United States District Court, N.D. California
ORDER CERTIFYING CLASS AND DENYING DEFENDANTS'
MOTION FOR SUMMARY JUDGMENT RE: DKT. NOS. 99, 100, 102, 103,
110, 111, 112, 121, 127, 128, 130, 132, 136, 138, 144,
WILLIAM H. ORRICK, UNITED STATES DISTRICT JUDGE
to plaintiffs Vicky Maldonado and Justin Carter, defendants
Apple, Inc., AppleCare Service Company Inc., and Apple CSC
Inc. (collectively, “Apple”) breach the AppleCare
and AppleCare agreements every time a consumer receives a
remanufactured replacement device because those devices are
not “equivalent to new in performance and
reliability” as promised under the contract. Instead,
the presence of non-new parts means remanufactured devices
can never be as reliable as new ones. Plaintiffs move for
class certification to pursue their claims against Apple,
which opposes on predominance and other grounds and further
contends that it is entitled to summary judgment on
Maldonado's and Carter's claims. For the reasons set
forth below, I will deny Apple's motion for summary
judgment and grant plaintiffs' motion for class
AppleCare, AppleCare, and the Remanufacturing
and AppleCare (“AC/AC”) plans provide extended
warranty and technical support for Apple consumers who wish
for more than the standard one-year hardware warranty and 90
days of free technical support. See Declaration of Steve
Berman ("Berman Decl.") Ex. 1 [Dkt. No. 103-2] (AC
Plan); Berman Decl. Ex. 2 [Dkt. No. 103-3] (AC Plan).
Purchase of a plan entitles consumers to a second year of
hardware coverage for non-accidental damage, two years of
accidental damage coverage, and two years of free technical
support. The contract provides that when a consumer submits a
claim for hardware issues, Apple will either repair the
device or replace it with a device that is "new or
equivalent to new in performance and reliability and is
functionally equivalent to the original product." AC
Plan § 3.1.
devices provided under the AC/AC plans can be either new or
remanufactured. New devices are made with only parts
coming straight from vendors, while remanufactured devices
use "a small quantity of components or parts recovered
from the field-returned units." Deposition of Jason Fu
("Fu Depo."), Berman Decl. Ex. 7 [Dkt. No. 102-10]
19:20-20:1; see Deposition of Michael Lanigan
("Lanigan Depo."), Berman Decl. Ex. 3 [Dkt. No.
customer returns a device, Apple disassembles it and performs
tests to determine which parts, if any, can be
recovered. Lanigan Depo. 33:17-20, 37:5-8, 63:3-4;
see Fu Depo. 22:24-23:12. Parts can be recovered if
they pass Apple's tests without problems. See
Lanigan Depo. 73:14-16. Only the XXXXX will be repaired and retested if issues are
found initially. Lanigan Depo. 73:2-16; Fu Depo. 43:5-14.
Each individual part can be recovered XXXXX. Lanigan Depo. 63:6-12. Apple exercises
this limitation even if a component meets the applicable
testing standards. Id. at 65:9-20. There are some
exceptions XXXXX; for example, where
certain repairs on XXXXX. See
Id. at 68:10-69:4. Remanufactured devices and new
devices XXXXX to gather all the
component parts along with the same assembly process.
Id. at 24:21-25, 40:23-41:24, 56:11-17. The
parts-whether new or recovered-that are used to build a
particular device are selected at random from a common
pool. Id. at 57:9-16. Accordingly, each
remanufactured device could have a different mix of recovered
parts. Fu Depo. 30:5-8.
testing process and criteria are the same for both new and
remanufactured devices. Id. at 36:1-7. Reliability
tests are part of Apple's qualification process. Lanigan
Depo. 33:10-17, 46:6-47:23 (describing "a set of
physical tests to stress the device both electrically and
mechanically';): id at 50:11-14 (noting that
"[i]t's not [that] XXXXX") Devices that have gone through
reliability testing are "scrapped." Id. at
example. XXXXX); see also Fu
Depo. 25:17-20 (noting that "[d]evices going through
these stress tests are not shippable to customer").
performs reliability tests on test samples "with a clear
understanding [of] what parts hi the remanufactured phones
are recovered from field-returned units." Fu Depo.
27:5-15. Out of a sample of XXXXX
with a certain recovered part, Apple might perform
reliability tests on XXXXX. See
Id. at 31:21-32:24. "Apple tests a sample of
iPhones that have XXXXX." Declaration of Jason Fu ("Fu
Decl.") [Dkt. No. 112-16] ¶ 4; see Fu Depo.
