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Yastrab v. Apple Inc.

United States District Court, N.D. California, San Jose Division

March 23, 2015

DAVID YASTRAB, individually and on behalf of all others similarly situated, Plaintiff,
v.
APPLE INC., Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; DENYING DEFENDANT'S MOTION TO STRIKE Re: Dkt. Nos. 14, 15

EDWARD J. DAVILA, District Judge.

Plaintiff David Yastrab ("Plaintiff") brings the instant putative class action against Defendant Apple Inc. ("Apple") in which he alleges his iPhone 4's Wi-Fi and Bluetooth capabilities stopped working after he downloaded a software update. Presently before the Court are two motions filed by Apple: one to dismiss Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), and one to strike the class allegations from the Complaint under Rule 12(f). See Docket Item Nos. 14, 15. Plaintiff has filed written opposition to both motions. See Docket Item Nos. 18, 19.

Federal jurisdiction arises pursuant to 28 U.S.C. § 1332. Having carefully reviewed the parties' briefing and for the reasons explained below, the Motion to Dismiss will be granted while the Motion to Strike will be denied.

I. FACTUAL AND PROCEDURAL BACKGROUND

At the center of this case is Apple's popular iPhone product, which first debuted in 2007. See Compl., Docket Item No. 1, at ¶ 2. iPhones come equipped with a mobile operating system called iOS, which consists of a collection of software applications, or "apps." Id. at ¶ 3. These apps allow users to utilize the features of Apple products. Id . Since its first version in 2007, the iOS operating system has been updated several times by Apple. Id. at ¶ 4. When a new version of iOS is released, Apple prompts users to download the update via a message on their iPhone. Id. at ¶ 5.

Three iPhone models are implicated in the Complaint: the iPhone 4 released in 2010, the iPhone 4s released in 2011, and the iPhone 5 released in 2012. Id. at ¶¶ 2, 3. Also implicated is an update to the iOS software known iOS 7, which was unveiled by Apple on June 10, 2013. Id. at ¶¶ 1, 2, 3, 16. According to the Complaint, Apple described iOS 7 as "a platform for over a million mobile apps, iCloud, [1] and includes security features that prevent unauthorized access to Apple devices." Id. at ¶ 8. Plaintiff, however, contends that users of the iPhone 4, 4s, and 5 experienced reduced functionality as a result of installing iOS7, "essentially forcing consumers to render their iPhones obsolete." Id. at ¶ 1.

Plaintiff is a New York resident who acquired an iPhone 4s on or around April 30, 2012. Id. at ¶ 53. In doing so, Plaintiff alleges that he viewed Apple's representations regarding "the iPhone 4s's ability to download future iOS updates, Bluetooth[2] and Wi-Fi connection capabilities, ability to backup data via iCloud and the ability to run apps via a Wi-Fi connection, " and would not have acquired the iPhone 4s had he not seen these representations. Id. at ¶ 35. Plaintiff believes these representations, as well as Apple's advertising and marketing campaigns, were designed to induce consumers to purchase the iPhone over other smartphones "because of their Bluetooth and Wifi connection capabilities, large library of apps, iCloud and Siri[3] - all of which require a Network connection or Wi-Fi connection to operate." Id. at ¶ 19.

Plaintiff received an alert from Apple in or about October 2013 notifying him that iOS 7 was available and he promptly downloaded it. Id. at ¶ 54. However, after the download was complete and the updated software installed, the Wi-Fi and Bluetooth connection capabilities on his iPhone 4s were disabled, or "grayed out." Id. at 55. Plaintiff alleges that the "grayed out" problem was experienced by a large number of users of the iPhone 4, 4s and 5, and that Apple received "thousands of comments" concerning the problem. Id. at ¶ 56. An updated version of iOS 7 was thereafter released on March 10, 2014 - iOS 7.1 - but that update did not resolve the "grayed out" problem.[4] Id. at ¶ 63. Nor was Plaintiff able to resolve the issue with his iPhone 4s after following instructions on Apple's website and visiting two Apple stores. Id. at ¶ 68. In addition, Apple would not allow iPhone users to downgrade their mobile software to a previous version of iOS. Id. at ¶¶ 69-71.

Plaintiff alleges that, because the Wi-Fi and Bluetooth connection capabilities were "grayed out" after installing iOS 7, users of the iPhone 4s were forced to use their cellular network connection for all features requiring an internet connection, such as iCloud and Siri. Id. at ¶¶ 19, 73. As a result, users incurred "unanticipated monthly data usage charges" with their cellular provider and were left with an iPhone "of significant reduced value and utility." Id. at 73.

Because the "grayed out" problem was wide-ranging, Plaintiff believes it is "reasonable and plausible" to infer that Apple had either actual or constructive knowledge of the shortcomings in the iPhone 4s and iOS 7 prior to their distribution, and that Apple withheld this material information from consumers. Id. at ¶¶ 75-76. He seeks to represent the following classes:

GENERAL CLASS: All users who experienced loss or reduced functionality of their iPhone as a result of upgrading iOS.
SUBCLASS: All users of Apple iPhone 4s in the United States who experienced a loss of Wi-Fi and/or Bluetooth functionality after downloading iOS 7.

Plaintiff filed the Complaint underlying this action on April 29, 2014. He asserts five claims under California law: (1) violation of the Consumer Legal Remedies Act ("CLRA"), California Civil Code §§1750 et seq., (2) violation of the Unfair Competition Law ("UCL"), California Business and Professions Code §§ 17200 et seq., (3) breach of express warranty, (4) intentional misrepresentation, and (5) negligent misrepresentation. These motions followed.

II. LEGAL STANDARD

A. Motion to Dismiss

On a Rule 12(b)(6) motion to dismiss for failure to state a claim, the complaint is construed in the light most favorable to the non-moving party, and all material allegations in the complaint are taken to be true. Sanders v. Kennedy, 794 F.2d 478, 481 (9th Cir. 1986). This rule does not apply to legal conclusions, however - "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to state a claim. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). While a complaint does not need detailed factual allegations to survive a 12(b)(6) motion, plaintiffs must at least provide grounds demonstrating their entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the plaintiff must allege sufficient factual allegations "to raise a right to relief above the speculative ...


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