Rutter v. Apple Inc.

Background

The plaintiffs filed a third amended complaint asserting claims under California’s Consumers Legal Remedies Act and Unfair Competition Law, along with breach-of-contract claims. They alleged that Apple offered five gigabytes of free iCloud storage to encourage users to adopt the service and then made it virtually impossible to reduce stored data below that limit, effectively forcing users to purchase paid storage tiers.

The case had already gone through three earlier complaints. The court had dismissed the first amended complaint and second amended complaint before Apple moved to dismiss the third amended complaint.

Legal standard

Apple moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally recognized claim supported by sufficient facts. Because the consumer-protection allegations were based on fraud, the court also applied Federal Rule of Civil Procedure 9(b), which requires the circumstances of alleged fraud to be stated in detail, including who made the statements, what was said, and when, where, and how the statements were misleading.

Consumer-protection claims

The court examined representations in Apple’s iCloud Terms and Conditions, an iCloud Capacity Email, and an iCloud Confirmation Email. It found that the plaintiffs had not alleged that they read or relied on the Terms and Conditions, which independently supported dismissal of claims based on those terms.

The court also found that the emails were not plausibly misleading or unfair. The Confirmation Email said users would be billed until they canceled by downgrading to the free plan, but it did not promise that users could keep selected data while discarding the rest. The Capacity Email said users could upgrade their plan or reduce the amount of storage they were using, but the plaintiffs did not plausibly allege that Apple prevented users from reducing stored data.

The court found the plaintiffs’ descriptions of their efforts to reduce storage too imprecise and lacking in factual detail. They did not provide screenshots or clearly identify the steps they took, and some allegations both disclaimed memory of the details and asserted that the described steps were the ones they had tried. The court also noted that William Rutter and Robert Barker alleged that they successfully managed their stored data, which undermined the theory that reducing storage was virtually impossible.

The court rejected the argument that Apple had a legal duty to provide more detailed instructions or assistance. It stated that Apple’s failure to provide additional help might be objectionable, but the plaintiffs had not identified a representation or legal duty that required such assistance. The court therefore granted the motion to dismiss the Consumers Legal Remedies Act and Unfair Competition Law claims without leave to amend.

Breach-of-contract claims

The plaintiffs alleged that Apple breached the iCloud Terms and Conditions by providing links to upgrade but not to reduce storage, and by failing to provide a way to save some data while discarding the rest. The court repeated its earlier conclusion that the relevant Terms and Conditions provision was not an enforceable promise and that the plaintiffs had not plausibly alleged a breach. It further stated that the provision addressed downgrading a storage tier, not reducing stored data.

The court also found that the iCloud Capacity Email did not establish a contract subject to breach. Even assuming it contained a contractual promise to allow users to reduce data, the plaintiffs had not plausibly alleged that Apple interfered with that ability. Their related implied-covenant claim therefore failed as well. The court dismissed the breach-of-contract claims without leave to amend.

Disposition

The court granted Apple’s motion to dismiss without leave to amend. It dismissed the case without leave to amend, directed the Clerk to enter judgment for Apple, and ordered the case closed. The court concluded that another amendment would be futile because the plaintiffs had repeatedly failed to plead a cognizable theory after multiple opportunities to amend.