Apple Settles iCloud Storage Breach of Contract Class Action Lawsuit: You May Be Owed Money (Plus Full Text of Complaint)

Williams v Apple complaint
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Wondering “What is the deal with,” or “How much will I get paid from” the Apple iCloud storage breach of contract class action settlement? Here’s everything you need to know, including the full text of the Williams v. Apple complaint which sparked it all. Here’s what happened: in 2019 Andrea Williams sued Apple for breach of contract, saying that, in violation of Apple’s terms of service, Apple was storing iCloud users’ data on 3rd-party servers, rather than on their own servers over which they exercised full control. Now Apple has settled the class action lawsuit, and so if you are a U.S.-based iCloud subscriber who paid for an iCloud subscription at any time between September 16, 2015 and January 31, 2016, you are a member of the class who is to be compensated.

Of course, even though the settlement is nearly $15million, what you will be paid will be nor more than equal to what you paid for your iCloud subscription during that time period. The entire time period is 4 1/2 months, so if you were on the .99 per month plan at the time, you can expect, at most, to get a check from Apple for $4.46. If you were on the $2.99 per month plan you can expect (again at most) $13.46. Of course, if you were on the 2TB $9.99 per month plan, you can look forward to as much as $44.96. The reason we say “at most” and “as much as” is because it all depends on how many members of the class there are, as they have to split the pot. And that’s after attorneys fees, which are typically, but sometimes more than, 30% of the settlement amount.

Among other things, Apple’s Terms of Service for iCloud storage read:

Apple is the provider of the Service, which permits you to utilize certain Internet services, including storing your personal content (such as contacts, calendars, photos, notes, reminders, documents, app data, and iCloud email) and making it accessible on your compatible devices and computers, and certain location based services, only under the terms and conditions set forth in this Agreement. iCloud is automatically enabled when you are running devices on iOS 9 or later and sign in with your Apple ID during device setup, unless you are upgrading the device and have previously chosen not to enable iCloud. You can disable iCloud in Settings. When iCloud is enabled, your content will be automatically sent to and stored by Apple, so you can later access that content or have content wirelessly pushed to your other iCloud-enabled devices or computers.

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Note the “When iCloud is enabled, your content will be automatically sent to and stored by Apple“. That is the crux of the complaint, which includes the following paragraph:

“Touting itself as the provider of the iCloud service (when, in fact, Apple was merely reselling cloud storage space on cloud facilities of other entities) allowed Apple not only to obtain paid subscriptions of class members who subscribed to iCloud believing that their cloud storage was being provided by Apple, but also allowed Apple to charge a premium for its iCloud service because subscribers placed a value on having the “Apple” brand as the provider of the storage service for their most sensitive data. In fact, at the time that Apple was selling iCloud storage as its own to subscribers, but actually reselling (unbeknownst to class members) cloud storage provided by Amazon or Microsoft, [at a time when] these rival entities (i.e., Amazon or Microsoft) were providing cloud storage services to the public at prices lower than Apple’s iCloud. Class members, therefore, paid a premium for their belief and understanding that their data would be stored by Apple.”

They’re not wrong.

The attorneys and administrator of the settlement have put up a site with info about how to get your settlement and an FAQ at StorageClassActionSettlement.com.

Here’s the complaint as a PDF via Scribd; and below that is the full text of the complaint in plain text (but including page numbers and other incidental text).

Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 1 of 59

1 ROY A. KATRIEL (SBN 265463)
THE KATRIEL LAW FIRM, P.C.
2 4660 La Jolla Village Drive, Suite 200
San Diego, CA 92122
3 Telephone: (858) 546 4435
e-mail: [email protected]
4
AZRA MEHDI (SBN 220406)
5 THE MEHDI FIRM, P.C.
One Market
6 Spear Tower, Suite 3600
San Francisco, CA 94111
7 Telephone: (415) 293-8039
Facsimile: (415) 293-8001
8 e-mail: [email protected]

9
Counsel for Plaintiffs Andrea M. Williams
10
and James Stewart
11
12
13 UNITED STATES DISTRICT COURT

14 NORTHERN DISTRICT OF CALIFORNIA

15 ANDREA M. WILLIAMS AND JAMES No.
STEWART, On Behalf of Themselves And
16 All Others Similarly Situated,
17 CLASS ACTION COMPLAINT
Plaintiff,
18 v. Class Action
19 APPLE, INC., Jury Trial Demanded
20 Defendant.
21
22
23
24
25
26
27
28
Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 2 of 59

1 NATURE OF THE ACTION

2 1. Plaintiffs Andrea M. Williams and James Stewart and (collectively “Plaintiffs”) bring

3 this Class Action Complaint against Defendant Apple, Inc. (“Defendant” or “Apple”) on behalf of

4 themselves and all other similarly situated persons in the United States who during the Class

5 Period defined below paid for subscriptions to Apple’s iCloud service. Plaintiffs allege claims for

6 breach of contract, violations of California’s False Advertising Law (California Business and

7 Professions Code, §§ 17500 et seq.), and violations of California’s Unfair Competition Law

8 (California Business and Professions Code, §§ 17200 et seq.).

