Bryan v. Apple Inc.

• Court: District Court, N.D. California
• Decided: March 2, 2023
• Docket: 3:22-cv-00845
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CHRISTOPHER BRYAN, et al., Case No. 22-cv-00845-HSG

8 Plaintiffs, ORDER GRANTING IN PART AND DENYING IN PART MOTION TO 9 v. DISMISS

10 APPLE INC., Re: Dkt. No. 27, 38 11 Defendant.

12 13 Pending before the Court is Defendant Apple Inc.’s motion to dismiss. Dkt. No. 27. The 14 Court finds this matter appropriate for disposition without oral argument and the matter is deemed 15 submitted. See Civil L.R. 7-1(b). For the reasons detailed below, the Court GRANTS IN PART 16 and DENIES IN PART the motion to dismiss. 17 I. BACKGROUND 18 Plaintiffs Christopher Bryan and Heriberto Valiente bring this putative nationwide class 19 action against Defendant, alleging that Apple’s iPad Mini 6 is defective. See Dkt. No. 20 20 (“FAC”). Specifically, Plaintiffs contend that the iPad’s liquid crystal display (“LCD”) screens 21 are prone to image distortions called “jelly scrolling,” which “bends, warps, blurs and obscures 22 text and images rendering the Device unusable.” See id. at ¶¶ 1–2, 25. Plaintiffs contend that the 23 defect is caused by the placement of a “controller board” within the iPad. See id. at ¶¶ 3–4. 24 According to the complaint, Apple was aware of this defect, and publicly reported it just days after 25 the iPad’s release, but has not addressed this issue and continues to sell the product without proper 26 disclosures. See id. at ¶¶ 2–3. 27 Based on these allegations, Plaintiffs bring causes of action for violations of California’s 1 Advertising Law (“FAL”); Colorado’s Consumer Protection Act (“CCPA”); Florida’s Deceptive 2 and Unfair Trade Practices Act (“FDUTPA”); as well as for fraud, fraudulent 3 omission/concealment, fraudulent inducement, negligent misrepresentation, and unjust 4 enrichment. Id. at ¶¶ 91–204. Plaintiffs also seek an injunction prohibiting Defendant from 5 continuing to engage in its allegedly deceptive practices. See id. at ¶¶ 122, 134, 146; FAC at 49 6 (“Request for Relief”). Defendant moves to dismiss the complaint in its entirety. Dkt. No. 23. 7 II. LEGAL STANDARD 8 Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 9 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 10 defendant may move to dismiss a complaint for failing to state a claim upon which relief can be 11 granted under Rule 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the 12 complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” 13 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 14 12(b)(6) motion, a plaintiff need only plead “enough facts to state a claim to relief that is plausible 15 on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible 16 when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that 17 the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 18 Rule 9(b) imposes a heightened pleading standard where fraud is an essential element of a 19 claim. See Fed. R. Civ. P. 9(b) (“In alleging fraud or mistake, a party must state with particularity 20 the circumstances constituting fraud or mistake.”); see also Vess v. Ciba–Geigy Corp. USA, 317 21 F.3d 1097, 1107 (9th Cir. 2003). A plaintiff must identify “the who, what, when, where, and how” 22 of the alleged conduct, so as to provide defendants with sufficient information to defend against 23 the charge. Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997). However, “[m]alice, intent, 24 knowledge, and other conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 25 Rule 9(b). 26 In reviewing the plausibility of a complaint, courts “accept factual allegations in the 27 complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” 1 courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of 2 fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 3 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). 4 III. DISCUSSION 5 Defendant asserts myriad reasons why the FAC is deficient. See generally Dkt. No. 27. 6 With one limited exception identified below, the Court is not persuaded by these arguments and 7 finds that the amended complaint is sufficient to survive the motion to dismiss stage. 