31:3-32:17. If the testing shows no quality or reliability
concerns, then the remanufactured devices with that non-new
part can be sent to customers. Fu Depo. 107:2-4. If there are
issues, Apple XXXXX. Id. at
107:10-14. If the issue is related to the recovered part,
XXXXX. Id. at 107:15-23.
Returns, Failure Rate, and Equivalence to New
engineering perspective, Apple considers a device
"equivalent to new" if it meets the same
engineering specifications as a new device. Fu Depo. 21:
20-24. Apple has the same quality standards for new and
remanufactured devices, and it goes through the same process
to qualify the remanufactured products for distribution to
consumers. See Id. at 21:11 -16. The difference
between performance and reliability depends on the timing.
Id. Performance refers to how the device functions
when it leaves the factory, while reliability refers to its
"lifetime in the field." Id. at 22:3-7.
How long an iPhone lasts is "highly dependent on how the
phones will be used." Id. at 110:2-7.
uses a few reference points to monitor products in the field
and better understand device failure. See
Declaration of Michael Lanigan ("Lanigan Decl.")
[Dkt. No. 112-18] ¶ 15. One is XXXXX. looper metric. A looper is a unit that has
been returned to Apple after being out in the field. Lanigan
Depo. 36:11-18. When a consumer returns a phone or seeks a
replacement device, an Apple customer service representative
XXXXX with the device by selecting a
CompTIA code from a pull-down menu. Id. at 91:18-24,
36:11-18 (noting as one example, the consumer dropping the
device): Declaration of Avijit Sen ("Sen Decl.")
[Dkt. No. 112-14] ¶ 5. Apple has no control over the
accuracy of these codes; they XXXXX.
Deposition of Avijit Sen ("Sen Depo.") Berman Decl.
Ex. 8 [Dkt. No. 102-12] 81:19-24; see Sen Decl.
¶ 5. Apple compares CompTIA codes for new and
remanufactured devices, although the reliability tests are
"a more controlled way to identify what's causing a
device to fail, all the stress conditions." Fu Depo.
XXXXX all devices that customers
return under AC/AC to determine XXXXX. Lanigan Decl. ¶ 13. XXXXX. Id. Units can come back for
genuine issues or because the consumer is "leveraging]
the service environment for a new device." Lanigan Depo.
103:22-104:20; see also Fu Depo. 69:24-70:3 (noting
"return rate is just a number" and a customer might
return a device for reasons other than performance and
reliability). Although a return does not necessarily mean the
device has actually failed, Apple uses the return rate to
help it understand device failure. See Lanigan Depo.
97:7-25, 108:6-109:8; see also Lanigan Decl. ¶
15 (noting that Apple refers to return rate as failure rate
"even where [it] has not yet conducted a root cause
analysis or determined that a true failure occurred");
Fu Depo. 70:8-71:23 (noting that the return rate, while part
of the discussion about remanufactured and new devices, is
"not reliable information").
NAMED PLAINTIFFS' EXPERIENCES WITH AC/AC
Justin Carter paid $849 for an iPhone 6 Plus and $99 for AC.
Deposition of Justin Carter ("Carter Depo."), Patel
Decl. Ex. A [Dkt. No. 113-2] 91:15-19. Almost a year after he
had purchased the phone. Carter began experiencing battery
issues with it. Id. at 95:16-24. On May 26, 2016,
Carter called Apple and set up a repair appointment due to
the limited battery life and cosmetic damage. Id.
at 16:1-11; Declaration of Charlotte Gould ("Gould
Decl.") [Dkt. No. 112-20] ¶ 3. On July 10, 2016, he
canceled the repair and requested a replacement device
because of the battery issues. Gould Decl. ¶ 4. The
following day Apple shipped a replacement iPhone, which was
remanufactured with XXXXX recovered
parts: XXXXX. Id. ¶ 4;
Lanigan Decl. ¶ 18. Carter also experienced battery
issues with the first replacement. Carter Depo. 16:16-23.
After Carter spoke with counsel about those problems, someone
came to his work and visually inspected the phone on October
18, 2016. Id. at 134:21-25, 135:12-15, 139:10-16.
was experiencing the same problems a week later on October
25, 2016, so he called Apple about those problems. Gould
Decl. ¶ 5; Carter Depo. 150:19-151:6. The following day
Apple shipped a second remanufactured replacement device with
a recovered XXXXX. Gould Decl. ¶
5; Lanigan Decl.¶19. The same individual visually
inspected the second replacement device. Carter Depo.
162:3-25. Carter then purchased a new iPhone from Verizon,
which Apple shipped on November 2, 2016. Carter Depo.
172:6-12 (noting he paid for the phone and received
reimbursement from counsel). On November 3, 2016, Carter
received an email indicating that a third replacement had
been shipped, and he received that device on November 4.
