Adkins v. Apple Inc.
Adkins v. Apple Inc.
Opinion of the Court
ORDER GRANTING MOTION TO DISMISS IN PART AND DENYING IN PART
INTRODUCTION
Plaintiffs Patricia Sue Adkins, Jennifer Galindo, and Fabrienne English have sued defendants Apple, Inc., AppleCare Service Company, Inc., and Apple CSC, Inc. (collectively, “Apple”) for consumer fraud. They allege that Apple salespersons represented that Apple service plans entitled plaintiffs to new replacement devices and parts, when in fact Apple uses secondhand replacement devices and parts, and that they would not have purchased the service plans but for this alleged misrepresentation. Contrary to Apple’s contention, that is sufficient for Article III standing, and plaintiffs have stated plausible claims under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Rights Act. On the other hand, Adkins’s and Galin-do’s claims under the Secondhand Merchandise Labeling Law claim are DISMISSED WITHOUT ' LEAVE TO AMEND because they did not purchase any secondhand products. English’s Secondhand Merchandise Labeling claim survives based on her allegation that she purchased a used iPhone that Apple did not indicate was used. Plaintiffs did not provide pre-suit notice of the alleged breach of express warranty, so that claim is DISMISSED WITHOUT LEAVE TO AMEND.
BACKGROUND
Plaintiffs’ first amended complaint (“FAC”) includes two separate allegations: (i) that the plaintiffs purchased Apple-Care + service plans in reliance on Apple’s misrepresentations and (ii) United States District Court Northern District of California that plaintiff English purchased what Apple represented was a new iPhone, but was in fact a refurbished phone that did not function properly. Plaintiffs allege causes of action for (i) violation of the Consumer Legal Remedies Act, (ii) breach of warranty, (iii) fraud, (iv) violation of the California False Advertising Law, (v) violation of the Secondhand Merchandise Labeling Law, (vi) violation of the California Unfair Competition Law, and (vii) unjust enrichment.
All individual persons in the United States who, for purposes other than resale, purchased Class Devices manufactured by Apple and/or Extended Warranties sold by Apple, who have not returned them or received a refund.
1. PLAINTIFFS’ PURCHASES OF APPLECARE + SERVICE PLANS
English _ purchased an iPhone 4 - and wireless service from Sprint Online. ¶ 56. Adkins purchased an iPod Touch and Jennifer Galindo purchased an iPhone 5 from separate Apple Stores in Texas. ¶34. They each purchased AppleCare -l- service plans
At the time that Adkins purchased her iPod Touch, an Apple Store salesperson told her that “the AppleCare + plan cost $59.00 and that she would ‘get coverage for two full years.’” ¶34. The salesperson explained that “when you get that, not only do you get regular coverage but it’s AppleCare-I- so you get physical damage coverage. -Two times within two years you will get a replacement cost of only $29.00 to replace that device if something is wrong with it.” The salesperson told Adkins that the replacement would be the “same, model. Yep, you don’t lose. You don’t get downgraded and it’s not a refurbished model, either.” Id. Two. days later, on November 1, 2013, Adkins, went to a different Apple Store .for help setting up her iPod. Id. A salesperson told her that if she needed a replacement device under the AppleCare + service plan, “[w]e give you a completely new device and one that’s just like yours. You get an iPhone 5S, a gold phone, you get an iPhone .5S. Urn [sic] you pay the $79 and you get a brand new one:” Id. The FAC claims that “[obviously the salesperson was speaking by way of example, as Adkins had purchased an iPod, not an iPhone.” Id. ■
Similarly, the day that she purchased her iPhone 5, October 30, 2013, Galindo was told by an Apple Store salesperson that the AppleCare -I- service plan covered “drops and everything, yeah, with that it would be $79 to replace it and get a new one.” ¶ 42. The salesperson told Galindo that the replacement device would be “brand new.” Id.
, Likewise, on February 15, 2013, English purchased an AppleCare + service plan from an Apple Store in Texas after a salesperson “told English that a replacement device would be new.” ¶ 53.
At the time that the plaintiffs purchased their AppleCare + service plans, there was no written information in the Apple Stores, “conspicuously posted within public view,” indicating that the AppleCare-)- service plans authorized Apple to replace the devices with used or reconditioned devices that were not functionally equivalent to new devices, or to repair the devices using reconditioned parts that were not functionally equivalent to new parts. ¶¶ 35, 43, 54. Nor did the Apple Store salespersons tell the plaintiffs that the AppleCare + service plans authorized Apple to replace or repair the devices with used or reconditioned devices or parts that were not functionally equivalent to new devices or parts. ¶¶ 36, 44,55. ,
Plaintiffs allege that, contrary, to the Apple Store salespersons’ representations, under the. AppleCare + service plan, Apple
Relying on their discussions with the sales representatives, “and uninformed as to the true character” of the AppleCare+ service plan, the plaintiffs purchased Ap-pléCare+ service plans.
