practices for the purposes of the CLRA, and were undertaken by Apple in transactions intended to result in, and which resulted in, the sale of goods to consumers; namely, to sell replacement batteries, repair services, and/or replacement devices for their Affected 1Phones.
85. By engaging in the conduct alleged in Paragraphs 1 through 70 of this Complaint, Apple has violated subdivisions (a)(b), (a)(7), and (a)}(9) of California Civil Code section 1770 by, among other things, misrepresenting and concealing the true nature and scope of the Battery Defect and that the 10S modification would cause Affected 1Phones to perform slowly and erratically and not disclosing those facts to Plaintiffs and the other Consumer Subclass members before they bore the cost of purchasing a replacement device for their Affected 1Phone, purchasing a new Affected 1Phone, and/or purchasing replacement parts and/or repair services as a result of the Battery Defect or the 10S modification.
86. By concealing the Battery Defect and the 10S modification from Plaintiffs and the other Consumer Subclass members, Apple has represented, and continues to represent, that Affected 1Phones have characteristics, uses and benefits, or qualities that they do not have, and that they are of a particular standard, quality, or grade, when they are not, in violation of Civil Code section 1770, subsections (a}(b) and (a)(7).
87. By engaging in the conduct alleged herein, above, Apple has also advertised, and continues to advertise, goods with the intent not to sell them as advertised, in violation of California Civil Code section 1770(a)(9).
88. Pursuant to Section 1782 of the CLRA, Plaintiffs have sent written providing Apple with an opportunity to correct or otherwise rectify the problems alleged herein within 30 days of receipt of that notice.
89. Unless Apple agrees to correct, repair, replace, or otherwise rectify the problems created by Apple’s conduct as alleged herein, Plaintiffs will amend this Complaint to seek an order awarding actual damages and, because Apple engaged in the conduct alleged herein deliberately and with willful and malicious intent, punitive damages.
90. Plaintiffs, individually and on behalf of the other Consumer Subclass members, now seek an Order requiring Apple to (a) cease violating the CLRA by modifying 10S in a manner that prevents it from slowing the performance of Affected 1Phones; (b) to provide owners of Affected iPhones with notice that the slow performance of those devices 1s caused by modifications Apple made to 108S; and (c) to provide current owners of Affected 1Phones with new batteries for those devices free of charge.
(Unlawful, Fraudulent, and Unfair Business Practices in Violation of the Unfair Competition Law)
91. Plaintiffs reallege and incorporate by reference the allegations contained in preceding paragraphs 1-70 of this Complaint.
92. By committing the acts and practices alleged herein, Apple has engaged in unlawful, fraudulent, and unfair business practices in violation of the UCL:
a. Unlawful Conduct: As a result of engaging in the conduct alleged in this Complaint, Apple has violated the UCL’s proscription against engaging in unlawful conduct by virtue of (i) its fraudulent and deceitful conduct 1n violation of California Civil Code sections 1709 through 1711; (ii) its violations of the CLRA, Cal. Civ. Code §§ 1770(a)(b), (a)(7), and (a)(9); (iii) its violations of the Computer Fraud and Abuse Act (“CFFA”), 18 U.S.C. § 1030; b. Fraudulent Conduct: Apple has violated the UCL’s proscription against fraud as a result of engaging in the fraudulent and deceitful conduct alleged in this Complaint.
c. Unfair Conduct: Apple has violated the UCL’s proscription against unfair conduct as a result of engaging in the conduct alleged in this Complaint, which violates legislatively-declared policies articulated in, inter alia, California Civil Code sections 1710, 1711, and 1770 (including subsections @)(5), (a)(7), and (a)(9)).
03. Apple’'s UCL violations continue through the present day. As a direct and proximate result of Apple’s UCL violations of the UCL, Plaintiffs and the other Class members have suffered actual damage in that, among other things, they paid more for their Affected iPhones than they would have had Apple not concealed the existence of the Battery Defect and the effects of its 10S modification(s).
WHEREFORE, Plaintiffs, individually and on behalf of all others similarly
situated, respectfully request that this Court grant the following relief:
1. For an order certifying that the action may be maintained as a class action, on behalf of the proposed Class, the Consumer Subclass, and any other subclass(es) the Court may deem appropriate;
2. For an award of monetary damages, including but not limited to, compensatory, incidental, and consequential damages commensurate with proof at trial for the acts complained of herein;
3. For an award of punitive damages in an amount consistent with applicable statutes and precedent;
4. For an order pursuant to California Civil Code section 1780(a)(2) requiring Apple to (a) provide owners of Affected 1Phones with notice that the slow performance of those devices 1s caused by modifications Apple made to 10S; (b) modify 10S in a manner that prevents it from slowing the performance of Affected 1Phones; and (c¢) provide current owners of Affected 1Phones with new batteries for those devices free of charge;
b. For an order awarding attorney fees and costs pursuant to California Civil Code section 1780(e);
6. For an order that requires Apple (a) to modify 10S in a manner that prevents it from slowing the performance of Affected iPhones; (b) to provide owners of Affected 1Phones with notice that the slow performance of those devices 1s caused by modifications Apple made to 10S; (¢) reimburse current owners of Affected 1Phones with the purchase price they paid for those devices after Apple knew, but caused by the 10S modification; (d) to provide current owners of Affected iPhones with new batteries for those devices free of charge; (e) to make full restitution of all moneys wrongfully obtained from its violations of the UCL, as alleged in this Complaint; and (f) requires Apple to pay the attorney fees and costs incurred by counsel for Plaintiffs and the proposed Class in accordance with California Code of Civil Procedure section 1021.5.
7. For an award of attorney fees; 8. For an award of costs; 9. For an award of pre- and post-judgment interest on any amounts
awarded; and 10. For any and all other relief the Court deems just and appropriate.
Plaintiffs, individually and on behalf of the other Class and Consumer Subclass
members, demand a jury trial in this case for all the causes of action so triable
DATED: January 3, 2018 FAZz10 | MICHELETTI LLP
by /s/ Jeffrey L. Fazio
Jeftrey L. Fazio (146043) (firstname.lastname@example.org) Dina E. Micheletti (184141) (email@example.com)
2410 Camino Ramon, Suite 315
San Ramon, California 94583
Adam J. Levitt (pending admission pro hac vice) (firstname.lastname@example.org)
Amy E. Keller (pending admission pro hac vice) (email@example.com)
Ten North Dearborn Street, Eleventh Floor Chicago, Illinois 60602
T: 312-214-7900 Attorneys for Plaintiffs