Did Apple Break Any Laws by Slowing Down Older iPhones?

Did Apple Break Any Laws by Slowing Down Older iPhones?


The Legality of Apple’s Decision to “Slow Down” iPhones

Most Americans are consumed by their smartphones. A majority want the hottest gadget as soon as it comes out. Tech companies like Apple capitalize on this interest and organize unveiling parties to show off their latest offerings. Not everyone is technologically obsessed and running to their local Verizon or AT&T store to buy the newest phone when it comes out though. Many people pride themselves on keeping their phones, even one that is several generations old.

A smartphone, like any other technological device, will slow down as it ages. But is it permissible for the smartphone’s manufacturer to purposefully slow a phone down?  

In a public statement, Apple recently acknowledged slowing down older iPhones with lower-capacity batteries, such as the iPhone 6, 6S, 7, and SE models, mainly to prevent “accidental and unexpected shutdowns” caused by batteries that may not be able supply the necessary power for new features.[1] In the statement, Apple said that the goal of the battery-related slowing was “to deliver the best experience for customers,” but slowing the phones down also lessened the computing power of the iPhones.[2]

Once Apple confirmed that it engages in a practice that it was long-suspected of undertaking, the backlash from consumers was immediate. Some said they would switch to Samsung smartphones immediately. Popular technology writer and podcaster Marco Arment tweeted, “The reputation damage from secretly slowing down old iPhones, regardless of the reason, will likely linger for a decade.”[3] Other angry iPhone owners went even further.

Two lawsuits have been filed against Apple.[4] The first was filed by iPhone 7 owners in the federal district court for the Central District of California.[5] The second lawsuit was filed by plaintiffs in the federal district court for the Northern District of Illinois.[6] Even though both lawsuits are filed by aggravated Apple consumers, they differ in arguments presented. In this presentation, we’ll examine and analyze the arguments made to see where, and why, Apple may have crossed the line.  

Two California residents and iPhone owners, Stefan Bogdanovich and Dakota Speas, filed the first lawsuit. Their allegations are common law claims. First, they allege that Apple breached an implied contract that it entered with consumers that it would not “purposefully interfere with Plaintiffs’ (…) usage or speed of the device” when starting with iOS 10.2.1, it required consumers to download iOS updates that led to a slowdown in phone performance. So, how does an implied contract form? An implied contract arises when two or more parties have no written contract, but the law creates an obligation in the interest of fairness because of both parties’ conduct, the nature of the relationship between the parties, as well as industry customs, habits, and trade practices.[7]

The plaintiff must demonstrate that though it was never written down, it was implied that when the plaintiffs purchased iPhones, Apple would not interfere with the phone and would disclose any occasion that it would tamper. On the other hand, Apple could argue that conduct and circumstances don’t lead to an implied contract forming. Apple can look to practices of other phone manufacturers such as Samsung, LG, or Motorola, to prove that there aren’t any implied contracts regarding phone manufacturer ability to alter phone performance after purchase.

The plaintiffs’ second cause of action is that Apple committed a trespass to chattel when it intentionally interfered with their possession of their iPhones without their consent. Under California law, someone commits trespass to chattels when he intentionally interferes with another person’s lawful possession of personal property.[8] A casual or temporary interference will not suffice; there must be an actual showing of harm to the person who lawfully possesses the property.[9]

Here, Apple’s conduct may have arisen to a trespass to chattels because the plaintiffs had use of their iPhones interrupted with when their phones’ performance slowed down after downloading iOS 10.2.1. The slowdowns and interference that took place will most likely not be viewed as a trespass to chattels if the plaintiffs were merely inconvenienced when browsing the Internet on Safari, or had delays in uploading photos to Instagram or Facebook. If they move forward in their case, the plaintiffs must prove that the slowed phone performance harmed them in a meaningful way.

Moving on to the second case, the plaintiffs in the Illinois suit, unlike the California suit, are making claims based on violations of state law and are not making common law tort and contracts claims. The plaintiffs are residents of several states such as Illinois, Indiana, and North Carolina. Each plaintiff describes how he or she owned an older iPhone, but over time, noticed their phones slowing down after installing updates. As they grew more frustrated with their phones, the plaintiffs discarded their iPhones and purchased newer iPhone models.

