Suptlfor Coert NOV 17 2017 - eclaim.kccllc.net 11!1 Suptlfor Coert NOV 17 2017 By: K. Mulligan, Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN DIEGO ... Disgorgement

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~ I L E D rcltll of 11!1 Suptlfor Coert

NOV 17 2017

By: K. Mulligan, Clerk

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN DIEGO

DENISE ADAME, individually and on behalf of all others similarly situated,

Plaintiffs,

v.

APPLE INC., and Does 1 through 25; and XYZ Corporations 26-50 inclusive,

Defendants.

Case No. 37-2010-96876-CU-BT-CTL

[FJle;J OO:iID] JUDGMENT IN FAVOR OF DEFENDANT APPLE INC.

Action Filed: TAC Filed:

July 28, 2010 July 2, 2015

[PttOFOSED] JUDGMENT IN FAVOR OF DEFENDANT APPLE !NC.

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On November 6, 2015, Defendant Apple Inc. 's Demurrer to the Third Amended

Complaint and Motion to Strike came on for hearing before the Court, the Honorable Ronald L.

Styn presiding. On November 6, 2015, the Court issued (i) an Order sustaining Apple's

Demurrer as to Plaintiff's cause of action for violation of California's False Advertising Law,

Cal. Bus. & Prof. Code section 17500 et seq. ("FAL"), and (ii) an Order striking Plaintiff's claims

for restitution and disgorgement under her cause of action for violation of California's Unfair

Competition Law, Cal. Bus. & Prof. Code section 17200 et seq. ("UCL"). A true and correct

copy of the Court's November 6, 2015 Orders are attached as Exhibits A and B.

On November 3, 2017, Apple's Motion to Decertify Class came on for hearing before the

Court, the Honorable Ronald L. Styn presiding. On November 8, 2017, the Court issued an Order

granting Apple's Motion to Decertify Class, including a finding that Plaintiff Denise Adame lacks

standing to pursue her causes of action for violation of California's (i) Unfair Competition Law,

Cal. Bus. & Pro£ Code section 17200 et seq. ("UCL") and (ii) Consumers Legal Remedies Act,

Civ. Code section 1750 et seq. ("CLRA"). A true and correct copy of the Court's November 8,

2017 Order is attached as Exhibit C.

IT IS HEREBY ORDERED ADJUDGED AND DECREED THAT:

AJl trial and pretrial dates are vacated, including the trial readiness conference and trial

call set for November 17, 2017.

Judgment shall be entered in favor of Defendant Apple Inc. and against Plaintiff Denise

Adame, pursuant to the Court's November 6, 2015 and November 8, 2017 Orders.

Plaintiff Denise Adame shall take nothing and Defendant Apple Inc. shall recover from

Plaintiff costs of suit incurred in this action recoverable pursuant to Code of Civil Procedure

sections 1032 and 1033.5, subject to the filing of, and ruling on, a Memorandum of Costs.f

The Clerk is ordered to enter the judgment accordingly.

(!$~JUDGMENT IN FAVOR OF DEFENDANT APPLE INC.

l.J. EXHIBIT A

EXHIBIT A

'•

SUPERIOR COURT OF CALIFORNIA, COUNTY OF SAN DIEGO

CENTRAL

MINUTE ORDER

DATE: 11/0612015 TIME: 08:30:00 AM JUDICIAL OFFICER PRESIDING: Ronald L. Styn CLERK: Kim Mulligan REPORTER/ERM: Rachelle Pilato CSR# 13087 BAILIFF/COURT ATTENDANT: A. Riego

DEPT: C~62

CASE NO: 37-2010-00096876-CU-BT-CTL CASE !NIT.DATE: 07/28/2010 CASE TITLE: Herr vs. Apple Inc CASE CATEGORY: Civil - Unlimited CASE TYPE: Business Tort

EVENT TYPE: Demurrer I Motion to Strike

APPEARANCES DAVID F MCDOWELL, Jr, counsel, present for Defendant(s). Benjamin I. Siminou, counsel, present for Plaintiff(s}. Charlynne L Rejaian, counsel, present for Plaintiff(s). Purvi G. Patel, counsel, present for Defendant(s).

The Court hears oral argument and CONFIRMS the tentative ruling as follows:

Defendant Apple, lnc.'s motion to strike is granted as to the allegations and prayer for restitution and disgorgement and denied as to the allegations and prayer for CLRA damages for purchases other than of the iPhone 3G, 3GS and 4.

Restitution

Apple's motion is granted. The complaint prays for "restitution of all monies taken from Plaintiff and the class as a result of the misconduct alleged herein so that Plaintiff and the class can be returned to the status quo ante .... " Specifically, 11the difference between the safes-tax reimbursement on the unbundled price of the iPhones [Plaintiff] purch~sed less the sales-tax reimbursement on the bundled price for such phones" [TAC 1J 86]. The court finds restitution of the difference in the sales-tax reimbursement to Plaintiff analogous to the plaintiffs' attempt to obtain restitution of insurance premiums in M & F Fishing, Inc. v. Sea~Pac Ins. Managers, Inc. (2012) 202 Cal.App.4th 1509. In M&F Fishing the premiums were paid, not to the defendant brokers, but to the insurers. In this case, it is undisputed that Apple pays 100% of the sales-tax reimbursement to the SBE. Thus, as with the insurance premiums in M&F Fishing, there is no basis to award restitution of sale-tax reimbursements to Plaintiff. See also, Day v. AT & T Corp. (1998) 63 Cal.App.4th 325, 340 ["the notion of restoring something to a victim of unfair

DATE: 11/06/2015 DEPT: C-62

MINUTE ORDER Page 1 Calendar No. 13

CASE TITLE: Herr vs. Apple Inc CASE NO: 37-2010-00096876-CU·BT ·CTL

competition includes two separate components. The offending party must have obtained something to which it was not entitled and the victim must have given up something which he or she was entitled to keep'j.