8 A. Out-of-State Plaintiffs 9 As an initial matter, Defendant contends that the California claims should be dismissed 10 because neither Plaintiff is a resident of the state.1 See Dkt. No. 27 at 9–10. But the fact that 11 Plaintiffs are not California residents is not dispositive. “State statutory remedies may be invoked 12 by out-of-state parties when they are harmed by wrongful conduct occurring in California.” 13 Norwest Mortg., Inc. v. Super. Ct., 72 Cal. App. 4th 214, 224–225 (Cal. Ct. App. 1999); see also 14 In re iPhone 4S Consumer Litig., No. C 12-1127 CW, 2013 WL 3829653, at *7–9 (N.D. Cal. July 15 23, 2013). Here, Plaintiffs allege that Defendant is a California company, and its decisions about 16 the product design and advertising for the iPad Mini 6 were developed in and coordinated from the 17 company’s headquarters in Cupertino, California. See FAC at ¶¶ 11, 15. 18 Although Defendant does not identify whether it is challenging the California-based claims 19 on the basis of standing or choice-of-law, Dkt. No. 35 at 2–4, the Court agrees with those courts 20 that have found “[i]t is more logical to consider named plaintiffs’ ability to raise other state-law 21 claims as a question of commonality, typicality, and adequacy under Rule 23, rather than a 22 question of standing.” See Sultanis v. Champion Petfoods USA Inc., No. 21-CV-00162-EMC, 23 2021 WL 3373934, at *6 (N.D. Cal. Aug. 3, 2021); Patterson v. RW Direct, Inc., No. 18-CV- 24 00055-VC, 2018 WL 6106379, at *1 (N.D. Cal. Nov. 21, 2018). A choice of law analysis also 25 “might demonstrate that a different state law should apply to a non-resident’s California claims.” 26 In re Big Heart Pet Brands Litig., No. 18-CV-00861-JSW, 2019 WL 8266869, at *12 (N.D. Cal. 27 1 Oct. 4, 2019). Defendant does not offer any analysis of the differences between California law 2 and other potential jurisdictions, and the Court lacks sufficient information to address such issues 3 at this time. Accordingly, as this Court recently explained, “whether non-California plaintiffs may 4 bring claims under California law is an issue better addressed at a later stage.” Smith v. Apple, 5 Inc., No. 21-CV-09527-HSG, 2023 WL 2095914, at *2 (N.D. Cal. Feb. 17, 2023). 6 B. Standing 7 Defendant also contends that Plaintiffs lack Article III standing to pursue injunctive relief. 8 Dkt. No. 27 at 21–22. Defendant urges that Plaintiffs may not be misled in the future because they 9 are aware of the jelly scrolling issue now, and do not allege that they intend to purchase another 10 iPad Mini 6 in the future. Id. 11 To have standing to seek injunctive relief under Article III, a plaintiff must “demonstrate a 12 real and immediate threat of repeated injury in the future.” Chapman v. Pier 1 Imports (U.S.) Inc., 13 631 F.3d 939, 946 (9th Cir. 2011) (quotation omitted). So once a plaintiff has been wronged, they 14 are entitled to injunctive relief only if they can show that they face a “real or immediate threat that 15 [they] will again be wronged in a similar way.” Mayfield v. United States, 599 F.3d 964, 970 (9th 16 Cir. 2010) (quotation omitted). In the context of false advertising cases, the Ninth Circuit has 17 confirmed “that a previously deceived consumer may have standing to seek an injunction against 18 false advertising or labeling, even though the consumer now knows or suspects that the advertising 19 was false at the time of the original purchase.” Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 20 969 (9th Cir. 2018). A plaintiff may establish the risk of future harm in two ways: (1) “the 21 consumer’s plausible allegations that [they] will be unable to rely on the product’s advertising or 22 labeling in the future, and so will not purchase the product although [they] would like to”; or 23 (2) “the consumer’s plausible allegations that [they] might purchase the product in the future, 24 despite the fact it was once marred by false advertising or labeling, as [they] may reasonably, but 25 incorrectly, assume the product was improved.” Id. at 969–70. 