Calling the Apple-induced updates a purposeful “throttling down the performance speed” of older devices, the plaintiffs claim violations of their respective state laws that prohibit consumer fraud and deceptive business practices. Each state has different language in its statutes, but the primary purpose undergirding these laws is that consumers must be protected from businesses that commit deceptive acts.[10] These laws also grant a consumer victim to a deceptive business practice with a private cause of action.[11]

Instead of analyzing all state claims, it’s easier to evaluate the second lawsuit’s basis by examining Count 1 of the complaint, which reads that Apple violated the Illinois Consumer Fraud and Deceptive Business Practices Act (“IFCFA”). The IFCFA provides: 

                     Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby.

The Illinois plaintiffs allege that Apple violated the IFCFA when it slowed down the performance speeds of older phones because it sought to deceive consumers and goad those who owned older iPhones into purchasing new phones.

The Illinois plaintiffs interestingly face both adversity and ease with the claims they’re making. Starting with the difficulties, unlike the Illinois state attorney general, who when pursuing a criminal action for violation of the IFCFA, doesn’t have to furnish actual proof that people were misled or deceived by certain business practices, Illinois plaintiffs bringing a private action for IFCFA violations must prove causation to adequately plead a private cause of action for a violation.[12] Numerous lawsuits have established that to succeed in a private cause of action, a plaintiff must demonstrate each of the following elements:[13]

(1) a deceptive act or practice by the defendant;

(2) the defendant's intent that the plaintiff rely on the deception;

(3) the occurrence of the deception in the course of conduct involving trade or commerce; and

(4) actual damage to the plaintiff proximately caused by the deception.

Applying the law to the facts here, the plaintiffs must prove that Apple purposefully slowed down older iPhone performance speeds without telling consumers and that Apple intended for consumers to purchase the latest iPhone model by slowing the older phones down. Finally, they must prove that the slower phone caused actual damage.

Proving all of this may seem like an insurmountable task, but here’s where plaintiffs have some ease. The IFCFA doesn’t expressly require a high standard of proof such as the “beyond a reasonable doubt,” which is the standard the government must meet to prove the guilt of a defendant in a criminal trial[14], or “clear and convincing evidence,” a medium level of burden of proof which requires a party to prove that it is substantially more likely than not that it is true.[15] The Illinois Supreme Court has established that the appropriate standard of proof for a statutory fraud claim is “preponderance of the evidence,” the default burden of proof in a civil trial and a requirement that more than 50% of the evidence points to something.[16] This lower level of burden of proof may make it easier for the Illinois plaintiffs to argue that Apple violated state law.

These lawsuits are both in the initial phases. Plaintiffs in both cases are seeking class certification to make their lawsuits class actions. Plaintiffs looking to certify a class under Federal Rules of Civil Procedure Rule 23 must plead and prove numerosity, commonality of claims, typicality of plaintiff claims, and adequacy that the representative parties will fairly protect the interests of the class.[17] 

While it’s beyond the scope of this presentation to delve into how a class is certified, if it takes place, the plaintiffs will be conferred several benefits. First, the costs of litigating the claims will be spread across more plaintiffs who can join in. Most importantly, class certification can provide redress to persons with small claims and prevent a large corporate defendant like Apple from retaining the benefits of their alleged wrongs.[18] 

Even if these lawsuits don’t move forward, the changes will be felt. Apple is already increasing its transparency to explain why it engaged in this practice. The long-term effects aren’t yet clear, but the legal ramifications, just like the iPhone reveal parties, are sure to be attention-grabbing.



Footnotes:

[7] Restat 2d of Contracts, § 19 (2nd 1981).

[8] Intel Corp. v. Hamidi, 30 Cal. 4th 1342, (2003).

[9] In re iPhone Application Litig., 2011 U.S. Dist. LEXIS 106865, 2011 WL 4403963

[10] Indiana Deceptive Consumer Sales Act, IN ST § 24-5-0.5-2

[11] North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen Stat. § 75-1.1.

[12] Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100, (2005).

[13] Oliveira v. Amoco Oil Co., 201 Ill. 2d 134, (2002).

[14] In re Winship, 397 U.S. 358, (1970).

[16] Vern Walker, “Preponderance, Probability and Warranted Factfinding,” 62 Brooklyn L. Rev. 1075, (1996)

[18] Caro v. Procter & Gamble Co., 18 Cal. App. 4th 644, (1993).