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From Antitrust Law Daily, February 18, 2014

Consumers fail to state false advertising, deceptive practices claims based on iPhone Siri feature

By Linda O’Brien, J.D., LL.M.

Purchasers of the iPhone 4S mobile telephone failed to state putative class action claims under California’s Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA), and False Advertising Law (FAL) regarding Apple’s advertising of the Siri feature of the device, the federal district court in Oakland has ruled (In re iPhone 4S Consumer Litigation, February 14, 2014, Wilken, C.). Thus, the plaintiffs’ amended complaint was dismissed.

Apple, Inc. manufactures the iPhone 4S mobile telephone and marketed its voice-activated personal assistant feature named “Siri” through press conferences, press releases, emails, and on the company website. At product demonstrations and in advertisements, the feature was shown answering a series of questions and performing various tasks, including making appointments, searching the Internet, finding local businesses, sending text messages, and getting directions.

Frank Fazio, Carlisa Hamagaki, Daniel Balassone, and Benjamin Swartzmann each purchased an iPhone between October 2011 and January 2012 in reliance on Apple’s representations regarding the Siri feature. The four consumers filed a class action against Apple, alleging violations of the UCL, CLRA, and FAL, among other claims. Specifically, the plaintiffs alleged that the Siri feature did not perform as advertised, even when the feature was posed the same questions depicted in the product advertisements. They claimed that they paid a premium for the mobile phone based on the utility of the Siri feature and would not have done so if they had not relied on Apple’s allegedly false and misleading statements. In July 2013, Apple’s motion to dismiss the complaint was granted. The plaintiffs filed an amended complaint, and Apple moved to dismiss the amended complaint.

The UCL prohibits unlawful, unfair, or fraudulent business acts or practices, as well as unfair, deceptive, untrue, or misleading advertising. The CLRA deems unlawful any unfair methods of competition and unfair and deceptive acts or practices undertaken by any person in a transaction intended to result or which results in a sale of goods or services to a consumer. The FAL prohibits the dissemination of any untrue or misleading statement in any newspaper or other publications, or any advertising method.

Fraud claims. The court found that the plaintiffs failed to state with particularity what statements made by Apple were false or misleading and how the Siri feature failed to meet Apple’s representations. Under Federal Rule of Civil Procedure 9(b), in all claims of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity. Although the amended complaint specifies which advertisement that each individual plaintiff viewed, the allegations do not identify the specific statements within those advertisements that were false and misleading. The descriptions in the amended complaint of the advertisements include numerous general marketing statements about Siri but the complaint does not identify any particular false and misleading statements to meet the level of specificity required by Rule 9(b).

Consistency. The court also determined that the plaintiffs failed to allege any specific statement by Apple that expressly indicated that Siri would be able to answer every question or do so consistently. Apple’s descriptions of the product as “the coolest feature,” “this amazing assistant,” and “breakthrough” were mere puffery and not actionable. The plaintiffs may allege descriptions of a specific or absolute characteristic of a product but cannot rely on advertising that states in general terms that one product is superior in making their claims. In this case, the court could not determine whether the plaintiffs adequately pleaded that a misrepresentation had occurred, including the questions of whether (1) the plaintiffs were justified in inferring a performance standard from the advertisement; (2) a reasonable consumer would perceive the same standard; and (3) the Siri feature failed to meet the expected standard.

Additionally, the plaintiffs failed to describe with particularly what statements in Apple’s advertising campaign led them to believe that Siri would operate “on a consistent basis” as an intelligent assistant. In the amended complaint, the use of “consistency” indicated operation that was virtually perfect and the plaintiffs could not show that a reasonable consumer would expect such a level of performance based on the alleged advertisements, according to the court.

Finally, in the dismissal of their original complaint, the plaintiffs were advised what must be alleged for their claims to proceed and they were unable to do so. Since the plaintiffs failed to allege any additional facts that would state a claim, their amended complaint was dismissed with prejudice, the court concluded.

The case is No. C 12-1127 CW.

Attorneys: Jennifer Sarnelli (Gardy & Notis, LLP) for Frank M. Fazio. Matthew Stewart Kahn (Gibson, Dunn & Crutcher LLP) for Apple, Inc.

Companies: Apple, Inc.

MainStory: TopStory Advertising StateUnfairTradePractices CaliforniaNews

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