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Pirozzi v. Apple, Inc.

United States District Court, N.D. California

August 5, 2013

MARIA PIROZZI, Plaintiff,
v.
APPLE, INC, Defendant

Decided August 3, 2013.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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For Maria Pirozzi, individually and on behalf of all others similarly situated, Plaintiff: Jennifer Sarnelli, LEAD ATTORNEY, James S. Notis, PRO HAC VICE, Gardy & Notis, LLP, Englewood Cliffs, NJ; Kira German, PRO HAC VICE, Englewood Cliffs, NJ; Martin Stuart Bakst, Attorney at Law, Encino, CA.

For Apple, Inc, Defendant: S. Ashlie Beringer, LEAD ATTORNEY, Maia Taussig Perez, Gibson Dunn & Crutcher LLP, Palo Alto, CA; Joshua Aaron Jessen, Gibson Dunn & Crutcher LLP, Irvine, CA.

For Twitter, Inc., Miscellaneous: Timothy L. Alger, LEAD ATTORNEY, Perkins Coie LLP, Palo Alto, CA.

OPINION

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JON S. TIGAR, United States District Judge.

ORDER GRANTING IN PART AND DENYING IN PART APPLE'S MOTION DISMISS THE SECOND AMENDED COMPLAINT

Before the Court is Defendant Apple, Inc.'s Motion to Dismiss Plaintiffs' Second Amended Complaint. Mot., ECF No. 38. The Court previously dismissed Plaintiff's

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First Amended Complaint with leave to amend. ECF No. 28; Pirozzi v. Apple, Inc., No. 12-cv-1529-YGR, 913 F.Supp.2d 840 (N.D. Cal. Dec. 20, 2012) (" Pirozzi I" ). The Court will deny Apple's motion on all grounds except with respect to Plaintiff's unjust enrichment claim, which the Court will dismiss.

I. BACKGROUND

A. Procedural History

Plaintiff Maria Pirozzi filed this proposed class action on March 27, 2012, against Apple for failing to prevent third-party software applications distributed through its online App Store from uploading user information from Apple's mobile devices without permission. ECF No. 1. Following an amendment as of right, ECF No. 4, the Court dismissed Plaintiff's First Amended Complaint on December 20, 2012, without prejudice. ECF No. 28.

Plaintiff's operative Second Amended Complaint asserts five claims against Apple: (1) violation of California Unfair Competition Law (" UCL" ), Cal. Bus. & Prof. Code § 17200, et seq. (" UCL" ); (2) violation of False and Misleading Advertising Law (" FAL" ), Cal. Bus. & Prof. Code § 17500, et seq. (" FAL" ); (3) violation of the Consumer Legal Remedies Act (" CLRA" ), Cal. Civ. Code § 1750, et seq. (" CLRA" ); (4) negligent misrepresentation; and (5) unjust enrichment. ECF No. 29 (" SAC" ). Apple moves to dismiss on the grounds that Plaintiff lacks Article III standing, lacks standing to bring a claim under California's consumer protection statutes, fails to satisfy the particularity requirement of Rule 9(b), and fails to state a claim upon which relief can be granted. ECF No. 38 (" Mot." ).

B. Factual Allegations

The Court accepts the following allegations as true for the purpose of resolving this Rule 12(b)(6) motion. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).

Plaintiff alleges that Apple designs and manufactures three popular mobile devices: iPhone, iPod touch, and iPad (collectively " Apple Devices" ). Id. ¶ ¶ 26-28. Owners of Apple Devices can customize their user experience by installing third-party software applications (" Apps" ) through Apple's online App Store. Id. ¶ ¶ 33-45. Apps are integral to users' experiences when operating Apple Devices. Id. ¶ 42. The App Store is the exclusive source from which owners of Apple Devices can obtain Apps for their Apple Devices. Id. ¶ 37.