The court is not persuaded by Plaintiffs attempt to distinguish M&F Fishing. While Apple could have paid the sales-tax reimbursement to the State Board of Equalization without collecting reimbursements from its customers, it is undisputed that Apple paid 100% of the sares-tax reimbursement collected to the SBE. Nor is the court persuaded by the authorities Plaintiff relies on. People v. Beaumont Inv., Ltd. (2003) 111Cal.App.4th102, Korea Supply Co. v~ Lockheed Martin Corp. (2003) 29 Cal.4th 1134, Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, People v. Sarpas (2014) 225 Cal.App.4th 1539, Shersher v. Superior Court (2007} 154 Cal.App.4th 1491, Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305 each recognize that a plaintiff can only obtain restitution of monies that a defendant actually retains. While some of the cases impose restitution in instances involving an indirect payment, all involve a defendant actually retaining the allegedly ill~gotten monies. The benefit argument Plaintiff raises based on Apple's option to seek sales-tax reimbursement does not support a finding of restitution because it does not negate the fact that Apple paid 100% of the sales-tax reimbursement to the SBE. Plaintiffs public policy arguments are not persuasive in light of the controlling analysis of M&F Fishing.

Disgorgement

Apple's motion is granted. Plaintiff concedes Apple's motion by failing to offer any opposition to Apple's motion to strike the allegations and prayer for disgorgement.

CLRA Damages for Purchases other than of the iPhone 3G, 3GS and 4

Apple's motion is denied. The court finds, as pied, the complaint alleges facts sufficient to establish compliance with the notice requirements of CC § 1782. The complaint alleges:

138. Pursuant to the provisions of California Civil Code section 1782, Apple received, at least thirty (30) days prior to filing the original complaint in this action, a notice demanding that Apple correct the deceptive practlces and reimburse full compensation to consumers who have purchased iPhones from Apple. To date, Apple has failed to do so.

In bringing this motion, Apple relies, not on the allegations of the complaint, but on evidence of the CLRA notices sent by the original Plaintiffs to Apple. Apple argues that such notices do not provide proper CC § 1782 notice of Plaintiffs damage claims for purchases other than of the iPhone 3G, 3GS and 4 (the iPhones at issue in the CLRA notices sent by the original Plaintiffs to Apple). The extrinsic evidence Apple relies on is not properly before the court on a motion to strike. Pursuant to CCP § 437(a) "The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court ls required to take judicial notice." Therefore, Apple's motion must be denied.

fT IS SO ORDERED.

DATE: 11/06/2015 DEPT: C-62

--·---··---·-·····-------------

Judge Ronald L. Styn

MINUTE ORDER

---------------------------

Page 2 Calendar No. 13

l EXHIBIT B

EXHIBITB


CENTRAL

MINUTE ORDER

DATE: 11/06/2015 TIME: 08:30:00 AM JUDICIAL OFFICER PRESIDING: Ronald L. Styn CLERK: Kim Mulligan REPORTER/ERM: Rachelle Pilato CSR# 13087 BAILIFF/COURT ATTENDANT: A. Riego

DEPT: C-62

CASE NO: 37-2010-00096876-CU-BT-CTL CASE !NIT.DATE: 07/28/2010 CASE TITLE: Herr vs. Apple Inc CASE CATEGORY: Civil - Unlimited CASE TYPE: Business Tort

EVENT TYPE: Motion Hearing (Civil)

APPEARANCES DAVID F MCDOWELL, Jr, counsel, present for Defendant(s). Benjamin I. Siminou, counsel, present for Plaintiff(s). Charlynne I. Rejaian, counsel, present for Plaintiff(s). Purvi G. Patel, counsel, present for Defendant(s).

The Court hears oral argument and CONFIRMS + the tentative ruling as follows:

Defendant Apple, lnc.'s demurrer to Plaintiffs third amended complaint is sustained as to the Violation of False Advertising Law cause of action and overruled as to the remaining causes of action.

The court, as on the previous demurrer, first addresses the preliminary issues of Loeffler v. Target Corp. (2014) 58 Cal.4th 1081 and flsafe harbor."

Loeffler

Loeffler summarizes its conclusions as follows,

[t]he clear basis of plaintiffs' action-that Target represented fhaf it properly was charging and in fact charged sales tax reimbursement on a sale that plaintiffs believe the tax code exempted from taxation-requires resolution of a sales tax law question, that is, whether Target's sales of hot coffee to go to plaintiffs were subject to sales tax or fell within an exemption. That question, which we may characterize as the "taxability" question, is committed in the first instance to the Board, subject to judicial review under the restrictions and pursuant to the procedures provided by the tax code. A UCL or CLRA cause of action such as plaintiffs' cannot be reconciled with the primary decisionmaking role that the tax code vests in the Board with respect to tax issues.

DATE: 11/06/2015 DEPT: C-62


CASE TITLE: Herr vs. Apple Inc CASE NO: 37-2010-00096876-CU-BT-CTL

Loeffler, 58 Cal.4th at 1100. Loefflergoes on,

it would be inconsistent with this scheme to permit the consumer to initiate a consumer action such as plaintiffs' requiring a court to resolve, outside the searching regulatory scheme established by the tax code, whether a sale was taxable or exempt, and for the court to interfere in the statutory system by which the retailer is authorized to satisfy its obligations by remitting excess tax reimbursement amounts to the Board.

Loeffler, 58 Cal.4th at 1104.

