Wednesday, May 6, 2020
Ninth Circuit Says Consumers’ Reasonable Expectations Cannot Be Adjudicated at the Pleading Stage
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday reinstated a putative class action by California consumers against Apple, Inc. in which the plaintiffs complain that they purchased mobile devices advertised as having 16 GB of storage capacity while, in fact, the operating system, itself, uses 18.1 percent to 23.1 percent of that capacity.
What reasonable consumers would have expected based on Apple’s advertisement could not be determined at the pleading stage, a three-judge panel said in a memorandum opinion.
District Court Judge Edward J. Davila of the Northern District of California dismissed the action with prejudice on Nov. 6, 2018.
The named plaintiffs— Paul Orshan, Christopher Endara, and David Henderson—sued on Dec, 30, 2014, under California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act, claiming they would not have purchased their iPhones and iPads if they had been told how much of the memory was consumed by the iOS 8 operating system. That system was released on Sept. 17, 2014, and supplanted by iOS 9 on Sept. 16, 2015.
District Court’s Decision
Capsizing the second amended complaint, Davila wrote:
“Plaintiffs’ theory of deception—i.e., that Apple deceived Plaintiffs into thinking that iOS 8 would not consume as much storage capacity as it did. Plaintiffs still fail to explain how much storage space they actually expected iOS 8 would use, the basis for this expectation, or how any of Apple’s alleged misrepresentations or omissions created this expectation.”
Apple provided a disclaimer saying, “actual formatted capacity less.” Davila declared:
“[N]o reasonable consumer could have read Apple’s disclaimer and expected that all of the 16 GB would be available for personal use on their devices because the average consumer would know and expect that their Apple devices come pre-installed with an operating system and applications. Furthermore, no consumer could have read Apple’s disclaimer and reasonably expected that iOS 8 would not consume a substantial amount of storage; the disclosure simply does not imply anything about the amount of storage iOS 8 would or would not consume. In sum, Plaintiffs have failed to plead facts that would make it plausible that they reasonably expected iOS 8 not to consume a substantial amount of storage.”
Reversing, a three-judge panel—comprised of Circuit Judges Marsha S. Berzon and Sandra S. Ikuta, joined by District Court Judge Ivan L.R. Lemelle of the Eastern District of Louisiana, sitting by designation—said yesterday:
“Plaintiffs’ theory that they expected to be able to use the full 16 GB of advertised storage capacity and their alternative theory—that they did not expect to be denied for their own use the 18.1-21.3% of the 16 GB storage capacity that is estimated to be unavailable—are not resolvable at the pleading stage. Consumers with a wide range of technological needs and varying degrees of technological sophistication purchase Apple’s products. It is not possible to determine without factual development whether it is reasonable for iPhone and iPad consumers to have expected that they would not be denied use of such a substantial portion of the advertised storage capacity, nor is it clear whether, if reasonable, such expectations are shared by a ‘significant portion of the general consuming public.’ ”
The opinion continues:
“Apple’s ‘actual formatted capacity less’ disclaimer does not alter this analysis. We have previously held that an otherwise deceptive representation is not dispelled by the inclusion of fine print providing additional disclosures….Moreover, ‘less’ does not say how much less, and so gives rise a second inquiry—whether a reasonable consumer who does read the disclaimer would contemplate ‘less’ to be as much as the approximately 20% decrease here alleged.”
The case is Orshan v. Apple, Inc., 18-17329.
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