Apple completely controls users' experience from development of the Apple Devices to development and selection of the Apps available at the App Store. Id. ¶ ¶ 46-50. Apple claims to " review every app on the App Store based on a set of technical, content, and design criteria." Id. ¶ 63. The App approval process " ensure[s] that applications are reliable, perform as expected, and are free of explicit and offensive material." Id. The App Store Review Guidelines provide that " Apps cannot transmit data about a user without obtaining the user's prior permission and providing the user with access to information about how and where the data will be used." Id. " In order to offer an application for download in the App Store, a third-party developer must be registered as an 'Apple Developer' and agree to the iOS Developer Agreement (the 'IDA') [sic] and the Program License Agreement (the 'PLA') with Apple as well as [a] $99 yearly registration fee." Id. ¶ 48. Among other provisions, the PLA contractually requires developers to obtain user consent before they collect any user or device data through their apps. Id. ¶ 60. Apple also " provides third-party developers with review guidelines, and conducts a review of

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all applications submitted for inclusion in the App Store for compliance with these documents." Id. ¶ 48. " The App Store Review Guidelines set forth the technical, design, and content guidelines [that] Apple [uses] when reviewing an app for inclusion in Apple's App Store." Id. ¶ 60.

Plaintiff characterizes Apple as the " gatekeeper" to the App Store. Id. ¶ 51. The Second Amended Complaint identifies multiple Apple statements (in addition to those set forth above) in support of that characterization. Id. ¶ ¶ 51-58. They include former Apple CEO Steve Jobs' proclamations from 2007 to 2010 that limitations exist on the types of apps that would be allowed on Apple Devices, including apps that invade user privacy. Id. ¶ ¶ 51-53, 55. They also include current Apple CEO Tim Cook's statement in April 2011 that he believes the " user appreciates that Apple can take full responsibility for their experience." Id. ¶ 57. In addition, Apple's website contained the following statement in September 2011:

iOS 4 is highly secure from the moment you turn on your iPhone. All apps run in a safe environment, so a website Or.App. can't access data from other apps. iOS 4 supports encrypted network communication to protect your sensitive information. Optional parental controls let you manage iTunes purchases, Internet browsing, and access to explicit material. To guard your privacy, apps requesting location information must get your permission first. You can set a passcode lock to prevent unauthorized access to your phone and configure iPhone to delete all your data after too many unsuccessful passcode attempts. And in the event your iPhone is lost or stolen, Find My iPhone allows you to locate it on a map, lock its screen, and remotely delete all your data. If you get it back, you can restore everything from your last backup.

Id. at 61 (emphasis added). Apple's Public Policy contains similar statements, claiming that " Apple takes precautions -- including administrative, technical, and physical measures -- to safeguard your personal information against loss, theft, and misuse, as well as against unauthorized access, disclosure, alteration, and destruction." Id. at 81. According to Plaintiff, Apple made these statements in order to " cultivate a perception that its products are safe and that Apple strives to protect users." Id. ¶ 58. [1]

Notwithstanding Apple's representations that it was protecting users' personal information and the security of the iOS operating system, " Apple-approved apps have downloaded and/or copied users' private address book information (including names and contact information of users' contacts), location data, private photographs and videos without the users' knowledge or consent when a user agrees to allow an app to access the user's then current locations." Id. ¶ 66. " For example, in early February 2012, it was revealed that one such app, Path, was uploading data stored on users' Apple Devices (including address book and calendar) to its servers." Id. ¶ 69. " [O]ther popular apps such as Angry Birds, Cut-the-Rope, Twitter, Facebook, LinkedIn, Gowalla, Foodspotting, Instagram, Foursquare, Beluga, Yelp!, Hipster and Kik Messenger among others, have likewise downloaded users' data without their explicit consent in contrast to Apple's stated

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policy." Id. ΒΆ 70. And while " copying address book data, photos and videos without a user's consent is against Apple's rules . . . [, Apple has] failed to properly screen apps and allowed such apps to be ...


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