Apple Off the Hook in ios.4 Consumer Class Action

 California’s Consumer Legal Remedies Act (“CLRA”) is often depended upon by plaintiffs’ counsel in consumer actions. But recently, Judge Anthony J. Battaglia of the Southern District of California, granted Apple’s motion to dismiss a claim brought pursuant to California’s Consumer Legal Remedies Act (“CLRA”) and several other statutes, relating to Apple’s iOS 4.0 software upgrade for the iphone 3G and 3GS.

In their class action complaint, the plaintiffs alleged that Apple “violated the CLRA by fraudulently inducing Plaintiffs into downloading and installing iOS4 on their Third Generation iPhone devices knowing that the free upgrade would impair the functionality of their iPhone applications reliant upon AT&T’s data network.” The Plaintiffs alleged that the “upgrade” turned their phones into “virtually useless iBricks.”

Judge Battaglia dismissed the Plaintiffs’ CLRA claim on three grounds. First, he held that, because the software upgrade was free, it was not a “sale or lease” within the meaning of the CLRA. The court also noted that, “Although the CLRA does not require an enforceable contract between the consumer and the defendant . . . the transaction must result or be intended to result in the ‘sale or lease’ of goods or services to a consumer.”

The court also held that the purchase of the iphone was a separate transaction from the free software “upgrade” because the upgrade occurred about a year later.

The court also noted that the CLRA limits the definition of covered “goods” to “tangible chattels,” thus excluding software from its purview.

Finally, Judge Battaglia also found that provision of software is not a “service” for purposes of the CLRA “because software does not fit into the narrow definition of ‘service’ provided in Civil Code § 1761(b), defining service as “work, labor, and services . . ., including services furnished in connection with the sale or repair of goods.”

The plaintiffs  also brought claims for violation of California’s unfair competition law (Bus & Prof. Code §17200 et seq), tortious interference with contract, breach of implied contract, and requested and injunction. The court dismissed each of these claims, as well as the CLRA claim, without leave to amend.

This case is interesting in the way it treats software under the CLRA. We will be watching out for subsequent cases on this subject.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.