9 2. As detailed more fully below, Apple’s iCloud service provides users the ability to

10 store their digital data on remote servers, as opposed to keeping the data stored merely on the

11 users’ devices. This is commonly referred to as “storing on the cloud.” Throughout the Class

12 Period, Apple sold subscriptions to the putative class members by which Apple represented to
class members that, in exchange for paying Apple the iCloud monthly subscription fees, Apple
13
would provide them with cloud storage. In truth and in fact, however, Apple lacked the
14
necessary infrastructure to provide this service at the time it sold it. Unbeknownst to Plaintiffs
15
and the putative class members, instead of storing class members’ data on Apple cloud servers
16
and facilities, Apple actually stored users’ data on cloud facilities owned and operated by other
17
entities, like Amazon, Microsoft or Google—all undisclosed to these class members who paid and
18
entrusted Apple to store their data.
19
3. The selection of a cloud storage provider is a significant and material consideration,
20
as it involves entrusting all of a user’s stored data—including sensitive information like
21
photographs, documents of all kinds, and e-mail content—to be stored by the cloud storage
22
provider. Thus, users have an interest in who is offering this storage and taking custody of their
23
data. For this reason, in Apple’s iCloud subscription contract, Apple went to great lengths to
24
represent and assure iCloud subscribers that Apple was the provider of the cloud storage service
25
being purchased by the putative class members. Apple highlighted as much in its iCloud contract
26
for U.S. subscribers, emphasizing that:
27
28 -1-
Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 3 of 59

1 Apple is the provider of the Service, which permits you to utilize certain Internet
services, including storing your personal content (such as contacts, calendars, photos,
2 notes, reminders, documents, app data, and iCloud email) and making it accessible on
3 your compatible devices and computers, and certain location based services, only under
the terms and conditions set forth in this Agreement. iCloud is automatically enabled
4 when you are running devices on iOS 9 or later and sign in with your Apple ID during
device setup, unless you are upgrading the device and have previously chosen not to
5 enable iCloud. You can disable iCloud in Settings. When iCloud is enabled, your
content will be automatically sent to and stored by Apple, so you can later access that
6 content or have content wirelessly pushed to your other iCloud-enabled devices or
7 computers.
Ex. 1 to Class Action Complaint (iCloud U.S. Contract), at 1 (emphasis added).
8
4. Touting itself as the provider of the iCloud service (when, in fact, Apple was merely
9
reselling cloud storage space on cloud facilities of other entities) allowed Apple not only to obtain
10
paid subscriptions of class members who subscribed to iCloud believing that their cloud storage
11
was being provided by Apple, but also allowed Apple to charge a premium for its iCloud service
12
because subscribers placed a value on having the “Apple” brand as the provider of the storage
13
service for their most sensitive data. In fact, at the time that Apple was selling iCloud storage as
14
its own to subscribers, but actually reselling (unbeknownst to class members) cloud storage
15
provided by Amazon or Microsoft, these rival entities (i.e., Amazon or Microsoft) were providing
16
cloud storage services to the public at prices lower than Apple’s iCloud. Class members,
17
therefore, paid a premium for their belief and understanding that their data would be stored by
18
Apple.
19
5. As the foregoing allegations make clear and as more fully detailed below, Apple has
20
breached its iCloud contract, a copy of which is attached hereto as Exhibit 1. This breach was
21
material and caused all class members harm in that, inter alia, they did not receive the benefit of
22
their bargain with Apple (a bargained-for assurance and promise that Apple would provide the
23
cloud storage service when, in fact, the service was provided by entirely different and unrelated
24
entities with whom class members did not contract). Further, by representing that “Apple is the
25
provider of the Service” when, in fact, it was not, Apple engaged in false advertising within the
26
meaning of California’s False Advertising Law (“FAL”). Moreover, Apple’s acts also amount
27
-2-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 4 of 59

1 to unlawful, unfair, or deceptive practices within the meaning of California’s Unfair Competition

2 Law (“UCL”).

3 6. Apple’s iCloud contract contains a choice of law provision, by which Apple and all

4 iCloud subscribers nationwide agreed to be bound by California law with regard to their rights

5 and liabilities in connection with the use and purchase of the iCloud service. See Ex. 1 to Class

6 Action Complaint, at § X.B (“Except to the extent expressly provided in the following paragraph, this

7 Agreement and the relationship between you and Apple shall be governed by the laws of the State of

8 California, excluding its conflicts of law provisions.”). It is therefore proper and appropriate to apply

9 California law to the claims raised on behalf of this nationwide putative class of iCloud subscribers.

10 JURISDICTION AND VENUE

11 7. This Court has subject-matter jurisdiction over all claims asserted in this Class Action

12 Complaint pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d). Plaintiffs’ action is
brought on behalf of a class of nationwide subscribers of Apple’s iCloud service during the Class
13
Period, and Defendant Apple is a citizen of California. The putative class action, therefore, satisfies the
14
diversity of citizenship requirement. Given the redress sought and that class members number in the
15
millions, this Class Action Complaint also satisfies the amount in controversy requirement, as the
16
amount of redress sought exceeds $5 million exclusive of interest, attorneys’ fees, or costs.
17
8. This Court has personal jurisdiction over Defendant because Apple is a corporation
18
incorporated under the laws of the State of California and has its principal place of business within this
19
state and judicial district at One Apple Park Way in Cupertino, California 95014.
20
9. Venue is proper in this district because Apple’s principal place of business is
21
located within this judicial district, the acts underlying all claims asserted in this Class Action
22
Complaint arose from within this judicial district and, as part of the iCloud contract, all parties
23
agreed to submit to venue in courts located within the county of Santa Clara, California. See Ex.
24
1 to Class Action Complaint, at § X.B. Venue in this Court, therefore, is proper pursuant to 28
25
U.S.C. § 1391.
26
27
-3-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 5 of 59

