Setback For Apple In Iphone MDL

In a case about exposing user data, Apple suffered a setback due to its concealment of information in litigation. Last week, in the multi-district litigation, In Re iPhone Application Litigation, Judge Lucy Koh of the Northern District of California denied Apple's motion for summary judgment in a putative class action by iPhone and iPad owners who allege that Apple enabled violations of their privacy rights through "apps." The court also ordered plaintiffs to withdraw their motion to certify two different classes and re-file the motion later. Both rulings were the results of Apple's failure to fully comply with its discovery obligations. The eventual outcome of these motions could have a far-reaching impact on privacy class actions nationally. Judge Koh, the judge who broke new ground in the Facebook "sponsored stories" privacy litigation (Fraley v. Facebook) and in prior rulings in the In Re iPhone case, is in a position to reshape the landscape of privacy class actions.

In Re iPhone was brought by users who contend that Apple allows advertisers and others to obtain their personal information. The users allege that Apple's App Store sells applications for iDevices (iPhones and iPads) that, without consent of the users, allows third parties to track and use personally identifying information - such as plaintiffs' WiFi network, address book, phone numbers, geolocation and photographs - and that the App Store click-through agreement did not put them on notice of this. Plaintiffs seek certification of a second class based on the contention that even when users turn off "geolocation services" on an iPhone, the device continues to transmit their location to Apple's servers.

The key issues in the case concern plaintiffs' standing to bring claims under California's Unfair Competition Law ("UCL") and other statutes—which turns in part on what damages or harm they suffered—whether Apple's terms of service promised to safeguard users' private information, what specific data was leaked, and with whom it was shared.

In September 2011, Judge Koh granted Apple's motion to dismiss based in part on lack of UCL standing because plaintiffs failed to allege any "lost money or property" as a result of using the no-cost App Store services. Having paid for some of the downloaded apps did not suffice because plaintiffs did not sue the app developers.

Less than a year later, Judge Koh denied in large part a motion to dismiss the amended complaint. Based on...