Williams v. Apple, Inc.Williams v. Apple, Inc.
- Reporters:
- Before:
- Lucy H. Koh
ORDER GRANTING IN PART AND DENYING IN PART APPLE‘S MOTION TO DISMISS
Plaintiffs bring this putative class action against Defendant Apple, Inc. (“Apple“) and allege breach of contract, violations of California‘s False Advertising Law (“FAL“), and violations of California‘s Unfair Competition Law (“UCL“). ECF No. 1 (“Class Action Complaint” or “CAC“). Before the Court is Apple‘s motion to dismiss. ECF No. 15. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS in part and DENIES in part Apple‘s motion to dismiss.
I. BACKGROUND
A. Factual Background
Apple is a corporation incorporated under the laws of California and has its principal place of business in Cupertino, California. CAC ¶ 7. Apple provides cloud storage services to Apple device users through iCloud, Apple‘s cloud service. Id. ¶¶ 13-17. iCloud allows subscribers to “utilize certain Internet services, including storing your personal content (such as contacts, calendars, photos, notes, reminders, documents, app data, and iCloud email) and making it accessible on your compatible devices and computers, and certain location based services.” CAC, Ex. 1 at 1.
According to the CAC, “[o]wners of Apple devices are granted up to 5 GB of iCloud storage for free. If an Apple device user wishes to store more than 5 GB of data on the cloud through iCloud, then that user must subscribe to iCloud‘s paid service.” CAC ¶ 20. The CAC alleges that “[i]n order to subscribe to iCloud, a user must agree to the iCloud Terms of Service Agreement.” Id. ¶ 22. The relevant portion of the iCloud Terms of Service Agreement (“iCloud Agreement“) provides the following:
Apple is the provider of the Service, which permits you to utilize certain Internet services, including storing your personal content (such as contacts, calendars, photos, notes, reminders, documents, app data, and iCloud email) and making it accessible on your compatible devices and computers, and certain location based services, only under the terms and conditions set forth in this Agreement. iCloud is automatically enabled when you are running devices on iOS 9 or later and sign in with your Apple ID during device setup, unless you are upgrading the device and have previously chosen not to enable iCloud. You can disable iCloud in Settings. When iCloud is enabled, your content will be automatically sent to and stored by Apple, so you can later access that content or have content wirelessly pushed to your other iCloud-enabled devices or computers. ¶
CAC, Ex. 1 at 1 (emphasis added). This language appears in a September 16, 2015 version of the iCloud Agreement and a September 17, 2018 version of the iCloud Agreement. CAC ¶ 23; CAC, Exs. 1-2.
Named Plaintiffs Andrea M. Williams and James Stewart bring the suit on behalf
The CAC alleges that Williams and Stewart were not informed by Apple that his or her data was being stored on “non-Apple remote servers and facilities” despite alleged assurances to the contrary. Id. ¶¶ 11-12. Specifically, Plaintiffs allege that they “bargained for, agreed, and paid to have Apple—an entity they trusted—store their data.”1 Id. ¶ 32. According to the CAC, however, Apple‘s representations were false and “Apple lacked the facilities needed to readily provide the cloud storage space being sold to class members through iCloud.” Id. ¶ 27. “Unable to provide the cloud storage space . . . , Apple breached its iCloud agreement with its subscribers and had these users’ data stored not by Apple on Apple facilities, but instead turned the users’ digital files to other entities, like Amazon and Microsoft[,] for them to store on their facilities.” Id. ¶ 28.
The CAC alleges that “[h]ad Apple disclosed that, contrary to its contractual representation, Apple was not the provider of the cloud storage,” putative class members “would not have subscribed to Apple‘s iCloud service or would have not agreed to pay as much as [they] did for the service.” Id. ¶¶ 11-12. The CAC claims that other companies, such as Microsoft and Google, offer cheaper cloud storage services than Apple and that Apple‘s “price premium” harmed putative class members who would have otherwise utilized these cheaper cloud storage alternatives. Id. ¶¶ 34-37.
B. Procedural History
On August 12, 2019, Plaintiffs filed a class action complaint against Apple on behalf of a putative class of United States iCloud subscribers (excluding Apple, its employees, and its directors) who during the Class Period from August 20, 2015 to the present paid for an Apple iCloud subscription. CAC ¶¶ 11-12, 38. Plaintiffs attached three exhibits to their CAC: a September 16, 2015 version of the iCloud Agreement, a September 17, 2018 version of the iCloud Agreement, and a version of the iCloud Agreement for subscribers in China. CAC, Exs. 1-3.
