Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal: Consumers unable to amend dismissed Apple MacBook logic board claims, (Apr 17, 2015)

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

Two purchasers of Apple Inc.’s MacBook Pro laptop computers were unable to amend fraud-based unfair competition claims against Apple for allegedly selling the computers with defective logic boards. In denying the purchasers’ motion to file an amended complaint, the federal district court in San Francisco determined that the proposed new safety allegation was resolved and no new basis existed for the proposed amended complaint (Marcus v. Apple Inc., April 16, 2015, Alsup, W.).

Uriel Marcus and Benedict Verceles purchased Apple’s MacBook Pro. Both laptops failed after the expiration of the manufacturer’s warranty, allegedly due to defective logic boards. The purchasers filed a product-defect class action against Apple, alleging violations of California’s Consumer Legal Remedies Act (CLRA), California’s Unfair Competition Law (UCL), and the Texas Deceptive Trade Practices Act (DTPA); as well asserting warranty-based claims for relief. In January 2015, the court dismissed the action but granted the individuals leave to amend their complaint. Subsequently, the plaintiffs moved to file an amended complaint, proposing a new allegation that the laptop’s logic board defect posed a safety hazard because it would cause the laptop to get hot and potentially burn consumers.

CLRA. The amended complaint alleged that the manufacturer violated three suctions of California’s CLRA by: (1) misrepresenting characteristics, benefits and use of the laptops; (2) misrepresenting that the laptops were of a particular standard, quality and/or grade; and (3) selling the laptops with an intentionally-concealed design defect that created an overheating safety issue. The court determined that there was no issue with respect to misrepresentation because the individuals failed to identify any affirmative misrepresentation that were in need of correction. The court also determined that there was no safety issue because the manufacturer had satisfied its duty to disclose the overheating safety issue through appropriate disclosures and instructions on use of the laptops.

DTPA. The amended complaint alleged that the manufacturer violated the DTPA because the logic board defect was a material fact that only the manufacturer knew and that it did not disclose it. However, the individuals failed to plausibly demonstrate the manufacturer’s knowledge about the defect at the time they purchased the laptops because they only presented general allegations in support of their claim.

UCL. The individuals’ amended complaint also alleged that the manufacturer violated the UCL, which proscribes unfair competition, including “any unlawful, unfair or fraudulent business act or practice.” The court determined that individuals failed to state a claim under the “unlawful” prong because they failed to establish an underlying violation of any of the remaining claims alleged in the complaint.

The court also rejected the plaintiffs’ allegation that the “unfair” prong was violated. After applying a balancing test to determine what was “unfair”, the court determined that the repair or replacement costs of the laptops were insufficient to show that the harm to the consumers outweighed the utility of the manufacturer’s business practices.

The case is No. C 14-03824 WHA

Attorneys: Omar Weaver Rosales (The Rosales Law Firm, LLC) for Uriel Marcus. David Michael Walsh (Morrison & Foerster) for Apple Inc.

Companies: Apple Inc.

Cases: StateUnfairTradePractices CaliforniaNews