The court finds, unlike the allegations in Loeffler, the complaint does not give rise to a "taxability" question. The complaint does not allege that Apple charged sales tax reimbursement on sales that Plaintiffs contend were exempt from taxation. Nor does the complaint allege that Apple charged an improper amount of sales tax reimbursement. Rather, the complaint alleges that Apple failed to disclose to Plaintiff that, instead of paying sales tax reimbursement on the lower cost of a bundled iPhone, Plaintiff would be paying sales tax reimbursement on the higher cost of an unbundled iPhone [TAC 'Wlf 2, 3, 33, 41, 42, 43, 46, 50, 75, 76, 77, 88, 95, 110, 111, 130], Thus, Plaintiff's claims are based, not on an alleged nontaxable transaction or excessive tax, but on an otherwise valid tax, calculated on an amount (the unbundled price of an lPhone) that Apple allegedly failed to disclose. The holding in Loeffler precluding the UCL and CLRA claims is fimited to claims requiring an adjudication of a "taxability" question.

[W]e conclude that permitting plaintiffs to use the UCL or CLRA to challenge Target's collection of a sales tax reimbursement on the ground that the sale was not taxable is inconsistent with the tax code provisions relating to the sales tax, particularly in light of the primary role assigned to the Board with regard to the resolution of sales tax issues and the presumption that all sales are taxable unless the taxpayer demonstrates otherwise to the satisfaction of the Board.

Loeffler, 58 Cal.4th at 1123-1124. Because the complaint does not give rise to a "taxability question, Plaintiff's UCL and CLRA claims are not barred under the analysis of Loeffler.

The court is not persuaded by Apple's argument that the holding in Loeffler is not limited to cases raising specific "taxability" issues, but extends to the pre-sale disclosure the complaint alleges is required in this case. As set forth above, the court finds the holding in Loeffler is limited to "taxability" issues. Nor is the court persuaded by Apple's reliance on the November 21, 2012 Letter from the State Board of Equalization. The SBE letter addresses the issue only in terms of the requirements of the Sales and Use Tax Law (CC§ 1656.1; Regulation 1700(a) and Regulation 1585(a)(3)).

Safe Harbor

Liability under the UCL, CLRA and the FAL does not extend to challenged conduct that falls into "safe harbors" provided by other statutes. Loeffler, 58 Cal.4th at 1125; Gel-Tech Communications, Inc. v. Los Angeles Cef/ular Telephone Co. (1999) 20 Cal.4th 163, 182. Apple relies on Sales And Use Tax Regulation 1585(b)(3) which specifically requires Apple to "report and pay tax measured by the unbundled sales price of the device" and also allows Apple to "collect tax or tax reimbursement from its------customers by the unbundled sales price." Apple relies on allegations that Plaintiff was provided with a receipt showing the amount of the sales tax reimbursement on both of her iPhone purchases [TAC 1111

DATE: 11/06/2015 DEPT: C-62

MINUTE ORDER Page2 Calendar No. 12


62, 63]. However, Apple fails to provide authority holding that Apple's compliance with Sales And Use Tax Regulation 1585(b)(3) and disclosure of the amount of sales tax reimbursement on Plaintiff's receipts provides Apple "safe harbor" from Plaintiff's claims based, not on Apple's collection of an improper sales tax reimbursement, but on Apple's alleged failure to disclose to customers that they would be paying sales tax reimbursement on the unbundled cost of an iPhone. With respect to disclosure of the amount of sales tax reimbursement on Plaintiff's receipts, Loeffler explains,

[i]t is presumed that the parties agreed to the addition of sales tax reimbursement to the sales price if the sales agreement so states, if the sales tax reimbursement is shown on the sales check, or if the retailer posts a notice or notifies consumers by specified methods that reimbursement for sales tax will be added to the sales price of all items or certain items. (Civ.Code, § 1656.1, subd. (a)(1), (2) & (3); 9 Witkin, Summary of Cal. Law, supra, Taxation, § 344, p. 498.)

Loeffler, 58 Cal.4th at 1108-1109. However, the court finds the complaint alleges facts sufficient to rebut this presumption. Specifically, the complaint alleges: "Apple does identify the amount of sales-tax reimbursement charged on the sale, however the number stated is not a product of the percent of sales-tax reimbursement identified on the receipt multiplied by the stated sales price of the iPhone. Rather, it is the product of the percent of sales-tax reimbursement stated on the receipt multiplied by an undisclosed full, unbundled price of the iPhone which is not identified anywhere on the receipt. By listing the bundled price of the phone next to the percentage of sales-tax reimbursement that apple purported to be collecting for the sale, Apple falsely suggested to its customers that Apple was collecting sales-tax reimbursement on the sales (i.e., bundled) price of the iPhone, further concealing the fact that consumers were actually paying a sales-tax reimbursement on the undisclosed, unbundled price of the iPhone" [TAC ~ 411 "[n]or is there an indication on the receipts that the sales-tax reimbursement was calculated on a price other than the stated sales price of the iPhone. Only by conducting an algebraic equation can the customer deduce that they have been charged sales tax on a much higher price than the stated sales price. As a consequence, aside from the fact that the receipts are not generated until after the transaction has been consummated, the average consumer is very unlikely to notice the discrepancy or its cause" [TAC 1J 42]; "[t]he ambiguous, inconspicuous, and inherently deceptive nature of Apple's receipts on bundled iPhone purchases is made worse by the fact that, at Apple's suggestion, many customers choose to have their receipts emailed to them and thus do not have a paper receipt in hand to inspect even if the discrepancy and its cause could be discerned by a the [sic] average consumer" [TAC if 43].

The court is not persuaded by Apple's reliance on Mccann v. Lucky Money, Inc. (2005) 129 Cal.App.4th 1382, because the analysis is specific to the statutory requirements applicable to the selling of foreign currency.

Apple also relies on Revenue and Taxation Code § 6901.5. The court finds, § 6901.5, by its terms, provides for "safe harbor" to reta.ilers only from claims seeking a sales tax reimbursement on a nontaxable transaction or in excess of the taxable amount. Specifically,

When an amount represented by a person to a customer as constituting reimbursement for taxes due under this part is computed upon an amount that is not taxable or is in excess of the taxable amount and is actually paid by the customer to the person, the amount so paid shall be returned by the person to the customer upon notification by the Board of Equalization or by the customer that such excess has been ascertained. In the event of his or her failure or refusa.I to do so, the amount so paid, if knowingly or mistakenly computed by the person upon an amount that is not taxable or is in excess of the taxable amount, shall be remitted by that person to this state.

