Backhaut v. Apple, Inc.

74 F.Supp.3d 1033

Adam Backhaut, Bouakhay Joy Backhaut, and Kenneth Morris, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs

v.Apple, Inc., Defendant.

Case No.: 14–CV–02285–LHK

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA San Jose Division

Signed November 19, 2014

William M. Audet, Jonas Palmer Mann, Joshua Caleb Ezrin, Mark Etheredge Burton, Jr., Theodore H. Chase, Audet & Partners, LLP, San Francisco, CA, for Plaintiffs.

David Michael Walsh, Esq., Kai Shields Bartolomeo, Morrison & Foerster, Los Angeles, CA, Tiffany Cheung, Morrison & Foerster LLP, San Francisco, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

LUCY H. KOH, United States District Judge

Plaintiffs Adam Backhaut, Bouakhay Joy Backhaut, and Kenneth Morris (collectively, “Plaintiffs”) bring this Complaint, a putative class action on behalf of themselves and others similarly situated against Defendant Apple, Inc. (“Defendant”) for violations of the Stored Communications Act, 18 U.S.C. § 2701 ; the Wiretap Act, 18 U.S.C. § 2510 ; California's Unfair Competition Law, Cal. Bus. & Prof.Code § 17200 ; and California's Consumers Legal Remedies Act, Cal. Civ.Code § 1750. Compl., ECF. No. 1. The gravamen of Plaintiffs' Complaint is that Apple wrongfully intercepts, stores, and otherwise prevents former Apple device users from receiving text messages sent to them from current Apple device users. Before the Court is Defendant's motion to dismiss Plaintiffs' Complaint. (“MTD”), ECF No. 12. Plaintiff opposed the motion. (“Opp.”), ECF No. 16. Defendant replied. (“Reply”), ECF No. 17. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court hereby grants in part and denies in part Defendant's motion to dismiss for the reasons stated below.

I. BACKGROUND

A. Factual Allegations

Defendant Apple, Inc., a California corporation headquartered in Cupertino, California is the “designer and seller” of the iPhone and other mobile devices that run “Apple's proprietary mobile operating system.” Compl. ¶¶ 7, 35. Apple's mobile operating system is known as “iOS” and its first iteration was released on June 29, 2007. Id. ¶ 7. On October 12, 2011, Apple released iOS 5, which included a “proprietary messaging service known as ‘iMessage’ ” that runs on a client application called “Messages.” Id. ¶¶ 8–9. The Backhaut Plaintiffs are residents of Michigan that purchased iPhones in December 2012. Id. ¶¶ 33, 39, 40. Plaintiff Morris is a resident of California and purchased his last iPhone in October 2012. Id. ¶¶ 34, 47. The Plaintiffs all used Apple's iMessage and Messages application on their iPhones. Two Plaintiffs, Adam Backhaut and Kenneth Morris, switched from Apple iPhones to non-Apple phones in December 2013 and December 2012 respectively.Id. ¶¶ 41, 47. Plaintiff Joy Backhaut continues to use iMessage and her iPhone.¹

Plaintiffs allege that Apple continues to knowingly “intercept and access text messages sent to former iPhone/iMessage Users and prevent their delivery,” in violation of the Stored Communications Act. Id . ¶ 64. In addition to this alleged “intercept[ion] and access,” Plaintiffs contend that Apple wrongfully “receives and stores these messages through the employment of a ... device under” the Wiretap Act. Id. ¶ 70. Plaintiffs further allege that these unlawful business practices support claims under California's Unfair Competition Law (“UCL”). Plaintiffs also allege “unfair” business practices and fraudulent conduct under the UCL. Finally, Plaintiffs contend Apple has made material misrepresentations and omissions to fraudulently induce consumers to purchase iPhones and iPads with the iMessage service, in violation of California's Consumers Legal Remedies Act (“CLRA”). Id. ¶¶ 88, 98–102.

1. Text Messages, iMessages, and Messages

“Text messages” or “texts” are “brief, electronic messages between two or more mobile devices.” Id . ¶ 3. There are “multiple technologies” for sending text messages, but the “traditional” or standard technology is the Short Message Service and Multimedia Messaging Service (“SMS/MMS”) protocols. Id. ¶¶ 3, 5. As an alternative to this standard protocol, Apple's proprietary text messages are known as “iMessages” and are sent using the “Messages” client application. Id. ¶¶ 8–10. Instead of the SMS/MMS protocol for sending and receiving messages, iMessages use Wi–Fi and cellular data networks to send messages and other content between two Apple devices. Id. ¶¶ 9–10.

