iPhone owners seek class-action status to push complaints over
device slowdown
By Tripp Mickle and Kirsten Grind
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 29, 2018).
Dozens of iPhone owners are taking Apple Inc. to court over its
disclosure that it slowed down old phones to preserve battery life,
in what could become one of the biggest legal challenges involving
the company's smartphone since its 2007 debut.
Some five dozen iPhone customers have filed at least 59 separate
lawsuits since December accusing Apple of slowing their phones to
spur people to buy new iPhones, according to court records. Apple
said in December that its software update introduced at the start
of 2017 reduced the performance of older phone models. The suits
seek an unspecified financial award, attorneys' fees and free
iPhone battery replacements, as well as a corrective advertising
campaign.
The lawsuits also seek class-action status. Efforts to combine
the cases will kick off at a March 29 legal meeting in Atlanta,
setting in motion an effort to have the class certified. A lead
attorney and a court location also will be chosen.
Class-action lawsuits are frequently filed against big
companies, but the large number of individual suits concerning a
single issue is unusual, say legal experts. It is also roughly
triple the number of suits filed in 2010 over the iPhone 4's
tendency to drop calls.
Apple settled the resulting class-action lawsuit in 2012,
agreeing to either pay iPhone 4 owners $15 or give them a free
case, according to Ira Rothken, an attorney who represented the
plaintiffs. The total potential settlement amount was $315
million.
The latest spate of iPhone lawsuits could present Apple with
unique challenges. The company is already working hard to convince
consumers that its newest devices are worth $1,000 or more, as
global demand for smartphones stagnates and people hold on to their
devices longer.
While legal experts say the plaintiffs face an uphill battle, a
multiyear court fight over the phone-throttling issue could force
the secretive company to disclose sensitive information about its
software development process, according to analysts.
Plus, a decision against Apple could require it and other tech
companies to be more transparent about how their software or
hardware features affect power or performance, said Mr. Rothken,
who isn't involved in this legal action. For years, companies have
been able to avoid such disclosures, mainly because customers
haven't demanded them.
"Whatever affects Apple would affect anyone making battery
devices," Mr. Rothken said.
An Apple spokeswoman declined to comment. The company has
previously said it would never do anything to intentionally shorten
or degrade the life of any of its devices, adding that Apple's goal
is to make iPhones that last as long as possible.
The lawsuits could also prolong the negative publicity
surrounding Apple's slowing of the phones. "It's the brand damage
that is even more risky and expensive for Apple," said Holger
Mueller, a technology analyst with Constellation Research.
Apple also is being investigated by the Justice Department and
Securities and Exchange Commission over potential securities
violations related to its disclosure of the software updates that
slowed older iPhones. It has faced questions from consumer and
watchdog groups in France, Italy and China.
Apple's predicament started after the company, prompted by
questions from users and analysts, said it introduced the software
update to prevent older iPhones with aged batteries from
unexpectedly shutting down. In late December, Apple apologized and
said it would reduce the out-of-warranty cost of battery
replacement to $29 from $79 for most customers.
Some of the current lawsuits are alleging that Apple
misrepresented the true nature and scope of the battery problems to
customers, and failed to inform users last year that upgrading to
new operating systems would force them to add a feature that slowed
down the phone, according to court records.
"To encourage consumers to purchase the newest iPhone in such
short intervals, Apple has to convince consumers to upgrade their
device," according to one complaint filed in federal court in
Northern California. "One way to do that is by reducing the
performance of older iPhones."
Larry Pethick, a 50-year-old resident of Grand Rapids, Michigan,
said his iPhone 6 started taking longer to load apps and activate
the GPS last fall after updating to a new operating system. Mr.
Pethick said he had lost his job that fall and didn't want to spend
$700 on a new phone, but came to the conclusion that buying a new
phone was his only option.
"The biggest frustration was that an adjustment was made that
severely inconvenienced me without me knowing about it," Mr.
Pethick said of Apple's software update. He is expected to join a
class-action suit against Apple in Northern Illinois.
Apple customers could find it difficult to win their case.
Fraudulent-concealment claims, such as in the iPhone instance, are
often hard to prove because courts typically want to preserve
companies' freedom to choose what to say as long as it isn't
actively misleading, said RebeccaTushnet, a professor at Harvard
Law School.
Apple has done enough since acknowledging the software change to
make clear that it was aiming to improve user performance, said
Wayne Lam, a smartphone analyst with the research firm IHS Markit,
adding that the class-action suit "won't amount to a hill of
beans."
Meanwhile, the controversy -- and Apple's $29 battery offer --
may already be taking a toll on the company's financial results.
Barclays previously estimated Apple could lose $10.29 billion in
revenue this year because of customers choosing to replace
batteries instead of their iPhones.
Write to Tripp Mickle at Tripp.Mickle@wsj.com and Kirsten Grind
at kirsten.grind@wsj.com
(END) Dow Jones Newswires
March 29, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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