Id. at 172:24-173:9; Gould Decl. ¶ 6. The third
replacement device was new. Lanigan Decl.¶ 20.
September 2013, Vicky Maldonado bought a fourth generation
iPad and AC at the mall. Deposition of Vicky Maldonado
("Maldonado Depo."), Patel Decl. Ex. B [Dkt. No.
113-3] 66:12-15, 25. In the beginning it worked well, but
after a while she brought it back to Apple because of
technical issues. Id. at 67:11-19. At first Apple
attempted to repair the iPad, but on May 8, 2015, they
replaced it with a remanufactured replacement iPad with a
recovered XXXXX. Id. at
67:13-19; Gould Decl. ¶ 7; Lanigan Decl. 121. She
experienced the same problems with the replacement device.
Maldonado Depo. 67:20-25. It functioned slowly, it turned off
unexpectedly, and it had other people's information on
it, namely a picture. Id. at 67:20-25, 69:4-8,
73:16-20. She brought the phone back to the store
immediately. See Id. at 74:11-25. On May 22, 2015,
Maldonado received a second remanufactured replacement iPad
with a recovered XXXXX. Gould Decl.
¶ 8; Lanigan Decl. ¶ 22. That iPad was later stolen
on a flight, and Maldonado was unable to locate it. Maldonado
Depo. 78:5-10, 79:22-80:12.
filed this case on July 20, 2016, and on August 12, 2016, I
granted Apple's request for an order relating it to the
earlier filed case before me, English v. Apple,
14-cv-1619. Dkt. Nos. 1, 21. On March 2, 2017, I granted in
part and denied in part Apple's motion to
dismiss. Order on MTD [Dkt. No. 64]. After a few
continuations of the case schedule, plaintiffs filed a motion
for class certification on February 28, 2019. Motion for
Class Certification (“Cert. Mot.”) [Dkt. No.
102-4]. On March 29, 2019, pursuant to the parties'
stipulation, I consolidated the hearings for the class
certification motion and Apple's forthcoming motion for
summary judgment. Dkt. No. 109. On April 8, Apple moved for
summary judgment. Motion for Summary Judgment
(“MSJ”) [Dkt. No. 110-4]. On June 10, plaintiffs
filed a conditional motion for additional discovery under
Federal Rule of Civil procedure 56(d). Dkt. No. 132. I heard
argument on all the motions on August 7, 2019. Dkt. No. 149.
judgment on a claim or defense is appropriate “if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a). In order to
prevail, a party moving for summary judgment must show the
absence of a genuine issue of material fact with respect to
an essential element of the non-moving party's claim, or
to a defense on which the non-moving party will bear the
burden of persuasion at trial. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Once the movant has
made this showing, the burden then shifts to the party
opposing summary judgment to identify “specific facts
showing there is a genuine issue for trial.”
Id. The party opposing summary judgment must present
affirmative evidence from which a jury could return a verdict
in that party's favor. Anderson v. Liberty
Lobby, 477 U.S. 242, 257 (1986).
summary judgment, the court draws all reasonable factual
inferences in favor of the non-movant. Id. at 255.
In deciding the motion, “[c]redibility determinations,
the weighing of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a
judge.” Id. However, conclusory and
speculative testimony does not raise genuine issues of fact
and is insufficient to defeat summary judgment. See
Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d
730, 738 (9th Cir. 1979).
certifying a class, the trial court must conduct a rigorous
analysis to determine whether the party seeking certification
has met the prerequisites of Rule 23.” Mazza v. Am.
Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012)
(internal quotation marks omitted). The party seeking
certification has the burden to show, by a preponderance of
the evidence, that certain prerequisites have been met.
See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338,
348-50 (2011); Conn. Ret. Plans & Trust Funds v.
Amgen Inc., 660 F.3d 1170, 1175 (9th Cir. 2011).
under Rule 23 is a two-step process. The party seeking
certification must first satisfy the four threshold
requirements of Rule 23(a). Specifically, Rule 23(a) requires
a showing that: (1) the class is so numerous that joinder of
all members is impracticable; (2) there are questions of law
or fact common to the class; (3) the claims or defenses of
the representative parties are typical of the claims or
defenses of the class; and (4) the representative parties
will fairly and adequately protect the interests of the
class. Fed.R.Civ.P. 23(a).
the party seeking certification must establish that one of
the three grounds for certification applies. See
Fed. R. Civ. P. 23(b). Plaintiffs seek certification under
Rule (b)(3), which requires them to establish that “the
questions of law or fact common to class members predominate
over any questions affecting only individual members, and
that a class action is superior to other available methods
for fairly and efficiently adjudicating the
controversy.” Fed.R.Civ.P. 23(b)(3). They also seek
certification under Rule 23(b)(2) for injunctive relief.
process of class-certification analysis, there “may
entail some overlap with the merits of the plaintiff's
underlying claim.” Amgen Inc. v. Connecticut Ret.