The CAC alleges three causes of action against Apple: (1) breach of contract, (2) violations of California‘s False Advertising Law (“FAL“); and (3) violations of California‘s Unfair Competition Law (“UCL“). Id.
On October 4, 2019, Apple filed a motion to dismiss the CAC. ECF No. 15 (“Mot.“). On October 18, 2019, Plaintiffs filed an opposition. ECF No. 19 (“Opp.“). On October 25, 2019, Apple filed a reply. ECF No. 22 (“Reply“).
II. LEGAL STANDARD
A. Motion to Dismiss Under Rule 12(b)(1)
A motion to dismiss pursuant to
“[I]n a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.” Id. In resolving such an attack, unlike with a motion to dismiss under
“In a facial attack,” on the other hand, “the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction.” Safe Air for Everyone, 373 F.3d at 1039. The court “resolves a facial attack as it would a motion to dismiss under
B. Motion to Dismiss Under Rule 12(b)(6)
C. Motion to Dismiss Under Rule 9(b)
Claims sounding in fraud are subject to the heightened pleading requirements of
“When an entire complaint . . . is grounded in fraud and its allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district court may dismiss the complaint . . . .” Vess, 317 F.3d at 1107. A motion to dismiss a complaint “under Rule 9(b) for failure to plead with particularity is the functional equivalent of a motion to dismiss under Rule 12(b)(6) for failure to state a claim.” Id.
D. Leave to Amend
If a court determines that a complaint should be dismissed, it must then decide whether to grant leave to
Accordingly, leave to amend generally shall be denied only if allowing amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publ‘g, 512 F.3d 522, 532 (9th Cir. 2008). At the same time, a court is justified in denying leave to amend when a plaintiff “repeated[ly] fail[s] to cure deficiencies by amendments previously allowed.” See Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892 (9th Cir. 2010). Indeed, a “district court‘s discretion to deny leave to amend is particularly broad where plaintiff has previously amended the complaint.” Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1058 (9th Cir. 2011) (quotation marks omitted).
III. DISCUSSION
Plaintiff‘s Class Action Complaint (“CAC“) alleges three causes of action against Apple: (1) breach of contract, (2) violations of California‘s False Advertising Law (“FAL“); and (3) violations of California‘s Unfair Competition Law (“UCL“). Id. ¶¶ 45-66. Apple moves to dismiss all three of Plaintiffs’ causes of action. Apple contends that the CAC must be dismissed because (1) Plaintiffs lack Article III standing; (2) Plaintiffs fail to adequately plead a breach of contract claim under California law; and (3) Plaintiffs fail to adequately plead FAL and UCL claims. Because the Court must first address jurisdictional concerns, the Court begins its analysis with Apple‘s argument that Plaintiffs lack Article III standing. Friery v. Los Angeles Unified Sch. Dist., 448 F.3d 1146, 1148 (9th Cir. 2006) (“As standing implicates Article III limitations on our power to decide a case, we must address it before proceeding to the merits.“). The Court then turns to Plaintiffs’ breach of contract claim before concluding with the FAL and UCL claims.
A. Article III Standing
Apple first argues that Plaintiffs lack Article III standing because they have not alleged anything beyond a merely speculative injury. See Mot. at 8-11. “[A] suit brought by a plaintiff without Article III standing is not a ‘case or controversy,’ and an Article III federal court therefore lacks subject matter jurisdiction over the suit.” Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004). “[T]he irreducible constitutional minimum of [Article III] standing contains three elements:” (1) an injury in fact (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). “The party invoking federal jurisdiction bears the burden of establishing” Article III standing. Id. at 561. “At the pleading stage, general factual allegations of injury resulting from the defendant‘s conduct may suffice, for on a motion to dismiss we presume that general allegations embrace those specific facts that are
Apple‘s argument is best construed as a facial attack whereby “the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction.” Safe Air for Everyone, 373 F.3d at 1039. A court “resolves a facial attack as it would a motion to dismiss under
In terms of substance, Apple argues that Plaintiffs have not adequately alleged an injury in fact to recover either monetary damages or to pursue injunctive relief. See Mot. at 8-11. The Court begins its analysis with respect to Article III standing for monetary damages before addressing Article III standing for injunctive relief.