DATE: 11/06/2015 DEPT: C-62


CASE TITLE: Herr. vs. Apple Inc CASE NO: 37-2010-00096876-CU-BT-CTL

Rev. & Tax. Code § 6901.5.

As discussed above, the complaint does not seek reimbursement for payment of sales tax reimbursement that is not taxable or is in excess of the taxable amount. Rather, the complaint alleges the tax was valid but was calculated on an amount (the unbundled price of an iPhone) that Apple allegedly failed to disclose. Under these circumstances, § 6901.5 does not provide Apple with a "safe harbor."

Actionable Omission

Apple demurrers to the UCL, FAL and CLRA claims arguing that the complaint fails to allege an actionable omission.

On the issue of materiality, the court finds the complaint alleges facts sufficient to establish Apple's intent to charge sales tax on the unbundled price of the iPhone as material. Specifically, the complaint alleges that, "[h]ad Plaintiff been advised that Apple charged a sales~tax reimbursement on the unbundled price of the iPhones even in a bundled sale, Plaintiff would not have purchased on iPhone from Apple without first conducting a diligent search - via the Internet, word of mouth, and by calling retailers - for alternative retailers who did not charge purchasers of bundled iPhones a sales-tax reimbursement on the unbundled purchase price" [TAC ~ 66] "Plaintiff would have discovered that - at the same time Plaintiff and members of the class made their iPhone purchases from Apple - Wal-Mart stores throughout California, as well as other retailers, were offering the very same bundled iPhones that Apple was offering for the same bundled price that Apple was offering except that Wal-Mart and these other retailers only charged purchasers of bundled iPhones a sales-tax reimbursement on the bundled price. Had Plaintiff discovered that Wal-Mart or these other retailers limited a sales-tax reimbursement of the bundled price of the iPhone, Plaintiff would have elected to purchase her phones from Wal~Mart or these other retailers instead of from Apple and thus would have paid less for identical iPhones" [TAC if 66].

On the issue of duty to disclose, the court finds the complaint alleges facts sufficient to support a finding that Apple had a duty to disclose that it charged tax on the unbundled price of the iPhone in a bundled iPhone sale. Outside of a fiduciary relationship, the duty to disclose exists only in three circumstances, "when the defendant had exclusive knowledge of material facts not known to the plaintiff ... when the defendant actively conceals a material fact from the plaintiff; and ... when the defendant makes partial representations but also suppresses some material facts." UMandri v. Judkins (1997) 52 Cal.App.4th 326, 336 citing He/iotis v. Schuman (1986) 181 Cal.App.3d 646, 651. The complaint alleges

Apple knew or should have known that based on its customers' experience in virtually every prior consumer transaction, its customers would, without more information, anticipate being charged a sales-tax reimbursement only on the sales price of their iPhone. Despite this knowledge, rather than provide a notice to the contrary, Apple actually bolstered this expectation by advertising only a single price for its various iPhone models without any indication that the prices were actually discounted or "bundled" prices. Combined with Apple's failure to notify customers that they would be charged a sales-tax reimbursement on the unbundled price (and an indication what the unbundled price would be}, Apple's mere disclosure of a single price for the iPhones led its customers - including Plaintiff - to reasonably expect that they would only be charged a sales-tax reimbursement on the sales price of their

----bundled iPhones-and not on the much higher; undisclosed, unbundled-price;----

[TAC crf 50.] The court finds such allegations sufficient to establish that Apple made a partial

DATE: 11/06/2015 DEPT: C-62


CASE TITLE: Herr vs. Apple Inc CASE NO: 37-2010-00096876-CU·BT-CTL

representation but suppressed material facts regarding the sale~tax reimbursement on an unbundled iPhone sale.

Violation of Unfair Competition Laws for "Unlawful" Business Practice (Business & Professions Code § 17200)

Apple's demurrer is overruled. Apple;s demurrer as to this cause of action is premised on the failure of Plaintiffs CLRA and False Advertising Law (FAL) causes of action. For the reasons set forth herein, the court finds the CLRA cause of action sufficiently pied to withstand demurrer. Therefore, Apple's demurrer is overruled.

Violation of Unfair Competition Laws for "Fraudulent" Business Practice (Business & Professions Code § 17200)

Apple's demurrer is overruled. Apple does not set forth an argument specific to this cause of action. For the reasons set forth above, Apple's demurrer is overruled.

Violation of Unfair Competition Laws for "Unfair" Business Practice (Business & Professions Code§ 17200)

Apple's demurrer is overruled.

A business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits. (Schnall v. Hertz Corp., supra, 78 Cal.App.4th at p. 1166, B3 Cal.Rptr.2d 439; Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 839, 33 Cal.Rptr.2d 438; but see Gel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th at pp. 184-187 and at p. 198, 83 Cal.Rptr.2d 548, 973 P.2d 527, dis. opn. of Kennard, J.) The determination whether a business practice is unfair " ' "involves an examination of [that practice's] impact on its alleged victim, balanced against the reasons, justifications and motives of the alleged wrongdoer. In brief, the court must weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim .... [Citations.]" [Citation.]' " (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 965, 93 Cal.Rptr.2d 413.}

As with the determination whether a practice is fraudulent, the determination whether it is unfair is one of fact which requires a review of the evidence from both parties. (Schnall v. Hertz Corp., supra, 78 Cal.App.4th at p. 1167, 93 Cal.Rptr.2d 439.} It thus cannot usually be made on demurrer. (Ibid.; Saunders v. Superior Court, supra, 27 Cal.App.4th at p. 841, 33 Cal.Rptr.2d 438.)

McKell v. Washington Mut., fnc. (2.006) 142 Cal.App.4th 1457, 1473.

