Parents Beat Motion to Dismiss in Lawsuit Against Apple for App Purchases Made by Their Children

Plaintiffs filed a class action against Apple Inc. on behalf of parents who downloaded or permitted their minor children to download a supposedly free app from Apple and then incurred charges for game-related purchases made by their children without their parents’ knowledge or permission.  In re Apple In-App Purchase Litig., 5:11-cv-1758 (N.D. Cal.).  According to the complaint, the children were able to purchase game currencies, which are virtual objects that are used when playing certain games, without their parents’ authorization.  These apps were provided by Apple and advertised as free.  Until early 2011, Apple required users to authenticate their accounts by entering a password before purchasing or downloading an app or buying game currency.  However, once the password was entered, Apple allowed buyers to buy game currencies for up to 15 minutes without re-entering the password.  During this 15 minute window, the children were able to charge their parents’ accounts in amounts ranging from $99.99 to $338.72.

Plaintiffs alleged violations of the California Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750 et seq., California’s Unfair Competition Law (“UCL”), Cal. Bus. Prof. Code. § 17200 et seq., breach of implied covenant of good faith and fair dealing, restitution, unjust enrichment, money had and received, and plaintiffs also sought a declaratory judgment.  On March 31, 2012, the district court denied the motion to dismiss against all the claims, except for the claim for breach of implied covenant of good faith, but did provide plaintiffs with leave to amend their complaint.  Plaintiffs made the interesting argument that each app purchase was a separate and voidable contract between Apple and the plaintiffs’ children, which could be disaffirmed by a parent.  Apple countered that the contractual relationship was based on the original Terms & Conditions signed by the plaintiffs.  Therefore, the individual purchases were not voidable.  The district court rejected Apple’s argument and noted that on a motion to dismiss the court must construe the complaint in the light most favorable to the plaintiffs and resolve any ambiguity in their favor.

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