1 INTRADISTRICT ASSIGNMENT

2 10. Pursuant to Civil L.R. 3-5(b), Plaintiffs allege that under Civil L.R. 3-2(e) and the

3 Court’s General Order No. 44, assignment of this action to the San Jose Division is appropriate

4 because the events giving rise to the claims arose from Apple’s principal place of business in

5 Santa Clara County. The Plaintiffs, putative class members, and Apple also agreed as part of the

6 iCloud agreement “to submit to the personal and exclusive jurisdiction of the courts located within the

7 county of Santa Clara, California, to resolve any dispute or claim arising from this Agreement.” Ex 1

8 to Class Action Complaint, at § X.B.

9 PARTIES

10 11. Plaintiff Andrea M. Williams is a resident of Florida and a citizen of Florida for

11 purposes of the federal diversity statute as she intends to remain in Florida for the foreseeable

12 future. During the Class Period, Ms. Williams subscribed to Apple’s iCloud service, paid money
to Apple for her iCloud subscription, and used iCloud to store her data on the cloud. The legal
13
agreement or contract that she and Apple entered into regarding Ms. Williams’ iCloud
14
subscription provided that Apple would be the provider of this cloud storage service. Ms.
15
Williams was never informed by Apple that her data actually was being stored on the cloud on
16
non-Apple remote servers and facilities, such as cloud storage facilities belonging to Amazon,
17
Microsoft, or Google (or possibly other entities). Had Apple disclosed that, contrary to its
18
contractual representation, Apple was not the provider of the cloud storage, Ms. Williams either
19
would not have subscribed to Apple’s iCloud service or would have not agreed to pay as much as
20
she did for the service..
21
12. Plaintiff James Stewart is a resident of San Francisco, California and a citizen of
22
California for purposes of the federal diversity statute as he intends to remain in California for the
23
foreseeable future. During the Class Period, Mr. Stewart subscribed to Apple’s iCloud service,
24
paid money to Apple for his iCloud subscription, and used iCloud to store his data on the cloud.
25
The legal agreement or contract that he and Apple entered into regarding Mr. Stewart’s iCloud
26
subscription provided that Apple would be the provider of this cloud storage service. Mr. Stewart
27
-4-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 6 of 59

1 was never informed by Apple that his data actually was being stored on the cloud on non-Apple

2 remote facilities, such as cloud storage facilities belonging to Amazon, Microsoft, or Google (or

3 possibly other entities). Had Apple disclosed that, contrary to its contractual representation,

4 Apple was not the provider of the cloud storage being provided as part of the iCloud agreement,

5 Mr. Stewart either would not have subscribed to Apple’s iCloud service or would have not agreed

6 to pay as much as he did for the service

7 CLOUD STORAGE

8 13. Cloud storage involves stashing data on hardware in a remote physical location,

9 which can be accessed from any device via the internet. Clients send files to a data server

10 maintained by a cloud provider instead of (or as well as) storing it on their own hard drives.

11 14. Cloud storage systems generally encompass hundreds of data servers linked

12 together by a master control server.
15. An appeal to individual users is that cloud storage service providers allow
13
individuals to store their photos, e-mail, music, calendars, contacts and other data in a central
14
location, accessible from whatever device happens to be handy. These can be set up to
15
automatically sync with the cloud, ending an era of fumbling with USB cables or other external
16
storage devices.
17
16. As the foregoing summary explanation makes clear, provision of cloud storage
18
services requires a sufficient and robust infrastructure of remote server and associated hardware
19
facilities for this data to be stored. Also, of importance to users, is the identity of the entity
20
providing this storage on its facilities, as the user is turning over sensitive data for storage, like
21
photographs, documents, and other personal digital files.
22
17. Today, there are a number of competing cloud storage service providers. In
23
addition to Apple’s iCloud, other cloud storage providers include Dropbox, Amazon (through,
24
inter alia, its Amazon Drive service), Microsoft (through its Microsoft OneDrive service), and
25
Google (through, inter alia, its Google Drive service).
26
27
-5-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 7 of 59

1 APPLE’S iCLOUD SERVICE AND APPLE’S COTNRACTUAL

2 MISREPRESENTATION

3 18. Apple launched its iCloud cloud storage and computing service on or about

4 October 12, 2011. iCloud replaced Apple’s previous MobileMe service, which had acted as a

5 data syncing center for email, contacts, calendars, bookmarks, notes, reminders (to-do lists),

6 iWork documents, photos, and other data.

7 19. iCloud enables users to store data such as documents, photos, and music on remote

8 servers for download to iOS, macOS, or Windows devices, to share and send data to other users,

9 and to manage their Apple devices if lost or stolen.