II. APPLE’S SALE OF REFURBISHED IPHONE TO PLAINTIFF ENGLISH WITHOUT INDICATING THAT IT WAS REFURBISHED
The iPhone 4 that' English purchased from Sprint Online had a cracked screen and needed to be replaced. ¶57. On February 15, 2013, English purchased what she thought was a new iPhone 4 for $99 from an Apple Store in Dallas. ¶ 53. The iPhone 4 “was taken out of a plain white box by the Apple Store employee.” ¶ 58. The FAC alleges that “[t]he container did not bear any label or other writing indicating that the [iPhone 4] was refurbished, reconditioned, used, or contained parts that were refurbished, reconditioned, or used; nor did the Apple Store employee so advise her.” Id. The iPhone was not new and it did not function adequately: “it would freeze up, i.e. stop working without warning, and even would ‘close’ unexpectedly.” Id. On information and belief, English alleges that the iPhone 4 was “a refurbished, reconditioned, or second hand phone, or contains parts that are refurbished, used, reconditioned, or second hand, and is not the functional equivalent of a new iPhone 4 Class Device.”" Id. The phone completely stopped working on or about July 22, 2013, and English took it in for replacement. ¶ 59. The iPhone 4 Apple replaced it with “also has freezing issues.” Id.
LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should be granted where the pleadings fail to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6)., The court must “accept factual allegations in the complaint as true and construe the pleadings in .the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The complaint “does not need detailed factual allegations,” but instead only needs enough factual allegations “to raise
DISCUSSION
I. PLAINTIFFS HAVE ARTICLE III STANDING
Apple argues that plaintiffs Adkins and Galindo lack Article III standing because they have not pleaded “injury in fact.”
Adkins and Galindo have standing. Under Article III of the United States Constitution, a plaintiff must show “injury in fact” to have standing in federal court. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). A “quintessential injury-in-fact” occurs when the “plaintiffs spent money that, absent defendants’ actions, they would not have spent.” Maya v. Centex Corp., 658 F.3d 1060, 1069 (9th Cir. 2011). I- and other judges in the Northern District have repeatedly held, in the food labeling context, that an allegation that .a plaintiff would not have purchased the defendants’ product but for the product being mislabeled is sufficient to confer Article III standing. See, e.g., Victor v. R.C. Bigelow, Inc., 13-cv-02976-WHO, 2014 WL 1028881, *4 (N.D.Cal. Mar. 14, 2014) (“Victor has Article III standing to bring this case. He alleges that he purchased Bigelow’s products that he would not have otherwise purchased had they not been mislabeled.”); Lanovaz v. Turnings N. Am., Inc., 12-cv-02646-RMW, 2013 WL 675929, at *6 (N.D.Cal. Feb. 25, 2013) (“The alleged purchase of a product that plaintiff would not otherwise have purchased but for the alleged unlawful label is sufficient to establish an economic injury-in-fact for plaintiffs unfair competition claims.”); Khasin v. Hershey Co., 12-CV-01862 EJD, 2012 WL 5471153, at *6 (N.D.Cal. Nov. 9, 2012).
Adkins and Galindo allege that they would not have purchased the Apple-Care + service plans had Apple Store salespersons not misrepresented that the plans entitled them to new replacement devices and repair parts. That is sufficient to establish injury in fact for Article III standing. It is beside the point that Adkins and Galindo have not submitted their devices for service under the plans and received non-new devices or parts; what matters is that they would not have purchased the plans in the first place if the plans had not allegedly been misrepresented. Cf. Victor, 2014 WL 1028881, at *4 (rejecting argument that purchaser of mislabeled tea product lacked injury where purchaser consumed the product without incident, the product was not unfit for its intended use, and the product was not tainted, spoiled, or contaminated).
As in Pantron, allowing Apple to rely on its refund policy as a defense to the consumer fraud allegations in this case would make the consumer protection laws at issue “a nullity.”