The complaint alleges

95. Apple engaged in "unfair" conduct in violation of Business and Professions Code section 17200 by, among other things, misrepresenting that it was only collecting sales-tax reimbursement based upon the bundled price of the iPhone when in fact Apple was collecting sales-tax reimbursement on the unbundled price of the iPhone. Such deceptive business practices have absolutely no utility or beneficial purpose,

DATE: 11/06/2015 DEPT: C-62

MINUTE ORDER Page 5

Calendar No. 12


and yet are harmful to the public and counter to public policy by causing members of the public to unknowingly pay more money for tangible goods than they agreed to pay.

98. In light of Apple's representations and her experience as a consumer, and in the absence of conspicuous, unambiguous pre-sale disclosures by Apple that it would charge purchasers of bundled iPhones a sales-tax reimbursement on the unbundled price of the phone, Plaintiff reasonably anticipated that she would only pay a sales-tax reimbursement on the sales price of her bundled iPhones and did not agree to pay a sales-tax reimbursement on an amount in excess of the bundled price.

104. Moreover, by failing to disclose to prospective customers including Plaintiff the full, out-of-pocket cost of purchasing an iPhone from Apple, Apple engaged in a "bait and switch" in which it lured prospective customers into its stores (or onto its website) based on advertisements that fostered an expectation of a lower total out-of-pocket price of an iPhone, only to assess a higher total price of an iPhone at the time of purchase.

105. As a result of Apple's conduct, purchasers of bundled iPhones from Apple, including Plaintiff, either never noticed the discrepancy between the sales-tax reimbursement its customers expected to pay and the amount of sales-tax reimbursement Apple actually charged, or if they noticed it at all, only made the discovery long after the fact when there was little or no practical opportunity to redress the discrepancy. This is because, prior to purchase, Apple made no effective effort to advise prospective purchasers of bundled iPhones that they would be assessed a sales-tax reimbursement on the unbundled price of the phone. Moreover, even after the transaction was consummated, the only evidence that the customer had, contrary to their expectations, been charged sales-tax reimbursement on the unbundled price of the phone rather than the sales price, was the fact that the amount of tax listed on the phone was more than the product of the sales price listed on the receipt multiplied by the prevailing tax rate listed on the receipt. ...

The court finds such allegations sufficient ~o support a finding that the alleged conduct is immoral, unethical, oppressive and/or unscrupulous and that the alleged conduct causes injury to consumers which outweighs its benefits.

In light of this ruling, the court does not address the arguments raised under the Cal-Tech "unfair" analysis.

Violation of False Advertising Law (Business & Professions Code§ 17500)

Apple's demurrer is sustained. Addressing the procedural issue, even though the court did not specifically allow Plaintiff leave to amend to add a cause of action for FAL, the court, in the interests of judicial economy and efficiency, exercises its discretion in favor of allowing the amendment and ruling on Apple's demurrer on its merits. Addressing the merits, pursuant to B&P Code § 17509

(a} Any advertisement, including any advertisement over the Internet, soliciting the purchase or lease of a product or service, or any combination thereof, that requires, as a condition of sale, the purchase or lease of a different product or service, or any combination thereof, shall conspicuously disclose in the advertisement the price ,of all those products or services. This requirement shall not in any way affect the provisions of Sections 16726 and 16727, with respect to unlawful buying arrangements.

DATE: 11/06/2015 DEPT: C-62



The complaint alleges, not that Apple failed to disclose the price of all products and services, but that Apple "failed to inform Apple1s customers that when they purchased the iPhone at the purported price listed in the advertisement, Apple would charge the customer sales-tax reimbursement on a significantly higher and undisclosed unbundled price of the iPhone" [TAC ,-r 110]. Nothing in B&P Code§ 17509 requires Apple to make the disclosure the complaint seeks. This section requires only the disclosure. of the price of all products and services, there is no requirement to disclose the sales-tax reimbursement or that the sales-tax reimbursement is calculated based on the unbundled price of the iPhone.

Violation of Consumer Legal Remedies Act (CC§ 1750)

Apple's demurrer is overruled. Apple does not set forth an argument specific to this cause of action. For the reasons set forth above, Apple's demurrer is overruled.

To the extent Apple demurrers to the portion of these causes of action arising out of Plaintiffs purchase of an iPhone 6, "a general demurrer does not lie as to a portion of a cause of action, and if any part of a cause of action is properly pleaded, the demurrer will be overruled." Fire Insurance Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 452 citing Campbell v. Genshlea (1919) 180 Cal. 213, 217. As these causes of action are properly pied as to Plaintiffs purchase of her iPhone 4$, Apple's demurrer is overruled. See also, Kong v. City of Hawaiian Gardens Redevelopment Agency (2003) 108 Cal.App.4th 1028, 1046; Caliber Bodyworks, Inc. v. Supedor Court (2005) 134 Cal.App.4th 365, 384-385; Pointe San Diego Residential CommunUy, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 274.

Apple's request for judicial notice is granted. Plaintiffs objection to Applies request for judicial notice is overruled.

IT IS SO ORDERED.

DATE: 11/06/2015 DEPT: C·62

Judge Ronald L. Styn


EXHIBIT C l

EXHIBIT C


CENTRAL MINUTE ORDER

DATE: 11/08/2017 TIME: 02:45:00 PM DEPT: C-62 JUDICIAL OFFICER PRESIDING: Ronald L. Styn CLERK: Kim Mulligan REPORTER/ERM: Not Reported BAILIFF/COURT ATTENDANT:

CASE NO: 37~2010-00096876-CU-BT~CTL CASE INIT.DATE: 07/28/2010 CASE TITLE: Adame vs. Apple Inc CASE CATEGORY: Civil- Unlimited CASE TYPE: Business Tort

EVENT TYPE: Motion Hearing to Certify/Decertify Class Action

APPEARANCES

The Court, having taken the above-entitled matter under submission on 11/03/17 and having fully considered the arguments .of all parties, both written and oral, as well as the evidence presented, now rules as follows:

After taking this matter under submission the court confirms and modifies its tentative ruling as follows.

