William Phillips v. Apple, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 20, 2018
• Docket: 16-17189
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 20 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

WILLIAM SCOTT PHILLIPS; SUZANNE No. 16-17189 SCHMIDT PHILLIPS; WILLIAM COTTRELL, on behalf of themselves and D.C. Nos. 5:15-cv-04879-LHK all others similarly situated, 5:15-cv-05205-LHK

Plaintiffs-Appellants, MEMORANDUM* v.

APPLE INC.,

Defendant-Appellee.

Appeal from the United States District Court for the Northern District of California Lucy H. Koh, District Judge, Presiding

Submitted February 15, 2018** San Francisco, California

Before: HAWKINS and TALLMAN, Circuit Judges, and MURPHY,*** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Stephen Joseph Murphy III, United States District Judge for the Eastern District of Michigan, sitting by designation. William Phillips, Suzanne Phillips, and William Cottrell (plaintiffs) appeal

the district court’s dismissal of their putative class action against Apple, Inc. for

alleged violations of California’s Unfair Competition Law (UCL), Cal. Bus. &

Prof. Code § 1700 et seq., and False Advertising Law (FAL), Cal. Bus. & Prof.

Code § 17500 et seq. We have jurisdiction under 28 U.S.C. § 1291. We review de

novo the district court’s dismissal for lack of standing and failure to state a claim.

Valle del Sol Inc. v. Whiting, 732 F.3d 1006, 1014 (9th Cir. 2013) (standing);

Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1035 (9th Cir. 2002) (failure to state

a claim). We affirm.

1. Plaintiffs do not have standing to seek an injunction. “Standing must

be shown with respect to each form of relief sought,” and a plaintiff seeking

injunctive relief “must demonstrate that he has suffered or is threatened with a

concrete and particularized legal harm, coupled with ‘a sufficient likelihood that he

will again be wronged in a similar way.’”1 Bates v. United Parcel Serv., Inc., 511

F.3d 974, 985 (9th Cir. 2007) (citation and internal quotation omitted) (quoting

City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983)).

Plaintiffs established a past injury: they paid data overuse charges to their

third-party wireless carriers for one billing cycle after Apple enabled “Wi-Fi

1 This is true even where, as here, a claim arises under state law. Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1021–22 (9th Cir. 2004).

2 Assist” on their Apple devices. They have not established, however, that they face

a “real and immediate threat of repeated injury.” Bates, 511 F.3d at 985 (quoting

O’Shea v. Littleton, 414 U.S. 488, 496 (1974)). They disabled Wi-Fi Assist, so it

no longer causes data overuse. Their second amended complaint did not allege

that they intended to install future updates that would enable Wi-Fi Assist, or that

Apple would install such updates automatically—despite the district court’s

warning that failure to do so could result in dismissal of plaintiffs’ claims.

The fact that Apple generally encourages consumers to install software

updates does not establish that plaintiffs themselves are likely to be injured by

future updates. They could choose not to install updates, or they could install them

and immediately disable Wi-Fi Assist. In either scenario, they will be unharmed.

We also note that despite plaintiffs’ contention that they “have no choice but to

upgrade their iOS devices,” and the fact that Apple released eleven updates to iOS

9 in 2015 and 2016, none of the plaintiffs have experienced data overages as a

result of Wi-Fi Assist since they discovered and disabled the feature. Plaintiffs

therefore lack standing to seek injunctive relief.

2. The district court properly dismissed plaintiffs’ UCL and FAL claims.

See Fed. R. Civ. P. 12(b)(6). The only remedies available under these statutes are

injunctive relief and restitution. Korea Supply Co. v. Lockheed Martin Corp., 63

P.3d 937, 943 (Cal. 2003); Veera v. Banana Republic, LLC, 211 Cal. Rptr. 3d 769,

3 775 (Cal. Ct. App. 2016). As described above, the plaintiffs do not have standing

to seek an injunction, and they have failed to state a claim of entitlement to

restitution.

Restitution under the UCL and FAL2 “is confined to restoration of any

interest in ‘money or property, real or personal, which may have been acquired by

means of . . . unfair competition.’” Kwikset Corp. v. Superior Court, 246 P.3d 877,

895 (Cal. 2011) (quoting Cal. Bus. & Prof. Code § 17203). A restitution order

“thus requires both that money or property have been lost by a plaintiff, on the one

hand, and that it have been acquired by a defendant, on the other.” Id. Those

requirements are not met here. The plaintiffs lost money in the form of data

overuse charges, but that money was acquired by their wireless carriers—not by

Apple.

Plaintiffs insist that there is “no support in California case law” for the

proposition that a restitutionary remedy requires a close relationship between the

defendant and the funds sought in restitution, but that assertion is belied by the

very cases they cite. Those cases establish that a defendant may be required to

make restitution where a plaintiff’s loss indirectly, but clearly, inured to the

defendant’s benefit. See, e.g., People, ex rel. Harris v. Sarpas, 172 Cal. Rptr. 3d

2 The restitutionary remedies provided by the UCL and the FAL “are identical and are construed in the same manner.” Hambrick v. Healthcare Partners Med. Grp., Inc., 189 Cal. Rptr. 3d 31, 54 (Cal. Ct. App. 2015) (citations omitted).

4 25, 47 (Cal. Ct. App. 2014) (“[Defendants] received money indirectly from

customers . . . .”); Troyk v. Farmers Grp., Inc., 90 Cal. Rptr. 3d 589, 618 (Cal. Ct.

App. 2009) (allowing restitution where it could “be inferred a substantial portion of

the service charges paid by the class members . . . were indirectly received by

[defendant]”); see also Colgan v. Leatherman Tool Grp., Inc., 38 Cal. Rptr. 3d 36,

62 (Cal. Ct. App. 2006) (noting that restitution is appropriate “where money or

property identified as belonging in good conscience to the plaintiff could clearly be

traced to particular funds or property in the defendant’s possession” (quotation

omitted)).

Plaintiffs did not allege that Apple received money or property, indirectly or

otherwise, from their overage payments.3 The district court explicitly invited them

to do so, granting them leave to amend their complaint to “allege a sufficiently

traceable connection between the money they paid and the money Apple received.”

Plaintiffs declined that opportunity. Absent any allegation that Apple directly or

indirectly received the money plaintiffs paid their wireless carriers for excess data

usage, they are not entitled to restitution, and the district court properly dismissed

their UCL and FAL claims.

Costs are awarded to Appellee.

3 Their reference to Apple’s “history of smart engagement with wireless carriers” does not establish any link between the data overuse charges they paid to their carriers and Apple’s revenue-sharing agreement with AT&T.

5 AFFIRMED.