10 20. Owners of Apple devices are granted up to 5 GB of iCloud storage for free. If an

11 Apple device user wishes to store more than 5 GB of data on the cloud through iCloud, then that

12 user must subscribe to iCloud’s paid service.
21. As set forth below, pricing for an iCloud subscription, which is billed on a
13
monthly basis, depends on the amount of cloud data storage (measured in gigabytes or terabytes)
14
the subscriber is entitled to store through iCloud.
15
22. In order to subscribe to iCloud, a user must agree to the iCloud Terms of Service
16
Agreement. A current version of the iCloud agreement for iCloud subscribers in the United
17
States is attached hereto as Exhibit 1. A key term of this iCloud agreement for U.S. subscribers,
18
which sets forth the terms, duties and obligations, of Apple and the iCloud subscribers, is that
19
Apple is the entity providing the iCloud cloud storage service for U.S. subscribers. This much is
20
underscored in the iCloud agreement’s second paragraph, in which Apple promises and represents
21
that:
22 Apple is the provider of the Service, which permits you to utilize certain Internet
23 services, including storing your personal content (such as contacts, calendars, photos,
notes, reminders, documents, app data, and iCloud email) and making it accessible on
24 your compatible devices and computers, and certain location based services, only under
the terms and conditions set forth in this Agreement. iCloud is automatically enabled
25 when you are running devices on iOS 9 or later and sign in with your Apple ID during
device setup, unless you are upgrading the device and have previously chosen not to
26 enable iCloud. You can disable iCloud in Settings. When iCloud is enabled, your
27 content will be automatically sent to and stored by Apple, so you can later access that
-6-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 8 of 59

1 content or have content wirelessly pushed to your other iCloud-enabled devices or
computers.
2
Ex. 1 to Class Action Complaint, at 1 (emphasis added).
3
4 23. Although the current version of the iCloud agreement for U.S. subscribers was last
5 revised on September 17, 2018, Apple’s representation that it was providing the iCloud cloud
6 storage service was a term and representation found in versions of the iCloud agreement for U.S.

7 subscribers for the entire Class Period. This is evidenced by the version of the iCloud agreement

8 for U.S. subscribers last revised on September 16, 2015, which contains the identical second

9 paragraph as the current version of that agreement and identically represents that “Apple is the

10 provider of the Service,….” A copy of the September 16, 2015 iCloud agreement for U.S. subscribers

11 is attached hereto as Exhibit 2.

12 24. As alleged at Paragraph 16 supra, the identity of the entity who is providing cloud

13 storage of subscribers’ digital data is of concern to subscribers and forms a material term of any

14 agreement by subscribers of cloud storage. Indeed, it would be nonsensical to contend that users are

15 indifferent to whom they entrust their most personal, private, and sensitive digital data for storage.

16 This concern is not merely a privacy-driven one, but also a driven by subscribers need to assure

17 themselves that the party to whom they entrust their digital data for cloud storage is one whom they
sufficiently trust to take protect the data while in storage on the cloud servers and to ensure that the data
18
will be accessible to the subscribers on demand at any point in the future.
19
25. Apple, in fact, recognized that consumers are not indifferent as to the identity of
20
the provider storing consumers’ digital data. Thus, for example, in mainland China, due to
21
governmental regulations, Apple was permitted to sell iCloud subscriptions for cloud storage to
22
Chinese users, but Apple was not permitted to own the cloud servers or other facilities. As a
23
result, Apple went to great lengths in its iCloud agreement for mainland Chinese subscriptions to
24
represent unlike in its U.S. iCloud agreement (where Apple represents that Apple provides the
25
iCloud cloud storage service) that another entity altogether, AIPO CLOUD (GUIZHOU)
26
27
-7-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 9 of 59

1 TECHNOLOGY CO. LTD (“GCBD”), provides the iCloud cloud storage service. A copy of

2 Apple’ iCloud agreement for China-based subscribers, therefore, provides that:

3 GCBD is the provider of the Service in the Mainland of China, which permits you to
utilize certain Internet services, including storing your personal content (such as
4 contacts, calendars, photos, notes, reminders, documents, app data, and iCloud email)
and making it accessible on your compatible devices and computers, and certain
5 location based services, only under the terms and conditions set forth in this Agreement.
6 iCloud is automatically enabled when you are running devices on iOS 9 or later and
sign in with your Apple ID during device setup, unless you are upgrading the device
7 and have previously chosen not to enable iCloud. You can disable iCloud in Settings.
When iCloud is enabled, your content will be automatically sent to and stored by
8 GCBD, so you can later access that content or have content wirelessly pushed to your
other iCloud-enabled devices or computers.
9
10 Ex. 3 to Class Action Complaint, at 1 (emphasis added).

11 26. Thus, mainland China subscribers who subscribe to Apple’s iCloud are, in fact,
12 informed that, though they are subscribing to Apple’s iCloud service, the cloud storage service is
13 provided by an unrelated entity altogether, GCBD. By contrast, U.S. subscribers to Apple’s iCloud are
14 assured by Apple that Apple is providing the cloud storage service for these subscribers.
15 27. In truth and in fact, Apple’s contractual representation is and has been false all along.
16 The fact of the matter is that, at the time that Apple sold iCloud subscriptions to the putative class
17 members, Apple lacked the facilities needed to readily provide the cloud storage space being sold to
18 class members through iCloud.
19 28. Unable to provide the cloud storage space to all class members that Apple sold and was
20 selling through iCloud, Apple breached its iCloud agreement with its subscribers and had these users’
21 data stored not by Apple on Apple facilities, but instead turned the users’ digital files to other entities,
22 like Amazon and Microsoft for them to store on their facilities. All this was undisclosed to Plaintiffs
23 and the putative class members, who believed all along that Apple was providing the cloud storage of
24 their data, as Apple had represented in its iCloud agreement and as these users had bargained for all

25 along.