II. PLAINTIFFS’ BREACH OF WARRANTY CLAIMS FAIL
The plaintiffs allege that Apple breached its express warranties
“To recover on a breach of warranty claim, the buyer must, within a reasonable time after he or she discovers or should have discovered any breach, notify the seller of any breach or be barred from any remedy.” Cardinal Health 301, Inc. v. Tyco Electronics Corp., 169 Cal.App.4th 116, 135, 87 Cal.Rptr.3d 5 (2008) (internal punctuation omitted) (citingCal. Com. Code § 2607(3)(A)), “This notice requirement is designed to allow the seller the opportunity to repair the defective item, reduce damages, avoid defective products in the future, and negotiate settlements.” Cardinal Health, 169 Cal.App.4th at 135, 87 Cal.Rptr.3d 5. The notice must be provided before suit is filed. See, e.g., Alvarez v. Chevron Corp., 656 F.3d 925, 932 (9th Cir. 2011) (express warranty claim barred where plaintiffs sent their notice letter simultaneously with the complaint).
The plaintiffs’ breach of warranty claim fails because the plaintiffs did not provide Apple pre-süit notice of the alleged breach of warranty. The November 4, 2013 letter to Apple does not constitute pre-suit notice as it was filed contemporaneously with the plaintiffs’ original complaint.
III. THE SECONDHAND MERCHANDISING LABELING LAW CLAIM IS DISMISSED AS TO ADKINS AND GALINDO BUT SURVIVES WITH RESPECT TO ENGLISH
The Secondhand Merchandising Labeling Law provides, in relevant part, that:
It is unláwful for any person, firm, of corporation ... to advertise, call attention to or give publicity to the sale of any merchandise, which merchandise is secondhand or used merchandise, or which merchandise is defective in any manner ... unless there is conspicuously displayed directly in connection with the name and description of that merchandise ... a direct and unequivocal statement, phrase, or word which will clearly indicate that the merchandise ... so. advertised is secondhand, used [or] defective....
Cal. Bus. & Prof. Code § 17531.
Plaintiffs allege that Apple used “secondhand,'used, and defective replacement devices and parts”‘“in fulfillment” of the AppleCare+ service plans sold to the named plaintiffs, without conspicuously indicating that the replacement devices and/or parts were secondhand, used, or defective. ¶141. However, Adkins and Galindo do not allege that' they have bought secondhand, used, or defective devices or that they sought repair or replacement of their devices under their Apple-Care + service plans, or otherwise. The Secondhand Merchandising Labeling Law claim therefore fails as to them. The plaintiffs argue that Adkins and Galindo can state a Secondhand Merchandising Labeling Law because “Apple has announced an intention to not comply with the Extended Warranties, thereby breaching the warranties before a claim cari even be made.” Opp. at 13. But Adkins and Gal-indo have not submitted claims under their AppleCare -I- service plans, so there is no allegation that they received merchandise from Apple that “is secondhand or used
Plaintiffs also allege that Apple represented that the iPhone 4 sold to English on February 15, 2013 was new, when in fact it was “a refurbished, reconditioned, or second hand phone, or contains parts that are refurbished, used, reconditioned, or second hand____” ¶ 143. Apple seeks to dismiss this claim on the grounds that English did not purchase a new iPhone in February 2013, but received an out-of-warranty replacement unit because the iPhone she ordered from Sprint Online had a cracked screen. Apple argues that “English’s allegation that she ‘bought’ a ‘new’ phone is belied by other allegations in the FAC and her receipt.” Mot. at 11. Apple points to the allegation that the iPhone came out of a “plain white box,” which, according to Apple, is a concession that the phone did “not [come out of] the Apple-branded box that comes with new iPhones.” Mot. at 11 (citing ¶ 58) (emphasis in Apple’s motion to dismiss). Apple also contends that “English’s receipt unambiguously states that she paid Apple for an ‘OW’ (out of warranty) repair (‘iPHONE DISC FLAT RATE REPAIR’) — not for the purchase of a new iPhone.” Mot. at 11 (citing FAC Ex. G) (emphasis in Apple’s motion to dismiss).
Notwithstanding Apple’s defense, English has adequately stated a claim under the Secondhand Merchandising Labeling Law. The FAC alleges that English “purchased what she thought was a new iPhone 4 for $99.00.” ¶53. The FAC further alleges that English would not have purchased the phone had she known that it was “reconditioned or refurbished” or that it contained “reconditioned, refurbished, second hand, or used parts.” ¶ 57. Apple has no authority for its argument that the Secondhand Merchandising Labeling Law does not apply to replacement merchandise. Neither party cited any case law interpreting the Secondhand Merchandising Labeling Law, and I am not aware of any. However, I see no reason that the Secondhand Merchandising Labeling Law cannot, as a matter of law, apply to English’s allegations. As noted, English alleges that she paid $99 for what she believed was a new iPhone. She does not allege that she received the iPhone pursuant to a service plan.