1. Article III for Monetary Damages
“To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.‘” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016), as revised (May 24, 2016) (quoting Lujan, 504 U.S. at 560). “For an injury to be ‘particularized,’ it must affect the plaintiff in a personal and individual way.” Id. (quotation marks omitted). Additionally, “[a]n injury in fact must also be ‘concrete’ . . . that is, it must actually exist.” Id.
Apple‘s argument that Plaintiffs have not established an injury in fact primarily relies on In re LinkedIn User Privacy Litig., 932 F. Supp. 2d 1089 (N.D. Cal. 2013), where LinkedIn users brought a putative class action against LinkedIn based on allegations that LinkedIn failed to protect users’ passwords and information despite promises and assurances to do so. Id. at 1091. The plaintiffs argued that they had standing to sue because they did not receive the full benefit of their bargain for their paid premium LinkedIn memberships. Id. at 1093. The district court disagreed and held that the plaintiffs had not adequately alleged facts establishing Article III standing.
First, the district court concluded that plaintiffs lacked standing because the Plaintiffs paid consideration “not for a particular level of security, but actually for the advanced networking tools and capabilities to facilitate enhanced usage of LinkedIn‘s services.” Id. at 1093. Second, the district court found that the plaintiffs did not have standing because they had not read and relied on the alleged misrepresentation. Id. Third, the district court found that the plaintiffs had not adequately alleged standing because the plaintiffs had not pleaded that their economic loss was caused by LinkedIn‘s failure to provide a certain level of security services. Id. at 1093-94. Finally, the district court determined that though the LinkedIn plaintiffs “t[ook] issue with the way in which LinkedIn performed the security services,” the plaintiffs had not alleged that any of their information was actually compromised and therefore, they had not alleged an injury in fact. Id. at 1094.
Apple relies on these four factors to argue that Plaintiffs here also lack Article III standing. Mot. at 7-11. The Court disagrees. First, as to whether Plaintiffs paid consideration for Apple to store Plaintiffs’ data on Apple‘s own servers, the
Specifically, the CAC alleges that Plaintiffs entered into the iCloud Agreement, paid for iCloud storage, and that the iCloud Agreement contained a contractual representation that Plaintiffs’ “content w[ould] be automatically sent to and stored by Apple.” CAC, Ex. 1 at 1. The CAC also pleads that Apple breached the iCloud Agreement by “turn[ing] [Plaintiffs‘] digital files to other entities, like Amazon and Microsoft[,] for them to store on their facilities.” CAC ¶ 28. This Court has previously recognized that such allegations are sufficient to confer standing. In re Yahoo! Inc. Customer Data Sec. Breach Litig., 2017 WL 3727318, at *17 (N.D. Cal. Aug. 30, 2017) (“The Court finds that Neff‘s allegations are sufficient to allege ‘benefit of the bargain’ losses as a result of the Data Breaches, which courts in this district and elsewhere have found are sufficient to allege an injury in fact for purposes of Article III standing.” (citing In re LinkedIn II, 2014 WL 1323713, at *6)). Therefore, the Court holds that the CAC sufficiently pleads that Plaintiffs paid consideration for Apple to store Plaintiff‘s data, and as such, Plaintiffs have Article III standing.
Second, Apple argues that Plaintiffs lack Article III standing because the CAC does not plead that Plaintiffs read or relied on the relevant contractual language. For FAL and UCL claims, “courts have held that actual reliance is required to demonstrate causation for purposes of Article III standing when the plaintiffs assert that their injury is the result of deceptive misrepresentations or omissions.” Phillips v. Apple Inc., 2016 WL 1579693, at *6 (N.D. Cal. Apr. 19, 2016) (collecting cases). The Court addresses whether the CAC adequately pleads reliance for Plaintiffs’ FAL and UCL claims later in this Order. See infra Part III.C.2.
Apple does not clearly allege that reliance is required for Article III standing for Plaintiffs’ breach of contract claim. Unlike FAL and UCL claims, “[r]eliance is not an element of a breach of contract claim,” Rodman v. Safeway, 125 F. Supp. 3d 922, 933 n.9 (N.D. Cal. 2015). Nonetheless, Apple‘s reliance argument is subsumed in the next paragraph‘s discussion of causation.