26 29. Apple continues to falsely claim that Apple is the provider of the iCloud cloud storage

27
-8-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 10 of 59

1 service when, in fact, the cloud storage of iCloud subscribers in the United States is done by Amazon

2 or Microsoft. Without disclosing any of this to its iCloud subscribers, Apple effectively acts as a

3 reseller of cloud storage on Amazon or Microsoft remote servers and facilities. Upon information and

4 belief, Apple currently pays approximately half a billion dollars per year to Amazon and Microsoft to

5 compensate them for storing Apple iCloud subscribers’ data on Amazon’s and Microsoft’s cloud

6 facilities.

7 30. Apple has never justified or even publicly explained its practice of having its iCloud

8 users’ data turned over to Microsoft or Amazon (or others) for cloud storage. Evidently, however,

9 Apple believes it is justified in doing so (and not disclosing as much) because Apple maintains that the

10 iCloud user data stored on Amazon or Microsoft cloud facilities is first encrypted by Apple before

11 being turned over to these entities and Apple itself stores the encryption keys.

12 31. But, even if accurate, this “justification” does not excuse or legitimize Apple’s
behavior, breach of its iCloud agreement, or misrepresentations. No iCloud subscriber bargained for or
13
agreed to have Apple turn his or her data—whether encrypted or not– to others for storage. More
14
fundamentally, encryption of iCloud subscribers’ data stored on third-parties’ facilities, at most,
15
addresses the concerns over privacy and unauthorized access to the stored data. But turning over data
16
to third parties for them to keep in storage at their facilities, without the prior consent of the subscribers
17
who own the data, does nothing to address other fundamental concerns about the integrity of the data,
18
reliability of the storage, and assurance that the data stored will remain intact and accessible by the user
19
on demand without being damaged, lost, stolen, or otherwise disposed of by third-party entities who
20
the subscribers never authorized to have their most sensitive digital data stored for indefinite periods of
21
time. And, if subscribers are kept in the dark as to who is storing their data this, in and of itself, raises a
22
privacy concern.
23
32. The subscribers bargained for, agreed, and paid to have Apple—an entity they trusted–
24
store their data. Instead, without their knowledge or consent, these iCloud subscribers had their data
25
turned over by Apple to third-parties for these third-parties to store the data in a manner completely
26
unknown to the subscribers.
27
-9-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 11 of 59

1 33. iCloud subscribers’ concerns about the identity of the party storing their data, including

2 concerns about the integrity and reliability of the storage, are well-founded. Upon information and

3 belief, certain iCloud subscriber data that Apple had turned over to Google for storage (without

4 disclosing as much to the subscribers) was stored in a Google facility that experienced a fire and

5 rendered the data inaccessible to affected iCloud subscribers for some period of time.

6 THE “APPLE” PREMIUM APPLES EXACTED BY ITS MISREPRESENTATION

7 34. By representing that Apple itself provides the iCloud cloud storage, Apple has ben able

8 to and has charged a premium for its cloud storage service. This, despite the fact, that the cloud storage

9 service actually is being performed by third-parties, unbeknownst to the iCloud subscriber. Plaintiffs

10 and class members have paid more for iCloud than they would have had Apple disclosed that the cloud

11 storage provided to iCloud subscribers actually was being provided not by Apple, but by other third

12 parties.
35. The price premium that the Apple brand name is able to and has exacted from iCloud
13
subscribers is evidenced, inter alia, by review of the less expensive or greater offerings provided by
14
other cloud storage providers. For example, as alleged herein, Apple’s iCloud storage actually has
15
been accomplished during the Class Period by having iCloud subscriber data stored on Microsoft cloud
16
facilities. Apple effectively is reselling Microsoft cloud storage to iCloud subscribers (without
17
informing them that it is doing so) that Apple has purchased or leased from Microsoft. But, whereas
18
Apple now charges $9.99 per month for an iCloud subscription in the United States that provides the
19
consumer with up to 2 terabytes of cloud storage, for the same $9.99 monthly price Microsoft provides
20
users with up to 6 terabytes of cloud storage and a free subscription to Microsoft’s Office 365 software
21
suite. That is, Apple’s iCloud offering is at least six times more expensive than Microsoft’s offering,
22
despite the fact, that Apple’s iCloud service actually employs (or doing the Class Period has employed)
23
the Microsoft cloud facilities to store the subscribers’ data. This price premium and disparity was even
24
more pronounced during the bulk of the Class Period because, until relatively recently, Apple’s iCloud
25
provided only one terabyte of storage for the monthly price of $9.99.
26
27
-10-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 12 of 59

1 36. So too, the pricing premium that the Apple brand name exacts for iCloud cloud

2 storage is evident by reference to the cloud storage offered by Google. For example, Apple offers

3 Apple device users iCloud storage of up to 5 gigabytes for free. By contrast, Google’s cloud storage

4 offering provides consumers with 15 gigabytes for free cloud storage. That is, Google offers for free

5 three times as much cloud storage as iCloud, despite the fact that, unbeknownst to iCloud subscribers,

6 their data actually is being stored on Google facilities.