Defendant Apple lnc.'s motion to decertify class is granted.

The "proper legal criterion" for deciding whether to certify or decertify a class is simply whether the class meets the requirements for class certification. (See Sav-On, supra, 34 Cal.4th at p. 332, 17 Cal.Rptr.3d 906, 96 P.3d 194.) As a general matter, this pertains to the fundamental question whether '1 'the class action proceeding is superior to alternate means for a fair and efficient adjudication of the litigation.' " (Ibid.) More particularly, whether common questions of law and fact predominate constitutes a proper criterion for certifying or decertifying a class. (Grogan-Beall v. Ferdinand Roten Galleries, Inc. (1982) 133 Cal.App.3d 969, 975-977, 184 Cal.Rptr. 411 {clecertification of class was based on proper criterion where the court determined there was a lack of commonality] (Grogan-Beall).)

Walsh v. /KON Office Solutions, Inc. (2007) 148 Cal.App.4th 1440, 1451-1452.

As summarized in Brinker Restaurant Corp, v. Superior Court (2012) 53 Cal.4th 1004,

------ - [d}raWing--onth~nanguage of Coae-of Civil Procedure sectio11-ss2-an-d ·federa1--precedent;we-have _____ _

DATE: 11/08/2017 DEPT: C-62

MINUTE ORDER Page 1 Calendar No.

GASE TITLE: Adame vs. Apple Inc CASE NO: 37-2010-00096876-CU-BT-CTL

articulated clear requirements for the certification of a class. The party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superiorto the alternatives. (Code Civ. Proc.,§ 382; Fireside Bank, at p. 1089, 56 Cal.Rptr.3d 861, 155 P.3d 268; Linder v. Thrifty Oil Co. {2000) 23 Cal.4th 429, 435, 97 Cal.Rptr.2d 179, 2 P.3d 27; City of San Jose, at p. 459, 115 Cal.Rptr. 797, 525 P.2d 701.) "In turn, the 'community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3} class representatives who can adequately represent the class.' " (Fireside Bank, at p. 1089, 56 CaLRptr.3d 861, 155 P.3d 268, quoting Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470, 174 Cal.Rptr. 515, 629 P.2d 23.) Brinker, 53 Cal.4th 1004, 1021.

The certified class is defined as;

Individuals who purchased an iPhone (3G, 3GS, 4, 48, 5, 5C, 58, 6, or 6Plus) with a wireless-service bundle between July 2009 and November 13, 2014, inclusive, either at an Apple Store in California or on Apple's online store using a California billing address.

Based on recently discovered evidence from Walmart regarding the sale of iPhones by Walmart, Apple argues that Plaintiff Adame is not a proper class representative because she cannot show she has suffered injury in fact or damage and thus is not typical or adequate to represent the class. Apple also argues that individual issues will predominate and thus class treatment is not appropriate in this case.

The court first addresses the issues of the applicability of Bower v. AT&T Mobility, LLC (2011} 196 Cal.App.4th 1545.

In ruling on Apple's demurrer to UCL and CLRA causes of action in the then Plaintiffs' Second Amended Complaint, this court, relying on Bower, ruled that "absent allegations that Plaintiffs could have obtained an iPhone for a lower price from another source" both Plaintiffs UCL and CLRA causes of action fail" [ROA 196]. Thereafter, Plaintiff amended the complaint to allege:

66. Had Plaintiff been advised that Apple charged a sales-tax reimbursement on the unbundled price of the iPhones even in a bundled sale, Plaintiff would not have purchased on iPhone from Apple without

. first conducting a diligent search - via the Internet, word of mouth, and by calling retailers - for alternative retailers who did not charge purchasers of bundled iPhones a sales-tax reimbursement on the unbundled purchase price. Plaintiff would have discovered that - at the same time Plaintiff and members of the class made their iPhone purchases from Apple - Wal-Mart stores throughout C~lifornia, as well as other retailers, were offering the very same bundled iPhones that Apple was offering for the same bundled price that Apple was offering except that Wal-Mart and these other retailers only charged purchasers of bundled iPhones a sales-tax reimbursement on the bundled price. Had Plaintiff discovered that Wal-Mart or these other retailers limited a sales-tax reimbursement of the bundled price of the iPhone, Plaintiff would have elected to purchase her phones from Wal-Mart or these other retailers instead of from Apple and thus would have paid less for identical iPhones.

This court cited to these allegations in overruling Apple's demurrer to UCL and CLRA causes of action in the Third Amended Complaint [ROA 219]. In granting Plaintiffs motion to modify class certification, this court cited to evidence relied on by Plaintiff that Walmart ceased limiting sales-tax reimbursement to the bundled price of the iPhone as of November 13, 2014 [ROA 291}. Based on this evidence, the court approved Plaintiff's proffered end date for the class period as November 13, 2014 [ROA 291]. In

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CASE TITLE: Adame vs. Apple Inc CASE NO: 37-2010-00096876-CU-BT-CTL

denying Apple's recent motion far summary adjudication of the UCL and CLRA causes of action, the court cited to Bower on the standing issue (i.e., "injury in fact/actual injury) and, based on the absence of evidence regarding Walmart's iPhone sales, the court found triable issues of material fact as to whether Plaintiff could have obtained either or both of the iPhones she purchased for a lower price from Walmart (i.e., with sales-tax reimbursement calculated on the bundled price of the iPhone) [ROA 317].

The court is not persuaded by the arguments that Plaintiff now raises that Bower does not apply to Plaintiffs UCL and CLRA claims in this case.

