Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Consumer’s false advertising claims over iMac screen display fail, (Mar 19, 2014)

By Linda O’Brien, J.D., LL.M.

A consumer failed to state false advertising claims against Apple, Inc. for false and misleading representations and advertisements regarding the quality, dependability, and screen display of certain models of iMac personal computers in violation of California’s Consumer Legal Remedies Act (CLRA) and Unfair Competition Law (UCL), the federal district court in San Francisco has ruled (Rasmussen v. Apple Inc., March 14, 2014, Chen. E.).

Apple Inc. produced the iMac personal computer, which integrates the computer’s screen, processor, hard drive, and other hardware into a unibody enclosure. Corbin Rasmussen purchased a 27-inch iMac computer in August 2011. The model had a “LED backlit” display. In December 2012, the screen of Rasmussen’s iMac went dim and diminished the viewable screen size by 50 percent. Rasmussen contacted Apple’s customer service and was informed that the computer was out of warranty and the repair to the screen would be more than $500. Rasmussen filed a proposed class action suit against Apple, alleging that the company (1) advertised the high quality nature of the screen and its long, productive life, and (2) failed to disclose a defect in the iMac model, which made failure of the screen display highly likely, in violation of the CLRA and UCL. Apple moved to dismiss for failure to state a claim.

CLRA claims. The court found that the plaintiff failed to state a claim under the CLRA based on a duty to disclose the defect. The CLRA provides a cause of action for unfair methods of competition and unfair, deceptive acts or practices. To state a claim under the CLRA, a plaintiff is required to show that the public are likely to be deceived by the challenged business practice or advertising. The court noted that Apple had no duty to disclose a latent defect that was manifested outside the warranty period since it was undisputed that the alleged defect did not relate to any safety issue. Moreover, Rasmussen lacked standing to assert a claim that the defect may manifest itself within the warranty period since the defect in his computer did not occur until after the expiration of the limited warranty period.

Rasmussen also failed to allege an actionable misrepresentation under the CLRA, the court determined. Representations by Apple regarding the screen performance and productive life of the iMac were constituted “mere puffery.” He did not allege any representations by Apple about specific or absolute characteristics of the longevity of the iMac model that would constitute an actionable statement.

UCL claims. The court also found that the plaintiffs failed to state a claim under the UCL. The UCL prohibits unfair, deceptive, untrue, or misleading advertising. Although Rasmussen demonstrated actual reliance on the defendant’s representations in making his purchase selection, he failed to show that Apple false advertised the characteristics or use of the iMac model at issue.

The case is No. C-13-4923-EMC.

Attorneys: Eric H. Gibbs (Girard Gibbs LLP) for Corbin Rasmussen. Matthew David Powers (O’Melveny & Myers LLP) for Apple, Inc.

Companies: Apple Inc.

Cases: StateUnfairTradePractices Advertising CaliforniaNews