1 Consumer who pays a premium for Apple’s newest and most sophisticated iPhones can reasonably expect their iPhone to include the most sophisticated hardware. Correspondingly, consumers can also expect that their iPhone will consist of the sophisticated software necessary to operate this new generation of hardware. But when a defect in Apple’s software precludes the hardware from functioning correctly, consumers are deprived of the full benefit of their iPhones. This is especially true when the Defect causes the consumer to use vast quantities of costly cellular data without their knowledge. In such circumstances, Apple should act quickly to provide a technical fix as soon as it learns about the issue. When Apple fails to repair or even disclose the Defect for years, consumers are left holding the bag to work out the mess with their wireless carriers. This is wrong, and Apple should be required to make restitution to its users.
2. From 2010 to 2012, Apple was competing fiercely with Samsung in the mobile device market. Samsung had overtaken Apple as a leader in mobile device sales, and Apple was looking to catch up.1 Apple’s next iPhone had to make a big splash to win back market share from Samsung’s Android. Apple was under heavy pressure to deliver a revolutionary product.
3. In September 2012, Apple released the iPhone 5: its answer to Samsung’s Android challenge. The iPhone 5 included the brand new A6 chip. The A6 chip was novel in two ways. First, it had a dual-core central processing unit (“CPU”) called Swift (the “Swift CPU”) that was responsible for basic operating system and app program execution and thus the primary functionality of the phone. The Swift CPU was an improved version of the dual-core CPU from prior generations of iPhones. Apple presented the A6 as offering combined CPU and graphics speeds that were roughly twice as fast as its predecessor.2 Apple also introduced the iPhone 5 as providing its users the ability to stream data through Wi-Fi or via LTE: each at much faster speeds than prior iPhones.3 Second, the A6 also contained a brand new tri-core graphics processing unit (GPU). GPUs are electronic circuits specially designed to convert data into images, animations, and graphics. The iPhone 5’s powerful new GPU was much faster and more efficient at processing large blocks of audio and video data compared to GPU’s in previous iPhones. As a result, iPhone 5 users could enjoy a significantly enhanced video streaming experience, including shorter buffering times and improved screen resolution.
4. The iPhone 5 included the new iOS 6 operating system. While iOS 6 had several key features immediately visible to the user, iOS 6 was also responsible for supporting the iPhone 5’s hardware, including its powerful A6 processor. “Perhaps one of the most important features of iPhone is the software it runs. And [Apple had] iOS 6 – the latest version of the world’s most advanced operating system.”4
5. Indeed, Apple presented the iPhone 5 as a product that would revolutionize the user experience for mobile devices: delivering lightning-fast internet and video over Wi-Fi or LTE, hundreds of new apps, a more comprehensive screen, and all inside a thinner phone.
6. But soon after the iPhone 5’s release, consumers began noticing a pattern that Apple had not advertised when it introduced the iPhone 5. Despite being connected to Wi-Fi signals, iPhone 5 purchasers experienced massive surges in the amount of cellular data they were using each month. Because most cellular plans, at that time, only allowed consumers a limited amount of data each month for a set price and charged more for any data overages, consumers, who were typically monitoring their usage to avoid overages, began to routinely exceed their data limits and incur hefty data fees as a result. Many felt compelled to increase their monthly subscription data plan limits to avoid the costly additional and unpredictable penalty charges.
7. What consumers were experiencing was the result of a defect in how iOS 6 interacted with the iPhone 5’s hardware (the “Defect”). In previous generations of iPhones, streaming audio-video decompression, decoding, and presentation to the display was handled by less powerful GPU’s and required assistance for the CPU. In the iPhone 5, when a consumer streamed high volumes of data for a period even as short as a couple of minutes, the GPU would take over all video decompression, decoding, and presentation to the display. As a result, the Swift CPU no longer played a role in the video decompression, decoding, and presentation process; the Swift CPU would go into sleep mode to conserve battery life. Once the Swift CPU was asleep, the iPhone 5’s operating system would automatically trigger the Wi-Fi connection to end. The phone would switch from streaming data via a Wi-Fi signal to streaming data via a cellular signal. The iOS 6 should not have disabled the Wi-Fi when the Swift CPU went to sleep, and consumers should not have incurred data usage charges as they should have been able to continue streaming their data via Wi-Fi. Because the phones switched to cellular connections instead of Wi-Fi, consumers unwittingly and unknowingly used excessive amounts of cellular data without warning or notice from Apple.
8. Apple became aware of this issue almost immediately. Consumers contacted Apple and their carriers, and they began commenting on Apple’s Internet message boards, asking whether other consumers were experiencing the same phenomena. Various news outlets also began taking notice of the issue. Within days, Apple, without admitting that any defect existed, provided a repair for the Defect for iPhone 5 owners on the Verizon network. Inexplicably, however, Apple did not repair the Defect for iPhone 5 consumers who were subscribers to the AT&T Mobility (“AT&T”) network. While Apple provided a repair to the Defect within two weeks to iPhone 5 owners on the Verizon network, iPhone 5 and 5s owners on the AT&T network had to wait over two years for a repair. Despite multiple updates to iOS and even new hardware in subsequent generations of the iPhone, Apple did not fix or even disclose the Defect to AT&T’s iPhone 5, 5S,5C, and iPhone 6 and 6 plus owners. As a result, the Defect affected all iOS 6 and 7 and was only resolved with the release of iOS 8.1 in October 2014. Through this entire period, Apple materially omitted and failed to disclose the Defect to consumers. By missing this material information, consumers charged hefty fees for data they did not intend to use and had sought not to use because they had initiated the connections through their Wi-Fi networks to avoid such charges. Apple’s non-disclosure also deprived consumers of the opportunity to make an informed choice especially given the stiff competition from Samsung as to whether an iPhone was the rsuitablemobile device for them, which did not have this issue.
9. As discussed more fully below, Apple’s omissions regarding the Defect violates (i) California’s Business & Professions Code §§ 17200, et seq. (the Unfair Competition Law or “UCL”); (ii) California Civil Code §§ 1750, et seq. (the Consumers Legal Remedies Act or “CLRA”); and (iii) California’s Business & Professions Code §§ 17500, et seq. (the False Advertising Law or “FAL”)