Minute Order

Cal. Super. - 6th Dist.June 18, 2018

SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER LINE 6 Hearing Start Time: 9:00 AM Chinitz v. Apple Inc. 18CV330235 Hearing Type: Hearing: Demurrer Date of Hearing: 04/05/2019 Comments: Heard By: Walsh, Brian C Location: Department 1 Cou rtroom Reporter: Cou rtroom Clerk: Ann Vizconde Cou rt lnte rprete r: Court Investigator: Parties Present: Future Hearings: Bourne, Joseph C Attorney Exhibits: - Demurrer by Defendant Apple Inc. to the First Amended Complaint. Moving papers due 12/14/18; opposition papers due 1/18/19; reply papers due 2/8/19. PRO TEM REPORTER: Camm'l Bowen, CSR #13492 Also present is Alexis Amezcua. Tentative Ruling is not contested. THE COURT ADOPTS THE TENTATIVE RULING; see below: This is a putative class action on behalf of purchasers of defendant s iPad device who upgraded the device s operating system to iOS 11 during the class period. Before the Court is Apple s demurrer to each cause of action in the operative Amended Class Action Complaint ( FAC ) for failure to state a claim (Code Civ. Proc., 430.10, subd. (e)), which plaintiff opposes. As an initial matter, defendant failed to file a meet and confer declaration as required by Code of Civil Procedure section 430.41, subdivision (a). While the Court will overlook this deficiency in the interest of moving the case forward, Apple is reminded to comply with the Code of Civil Procedure in the future. I. Allegations of the Operative Complaint Plaintiff resides in Santa Cruz and purchased a 64GB Wifi-enabled iPad mini 4 on October 26, 2015. (FAC, 4-5.) He alleges that after he updated his iPad s operating system to iOS 11 on September 19, 2017, the iPad s battery began draining at a significant rate, permitting only 15 minutes of use at full charge versus eight to nine hours before the update. (Id. at 7-9.) Plaintiff did not consent to or expect this decreased battery performance, which caused him to lose the use and value of his iPad. (Id. at 10-12.) Printed: 4/5/20] 9 04/05/20] 9 Hearing: Demurrer - 18CV330235 Page 1 0f 6 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Plaintiff alleges that analyses by electronic device maintenance company Wandera of moderate to heavy iPad users in its global network showed an average 144-minute loss in battery life following the release of iOS 11, which improved only slightly after Apple released iOS 11.0.1. (FAC, 28-39.) According to plaintiff, consumers will purchase a new device if they experience performance problems with their current iPad, which benefits Apple. (Id. at 18-24, 48-50.) Plaintiff brings this action on behalf of a putative class of persons in California who purchased one or more iPads and who, during the period from September 19, 2017, through the date of class certification, upgraded the operating system on their iPads to i0511. (FAC, 51-52.) She asserts claims for (1) violation of the Unfair Competition Law ( UCL ), (2) violation of the Consumer Legal Remedies Act ( CLRA ), (3) trespass to chattels, (4) breach of the implied covenant of good faith and fair dealing, and (5) breach of implied contract. II. Legal Standard The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, [a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine ofjudicial notice. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations and quotations omitted; see also Code Civ. Proc., 430.30, subd. (a).) It is not the ordinary function of a demurrer to test the truth of the plaintiff s allegations or the accuracy with which he describes the defendant s conduct. Thus, the facts alleged in the pleading are deemed to be true, however improbable they may be. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) In ruling on a demurrer, the allegations of the complaint must be liberally construed, with a view to substantial justice between the parties. (Glennen v. Allergan, Inc. (2016) 247 Cal.App.4th 1, 6.) Nevertheless, while [a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact. (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120.) Ill. Request for Judicial Notice Apple s request for judicial notice of its Hardware Warranty, which is not referenced in the FAC, is DENIED. In Hoey v. Sony Electronics Inc. (N.D. Cal. 2007) 515 F.Supp.2d 1099 and the other cases cited by Apple with regard to the doctrine of incorporation by reference, the document at issue was expressly referenced in the operative pleading. (See id.at p. 1103 [Here, incorporation by reference of the VAIO notebook warranty is appropriate because the allegations in plaintiffs complaint are based directly on the express warranty for these VAIO notebooks. ]; Cover v. Windsor Surry Company (N.D. Cal., Feb. 10, 2016, No. 14- CV-05262-WHO) 2016 WL 520991, at *2, fn. 1 [granting judicial notice where plaintiff does not dispute the accuracy of the warranty and quotes directly from it in his complaint ].) Here, plaintiff does not expressly reference the warranty or assert a claim based on that document. Printed: 4/5/20] 9 04/05/20] 9 Hearing: Demurrer - 18CV330235 Page 2 of 6 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER In addition, the Court may not take judicial notice of the warranty simply because Apple asserts that it was posted to its web site. Although it might be appropriate to take judicial notice of the existence and content of a web site under some circumstances, here, Apple relies on the foundational fact that the warranty applies to the plaintiff s iPad, an issue which is reasonably subject to dispute. (See Searles Valley Minerals Operations, Inc. v. State Bd. of Eq ualization (2008) 160 Cal.App.4th 514, 519 [refusing to take judicial notice of web site pages of the American Coal Foundation and the United States Department of Energy]; Duronslet v. Kamps (2012) 203 Cal.App.4th 717, 737 [refusing to take judicial notice of information on the California Board of Registered Nursing web site]; see also Cover v. Windsor Surry Company (N.D. Ca|., Feb. 10, 2016, No. 14-CV-05262-WHO) 2016 WL 520991, at *2 [denyingjudicial notice of a document from the defendant s web site because the document is not incorporated into Cover s complaint, he does not quote from it, and there is no objective evidence by which the court can determine the accuracy of the statements therein or whether it existed on Windsor s website at the time of Cover s purchases ].) The hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of affidavits, declarations, depositions, and other such material which was filed on behalf of the adverse party and which purports to contradict the allegations and contentions of the plaintiff. (Bounds v. Superior Court (KMA Group) (2014) 229 Cal.App.4th 468, 477, internal citation and quotations omitted.) Ill. The First Cause of Action Under the UCL Apple urges that plaintiff fails to state a claim under the UCL because he does not allege injury or standing; he fails to allege facts sufficient to establish a violation of any of the three prongs of the statute; and he is not entitled to restitution under the UCL. A. Whether Plaintiff Pleads a UCLViolation The UCL prohibits, and provides civil remedies for, unfair competition, which it defines as any unlawful, unfair or fraudulent business act or practice. (Kwikset Corp. v. Superior Court (Benson) (2011) 51 Ca|.4th 310, 320, citations omitted.) Because section 17200 is written in the disjunctive, it establishes three varieties of unfair competition-acts or practices which are unlawful, or unfair, or fraudulent. In other words, a practice is prohibited as unfair or deceptive even if not unlawful and vice versa. (Puentes v. Wells Fargo Home Mortgage, Inc. (2008) 160 Cal.App.4th 638, 644, citations and quotations marks omitted.) As noted by Apple, the FAC does not identify which prong or prongs of the UCL plaintiff contends that the iOS 11 upgrade violated. In her opposition papers, plaintiff contends that all three prongs were violated. First, plaintiff contends that Apple violated the fraudulent prong by advertising the battery life of its iPads without disclosing that a future iOS update would result in significant impairment to battery life. Plaintiff urges that he relied on Apple s representations regarding battery life when he purchased his iPad. However, none of these facts are alleged in the FAC. Plaintiff accordingly fails to state a claim under the fraudulent prong of the UCL. Next, plaintiff contends that Apple s practices were unlawful under the CLRA and because the practices constitute trespass to chattels. As discussed below, plaintiff fails to state a claim under the CLRA, but he Printed: 4/5/20] 9 04/05/20] 9 Hearing: Demurrer - 18CV330235 Page 3 of 6 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER does state a claim for trespass to chattels. Apple challenges plaintiff s unlawful UCL claim on the sole ground that plaintiff fails to state a cause of action as to both of the underlying claims on which it is based. Accordingly, plaintiff s UCL claim survives demurrer insofar as it is based on the unlawful prong. (See CRST Van Expedited, Inc. v. Werner Enterprises, Inc. (9th Cir. 2007) 479 F.3d 1099, 1107 [plaintiff alleged a UCL unlawful violation based on underlying claim for intentional interference with contractl.) The Court accordingly need not address whether plaintiff also states a claim based on the unfair prong of the UCL. (See