In multidistrict litigation against Apple, the District Court approved a class action settlement resolving allegations that Apple secretly throttled the system performance of certain model iPhones to mask battery defects.  Various objectors appealed.

Initially, the Court of Appeals agreed with the District Court in rejecting several of the primary objections. “Most of their arguments boil down to the same core complaint: the settlement extinguishes the claims of ‘all former or current U.S. owners’ of certain devices who downloaded iOS software before Apple disclosed potential defects, yet the settlement limits recovery to the subset of owners who can attest that they experienced the alleged defects.” The problem is their assumption that all Class members suffered the same impairment of iPhone performance and uniform damages. “Throughout this litigation, Apple has disputed that all devices were used in a way that would have activated the performance management feature that slowed system performance. Apple insists that even when the feature was activated, users may not have noticed any differences. Although plaintiffs alleged that the iOS updates affected all Plaintiffs alike, the parties agreed to the attestation requirement as a compromise. That compromise was reasonable. It reflected the bargaining and compromise inherent in settling disputes. At the time of the settlement, the only claims that remained – concerning Apple’s alleged failure to disclose the nature of the iOS updates – all required a showing of damages for a plaintiff to recover. Neither the federal Computer Fraud and Abuse Act nor California’s Data Access and Fraud Act provides for statutory damages, and trespass to chattels is not actionable without damage to or interference with the phone’s operation. If a class member did not perceive and could not otherwise detect the throttling, then the class member’s inability to make the attestation relinquished a valueless claim. Apple, on the other hand, risked increased liability by proceeding to trial because plaintiffs might have proven that the system slowdowns affected every device. The settlement allowed Apple to limit its exposure while ensuring that compensation was available to every class member who suffered a compensable injury.

“That not every class member had an actionable claim is not tantamount to two adverse groups requiring separate representation, as in Amchem…. All class members who were injured by Apple’s failure to disclose the nature of the iOS updates experienced injury during the same time frame and in the same manner.

“Nor does the possibility that some class members suffered no damages mean that they lack standing and must be dismissed. While class members must maintain their personal interest in the dispute at all stages of litigation to have a judgment bind them, at the pleading stage, general factual allegations of injury resulting from the defendant’s conduct may suffice. At the time the parties settled, prior to class certification or summary judgment, plaintiffs alleged that all putative class members experienced throttling from Apple’s allegedly unlawful intrusion into their phones. That sufficed to establish standing. Had the parties brought the case to trial, as in TransUnion, plaintiffs’ allegation of classwide injury would have been either proven or disproven. The risk that this uncertain outcome posed to the parties was one of the factors that induced them to settle.”

However, the Court of Appeal was forced to vacate the settlement and remand for reconsideration based on the District Court’s presumption that the settlement was fair, reasonable, and adequate.  “In Roes, we reversed the district court for beginning its analysis with a presumption that the settlement was fair and reasonable. We observed that this presumption once was commonly applied by district courts, but is nonetheless erroneous as to settlements negotiated prior to class certification. Here, as in Roes, the district court cited the wrong legal standard and failed to acknowledge longstanding Circuit precedent requiring a heightened fairness inquiry prior to class certification.”

 

In re Apple Device Performance Lit., 50 F.4th 769 (9^th Cir. 2022).