Plans & Trust Funds, 568 U.S. 455, 465-66 (2013)
(internal quotation marks omitted). However, “Rule 23
grants courts no license to engage in free-ranging merits
inquiries at the certification stage.” Id. at
466. “Merits questions may be considered to the
extent-but only to the extent-that they are relevant to
determining whether the Rule 23 prerequisites for class
certification are satisfied.” Id.
moves for summary judgment on Maldonado's and
Carter's breach of contract claims and asserts that the
remaining claims fall for the same reasons. According to
Apple, plaintiffs lack evidence to prove their essential
elements of their breach of contract claims, and Carter's
conduct should prevent him from pursuing his claims.
Plaintiffs' Theory of Liability and Damages
motion for summary judgment is based on three main arguments:
(i) plaintiffs contend that they were entitled to new
devices, in clear contradiction of the contract language;
(ii) plaintiffs lack evidence showing that their
remanufactured devices were not equivalent to new; (iii)
plaintiffs cannot show that Apple's alleged breach caused
their damages because the malfunctions they complained of do
not relate to non-new part(s) in their devices. MSJ 8-16.
These arguments are based on a misunderstanding of
plaintiffs' theory of liability; none succeeds.
to Apple, plaintiffs' position boils down to an assertion
that they were entitled to new devices rather than the
remanufactured devices they received. MSJ 8-9 (contending
that in their deposition testimony, plaintiffs “appear
ultimately to take the position that ‘equivalent to new
in performance and reliability' means
‘new'”). This theory contradicts the AC/AC
language, which unambiguously states that consumers may
receive one of two types of replacement devices under the
contract: new or “equivalent to new.” MSJ 8-9.
with Apple that given the language of the contract,
equivalent-to-new devices cannot be the same as new devices.
But plaintiffs' theory does not amount to a contention
that they were entitled to new devices. Their case rests on
their ability to prove that remanufactured devices are not
“equivalent to new.” See Carter Depo.
108:11-18 (testifying that he understood “equivalent to
new” as meaning the phone would “operate exactly
like [his] new phone did”). If plaintiffs can prove
this theory, consumers who received such devices did not
receive the benefit of their bargain.
also challenges the evidence plaintiffs rely on to prove
their theory: plaintiffs' interpretation of the contract
is “unrealistic and unsupportable” because the
expert opinion of Michael Pecht-that any device with a
non-new component cannot be equivalent to new-“reads
‘equivalent to new' out of the AC contract.”
Reply MSJ 3; see infra Section II.B -
Plaintiffs' Classwide Theories (discussing Pecht's
opinions in more detail). I disagree. Pecht's report sets
forth reasons why remanufactured devices do not meet that
mark; it does not read “equivalent to new” out of
the contract. Apple's performance must match its promise,
and a reasonable fact finder could rely on this evidence to
conclude that it does not.
next contends that it is entitled to summary judgment because
plaintiffs lack evidence showing that their specific
devices were not equivalent to new in performance and
reliability. MSJ 10-14. Instead, the evidence shows that
remanufactured devices go through the same manufacturing and
testing process as new iPhones and iPads. Id. at
11-12. Apple presents evidence of its remanufacturing and
testing processes that could lead a fact finder to conclude
that the resulting remanufactured devices are equivalent to
new. But a fact finder could also credit the reports of Pecht
and Robert Bardwell and conclude that remanufactured
devices-including Maldonado's and Carter's-are
inferior. Plaintiffs' theory of breach does not depend on
the nature of any individual device. They assert that load
conditions prevent all devices with non-new parts
from being considered “equivalent to new.”
See infra Section II.B.1 - Plaintiffs' Classwide
Theories (discussing the Pecht and Bardwell reports in more
Apple claims that plaintiffs cannot show that a non-new part
caused the problems they allegedly experienced, and thus
there is no evidence to tie Apple's alleged breach with
plaintiffs' alleged damages. MSJ 14-16. For the reasons
discussed above, plaintiffs' success does not depend on
the functioning or malfunctioning of individual devices.
Oppo. MSJ 17. Apple promised plaintiffs equivalent-to-new
devices under the AC contract. Plaintiffs assert that when
they submitted claims under the contract, instead of
receiving the benefit of their bargain they received inferior
devices that were more likely to fail and have shorter
lifespans. If a fact finder credits this theory, then Apple
breached-and caused plaintiffs' damages-at the time of
can challenge plaintiffs' evidence at trial, but material
disputes of fact preclude summary judgment.