id. at p. 1107, fn. 10; ll, Inc. v. Superior Court (Ibershof) (1995) 33 Cal.App.4th 1680, 1682-1684 [a demurrer does not lie to a portion of a cause of actionl.) B. Standing, Injury, and Restitution Apple argues that because plaintiff s iOS 11 download was free of charge, he cannot show that he lost money or property as required to establish standing under the UCL. However, [t]here are innumerable ways in which economic injury from unfair competition may be shown, including where a plaintiff ha[s] a present or future property interest diminished. (Kwikset Corp. v. Superior Court, supra, 51 Cal.4th at p. 323.) Here, plaintiff alleges that he lost the use and value of his iPad due to the iOS 11 upgrade. (FAC, 10- 12.) This suffices to establish standing under the UCL, which does not always require allegations that a plaintiff paid for the product or service that harmed him or her. (See Alborzian v. JPMorgan Chase Bank, N.A. (2015) 235 Cal.App.4th 29, 38 [UCL unlawful plaintiffs established standing by alleging diminished credit score, even where they never made payments on the loan at issue].) Plaintiff s allegations also show injury in fact. (See Kwikset Corp. v. Superior Court, supra, 51 Cal.4th at p. 325 [ If a party has alleged or proven a personal, individualized loss of money or property in any nontrivial amount, he or she has also alleged or proven injury in fact. ].) Finally, Apple contends that plaintiff s UCL claim fails because he does not allege facts showing an entitlement to restitution. However, [t]o make standing under section 17204 dependent on eligibility for restitution under section 17203 would turn the remedial scheme of the UCL on its head. Injunctions are the primary form of relief available under the UCL to protect consumers from unfair business practices, while restitution is a type of ancillary relief. (Kwikset Corp. v. Superior Court, supra, 51 Cal.4th at p. 337, quoting In re Tobacco || Cases (2009) 46 Cal.4th 298, 319.) Entitlement to restitution is not an element of a UCL claim, and the Court accordingly need not address whether plaintiff s allegations establish an entitlement to restitution. C. Conclusion In light of the above, the demurrer to the first cause of action will be overruled. IV. The Second Cause of Action Under the CLRA Apple contends that free software downloads like the iOS 11 upgrade are not a sale or lease under the Printed: 4/5/20] 9 04/05/20] 9 Hearing: Demurrer - 18CV330235 Page 4 0f 6 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER CLRA, citing federal opinions. It also urges that, as with his UCL fraudulent claim, plaintiff fails to allege an actionable misrepresentation or omission in support of his claim. As already discussed, Apple is correct on the second point. As to the first point, Apple s own authority notes that it may be possible to state a CLRA claim based on a software upgrade in some circumstances. (See Moore v. Apple, Inc. (N.D. Cal. 2014) 73 F.Supp.3d 1191, 1201 [noting that in In re Sony PS3 Other OS Litig. (9th Cir.2014) 551 Fed. App x. 916, the Ninth Circuit concluded the plaintiffs had stated a viable claim under the CLRA because they allege[d] that Sony s representations at the time of sale mischaracterized the dual functionality [of the good] and were likely to deceive members of the public because the subsequent, free software update restricted a material feature of the good ].) The Court will consequently allow plaintiff leave to amend his CLRA claim, and will address Apple s argument in the context of any more specific allegations plaintiff may offer in an amended complaint. The demurrer to the second cause of action will be sustained with leave to amend. V. The Third Cause of Action for Trespass to Chattels Apple argues that plaintiff fails to state a claim for trespass to chattels because he does not allege physical damage to his iPad; impairment of its condition, quality, or value; or that he was deprived of its use for a substantial time. (See Fields v. Wise Media, LLC (N.D. Cal., Sept. 24, 2013, No. C 12-05160 WHA) 2013 WL 5340490, at *4 [ [t]o allege a plausible claim for trespass to a computer system or similar device, California law requires that plaintiffs plead with factual particularity that the purported trespass caused one of these three types of harm, citing Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1356.) However, plaintiff does allege that the quality and value of his iPad was impaired by its substantially reduced battery life. (See In re Apple Inc. Device Performance Litigation (N.D. Cal. 2018) 347 F.Supp.3d 434, 455 [plaintiffs easily alleged impairment of their iPhones condition, quality, or value where they alleged