Smith v. Apple, Inc.

Background

This putative class action concerns First Generation, Series 1 through Series 6, and Series SE Apple Watches. Plaintiffs alleged that the watches had an undisclosed and unreasonably dangerous defect: batteries could suddenly swell because Apple had not provided enough internal space, causing the screen to detach, crack, or shatter. Plaintiffs alleged that exposed sharp edges caused, or created a substantial risk of, cuts and other injuries.

Plaintiffs asserted claims under California’s Unfair Competition Law, the California Consumers Legal Remedies Act, various state fraud-by-omission laws, the Song-Beverly Consumer Warranty Act, implied-warranty law, and the federal Magnuson-Moss Warranty Act. They also asserted consumer-protection claims under Michigan, New York, and Texas law.

Rulings on the Motion to Dismiss

The court granted in part and denied in part Apple’s motion to dismiss the First Amended Complaint.

California law and non-California plaintiffs. The court declined to decide at the motion-to-dismiss stage whether plaintiffs from outside California could pursue California-law claims. Plaintiffs alleged that Apple was a California company and made decisions there about promotional materials, product design, and testing. The court held that Apple had not shown on this motion that the non-California plaintiffs could not pursue those claims.

Equitable relief. The court held that plaintiffs had not adequately alleged that money damages were insufficient. It therefore dismissed the claims to the extent they sought equitable relief. The court dismissed the Unfair Competition Law claim in its entirety without prejudice to pursuing it in state court. It dismissed the restitution claim without leave to amend, but granted leave to amend other forms of equitable relief if plaintiffs could explain why legal remedies were inadequate.

Chris Smith’s Consumers Legal Remedies Act claim. The court dismissed Chris Smith’s claim without leave to amend because the complaint alleged that his mother, rather than Smith, purchased the watch, and the court held that only the purchaser could assert that claim based on the sale.

Fraud by omission and alleged safety hazard. The court held that plaintiffs adequately alleged that Apple knew about the defect before sale. The alleged sources of knowledge included Apple-monitored consumer forums, pre-sale testing, patent applications, and other information. The court also held that plaintiffs adequately alleged an unreasonable safety hazard because they claimed that detached screens exposed sharp edges and had caused lacerations, cuts, abrasions, and other injuries.

Statute of limitations. The court dismissed Smithson’s and Rogers’s California Unfair Competition Law, Consumers Legal Remedies Act, and California common-law claims as time-barred, but granted leave to amend. The plaintiffs had not adequately alleged when or how they discovered the defect or why they could not have discovered it earlier through reasonable diligence.

Michigan, New York, and Texas consumer-protection claims. The court rejected Apple’s arguments that these claims were inadequately pleaded. It held that plaintiffs adequately alleged Apple’s pre-sale knowledge and alleged that they would not have purchased the watches had Apple disclosed the defect. The court also rejected arguments requiring plaintiffs to identify specific representations because the claims were based on omissions rather than affirmative misrepresentations.

Implied warranty. The court held that Apple’s Limited Warranty validly disclaimed the implied warranty of merchantability because it mentioned merchantability and was sufficiently conspicuous. It dismissed the implied-warranty claim without leave to amend.

Song-Beverly Consumer Warranty Act. The court rejected Apple’s arguments that the claim was barred by the Act’s one-year warranty limit or required plaintiffs to show that the defect was substantially certain to appear. But it held that the claims of every plaintiff except Ortega were time-barred under the Act’s four-year limitations period. The court dismissed those claims as time-barred and granted leave to amend to allege facts showing why they were timely.

Magnuson-Moss Warranty Act. The court held that it lacked jurisdiction over the federal warranty claim because the complaint named only 12 plaintiffs, while a class action under that statute requires at least 100 named plaintiffs for a district court to exercise jurisdiction. The court dismissed the claim with leave to amend. It stated that plaintiffs could not renew the putative class claim unless they could consistently with their lawyers’ obligations under Rule 11 plead enough named plaintiffs to satisfy the numerosity requirement.

Disposition

The court granted in part and denied in part Apple’s motion to dismiss. It allowed plaintiffs 28 days to file an amended complaint and scheduled a telephonic case-management conference for April 4, 2023. Judge Haywood S. Gilliam, Jr. signed the order.