“Once an iPhone user activates iMessage,” the interface for sending iMessages and SMS/MMS text messages on the Messages client application is the same. Id. ¶ 11. The Messages application “automatically checks if the contact to whom the text message is being sent is also registered as an iMessage user.” Id. ¶ 13. If the contact is registered as an iMessage user, the text message is sent as an iMessage, “bypassing the SMS/MMS system of the sender's cellular carrier.” Id. If the contact is not registered as an iMessage user, the text message is sent as an SMS/MMS. Id. The Messages application “does not allow the user to select whether a text message will be sent using iMessage or SMS/MMS.” Id. ¶ 12. However, a sender can see whether a message was sent using iMessage or SMS/MMS based on the background color of the message: blue for iMessage and green for SMS/MMS. Id. ¶ 14. When an iMessage is “received, the world ‘delivered’ will appear under the text message on the sender's phone.” Id. ¶ 15.

2. Plaintiffs' Experiences

a. The Backhauts

In December 2012, the Backhauts purchased iPhone 5s in Michigan. Id. ¶ 39–40. “At the time of purchase,” a Best Buy employee set up their iPhones, including iMessage. Id. In December 2013, Plaintiff Adam Backhaut purchased a “HTC One,” a non-Apple mobile device that runs on an Android operating system. Id. ¶ 41. Following Adam Backhaut's switch, Plaintiff Joy Backhaut continued to send him text messages from her iPhone. Id. ¶ 43. On Joy Backhaut's phone, the word “delivered” appeared under her messages to her spouse, but Adam Backhaut never received those messages. Id. Upon realizing that he was not receiving certain text messages, Adam Backhaut “attempted to remove his phone number from the iMessage system but was unsuccessful.” Id. ¶ 45. He continues to not receive messages from iPhone/iMessage users.Id. ¶ 45.

b. Kenneth Morris

Plaintiff Morris was an iPhone user from November 2007 to December 2012. Id. ¶ 46. He purchased his last iPhone, an iPhone 5, in October 2012. Id. ¶ 47. In December 2012, Plaintiff Morris purchased a non-Apple phone. Id. Morris also “attempted to remove his phone number from the iMessage system” but was unable to do so. Id. ¶ 49. Morris also asked his contacts to manually change the settings in their iPhones to send him SMS/MMS messages rather than iMessages. Id. This resolved the problem until Apple released iOS 7.1.1, at which point even contacts who had manually changed their settings had difficulties sending Morris text messages. Id. ¶ 50.

B. Procedural History

Plaintiffs filed this putative class action Complaint on May 16, 2014. ECF No. 1. Defendant filed its motion to dismiss on August 18, 2014. ECF No. 12. As part of its motion to dismiss, Defendant also filed a request for judicial notice, which Plaintiff did not oppose.² ECF No. 12. Plaintiffs filed their opposition on September 22, 2014. ECF No. 16. Defendant filed its reply on October 21, 2014. ECF No. 17.

II. LEGAL STANDARDS

A. Motion to Dismiss Under Rule 12(b)(6)

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an action for failure to allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal citations omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the non-moving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.2008).

Nonetheless, the Court need not accept as true allegations contradicted by judicially noticeable facts, and the “[C]ourt may look beyond the plaintiff's complaint to matters of public record” without converting the Rule 12(b)(6) motion into one for summary judgment. Shaw v. Hahn, 56 F.3d 1128, 1129 n. 1 (9th Cir.), cert. denied, 516 U.S. 964, 116 S.Ct. 418, 133 L.Ed.2d 336 (1995) ; see Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir.2002) ; Shwarz v. United States, 234 F.3d 428, 435 (9th Cir.2000). Nor is the Court required to “ ‘assume the truth of legal conclusions merely because they are cast in the form of factual allegations.’ ” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir.2011) (quoting W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.1981) ). Mere “conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir.2004) (internal quotation marks and citations omitted); accord Iqbal, 556 U.S. at 663–64, 129 S.Ct. 1937. Furthermore, “a plaintiff may plead herself out of court” if she “plead [s] facts which establish that [s]he cannot prevail on h[er] ... claim.” Weisbuch v. Cnty. of L.A., 119 F.3d 778, 783 n. 1 (9th Cir.1997) (internal quotation marks and citation omitted).

B. Rule 9(b) Pleading Requirements

Claims sounding in fraud or mistake are subject to the heightened pleading...