4/3/2018 Apple Faces Multiple Lawsuits Over Slowed-Down iPhones - WSJ

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TECH

Apple Faces Multiple Lawsuits Over Slowed-

Down iPhones
Complaints could prolong attention on company’s controversial battery strategy

Some ive dozen iPhone customers have iled at least 59 separate lawsuits since December over the throttled-phone issue.
PHOTO: ELIZABETH SHAFIROFF FOR THE WALL STREET JOURNAL

By Tripp Mickle and Kirsten Grind

March 28, 2018 5 30 a.m. ET

Dozens of iPhone owners are taking Apple Inc. AAPL +0.18% ▲ to court over its disclosure that it
slowed down old phones to preserve battery life, in what could become one of the biggest legal
challenges involving the company’s smartphone since its 2007 debut.

Some five dozen iPhone customers have filed at least 59 separate lawsuits since December
accusing Apple of slowing their phones to spur people to buy new iPhones, according to court
records. Apple said in December that its software update introduced at the start of 2017
reduced the performance of older phone models. The suits seek an unspecified financial award,
attorneys’ fees and free iPhone battery replacements, as well as a corrective advertising
campaign.

The lawsuits also seek class-action status. Efforts to combine the cases will kick off at a
March 29 legal meeting in Atlanta, setting in motion an effort to have the class certified. A
lead attorney and a court location also will be chosen.

Class-action lawsuits are frequently filed against big companies, but the large number of
individual suits concerning a single issue is unusual, say legal experts. It is also roughly triple
the number of suits filed in 2010 over the iPhone 4’s tendency to drop calls.

Apple settled the resulting class-action lawsuit in 2012, agreeing to either pay iPhone 4 owners
$15 or give them a free case, according to Ira Rothken, an attorney who represented the
plaintiffs. The total potential settlement amount was $315 million.

The latest spate of iPhone lawsuits could present Apple with unique challenges. The company is
already working hard to convince consumers that its newest devices are worth $1,000 or more,
as global demand for smartphones stagnates and people hold on to their devices longer.

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4/3/2018 Apple Faces Multiple Lawsuits Over Slowed-Down iPhones - WSJ
While legal experts say the plaintiffs face an uphill battle, a multiyear court fight over the
phone-throttling issue could force the secretive company to disclose sensitive information
about its software development process, according to analysts.

Plus, a decision against Apple could require it and other tech companies to be more transparent
about how their software or hardware features affect power or performance, said Mr. Rothken,
who isn’t involved in this legal action. For years, companies have been able to avoid such
disclosures, mainly because customers haven’t demanded them.

“Whatever affects Apple would affect anyone making battery devices,” Mr. Rothken said.

An Apple spokeswoman declined to comment. The company has previously said it would never
do anything to intentionally shorten or degrade the life of any of its devices, adding that Apple’s
goal is to make iPhones that last as long as possible.

The lawsuits could also prolong the negative publicity surrounding Apple’s slowing of the
phones. “It’s the brand damage that is even more risky and expensive for Apple,” said Holger
Mueller, a technology analyst with Constellation Research.

Apple also is being investigated by the Justice

Newsletter Sign-up Department and Securities and Exchange
Commission over potential securities violations
related to its disclosure of the software updates
that slowed older iPhones. It has faced questions
from consumer and watchdog groups in France,
Italy and China.

Apple’s predicament started after the company,

prompted by questions from users and analysts,
said it introduced the software update to prevent
older iPhones with aged batteries from
unexpectedly shutting down. In late December,
Apple apologized and said it would reduce the
out-of-warranty cost of battery replacement to
$29 from $79 for most customers.

Some of the current lawsuits are alleging that Apple misrepresented the true nature and scope
of the battery problems to customers, and failed to inform users last year that upgrading to new
operating systems would force them to add a feature that slowed down the phone, according to
court records.

“To encourage consumers to purchase the newest iPhone in such short intervals, Apple has to
convince consumers to upgrade their device,” according to one complaint filed in federal court
in Northern California. “One way to do that is by reducing the performance of older iPhones.”

Larry Pethick, a 50-year-old resident of Grand Rapids, Michigan, said his iPhone 6 started
taking longer to load apps and activate the GPS last fall after updating to a new operating
system. Mr. Pethick said he had lost his job that fall and didn’t want to spend $700 on a new
phone, but came to the conclusion that buying a new phone was his only option.

“The biggest frustration was that an adjustment was made that severely inconvenienced me
without me knowing about it,” Mr. Pethick said of Apple’s software update. He is expected to
join a class-action suit against Apple in Northern Illinois.

Apple customers could find it difficult to win their case. Fraudulent-concealment claims, such
as in the iPhone instance, are often hard to prove because courts typically want to preserve
companies’ freedom to choose what to say as long as it isn’t actively misleading, said
RebeccaTushnet, a professor at Harvard Law School.

Apple has done enough since acknowledging the software change to make clear that it was
aiming to improve user performance, said Wayne Lam, a smartphone analyst with the research
firm IHS Markit , adding that the class-action suit “won’t amount to a hill of beans.”

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4/3/2018 Apple Faces Multiple Lawsuits Over Slowed-Down iPhones - WSJ
Meanwhile, the controversy—and Apple’s $29 battery offer—may already be taking a toll on the
company’s financial results. Barclays previously estimated Apple could lose $10.29 billion in
revenue this year because of customers choosing to replace batteries instead of their iPhones.

Write to Tripp Mickle at

RELATED COVERAGE Tripp.Mickle@wsj.com and Kirsten
Grind at kirsten.grind@wsj.com
Apple Faces Two Federal Probes Over iPhone Battery Issue (Jan. 31)
Apple Apologizes for Handling of iPhone Battery Issue (Dec. 28, 2017) Appeared in the March 29, 2018, print
edition as 'Lawsuits Over iPhones
Begin to Cluster.'

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