7 37. These current examples of the price premium charged by Apple for its iCloud offering

8 are even more pronounced earlier within the Class Period. For many years, Apple charged an even

9 higher premium (either through higher monthly pricing for its iCloud plans or offering less cloud

10 storage capacity for the same price) relative to other cloud storage providers, including the very

11 providers that Apple employed for the storage of iCloud subscribers’ data.

12 CLASS ALLEGATIONS
38. Pursuant to Federal Rules of Civil Procedure 23(b)(3) and (b)(2), Plaintiffs bring this
13
action as a class action on behalf of themselves and all other similarly situated subscribers within the
14
United States who during the Class Period defined as August 20, 2015 to the present paid for an Apple
15
iCloud subscription. Alternatively, to the extent that the Court should find that a nationwide class is
16
unavailable, Plaintiffs reserve the right to seek certification of state-wide class comprising paid iCloud
17
subscribers within California and Florida during the Class Period. Specifically excluded from all these
18
putative class definitions are Apple, its employees, and directors. Plaintiffs reserve the right to amend
19
these putative class definitions as discovery or other case circumstances may warrant.
20
39. Class certification is appropriate because the class sought to be certified is more than
21
sufficiently numerous to make joinder practical. Upon information and belief, based on Apple’s
22
regulatory filings, common knowledge, and media reporting, the number of paying iCloud subscribers
23
in the United States numbers at least in the tens of millions.
24
40. Class certification is appropriate because Plaintiffs and their counsel are adequate class
25
representatives. Like all members of the class they seek to represent, Plaintiffs Williams and Stewart
26
paid for Apple’s iCloud cloud storage service during the Class Period and, like all class members, these
27
-11-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 13 of 59

1 plaintiffs allege that Apple breached its iCloud agreement with them, misrepresented and falsely

2 advertised its iCloud offering, and violated the UCL by, inter alia, failing to disclose that Apple was

3 not the provider of the iCloud cloud storage service but, in fact, the Plaintiffs’ and class members’ data

4 was stored by third-parties. Plaintiffs’ counsel is experienced in class action litigation, including

5 previous classwide litigation against Apple, and will adequately represent the interests of putative class

6 members.

7 41. Class certification is appropriate because Plaintiffs’ action raises common

8 questions of fact or law, whose means of proof predominates over questions that may call for

9 individual adjudication. Among these predominating common questions of fact or law are:

10 a. Whether Apple and the class members entered into a contract for the provision of

11 iCloud cloud storage services and, if so, the material terms of such contracts;

12 b. Whether Apple materially breached its iCloud agreement with class members;
c. Whether any such material breach caused harm or injury;
13
d. Whether Apple made and disseminated to the public any representation about its
14
iCloud that was false or misleading;
15
e. The measure of any damages, restitution, or other recovery due to the class members
16
as a result of Apple’s conduct alleged herein;
17
f. Whether Apple’s non-disclosure that third-parties unknown to class members were
18
providing the cloud storage of subscribers files should be enjoined.
19
42. Class certification is appropriate because Plaintiffs’ claims are typical of the
20
claims asserted on behalf of the putative class members. Plaintiffs, like all class members, claim
21
that they were harmed because Apple falsely represented that it was the provider of the iCloud
22
storage service when, in fact, the cloud storage of Plaintiffs’ and class members’ data was done
23
by third-parties that were undisclosed to Plaintiffs or class members. All claims asserted by
24
Plaintiffs also are asserted on behalf of all class members, and there are no conflicts of interest
25
that render Plaintiffs’ claims or interests atypical of the claims or interests of the class members.
26
27
-12-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 14 of 59

1 43. Class certification is appropriate because classwide adjudication of the claims

2 alleged by Plaintiffs is superior to separate adjudication by individual class members, which may

3 yield conflicting results, judgments, and obligations. Further, the costs of litigating this complex

4 action against a large multi-national defendant like Apple renders individual litigation impractical

5 and unfeasible, thereby rendering classwide adjudication a superior means of resolving the claims

6 alleged in this Class Action Complaint.

7 44. Class certification also is separately and independently appropriate because Apple

8 has acted or refused to act on grounds generally applicable to the class, such that final injunctive

9 relief or declaratory relief is appropriate respecting the class as a whole. In its iCloud

10 agreements with all class members, Apple continues to represent that Apple is the provider of the

11 iCloud cloud storage service and has failed to and continues to fail to disclose that the cloud

12 storage of iCloud subscribers’ data actually is provided by non-Apple third parties unknown to
the class members.
13
COUNT I
14
(Breach of Contract)
15
45. Plaintiffs hereby incorporate by reference the allegations in paragraphs 1-44 o this
16
Class Action Complaint with the same force and effect as if those allegations had been fully
17
restated herein.
18
46. Plaintiffs and the members of the putative class entered into a contractual
19
agreement with Apple governing their relationship with respect to the Apple iCloud service. A
20
copy of the current version of that agreement is attached hereto as Exhibit 1, and a copy of the
21
version of the agreement that was in effect as of September 16, 2015 is attached hereto as Exhibit
22
2.
23
47. A material term of the iCloud agreements in effect throughout the Class Period
24
was Apple’s promise and representation that Apple was the provider of the Apple iCloud cloud
25
storage service for class members’ data. This term and representation formed part of, inter alia,
26
the second paragraph of the iCloud agreement, which provides that:
27
-13-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 15 of 59

