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From Antitrust Law Daily, March 3, 2017

Apple’s AppleCare+ plan claims dismissed for lack of specificity

By Robert B. Barnett Jr., J.D.

Allegations that Apple misrepresented that refurbished replacement products under its AppleCare+ service plan were "equivalent to new" were dismissed without prejudice because the consumers failed to plead reliance with sufficient particularity, especially as to the details of whether they read the AppleCare+ plan prior to purchase, the federal district court in San Francisco has ruled. Claims against Apple for breach of contract and statutory warranty violations were adequately pleaded (Maldonado v. Apple, Inc., March 2, 2017, Orrick, W.).

After purchasing Apple products and the AppleCare+ service plan, each of the plaintiffs experienced performance problems with their products that required them to seek replacements under the AppleCare+ plan. Although all three received replacements, they each contended that the replacements were inadequate and in violation of what they were promised under the AppleCare+ plan ("equivalent to new"). In July 2016, the plaintiffs filed suit against Apple, alleging causes of action for breach of contract, as well as violations of the Magnuson-Moss Warranty Act, Song-Beverly Consumer Warranty Act, and California’s Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law.

Standing. The purchasers had Article III standing to assert California consumer protection law claims, breach of contract, and breach of warranty claims against Apple, according to the court. Apple argued that the consumers lacked standing for failure to show an actual injury. Specifically, Apple argued that providing replacements products that were not "equivalent to new" as promised was not an actual injury, pointing out that the purchasers never alleged that the replacement parts did not work as advertised. However, the court noted that the purchasers’ legal theory did not rely on proof that the replacement part did not perform adequately. Instead, they alleged that Apple deceived them by promising them a replacement that was "equivalent to new" but actually gave them used refurbished replacements that were not equivalent to new products.

Breach of contract and warranties. The consumers adequately alleged that Apple breached its promise to deliver "equivalent to new" replacements. The complaint supported the "how" and the "why" of their allegations with specific facts about the performance of their replacement devices and with a contention that used, refurbished, or remanufactured parts can never be "equivalent to new." As a result, the court declined to dismiss the breach of contract and breach of warranty claims under the Magnuson-Moss Warranty Act and the Song-Beverly Consumer Warranty Act.

State claims. The California unfair competition, false advertising, and consumer protection claims, which were based in fraud, were dismissed for failure to show reliance, according to the court. A fraud complaint must allege specifics establishing the "who, what, when, where, and how" of the misconduct. In this case, the complaint failed to set forth facts as to whether the women read the AppleCare+ plan prior to purchase. Absent such proof, the purchasers would not be able to establish that they relied on the alleged misrepresentations. Although the consumers alleged that they relied on the misrepresentations "prior to purchase," they never alleged the specifics of when that reliance occurred.

The court deemed the other fraud allegations to be adequately pleaded, and gave the purchasers leave to amend their fraud allegations.

The case is No. 3:16-cv-04067-WHO.

Attorneys: Renee Fagan Kennedy (Renee Fagan Kennedy, Attorney at Law) for Vicky Maldonado. Penelope Athene Preovolos (Morrison & Foerster LLP) for Apple, Inc., Apple CSC Inc. and Applecare Service Co. Inc.

Companies: Apple, Inc.; Apple CSC Inc.; Applecare Service Co. Inc.

MainStory: TopStory Advertising ConsumerProtection StateUnfairTradePractices CaliforniaNews

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