IV. PLAINTIFFS’ UCL, FAL, CLRA AND FRAUD CLAIMS ARE PLAUSIBLE
Apple argues that Adkins’s and Galindo’s UCL, FAL, CLRA, and fraud claims fail because they cannot plausibly allege reliance, causation, or injury. Apple contends that “[g]iven that they had the right to return their devices and cancel them Service Plans for full refunds, Adkins
I disagree with Apple’s contention, for which it cited no authority. Adkins and Galindo have pleaded that they purchased the AppleCare+ service plans in reliance on alleged misrepresentations and would not have purchased the plans but for those misrepresentations. I cannot conclude that those allegations are not plausible, based merely on the plaintiffs’ failure to cancel the service plans. As noted above in the discussion about standing, the plaintiffs allege that they were injured by purchasing the plans under false pretenses; that they may never experience unsatisfactory repairs in the future does not preclude their alleged injury. Adkins and Galindo have sufficiently pleaded reliance, causation, and injury.
V. UNJUST ENRICHMENT IS NOT A CAUSE OF ACTION
“There is no cause of action in California for unjust enrichment.” World Surveillance Grp. Inc. v. La Jolla Cove Investors, Inc., 2014 WL 1411249, *2 (N.D.Cal. Apr. 11, 2014) (citing Melchior v. New Line Prods., Inc., 106 Cal.App.4th 779, 793, 131 Cal.Rptr.2d 347 (2003)). Plaintiffs’ cause of action for unjust enrichment is DISMISSED WITHOUT LEAVE TO AMEMD.
VI. LEGAL ARGUMENT SHALL BE STRUCK FROM THE COMPLAINT
A court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Motions to strike “are generally disfavored because they are often used as delaying tactics and because of the limited importance of pleadings in federal practice.” Rosales v. Citibank, 133 F.Supp.2d 1177, 1180 (N.D.Cal. 2001). However, in this case, striking nine paragraphs from the FAC which consist of improper legal argument is warranted. See, e.g., Farhang v. Indian Inst. of Tech., Kharagpur, 2010 WL 3504897, *1 (N.D.Cal. Sept. 7, 2010) (striking “legal argument, which does not belong in a complaint”). Paragraphs 24, 25, 25b, 31, 66, 66a, 66b, 66c, and 66d are ordered STRUCK.
CONCLUSION
Apple’s motion to dismiss plaintiffs’ first amended complaint is GRANTED IN PART and DENIED IN PART. Plaintiffs’ second (breach of warranty), third (violations of the Song-Beverly Consumer Warranty Act), and eighth (unjust enrichment) causes of action are DISMISSED WITHOUT LEAVE TO AMEND. Plaintiffs’ sixth cause of action (violations of the Secondhand Merchandise Labeling Law) is DISMISSED WITHOUT LEAVE TO AMEND as to plaintiffs Adkins and Galin-do, but survives as to plaintiff English. Paragraphs 24, 25, 25b, 31, 66, 66a, 66b, 66c, and 66d are STRUCK from the first amended complaint. Apple’s request for judicial notice at Docket No. 69 is GRANTED. Apple shall file an answer to the remaining causes of action and paragraphs of plaintiffs’ first amended complaint by July 23,2014.
IT IS SO ORDERED.
. The FAC also alleges a cause of action under the Song-Beverly Consumer Warranty Act. The plaintiffs have withdrawn this cause
. Unless otherwise noted, all paragraph citations are to the FAC.
. "Extended warranties,” as used in the FAC, includes the AppleCare and AppleCare-I- service plans. However, the three named plaintiffs purchased the AppleCare + plan; none purchased the AppleCare plan. Accordingly, for purposes of this motion, this order refers to the AppleCare-)- service plan, not the Extended Warranties. Likewise, rather than refer to Class Devices, the order refers to the actual deyices purchased by the named plaintiffs, i.e., iPhone, iPad.
. Adkins paid $59 for á two-year AppleCare + service plan for her iPod Touch. ¶ 38. Gal-lindo paid $99 for a two-year AppleCare+ service plan for her iPhone 5. ¶ 47. English paid $99 for a two-year AppleCare+ service plan for her iPhone 4. ¶ 56.