1 Apple is the provider of the Service, which permits you to utilize certain Internet
services, including storing your personal content (such as contacts, calendars, photos,
2 notes, reminders, documents, app data, and iCloud email) and making it accessible on
3 your compatible devices and computers, and certain location based services, only under
the terms and conditions set forth in this Agreement. iCloud is automatically enabled
4 when you are running devices on iOS 9 or later and sign in with your Apple ID during
device setup, unless you are upgrading the device and have previously chosen not to
5 enable iCloud. You can disable iCloud in Settings. When iCloud is enabled, your
content will be automatically sent to and stored by Apple, so you can later access that
6 content or have content wirelessly pushed to your other iCloud-enabled devices or
7 computers.
Ex. 1 to Class Action Complaint (iCloud current U.S. Contract), at 1 (emphasis added); Ex 2 to Class
8
Action Complaint (iCloud U.S. contract last revised September 2015) (emphasis added).
9
48. Plaintiffs and class members fully performed their material obligations under their
10
iCloud agreements with Apple by paying the iCloud monthly subscription fees charged by Apple.
11
49. Apple materially breached its iCloud agreement with Plaintiffs and the class members
12
because, without Plaintiffs’ or class members’ prior consent, instead of Apple being the provider of the
13
cloud storage of class members’ data, such storage was provided by non-Apple third parties with
14
whom neither Plaintiffs nor class members had bargained.
15
50. Apple’s breach of its iCloud agreements with Plaintiffs and class members was
16
material, as individuals are self-evidently concerned about who their sensitive online data is entrusted
17
and provided to. All subscribers were informed and contracted for Apple to be the provider of cloud
18
storage for these subscribers’ data. The storage service, however, was performed by third parties, with
19
Apple effectively acting as a reseller of these third-parties’ cloud storage facilities.
20
51. Plaintiffs and class members were injured as a proximate, direct, and foreseeable result
21
of Apple’s material breach of the iCloud agreements. Had Apple disclosed that, instead, of Apple
22
being the provider of the iCloud cloud storage service other, non-Apple, third-parties were actually
23
undertaking the cloud storage of class members’ data, they would either not have entered into the
24
iCloud agreement with Apple or would not have agreed to pay Apple as much as they did for their
25
iCloud subscription.
26
27
-14-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 16 of 59

1 52. Apple has been able to and has charged a price premium for its iCloud subscription by

2 representing falsely that it was the provider of the iCloud cloud storage service.

3 53. Plaintiffs and class members are entitled to an award of damages as redress for Apple’s

4 material breach of the iCloud agreements with Plaintiffs and the class members, including but not

5 limited to, compensatory damages and/or benefit-of-the-bargain damages.

6 54. Plaintiffs and class members also are entitled to injunctive relief to enjoin Apple from

7 continuing breaching the iCloud agreement by using third parties instead of Apple to continue storing

8 class members data on the cloud.

9 COUNT II

10 (False Advertising – Violation Of California Bus. and Prof. Code, §§ 17500 et seq.)

11 55. Plaintiffs hereby incorporate by reference the allegations in paragraphs 1-44 o this

12 Class Action Complaint with the same force and effect as if those allegations had been fully
restated herein.
13
56. Apple’s representations in connection with the sale of iCloud subscriptions to class
14
members that Apple was the provider of the iCloud cloud storage service and that class members’
15
data would be stored on the cloud by Apple were and are false and misleading within the meaning
16
of California Business and Professions Code, § 17500 because, inter alia, Apple did not disclose
17
that the cloud storage of class members’ data provided through iCloud actually was being stored
18
not by Apple but by third-parties (like Microsoft, Amazon, Google, or possibly others) at their
19
facilities.
20
57. These representations were uniformly communicated to all class members because
21
they were included in and formed a key part of Apple’s iCloud agreements with all class
22
members. The representations were actually false and/or misleading because the data was not
23
stored by Apple, but by third parties whose storage facilities and services Apple was effectively
24
reselling to class members. That statements would have a tendency to mislead or deceive a
25
reasonable consumer and did deceive and mislead Plaintiffs.
26
27
-15-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 17 of 59

1 58. Plaintiffs and class members were harmed as a proximate, direct, and foreseeable result

2 of Apple’s false statements in connection Apple’s sale of iCloud subscriptions to class memberes. Had

3 Apple disclosed that, instead, of Apple being the provider of the iCloud cloud storage service other,

4 non-Apple, third-parties were actually undertaking the cloud storage of class members’ data, class

5 members would either not have subscribed to Apple’s iCloud or would not have agreed to pay Apple

6 as much as they did for their iCloud subscription.

7 59. Apple’s false and misleading statements alleged herein amount to false advertising

8 within the meaning of California’s False Advertising Law, California Business and Professions Code,

9 §17500 et seq.