that the iOS updates impaired the functioning of their iPhones by substantially slowing their processing speed (by as much as 50%) ]; San Miguel v. HP Inc. (N.D. Cal. 2018) 317 F.Supp.3d 1075, 1088 [plaintiffs stated a claim for trespass to chattels where they alleged that firmware update disabled [their] printers and rendered their non-HP ink cartridges unusable ]; In re: Lenovo Adware Litigation (N.D. Cal., Oct. 27, 2016, No. 15-MD-02624-RMW) 2016 WL 6277245, at *8-9 [plaintiffs stated a claim for trespass to chattels where they alleged that software actually and substantially harmed the functioning of the[ir] computers by slowing down their internet speeds and reducing their battery life, impairing the computers condition, quality, and value ]; see also Intel Corp. v. Hamidi, supra, 30 Cal.4th at pp. 1354-1357 [discussing line of federal cases involving spam and robotic data collection holding that the defendant s use of the plaintiff s computer system was sufficient to support an action for trespass when it actually did, or threatened to, interfere with the intended functioning of the system, as by significantly reducing its available memory and processing power ].) The cases Apple cites in support of its motion are distinguishable due to the lack of allegations or evidence of harm to the plaintiff s devices in those cases. While Apple invites the Court to speculate that plaintiff s battery issues were resolved by the iOS 11.0.1 upgrade and that any reduction in battery life was a transient or short-lived issue, these circumstances are not alleged in the FAC. Printed: 4/5/20] 9 04/05/20] 9 Hearing: Demurrer - 18CV330235 Page 5 0f 6 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Apple also contends that plaintiff s claim for trespass to chattels is barred by the economic loss rule, which requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) It urges that plaintiff s claim is governed by Apple s Hardware Warranty, not by tort law. (See Jimenez v. Superior Court (T.M. Cobb Co.) (2002) 29 Ca|.4th 473, 483 [ [T]he economic loss rule allows a plaintiff to recover in strict products liability in tort when a product defect causes damage to other property, that is, property other than the product itself. The law of contractual warranty governs damage to the prod uct itself. ].) Here, however, plaintiff does not allege that his battery was physically defective. He alleges that Apple s post-sale installation of iOS 11 substantially reduced his battery life, harm above and beyond any broken contractual promise made at the time of sale. The economic loss rule does not bar this claim. (See In re Apple Inc. Device Performance Litigation, supra, 347 F.Supp.3d at p. 456 [plaintiffs pled trespass to chattels claim separate and apart from any breach of contract claim based on theory that iOS update impaired the functioning of their iPhonesl.) The demurrer to the third cause of action will accordingly be overruled. VI. The Fourth and Fifth Causes of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing and Breach of Implied Contract Finally, defendant urges that plaintiff s claims for breach of the implied covenant of good faith and fair dealing and breach of implied contract fail because they are contrary to an express provision of Apple s Hardware Warranty. However, even if the Court were to take judicial notice of the warranty, plaintiff correctly urges that by its own terms, it simply does not apply to consumable parts, such as batteries unless failure has occurred due to a defect in materials or workmanship. Again, plaintiff does not allege that a defect in his battery was responsible for the issues he experienced. Rather, he contends that Apple s iOS 11 software is to blame. (See In re Apple Inc. Device Performance Litigation, supra, 347 F.Supp.3d 434, 447 [claims arising from installation of iOS were governed by Apple s software license agreement rather than its hardware warranty; Even if the Court were inclined to take judicial notice of Apple s hardware warranty, Plaintiffs claims cannot be said to arise therefrom or relate thereto because the warranty explicitly exempts consumable parts, such as batteries from its coverage. ].) The warranty does not cover or disclaim liability for the issue giving rise to plaintiff s complaint. Apple s demurrer to the fourth and fifth causes of action consequently fails. VII. Conclusion and Order Apple s demurrer is OVERRULED as to the first, third, fourth, and fifth causes of action. The demurrer is SUSTAINED WITH 20 DAYS LEAVE T0 AMEND as to the second cause of action. The Court will prepare the order. - ooOoo - Printed: 4/5/20] 9 04/05/20] 9 Hearing: Demurrer - 18CV330235 Page 6 0f 6