Third, Apple contends that Plaintiffs’ “benefit of the bargain” economic loss was not caused by Apple‘s decision not to store Plaintiffs’ data on Apple‘s own servers. This argument largely overlaps with Apple‘s other arguments regarding consideration, reliance, and damages, as these arguments involve whether Plaintiffs suffered any harm and whether that harm is fairly traceable to Apple‘s alleged breach of the iCloud Agreement. Here, as discussed previously, the CAC adequately alleges that Apple promised that Plaintiffs’ “content w[ould] be automatically sent to and stored by Apple,” CAC, Ex. 1 at 1, but that Apple breached this provision by “turn[ing] the users’ digital files to other entities, like Amazon and Microsoft[,] for [Amazon and Microsoft] to store on their facilities.” CAC ¶ 28. At this stage, this is enough to plead Article III standing.
Here, Plaintiffs sufficiently allege that they overpaid for Apple iCloud. Plaintiffs allege that Apple misrepresented who owned the physical servers used to store Plaintiffs’ information and that “[h]ad Apple disclosed that, contrary to its contractual representation, Apple was not the provider of the cloud storage,” putative class members “would not have subscribed to Apple‘s iCloud service or would have not agreed to pay as much as [they] did for the service.” CAC ¶¶ 11-12. This is especially true, as the CAC asserts that other companies, such as Microsoft and Google, offered cheaper cloud storage services than Apple and that Apple‘s “price premium” harmed putative class members who would have otherwise utilized these cheaper cloud storage alternatives. Id. ¶¶ 34-37. In this way, the instant case closely mirrors Chavez v. Blue Sky Natural Beverage Co., 340 Fed. App‘x 359 (9th Cir. 2009).
In Chavez, the named plaintiff “brought [a] purported class action on behalf of himself and others similarly situated, contending that, in contrast with appellees’ representations, Blue Sky products are not manufactured or bottled in New Mexico.” Id. at 360. As a result, the named plaintiff contended that the defendant was liable pursuant to the FAL, the UCL, and other California consumer fraud and common law causes of action. Id. The named plaintiff alleged that he “purchased Blue Sky soda instead of other brands based on representations that Blue Sky was a New Mexico company,” but later learned that “Blue Sky is not, in fact, bottled or produced in New Mexico, and, therefore, appellees misrepresented the origin and nature of their products.” Id. at 361. “[M]ost importantly,” the named plaintiff “lost money as a result of appellees’ deception in that he did not receive what he paid for” because he would not have paid the “full value . . . had he known the truth about the geographic origin of the products.” Id. (quotation marks and internal alterations omitted). The Ninth Circuit concluded that these allegations were enough to plead an injury in fact and reversed the district court‘s dismissal of the lawsuit. Id.
Chavez‘s logic applies here with equal force. Just like in Chavez, where the defendant allegedly misrepresented the origin and nature of its products, id. at 361, in the instant case, Plaintiffs allege that Apple misrepresented the nature of Apple
Accordingly, Plaintiffs have adequately alleged an injury in fact as to Plaintiffs’ breach of contract claim. As a result, the Court DENIES Apple‘s motion to dismiss Plaintiffs’ breach of contract claim on the basis that Plaintiffs lack Article III standing for monetary damages. In Part III.C.2 of this Order, the Court addresses Apple‘s motion to dismiss Plaintiffs’ FAL and UCL claims on the basis that Plaintiffs lack Article III standing for monetary damages.
2. Article III Standing for Injunctive Relief
The Court now addresses whether Plaintiffs possess Article III standing for injunctive relief. To demonstrate constitutional standing for “injunctive relief, which is a prospective remedy, the threat of injury must be ‘actual and imminent, not conjectural or hypothetical.‘” Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 966 (9th Cir. 2018) (quoting Summer v. Earth Island Inst., 555 U.S. 488, 493 (2009)). “In other words, the ‘threatened injury must be certainly impending to constitute injury in fact’ and ‘allegations of possible future injury are not sufficient.” Id. (citing Clapper v. Amnesty Int‘l USA, 568 U.S. 398, 409 (2013)). “Past wrongs, though insufficient by themselves to grant standing, are ‘evidence bearing on whether there is a real and immediate threat of repeated injury.‘” Id. (quoting City of L.A. v. Lyons, 461 U.S. 95, 102 (1983)). “Where standing is premised entirely on the threat of repeated injury, a plaintiff must show ‘a sufficient likelihood that [s]he will again be wronged in a similar way.‘” Id. (quoting Lyons, 461 U.S. at 111).