10 60. Apple continues to make the same false and misleading statements with respect to its

11 iCloud cloud storage service, such that, unless it is enjoined from doing so, Plaintiffs and class

12 members will continue to be harmed because they will not know who is storing their data on the cloud.
Plaintiffs and the class members therefore are entitled to and pray for an injunction to prevent Apple
13
from continuing to disseminate these false and misleading statements.
14
61. Apple has been able to and has charged a price premium for its iCloud subscription by
15
representing falsely that it was the provider of the iCloud cloud storage service.
16
62. Pursuant to California Business and Professions Code, §17535, Plaintiffs and the class
17
members are entitled to and seek an order of restitution for moneys paid by them to Apple for their
18
iCloud subscriptions during the Class Period.
19
COUNT III
20
(Violations of California’s UCL – Cal. Business and Professions Code, § 17200 et seq.)
21
63. Plaintiffs hereby incorporate by reference the allegations in paragraphs 1-44 o this
22
Class Action Complaint with the same force and effect as if those allegations had been fully
23
restated herein.
24
64. Apple’s business practice in connection with the sale of iCloud subscriptions to
25
Plaintiffs and class members as alleged herein is unlawful within the meaning of California’s
26
UCL (Bus. and Prof. Code, § 17200 et seq.) because it violates, inter alia, California’s False
27
-16-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 18 of 59

1 Advertising Law (Cal. Bus. and Prof. Code, § 17500 et seq.) and also because it amounts to a

2 breach of contract.

3 65. Apple’s business conduct alleged herein with respect to Apple’s iCloud

4 subscription sales also independently amounts to an unfair business practice within the meaning

5 of the UCL (Bus. and Prof. Code, § 17200 et seq.). Apple’s misrepresentation as to which entity

6 is providing the cloud storage of Plaintiffs’ and class members’ data cause substantial economic

7 injury that Plaintiffs and class members cannot avoid precisely because Apple fails to inform

8 Plaintiffs and the class members that Apple is not the provider of cloud storage for their data, but

9 that the subscribers’ data actually is turned over to third-parties unknown to Plaintiffs and the

10 class for cloud storage. Apple’s business practice is not outweighed by any countervailing

11 benefits to consumers or competition.

12 64. Apple’s business conduct alleged herein with respect to Apple’s iCloud
subscription sales also independently amounts to a deceptive business practice within the
13
meaning of the UCL (Bus. and Prof. Code, § 17200 et seq.). Apple’s misrepresentations to the
14
effect that Apple is proving the iCloud cloud storage service when, in fact, it has not, has
15
permitted Apple to charge a premium for class members’ iCloud subscriptions.
16
65. During the time that Apple engaged in this unlawful business practice, Plaintiffs
17
and class members conveyed money to Apple in the form of the iCloud subscription fees they
18
paid Apple. Apple acquired this money from Plaintiffs and class members by resort and use of
19
this unlawful business practice.
20
66. Plaintiffs and class members pray for an order of restitution, restoring to them the
21
money they conferred on Apple while Apple engaged in the unlawful business practices alleged
22
herein. Plaintiffs also pray for an injunction to prohibit Apple from continuing to engage in the
23
unlawful conduct alleged herein.
24
25
26
27
-17-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 19 of 59

1 PRAYER FOR RELIEF

2 Wherefore, Plaintiffs on behalf of themselves and on behalf of the members of the class,

3 requests award and relief as follows:

4 A. An order certifying that this action is properly brought and may be maintained as a

5 class action, that Plaintiffs be appointed Class Representatives and Plaintiffs’ counsel

6 be appointed Class Counsel;

7 B. With respect to Plaintiffs’ breach of contract claim (Count I), an award of damages to

8 compensate for Apple’s material breach of the iCloud agreements, as proved at trial;

9 C. With respect to Counts II and III for violations of California’s FAL and UCL,

10 respectfully, restitution in such amount to be determined by the Court;

11 D. Injunctive relief to enjoin Apple from continuing to falsely represent that it is the

12 provider of the iCloud cloud storage service and requiring Apple to disclose to class
members all entities who store class members’ data on the cloud as part of their iCloud
13
subscription;
14
E. An Order directing Apple to disseminate a Court-approved notice to the absent Class
15
members, informing them about the pendency of this class action, and their rights in
16
that regard;
17
F. An order establishing a common fund to be funded by Apple from which any and all
18
damages and restitution amounts awarded to class members may be paid, and from
19
which Plaintiffs’ counsel may be awarded and paid their reasonable attorneys’ fees
20
and costs of suit;
21
G. An award of attorneys’ fees and costs of suit under, inter alia, the common-benefit or
22
common fund doctrine to compensate Plaintiffs’ counsel for their reasonable fees and
23
costs expended in litigating this matter on behalf of the class;
24
H. Such other relief as the Court deems just and proper based on the evidence submitted.
25
26
27
-18-
28 Williams, et al. v. Apple, Inc., CLASS ACTION COMPLAINT
No.
Case 5:19-cv-04700 Document 1 Filed 08/12/19 Page 20 of 59

1 DEMAND FOR A JURY TRIAL

2 Plaintiffs demand a trial by jury on all counts so triable.

3
4 Dated: August 12, 2019 Respectfully submitted,

5
/s/ Roy A. Katriel_________________
6 ROY A. KATRIEL (SBN 265463)
THE KATRIEL LAW FIRM, P.C.
7 4660 La Jolla Village Drive, Suite 200
San Diego, CA 92122
8 Telephone: (858) 546 4435
e-mail: [email protected]
9
AZRA MEHDI (SBN 220406)
10 THE MEHDI FIRM, P.C.
One Market
11 Spear Tower, Suite 3600
San Francisco, CA 94111
12 Telephone: (415) 293-8039
Facsimile: (415) 293-8001
13 e-mail: [email protected]
14 Counsel for Plaintiffs James Stewart and Andrea M.
Williams

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