. The terms and conditions of the ■ Apple-Care + service plan are attached as Exhibit B to the FAC. The plan provides that if a valid claim is submitted, "Apple will either (a) repair the defect at no charge, using new parts or parts that are equivalent to new in performance and reliability, or (b) exchange the Covered Equipment, with a replacement product that is new or equivalent to new in performance and reliability. All replacement products provided under this Plan will at a minimum be functionally equivalent to the ■original product." FAC Ex. B, ¶ 3.1.
. Apple does not dispute that English has Article III standing.
. The parties dispute-whether plaintiffs Adkins and Galindo knew or should have known that they had 30 days to cancel their service plans. I do not address this dispute because I determine that the return policy does not defeat Article III standing, even assuming that Adkins and Galindo knew of the policy.
. The express warranties that plaintiffs’ FAC alleges were breached are the .AppleCare+ service plan and Apple’s "basic warranty,” which applies to.uninsured,consumers (i.e., those who do not purchase the AppleCare+ service plan). ¶ 106. Both.the AppleCare+ service plan and the basic warranty state that Apple will replace or repair defective devices with devices or parts that are new or "equivalent to new in performance and reliability” and “at least functionally equivalent to the original product.” . ¶ 105, Exs. B, D (terms and conditions, of AppleCare + service plan and basic warranty, respectively). However, in their opposition to the motion to dismiss, plaintiffs suggest that the express warranties that were breached were the Apple .Store salespersons’ oral representations that the Ap-pleCare + service plan entitled the plaintiffs to . new replacement parts and devices. See Opp. at 12 (arguing that November 4, 2013 letter gave Apple notice, .of the breach of warranty claim because letter requested ‘-‘assurances that future service pursuant to the war
. Plaintiffs' allege that "Plaintiffs timely provided Apple with written notice of its breaches of warranty by certified mail, and "thereby ' provided Apple with an opportunity to correct or otherwise rectify the problems alleged herein before this Complaint was filed.” ¶ 107. The FAC does not allege when the notice was provided to Apple or what information it contained. In its motion to dismiss, Apple claims that the alleged notice was sent on November 4, 2013, the same day that Plaintiffs filed suit. Apple contends that this notice was inadequate because- it was- not delivered before suit and, in any event, did not provide notice of the breach of warranty, but instead provided the notice required under the Consumer Legal Remedies Act. The letter is attached as -Exhibit A to Declaration of Purvi PateL Apple requests that the Court take judicial notice of the letter. Dkt. No. 69 (Defendants’ Request for Judicial Notice). Plaintiffs have not opposed this request and, in their opposition brief, implicitly concede that the referenced letter is the alleged notice which they provided to Apple. See Opp. at 11-12. The letter is incorporated into plaintiffs’ complaint. See II107. Apple’s request for judicial notice is" GRANTED.
. In addition, the letter was substantively deficient as well. It makes no reference to the replacement phones that English received from Apple, much less that those phones were defective; rather, the letter sets forth plaintiffs’ allegations that Apple Store sales representatives misrepresented that the Apple-Care + service plan entitled plaintiffs to new replacement and repair merchandise. See Dkt. No. 70. It is insufficient that the letter states that "it also serves as notice of violations for any other cause of action for which they-.-form the basis of complaint.” Without some reference to the allegedly defective replacement phones, the letter did not provide Apple “the opportunity to repair the defective item, reduce damages, avoid defective products in the future, and negotiate settlements.” Cardinal Health, 169 Cal.App.4th at 135, 87 Cal.Rptr.3d 5. Allowing plaintiffs to satisfy the notice requirement by referring to allegations in a complaint would'defeat the purpose of requiring notice before the filing of a complaint.
. Indeed, English bought her AppleCare + service plan the same day that she bought the iPhone at issue in the Secondhand Merchandising Labeling Law claim. See ¶ 57 .(‘‘at the time English purchased the Extended Warranty, she also purchased what she thought was a new iPhone 4 Class Device”). Accordingly, while English may have received a replacement phone at a favorable price as a "courtesy” to her, as Apple’s counsel stated at oral argument, English did not receive the phone pursuant to a service plan.
. Since plaintiffs are not granted leave to amend any of their causes of action, this order does not require plaintiffs to file a further amended complaint. The surviving portions of the first amended complaint at Docket Number 38 shall be the operative complaint in this matter.
Reference
- Full Case Name
- Patricia Sue ADKINS v. APPLE INC.
- Cited By
- 1 case
- Status
- Published