The Court agrees with Apple that Plaintiffs have failed to allege the “real and immediate threat of repeated injury” necessary to demonstrate Article III standing to seek injunctive relief. See Davidson, 889 F.3d at 966 (quoting Lyons, 461 U.S. at 102). The Ninth Circuit has clearly stated that mere “allegations of possible future injury are not sufficient.” Id. at 967 (quoting Clapper 568 U.S. at 409). Here, Plaintiffs do not allege that they are currently paying for iCloud storage or that they actually intend or plan to purchase iCloud storage again in the future.
Plaintiffs respond that one paragraph in the CAC pleads an allegation “unambiguously stated in the present tense,” and Plaintiffs argue that this allegation demonstrates they have standing to pursue injunctive relief. Opp. at 5, 12 (citing CAC ¶ 60). Specifically, the CAC alleges that “Apple continues to make the same false and misleading statements with respect to its iCloud cloud storage service, such that, unless [Apple] is enjoined from doing so, Plaintiffs and class members will continue to be harmed because they will not know
This allegation is insufficient to meet Plaintiffs’ burden to establish standing to pursue injunctive relief. See Sciacca v. Apple, Inc., 362 F. Supp. 3d 787, 795 (N.D. Cal. 2019) (“Once the defendant has moved to dismiss for lack of subject matter jurisdiction under
As a result, the Court GRANTS Apple‘s motion to dismiss Plaintiffs’ claims for injunctive relief for lack of Article III standing. Because amendment would not be futile, cause undue delay, or unduly prejudice Apple, and because Plaintiffs have not acted in bad faith, the Court GRANTS Plaintiffs leave to amend. Leadsinger, 512 F.3d at 532.
B. Breach of Contract Claim
Apple‘s second set of arguments pertain to Plaintiffs’ breach of contract claim. Mot. at 11-16. Under California law, the elements for a claim for breach of contract are “(1) the existence of the contract, (2) plaintiff‘s performance or excuse for nonperformance, (3) defendant‘s breach, and (4) the resulting damages to the plaintiff.” eOnline Glob., Inc. v. Google LLC, 387 F. Supp. 3d 980, 985 (N.D. Cal. 2019) (quoting Oasis W. Realty, LLC v. Goldman, 51 Cal. 4th 811, 821, (2011) (citation omitted)). Apple contends that Plaintiffs have failed to sufficiently allege the first, third, and fourth elements for a breach of contract claim. As discussed below, the Court disagrees.
1. The CAC Adequately Alleges the Existence of a Contract
Apple argues that Plaintiffs have failed “to allege sufficient information to identify the actual contract at issue, including the approximate date of the contract.” Mot. at 12. To be sure, the CAC does not allege when Named Plaintiffs Williams and Stewart entered into the iCloud Agreement with Apple. CAC ¶¶ 11-12. Rather, the CAC only pleads that Williams and Stewart agreed to the iCloud Agreement sometime during the nearly five-year Class Period from August 20, 2015 to the present. Id. Additionally, perhaps because the CAC does not allege when Williams and Stewart entered into the iCloud Agreement with Apple, the CAC does not plead which specific version of the iCloud Agreement Williams and Stewart signed. Id. Instead, the CAC incorporates language from a September 16, 2015 version of the iCloud Agreement and a September 17, 2018 version of the iCloud Agreement. Id. ¶ 23; Id., Exs. 1-2. The CAC, however, does not allege that these particular versions of the iCloud Agreement were the ones that Williams or Stewart signed. Id. ¶¶ 11-12, 23.
Nonetheless, though the CAC fails to identify the specific version of the iCloud Agreement to which Williams and Stewart agreed and when Williams and Stewart signed the iCloud Agreement, this is not required to plead the existence of a
Insofar as Apple argues that Plaintiffs’ failure to plead when Williams and Stewart entered into the iCloud Agreement prejudices Apple because it prevents Apple from raises a statute of limitations defense, Mot. at 12 n.3, this argument fails on the particular facts of the instant case. Specifically, Plaintiffs filed the CAC on August 12, 2019 and allege a Class Period beginning August 20, 2015. Under California law, the statute of limitations for breach of contract is four years.
The Court therefore DENIES Apple‘s motion to dismiss Plaintiffs’ breach of contract claim on the basis that Plaintiffs did not allege the existence of a contract.