PreliminarJly, Bower is also a cellular phone provider sales tax reimbursement case, and, as such, was decided under facts virtually identical to those presented on this motion. With respect to the UCL cause of action, the complaint at issue in Bower alleged that the plaintiff "relied on the misrepresentations and misleading statements made by ... [AT&D that AT&T is legally required to charge consumers far the bundled sales tax" and, as In this case, that the plaintiff "was denied any opportunity [to] shop around for retailers that do not charge consumers this discretionary fee." Bower, 196 Cal.App.4th at 1554. The court found,

[t]hese allegations are insufficient to plead the required element of injury in fact, the absence of which is fatal to Bower's section 17200 cause of action. Bower's claim that she was told that charging her "sales tax" on the full, undiscounted price of the telephone was mandatory, when it was merely discretionary, and that she was "denied any opportunity" to shop around for a retailer that does not charge sales tax reimbursement on the full, undiscounted price of a cellular telephone as part of a bundled transaction pleads at the most a conjectural or hypothetical injury, not an injury in fact.

Bower did not allege that she could have obtained a bundled transaction for a new cellular telephone-the telephone that she selected-at a lower price from another source. (Peterson v. Ce/lco Partnership (2008) 164 Cal.App.4th 1583, 1591, 80 Cal.Rptr.3d 316 [affirming judgment based on demurrer sustained to § 17200 cause of action on grounds of lack of economic injury when plaintiffs did "not allege they could have bought the same insurance for a lower price either directly from the insurer or from a licensed agent"].) This is not a case in which the defendant's alleged misrepresentation caused a consumer to purchase a product that he or she would not have bought but for the misrepresentation and the product was worth less than represented by the defendant or was different from what the consumer wanted and expected to buy. (Compare Kwikset v. Superior Court, supra, 51 Cal.4th at p. 330, 120 Cal.Rptr.3d 741, 246 P.3d 877 [cause of action stated under§ 17200 because defendant's labeling of product as "Made in America" when all components were not made in America allegedly caused the consumer to "part with more money than he or she otherwise would have been willing to expend" and he or she would not have purchased the product but for the misrepresentation].) Bower thus did not plead injury in fact in connection with her section 17200 cause of action.

Bower, 196 Cal.App.4th at 1554~1555.

The plaintiff in Bower relied on the same allegation with respect to the CLRA cause of action.

In her cause of action under the CLRA, Bower alleged that AT & T violated numerous provisions of the Act by misrepresenting that California law requires it to charge customers sales tax on the full, unbundled price of the cellular telephone when it is not legally required to do so, but rather is only permitted to seek sales tax reimbursement from its customers. On appeal, she contends her allegation

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.. CASE TITLE: Adame vs. Apple Inc CASE NO: 37-2010-00096876-CU-BT·CTL

that she was denied the opportunity to shop around for a retailer that does not charge sales tax reimbursement on the full, undiscounted price of a cellular telephone as part of a bundled transaction is sufficient to satisfy the CLRA's pleading requirements. Similar to her section 17200 cause of action, this allegation is insufficient to support her CLRA cause of action. As noted, Bower did not allege that she could have obtained a bundled transaction for the new cellular telephone that she wanted at a lower price from another source. Bower thus did not allege a ''tangible increased cost or burden" as a result of AT & T's purported misrepresentation sufficient to pursue a CLRA cause of action. (Meyer, supra, 45 Cal.4th at p. 643, 88 Cal.Rptr.3d 859, 200 P.3d 295.)

Bower, 196 Cal.App.4th at 1556.

The court is unable to distinguish the facts of this case from those in Bower. The court finds Bower controlling. Plaintiff offers no persuasive reason for this court to find otherwise.

At oral argument Plaintiff again tried to distinguish Bower from the facts of this case. Following oral argument, the court re-read Bower. In Bower the plaintiff was told by AT&T that charging sales tax reimbursement on the unbundled price of the cellular telephone was mandatory. As a result of AT& T's alleged misrepresentation, the plaintiff was denied the opportunity to shop around for a retailer that did not charge sales tax reimbursement on the unbundled price of the cellular telephone in a bundled transaction. In this case, Plaintiff alleges that Apple failed to disclose that Plaintiff was being charged sales tax reimbursement on the unbundled price of the iPhone. As a result of Apple's alleged failure to disclose, Plaintiff was also denied the opportunity to shop around for a retailer that did not charge sales tax reimbursement on the unbundled price of the iPhone in a bundled transaction. Both the· Bower plaintiff and Plaintiff in this case suffered the same harm - denial of the opportunity to shop around for a retailer that charged sales tax reimbursement on the bundled price of the iPhone in a bundled transaction. Therefore, the holding of Bower applies and Plaintiff must show that she could have purchased her iPhone in a bundled transaction from another retailer without having to pay sales tax reimbursement on the unbundled price. Based on the evidence from Walmart, Plaintiff could not do so at Walmart. Plaintiff fails to offer any evidence that she could have purchased her iPhone in a bundled transaction from any other retailer without having to pay sales tax reimbursement on the unbundled price. As a result, Plaintiff cannot establish injury in fact/actual injury for purposes of her UCL and CLRA claims.

Plaintiffs reliance on Veera v. Banana Republic, LLC (2016) 6 Cal.App.5th 907 and Medrazo v. Honda of North Hollywood (2012) 205 Cal.App.4th 1 is misplaced. Neither involves facts analogous to those in this case or Bower. The alleged misrepresentations in Veera caused the plaintiffs to purchase items of clothing they would not have purchased but for Banana Republic's alleged misrepresentation. The alleged misrepresentations in Medrazo caused the plaintiff to purchase a motorcycle the dealer was not legally allowed to sell. In this case, as in Bower, Plaintiff's UCL and CLRA causes of action are based on allegations that Plaintiff was denied the opportunity to shop around for a retailer that does not charge sales-tax reimbursement on the full, undiscounted price of an iPhone as part of a bundled transaction. This case is not a case in which Plaintiff contends that Apple's alleged misrepresentation regarding the sale-tax reimbursement caused Plaintiff to purchase a product she would not have bought but for the misrepresentation. Both Veera and Medrazo involve such facts and are distinguishable for the same reasons as Kwikset as set forth in the highlighted language above in Bower.