26 Here, consistent with Davidson, Plaintiffs allege that “[d]espite these injuries, Plaintiff[s] 27 remain[] very much interested in purchasing from Apple as [they] believe that Apple is a reputable 1 commitment to innovation.” See FAC at ¶¶ 8, 10. Plaintiffs also “look forward to purchasing 2 from Apple in the future and hope[] that [they] can be assured that Apple’s representations about 3 its products are accurate.” See id. However inartful these allegations may be, the Court finds that 4 when these allegations are viewed in the light most favorable to Plaintiffs—as they must be at this 5 stage—they are sufficient to establish a risk of future harm. Plaintiffs have alleged that they 6 cannot rely on Apple’s labeling or marketing, and thus cannot purchase their products (including 7 the iPad Mini) although they would like to do so in the future if properly labeled. 8 C. Damages under Colorado Consumer Protection Act 9 Defendant next argues that Plaintiffs are prohibited from pursuing monetary and injunctive 10 relief under the CCPA, Colo. Rev. Stat. § 6-1-113. Dkt. No. 27 at 19–20. Despite Defendant’s 11 urging, § 6-1-113(2.9) now explicitly states that “[i]n a case certified as a class action, a successful 12 plaintiff may recover actual damages, injunctive relief allowed by law, and reasonable attorney 13 fees and costs.” Colo. Rev. Stat. Ann. § 6-1-113(2.9). 14 D. Equitable Relief 15 Defendant also challenges Plaintiffs’ claims for equitable restitution and unjust enrichment 16 because Plaintiffs do not allege that they lack an adequate remedy at law. Dkt. No. 27 at 20–21. 17 Defendant suggests that because Plaintiffs also plead claims for actual damages, by definition they 18 cannot allege that they lack an adequate remedy at law. Id. Defendant relies on Sonner v. Premier 19 Nutrition Corp., in which the Ninth Circuit upheld the dismissal of claims for restitution because 20 the plaintiff also had asserted a claim for money damages under the CLRA. 971 F.3d 834, 843–44 21 (9th Cir. 2020). 22 In response, Plaintiffs point out that this Court has previously explained that Sonner “did 23 not purport to disturb the well-established rule that equitable and damages claims may coexist 24 when they are based on different theories.” See Brown v. Natures Path Foods, Inc., No. 21-CV- 25 05132-HSG, 2022 WL 717816, at *6, n.15 (N.D. Cal. Mar. 10, 2022). However, Plaintiffs fail to 26 explain how their claims for damages and equitable relief are based on different theories. 27 Plaintiffs do not even assert in the complaint that they lack an adequate remedy at law to support 1 dismiss on this narrow basis. 2 E. Fraud-Based Claims 3 Defendant’s primary argument is that Plaintiffs have not adequately alleged actionable 4 misrepresentations or omissions for purposes of their fraud-based claims.2 See Dkt. No. 27 at 10– 5 17. Defendant contends that Plaintiffs have not—and cannot—identify any false or misleading 6 statement that Apple made about the iPad Mini 6. Id. At bottom, Defendant states that “jelly 7 scrolling” is “simply the way all LCD screens function,” and does not impair the use of the 8 product. See Dkt. No. 27 at 1, 4–6. Defendant further notes that it publicly addressed concerns 9 about “jelly scrolling,” and confirmed that this is normal. See id. at 6, 12. Plaintiffs also 10 acknowledge this public statement “to niche tech publications” in the amended complaint. See 11 FAC at ¶¶ 1–2, 30, & n.4. In short, Defendant disagrees with Plaintiffs’ contentions that (1) the 12 iPad Mini 6 contains a defect; and (2) Defendant misled consumers about the defect. Defendant 13 will have the opportunity to challenge the ultimate factual truth or falsity of Plaintiffs’ allegations, 14 but it is not the Court’s role to resolve such disputes at the motion to dismiss stage. 