2. The CAC Adequately Alleges Apple‘s Breach of the iCloud Agreement
Apple next argues that Plaintiffs’ breach of contract claim should be dismissed because the CAC does not sufficiently plead that Apple breached the iCloud Agreement. Apple contends that the representation that “Apple is the provider of the [iCloud] Service” and that Plaintiffs’ “content will be automatically sent to and stored by Apple” can only be interpreted to mean that “Apple made iCloud available to Plaintiffs,” and Apple contends that it fulfilled these duties. Mot. at 14. As a result, according to Apple, there was no breach of the iCloud Agreement. Plaintiffs respond that the plain reading of this contractual provision compels the conclusion that Apple promised to store Plaintiffs’ files and data on Apple‘s own servers. Opp. at 15.
Under California law, a contract “must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.”
However, what the parties intended by an ambiguous contract is a factual determination, United States v. Plummer, 941 F.2d 799, 803 (9th Cir. 1991), and thus “[w]here the language ‘leaves doubt as to the parties’ intent,’ the motion to dismiss must be denied.” Monaco v. Bear Stearns Residential Mortg. Corp., 554 F. Supp. 2d 1034, 1040 (C.D. Cal. 2008) (quoting Consul Ltd. v. Solide Enteres., Inc., 802 F.2d 1143, 1149 (9th Cir. 1986)). “A contract provision will be considered ambiguous when it is capable of two or more reasonable interpretations.” Id. (citation omitted); see also Tanadgusix Corp. v. Huber, 404 F.3d 1201, 1205 (9th Cir. 2005) (“A contract is ambiguous if reasonable people could find its terms susceptible to more than one interpretation.“); In re iPhone Application Litig., 844 F. Supp. 2d 1040, 1076 (N.D. Cal. 2012) (“However, ‘[i]f a contract is capable of two different reasonable interpretations, the contract is ambiguous.‘” (quoting Oceanside 84, Ltd. v. Fid. Fed. Bank, 56 Cal. App. 4th 1441, 1448 (1997))).
Here, the Court holds that Apple and Plaintiffs have proffered reasonable interpretations of the disputed contractual provision. Again, the relevant contractual language provides as follows:
Apple is the provider of the Service, which permits you to utilize certain Internet services, including storing your personal content (such as contacts, calendars, photos, notes, reminders, documents, app data, and iCloud email) and making it accessible on your compatible devices and computers, and certain location based services, only under the terms and conditions set forth in this Agreement. iCloud is automatically enabled when you are running devices on iOS 9 or later and sign in with your Apple ID during device setup, unless you are upgrading the device and have previously chosen not to enable iCloud. You can disable iCloud in Settings. When iCloud is enabled, your content will be automatically sent to and stored by Apple, so you can later access that content or have content wirelessly pushed to your other iCloud-enabled devices or computers. ¶
CAC, Ex. 1 at 1 (emphasis added); CAC ¶ 23.
Apple reads this language to mean only that “Apple has taken charge of subscribers’ data so that [subscribers’ data] can later be accessed or pushed to subscribers’ devices.” Mot. at 14. Given this interpretation, Apple contends that it did not breach any duty to store Plaintiffs’ data on Apple‘s own servers. The Court agrees that the contractual language is certainly susceptible to Apple‘s interpretation.
At the same time, Plaintiffs argue that the “plain dictionary meaning” of “stored” is “to provide storage room for: HOLD,” and that therefore, Apple promised that it would be the entity providing storage room for users’ data on its own servers. Opp. at 15. The Court agrees that a reasonable person could interpret this language to mean that Apple itself would be the entity storing users’ data on Apple‘s servers. Therefore, under Plaintiffs’ interpretation, Apple breached the iCloud Agreement by “turn[ing] the users’ digital files to other entities, like Amazon and Microsoft[,] for [Amazon and Microsoft] to store on their facilities.” CAC ¶ 28.
Given the fact that Apple and Plaintiffs both provide reasonable interpretations, the disputed contractual language is ambiguous, and “this ambiguity raises a question of fact as to the parties’ intent.” Microsoft Corp. v. Hon Hai Precision Indus. Co., 2019 WL 3859035, at *6 (N.D. Cal. Aug. 16, 2019) (citing Tanadgusix Corp., 404 F.3d at 1205). “The parties may well argue at a later stage of litigation that the intent of the parties or properly admitted extrinsic evidence supports their respective interpretations of the contract,” but “[s]uch factually based arguments are appropriate . . . at a later stage of litigation, not on the pleadings.” Id. (quotation marks omitted). At this stage of the proceedings, “[w]here the language leaves doubt as to the parties’ intent, the motion to dismiss
Accordingly, because Plaintiffs sufficiently plead a breach of the iCloud Agreement, the Court DENIES Apple‘s motion to dismiss on this ground.
