A federal judge in the US District Court for the Northern District of Illinois recently dismissed a consumer class action against Apple Computer Inc. (Apple). The plaintiffs alleged that Apple unlawfully deceived purchasers of its iPhone by not fully disclosing that the battery contained within the product may need to be replaced after approximately 300 charges. The cost of replacement included a $79.00 service fee, shipping charges, and a fee for a loaner iPhone while the battery is replaced. In dismissing the case, the judge found that the plaintiffs could not establish that Apple had deceived them under either a theory of fraudulent concealment or under the Illinois Consumer Fraud and Deceptive Business Practices Act (IFCA). The court also dismissed the plaintiffs’ breach of warranty and breach of contract claims. Trujilo v. Apple Computer Inc., No. 07-C-4946 (N.D. Ill. Sept. 23, 2008). 

The plaintiffs’ primary allegation was that Apple had engaged in a deceptive act under Illinois statutory law by not disclosing the costs associated with having the battery replaced. In response, Apple argued that consumers could not have been deceived because the iPhone box contained a statement that the battery had a limited life, that the battery may need to be replaced, and that consumers could find more details regarding the battery replacement program at the Apple Web site. The court found that these disclosures and the one-year warranty were sufficient to make it reasonably clear that some out-of-pocket costs might be incurred by consumers during the life of the product, and that it would be unreasonable for consumers to assume that battery replacement would be perpetually free. 

The plaintiffs also alleged that Apple had breached its implied warranty of merchantability. The court dismissed this claim, explaining that there was no recognizable legal theory holding that a seller’s failure to disclose the costs of replacing a product’s consumable part is a breach of the implied warranty of merchantability. The court explained that a legal claim under a theory of implied warranty of merchantability is concerned with the condition of the goods at the time of sale. Thus, the breach of the implied warranty of merchantability would only occur if the defect existed when the iPhone left Apple’s control. Since the eventual replacement of the iPhone’s battery does not involve the iPhone’s condition at the time of sale, the court dismissed the claim.

Lastly, the court dismissed the plaintiffs’ breach of contract claim. The court found that Apple’s only contractual agreement with the plaintiffs was to sell them a “functional and complete iPhone, including a battery” and that Apple had not agreed to replace any depleted or broken part indefinitely at no additional cost.

This case demonstrates the importance of properly disclosing all material terms and conditions on product packaging and advertising materials. By including proper notice on the product packaging, Apple prevented the plaintiffs from being able to allege successfully that Apple had deceived them. Companies are advised to seek legal counsel to ensure proper drafting and design of product packaging and product advertising.

Arent Fox is continuing to monitor this case for further developments. For more information, please contact:

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Sarah L. Bruno
bruno.sarah@arentfox.com
202.775.5760

Matthew R. Mills
mills.matthew@arentfox.com
202.715.858