15 Plaintiffs allege that Defendant failed to adequately disclose that the iPad Mini 6 suffered 16 from jelly scrolling: 17 18 • Plaintiffs allege that “[d]ue to the Defect, the iPad Mini bends, warps, blurs and 19 obscures text and images rendering the Devices unusable,” and that users, including 20 Plaintiffs, “have reported motion sickness, nausea, vomiting, and migraines when using 21 the Device due to the Defect.” See FAC at ¶¶ 2, 8–10. Plaintiffs further allege that as 22 a result, the jelly scrolling defect “render[s] the display inoperable for its principal and 23 intended uses.” Id. at ¶¶ 8–10. This is enough to allege that the failure to disclose the 24 jelly scrolling defect was material. 25 26 • Plaintiffs further highlight how important the screen is to the use of the iPad. They 27 1 explain that “a tablet is a highly portable PC whose primary interface is a touch screen 2 that occupies the full length / width of [the] device,” and “the screen is the most-used 3 component.” See id. at ¶¶ 18–19 (quotation omitted). And “[b]ecause of the screen’s 4 centrality to the overall functioning of a tablet, the screen size and screen quality are 5 the most crucial aspects to consider while buying a tablet.” Id. at ¶ 19 (quotation 6 omitted). Consumers therefore expect the iPad “to exist independently of external 7 monitors for their use and to enable reading, watching, and playing all the while free of 8 characteristics that minimize their viewing pleasure, such as the Jelly Scroll Defect.” 9 Id. at ¶ 21. In other words, Plaintiffs have alleged that the design and clarity of the 10 screen are central to the product’s function, and the jelly scrolling defect impaired that 11 function. 12 13 • Plaintiffs further allege that Defendant had exclusive knowledge of and superior 14 information about the defect, and thus was required to disclose it. Plaintiffs explain 15 how Defendant would have learned about jelly scrolling through its own pre-release 16 testing and quality control, as well as consumer complaints. See id. at ¶¶ 40–82. As 17 noted above, the amended complaint states that Defendant actually publicly 18 acknowledged the existence of this issue. See id. at ¶¶ 1–2, 30, & n.4. Whether 19 Defendant sufficiently disclosed the alleged defect by making public statements to 20 certain media outlets, but not in its advertising, is a factual question that the Court need 21 not address here. 22 23 • Plaintiffs state that they reviewed and relied on the product’s “labeling, packaging, and 24 marketing materials,” which did not contain information about jelly scrolling or 25 disclosures that the product may not work as advertised. See id. at ¶¶ 7–8. They 26 conclude that had they known about the alleged defect, they would not have purchased 27 the product “on the same terms.” Id. at ¶¶ 8, 11. 1 The Court finds that Plaintiffs have thus adequately alleged their fraud-based claims.* 2 || IV. CONCLUSION 3 Accordingly, the Court GRANTS the motion to dismiss as to Plaintiffs’ claims for 4 restitution and unjust enrichment, but otherwise DENIES the motion to dismiss in its entirety. At 5 this stage, the Court cannot say that amendment necessarily would be futile as to Plaintiffs’ claims 6 || for restitution and unjust enrichment. Plaintiffs may therefore file an amended complaint within 7 || 21 days of the date of this order. Defendant’s motion to stay discovery, Dkt. No. 38, is further 8 DENIED as moot. 9 The Court SETS a telephonic case management conference on April 11, 2023, at 2:00 p.m. 10 || All counsel shall use the following dial-in information to access the call: 11 Dial-In: 888-808-6929, a 12 Passcode: 6064255

13 For call clarity, parties shall NOT use speaker phone or earpieces for these calls, and where

v 14 at all possible, parties shall use landlines. The Court further DIRECTS the parties to submit a

15 || joint case management statement by April 4, 2023. 16 IT IS SO ORDERED.

|| Dated: 3/2/2023

Z 18 Aaprrd 8 bbl |) HAYWOOD S. GILLIAM, JR. 19 United States District Judge 20 21 22 23 24 25 26 07 3 Defendant also argues that Plaintiffs have not sufficiently alleged facts to support a claim under either the “unlawful” or “unfair” prongs of the UCL. See Dkt. No. 27 at 17-18. But Defendant’s 28 arguments are derivative of its arguments discussed in Section III.E, and fail for the same reasons discussed above.