3. The CAC Adequately Alleges Resulting Damages
In Apple‘s final argument regarding Plaintiffs’ breach of contract claim, Apple contends that the CAC does not adequately allege resulting damages, the fourth element of a breach of contract claim. Apple‘s motion to dismiss focuses primarily on the argument that Plaintiffs’ allegations are nothing more than “a request for restitution,” which “simply is not a measure of contract damages.” Mot. at 15-16.
The CAC, however, does not make a claim for restitution, but rather seeks compensatory damages for Apple‘s alleged breach of the iCloud Agreement. In particular, the CAC alleges that “[h]ad Apple disclosed that, contrary to its contractual representation, Apple was not the provider of the cloud storage,” putative class members “would not have subscribed to Apple‘s iCloud service or would have not agreed to pay as much as [they] did for the service.” CAC ¶¶ 11-12. The CAC pleads that other companies, such as Microsoft and Google, offer cheaper cloud storage services than Apple and that Apple‘s “price premium” harmed putative class members who would have otherwise utilized these cheaper cloud storage alternatives. Id. ¶¶ 34-37. At the motion to dismiss stage and pursuant to
Accordingly, the Court DENIES Apple‘s motion to dismiss Plaintiffs’ breach of contract claim on the basis that Plaintiffs did not sufficiently allege resulting damages.
C. FAL and UCL Claims
Apple‘s final tranche of arguments concern Plaintiffs’ FAL and UCL claims. Plaintiffs allege that Apple‘s misrepresentations make Apple liable under the FAL and under the unlawful, unfair, and fraudulent prongs of the UCL. As an initial matter, when “‘plaintiffs’ unfair prong claim[] overlap[s] entirely with their claims of fraud,’ the plaintiffs’ unfair prong claim cannot survive‘” if the fraudulent prong claim fails. Ahern, 411 F. Supp. 3d at 561 (quoting In re Actimmune Mktg. Litig., 2009 WL 3740648, at *14 (N.D. Cal. Nov. 6, 2009), aff‘d, 464 Fed. App‘x 651 (9th Cir. 2011)). Here, Plaintiffs’ UCL unfair prong claim is premised on Apple‘s allegedly fraudulent misrepresentations. See CAC ¶ 65 (alleging that “Apple‘s misrepresentation as to which entity is providing the cloud storage of Plaintiffs’ and class members’ data” “independently amounts to an unfair business practice within the meaning of the UCL“). As such, Plaintiffs’ unfair prong claim overlaps entirely with Plaintiffs’ fraud claim, and Plaintiffs’ UCL unfair prong claim fails if Plaintiffs’ UCL fraudulent prong claim fails. Ahern, 411 F. Supp. 3d at 561.
Apple contends that Plaintiffs’ FAL and UCL claims must be dismissed because (1) the CAC fails to satisfy
1. The CAC Fails to Satisfy Rule 9(b)‘s Heightened Pleading Standards for Plaintiffs’ FAL Claim
As an initial matter,
In the instant case, the CAC does not allege when Williams and Stewart entered into the iCloud Agreement with Apple. Id. ¶¶ 11-12. Rather, the CAC only pleads that Williams and Stewart agreed to the iCloud Agreement sometime during the nearly five-year Class Period from August 20, 2015 to the present. Id. For the reasons stated below, the CAC‘s failure to plead when Williams and Stewart entered into the iCloud Agreement fails to satisfy
“[T]he ‘when’ of
Here, the issue of timeliness does not apply to Plaintiffs’ UCL claims. Plaintiffs filed the CAC on August 12, 2019 for a Class Period beginning on August 20, 2015, and the statute of limitations for UCL claims is four years. See
Thus, because Plaintiffs’ FAL claim may be time-barred as pleaded, Plaintiffs fail to satisfy
As a result, the Court GRANTS Apple‘s motion to dismiss Plaintiffs’ FAL claim because Plaintiffs’ FAL claim fails to satisfy
2. The CAC Does Not Adequately Plead Reliance for Plaintiffs’ FAL and UCL Claims
The Court finally addresses Apple‘s argument that Plaintiffs do not sufficiently plead reliance as necessary to establish FAL and UCL claims. “Plaintiffs alleging claims under the FAL and UCL are required to plead and prove actual reliance on the misrepresentations or omissions at issue.” Great Pac. Sec. v. Barclays Capital, Inc., 743 Fed. App‘x 780, 783 (9th Cir. 2018) (citing Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 326-27 (2011)). This is true of all of Plaintiffs’ UCL claims, regardless of whether they are brought under the unfair, unlawful, or fraudulent prong. Indeed, “California courts have held that when the ‘unfair competition’ underlying a plaintiff‘s UCL claim consists of a defendant‘s misrepresentation or omission, a plaintiff must have actually relied on the misrepresentation or omission, and suffered economic injury as a result of that reliance, to have standing to sue.” Backhaut v. Apple, 74 F. Supp. 3d 1033, 1047 (N.D. Cal. 2014) (citing In re Tobacco II, 46 Cal. 4th 298, 326 (2009)). “California courts have subsequently extended the actual reliance requirement to claims brought under the UCL‘s unlawful prong to the extent the predicate unlawful conduct is based on misrepresentations,” and “the California Supreme Court suggested that the actual reliance requirement applies whenever the underlying misconduct in a UCL action is fraudulent conduct.” Id. at 1047-48 (citations omitted).
