Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Apple obtains dismissal of Wi-Fi Assist misrepresentation claims, (Apr 21, 2016)

By Michael Menzhuber, J.D., LL.M.

A class action complaint, which alleged that Apple, Inc.’s failure to disclose information about its Wi-Fi Assist feature violated California’s Unfair Competition Law (UCL) and False Advertising Law (FAL), was dismissed by the federal district court in San Jose. The court dismissed the complaint after determining that the named plaintiffs lacked Article III or statutory standing (Phillips v. Apple, Inc., April 19, 2016, Koh, L.).

William Scott Phillips, Suzanne Schmidt Phillips, and William Cottrell each upgraded their Apple iPhone to the iOS 9 operating system. iOS 9 includes a default feature, Wi-Fi Assist, which automatically switches consumers to a cellular connection when it is stronger than the Wi-Fi connection. Apple issued a statement on its website that consumers might use more cellular data as a result of the switching and provided instructions if a consumer wanted to disable the Wi-Fi Assist feature.

Phillips and Cottrell filed two separate complaints, alleging that Apple violated California state laws by failing to disclose information about Wi-Fi Assist. The complaints were consolidated and the plaintiffs brought a putative class action against Apple that alleged violations of California’s UCL and FAL, and negligent misrepresentation.

The basis for the action was that: (1) Apple failed to adequately disclose and represent the true nature of Wi-Fi Assist; and (2) had the named plaintiffs been aware of its true nature, they would have disabled the Wi-Fi Assist feature to avoid data usage charges.

Apple filed a motion to dismiss on several grounds, including that the plaintiffs did not have Article III or statutory standing. Because the court agreed that the plaintiffs lacked such standing, it did not address Apple’s other grounds to dismiss.

The court noted that Article III and statutory standing both require a showing that the defendant’s alleged misrepresentation or nondisclosure was an immediate cause of the plaintiff’s injury-producing conduct. It determined that the plaintiffs lacked standing because they did not allege that they saw or heard any representations by Apple before downloading iOS 9 or using Wi-Fi Assist. The court was also unable to determine whether the plaintiffs could have seen Apple’s statement before being injured because they did not allege the date when they downloaded iOS 9 or disabled Wi-Fi Assist.

The court also noted that the plaintiffs’ complaint: (1) did not identify the existence of any advertising related to iOS 9 or Wi-Fi Assist; and (2) provided no factual support for their allegation that they and the class members justifiably relied on Apple’s alleged misrepresentations and omissions about Wi-Fi Assist.

Although it was unnecessary, given the plaintiffs’ failure to allege facts sufficient to support Article III or statutory standing, the court agreed with Apple’s additional argument that the plaintiffs lacked standing to seek injunctive relief because: (1) they were aware of Wi-Fi Assist and had the ability to turn it off; and (2) there was no danger that the plaintiffs would be misled in the future.

The case is No. 15-CV-04879-LHK.

Attorneys: Charles J. LaDuca (Cuneo Gilbert and LaDuca, LLP) for William Scott Phillips. David Ramraj Singh (Weil, Gotshal and Manges LLP) for Apple, Inc.

Companies: Apple, Inc.

Cases: Advertising ConsumerProtection CaliforniaNews