California businesses that sell goods or services to the public have a duty to deal fairly with consumers and other businesses. Statutes like the California Consumers Legal Remedies Act (CLRA) and the Unfair Competition Law (UCL) prohibit a variety of deceptive or unfair practices and allow civil claims for damages by aggrieved businesses or consumers. A lawsuit filed late last year in a Northern California federal court alleges violations of the CLRA and the UCL by a major technology company. Harvey v. Apple, Inc., et al., No. 3:17-cv-07274, complaint (N.D. Cal., Dec. 21, 2017). The complaint, which includes class action allegations, claims that the defendant allowed one of its signature products to go to market with a known defect, failed to disclose this defect to consumers, and made misleading statements about the nature of the defect and possible solutions for problems caused by the defect. Lawsuits filed in other California federal courts and other states make similar allegations, and the court is reportedly considering consolidation of some or all of the complaints.
The CLRA prohibits a wide range of deceptive practices involving the sale of goods or services to consumers. The deceptive practices alleged in Harvey include “representing that goods…have…characteristics,…uses, benefits, or quantities that they do not have”; “representing that [they]…are of a particular standard, quality, or grade,…if they are of another”; and “advertising [them] with intent not to sell them as advertised.” Cal. Civ. Code §§ 1770(a)(5), (7), (9). Damages under the CLRA may include injunctive relief, actual damages, punitive damages, and restitution. Id. at § 1780.
The UCL also establishes broad prohibitions on unfair or deceptive business practices under various provisions of state law, but its coverage is not limited to consumers. California law states that a person is liable for damages that result from “willfully deceiv[ing] another with intent to induce him to alter his position to his injury or risk.” Id. at § 1709. “Deceit” includes acts like “the suppression of a fact, by one who is bound to disclose it.” Id. at § 1710(3). An act of deceit that is intended “to defraud the public” can potentially result in liability to every person “who is actually misled by the deceit.” Id. at § 1711. An individual can file suit for violations of the UCL if the alleged unfair act has caused them to “suffer injury in fact and…los[e] money or property.” Cal. Bus. & Prof. Code §§ 17203, 17204.
The complaint in Harvey and other lawsuits arises from the defendant’s smartphone product, the iPhone. The plaintiff alleges that the iPhone 6 model suffers from a defect in its battery. Despite “car[ing] for his [phone] meticulously from the moment it was purchased,” he claims that it suffered from multiple performance problems, including “shut[ting] down suddenly, even when its battery levels were well over 50 percent.” Harvey, complaint at 3.
The plaintiff alleges that the defendant knew about this defect but misrepresented its nature and extent to the public. This allegedly included “modifying the iPhone operating system…to conceal the true nature and scope of the battery defect.” Id. at 4. The lawsuit asserts causes of action for fraudulent concealment and violations of the CLRA and UCL. It seeks monetary damages and injunctive relief.
For more than 40 years, business litigation attorney James G. Schwartz has represented businesses and business owners in the Bay Area in both transactional matters and litigation involving fraud and deceptive business practices. Contact us today at (925) 463-1073 or online to schedule an initial confidential consultation with a member of our team.
More Blog Posts:
U.S. Supreme Court Considers How the Alien Tort Statute Applies to Corporations in California and Around the Country, Pleasanton Business & Commercial Law Blog, February 20, 2018
Cybersecurity Obligations of California Businesses, Pleasanton Business & Commercial Law Blog, October 3, 2017
California Court Allows False Advertising Lawsuit to Proceed, Pleasanton Business & Commercial Law Blog, February 28, 2017