To establish actual reliance, the plaintiff must allege that “the defendant‘s misrepresentation or nondisclosure was an immediate cause of the plaintiff‘s injury-producing conduct.” Tobacco II, 46 Cal. 4th at 326 (internal quotation marks omitted). “A plaintiff may establish that the defendant‘s misrepresentation is an immediate
Indeed, “[t]o make the reliance showing, this Court has consistently held that plaintiffs in misrepresentation cases must allege that they actually read the challenged representations.” Perkins v. LinkedIn Corp., 53 F. Supp. 3d 1190, 1220 (N.D. Cal. 2014) (collecting cases); see also Woods v. Google, Inc., 2017 WL 4310765, at *3 (N.D. Cal. Sept. 28, 2017) (“To prevail on his UCL and FAL claims, [a plaintiff] must establish that he saw and relied on [a defendant‘s misrepresentations . . . .” (citing Perkins, 53 F. Supp. 3d at 1219)). Additionally, to adequately plead reliance for alleged misrepresentations, Plaintiffs must satisfy
Plaintiffs acknowledge that the CAC does not allege that Plaintiffs viewed Apple‘s alleged misrepresentations regarding iCloud storage, but that “[r]ead in context,” the CAC nonetheless pleads reliance. Opp. at 4, 22-23. Plaintiffs proffer two arguments as to why the CAC sufficiently alleges reliance even though the CAC does not plead that Plaintiffs saw or read the relevant representations.
First, Plaintiffs make much of the fact that the CAC alleges that Plaintiffs bargained for Apple to be the provider of iCloud storage and to be the entity that stored users’ data. CAC ¶ 32 (alleging that Plaintiffs “bargained for, agreed, and paid to have Apple . . . store their data“). This argument fails. Elsewhere, the CAC contradicts Plaintiffs’ allegation that they “bargained for” this specific provision. Specifically, the iCloud Agreements that Plaintiffs attached to the CAC are simple form contracts that could not be modified and merely allowed Plaintiffs to click an “AGREE” button. CAC, Ex. 1 at 1; CAC, Ex. 2 at 1; Opp. at 23. Nowhere do the CAC or the iCloud Agreements allege or establish that the iCloud Agreements could be modified. As a result, the Court holds that Plaintiffs’ allegation that they “bargained for” the provision in the iCloud agreement containing the alleged misrepresentations does not adequately plead reliance with the particularity required by
Second, Plaintiffs assert that they adequately plead reliance because they “affirmatively clicked the ‘AGREE’ [button] signifying their review and assent to the contract terms,” including Apple‘s alleged
As a result, the CAC does not properly allege, in compliance with
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS in part and DENIES in part Apple‘s motion to dismiss. Specifically, the Court GRANTS with leave to amend Apple‘s motion to dismiss Plaintiffs’ claims for injunctive relief and GRANTS with leave to amend Apple‘s motion to dismiss Plaintiffs’ FAL and UCL claims. The Court DENIES Apple‘s motion to dismiss Plaintiffs’ breach of contract claim.
Plaintiffs shall file any amended complaint within 30 days of this Order. Failure to do so or failure to cure deficiencies identified herein or in Apple‘s motion to dismiss will result in dismissal of the deficient claims with prejudice. Plaintiffs may not add new causes of action or new parties without a stipulation or leave of the Court.
IT IS SO ORDERED.
LUCY H. KOH
United States District Judge