This same distinction is evident in Federal cases discussing Bower including Murphy v. DirecTV, Inc. (G.D. Cal., Oct. 9, 2014, No. CV 07-6465 AG (VBKX)) 2014 WL 12695975.

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DEPT: C-62 MINUTE ORDER Page4

Calendar No.

CASE TITLE: Adame vs. Apple Inc CASE NO: 37-2010-00096876-CU-BT·CTL

... Plaintiff makes one additional argument specific to the CLRA claim as to why she has standing to pursue that claim.

Plaintiff notes that standing under CLRA is broader than standing under UCL, as the injury need not be economic. Under CLRA, the consumer must suffer 11any damage" resulting from the allegedly unlawful practice, which must be "some kind of tangible increased cost or burden to the consumer," but "may encompass harms other than pecuniary damages, such as certain types of transaction casts and opportunity costs." Meyer v. Sprint Spectrum L.P., 200 P.3d 295, 299 (Cal. 2009). Plaintiff argues that she has standing under CLRA because she "lost the opportunity to seek alternatives," such as purchasing equipment from another provider or leasing equipment at lower cost. (Opp'n at 12.)

This type of injury is too conjectural to confer standing. In Bower, the Court held that the plaintiff's allegation that she was denied the opportunity to "shop around" was not only insufficient for UCL standing, but also insufficient for CLRA standing. 127 Cal. Rptr. 3d at 579. Because the plaintiff did not allege she could have acquired the product at a lower price from another source, the court concluded that she had not alleged a "tangible increased cost or burden" resulting from the purported misrepresentation. Id. Similarly here, Plaintiffs claim to have lost the opportunity to shop elsewhere is insufficient for standing absent evidence that she would and could have leased elsewhere at a lower price.

Thus, Plaintiff lacks standing to pursue her CLRA claim.

Murphy v. DirecTV, Inc. (G.D. Cal. 2014) 2014 WL 12695975, at *5. See also, Johnson v. Wal-Mart Stores, Inc. (9th Cir. 2013) 544 Fed.Appx. 696 [finding Bowerinapposite].

The court is not persuaded by Plaintiffs arguments as to the timing of Kwikset and Bower. Bower was decided after Kwikset. Nor is the court persuaded by Plaintiff's reliance on the discussion of Peterson v. Gel/co Partnership (2008) 164 Cal.App.4th 1583 in Kwikset. Nothing in the brief discussion in Kwikset distinguishing Peterson calls lnto question the analysis of Bower.

Applying the analysis of Bower, the court looks to allegations of the complaint and the evidence Apple submits regarding Walmart's sales of iPhones.

The complaint alleges: "Plaintiff would have discovered that - at the same time Plaintiff and members of the class made their iPhone purchases from Apple - Wal-Mart stores throughout California, as well as other retailers, were offering the very same bundled iPhones that Apple was offering for the same bundled price that Apple was offering except that Wal-Mart and these other retailers only charged purchasers of bundled I Phones a sales-tax reimbursement on the bundled price." [TAC 'ff 66.]

The evidence Apple submits regarding Wal mart's sales of iPhones in California during the class period is subject to a motion to seal and will not discussed in this ruling. Plaintiff does not dispute the evidence from Walmart. The evidence demonstrates that Plaintiff Adame could not have purchased the iPhone 4S (32GB) or iPhone 6 (128 GB) from a Walmart in San Diego County. Because Plaintiff cannot establish that she could have purchased her iPhones from Walmart and paid a lower sales tax reimbursement, Plaintiff cannot establish standing - injury in fact under the UCL or damages under the CLRA.

Addressing the commonality issues, the court finds, given evidence of the availability of iPhanes for purchase from Walmart during the class period, there are individualized issues including those with

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. . CASE l"ITLE: Adame vs. Apple Inc CASE NO: 37-2010-00096876..CU~BT-CTL

'

respect to class members' purchasing decisions (in store/online, Appte Store/Walmart, cellular service provider, timing of purchase vis-à-vis "launch" of new iPhones, full retail price at Apple/sale price at Walmart) and with respect to whether class members suffered damage (i.e., the "fact of damage"). Hale v. Sharp Healthcare (2014) 232 Cal.App.4th 50, 63. The court finds these individualized issues preclude a finding that common questions predominate.

The court is not persuaded by the arguments Plaintiff raises.

The argument that Plaintiff "would have been content with the 16GB phone if that is the only way she could have saved the nearly $35 in sales-tax reimbursement" or that Plaintiff ,,would have chosen to buy an iPhone 4S (16GB) from Walmart" to avoid paying the additional sales-tax reimbursement paid at Apple demonstrates individualized issues not suitable for class treatment.

The argument that Plaintiff, in fact, purchased a different iPhone 4S (16GB) in December, 2011, is irrelevant because this purchase and this iPhone have never been at issue in this lawsuit. See, Rosenfeld v. Abraham Joshua Heschel Day School, Inc. (2014) 226 Cal.App.4th 886, 893. Moreover, Apple submits evidence that Plaintiff Adame testified that she does not know if she actually purchased this phone.

Plaintiff argues that Plaintiff is not required to demonstrate that she could have purchased the exact same phone from Walmart. Preliminarily, this allegation is at odds with the allegations of the complaint.

67. Apple's failure to advise Plaintiff that, despite purchasing a bundled iPhone, she would nonetheless be charged a sales-tax reimbursement on the undisclosed full, unbundled price of the iPhone was a substantial factor in causing Plaintiff not to seek out and avail herself of the opportunity to save money by purchasing the exact same bundled iPhone at war-Mart or another retailer who similarly limited its sales-tax reimbursement to the bundled price.

85. As detailed above, Apple's failure to advise Plaintiff that, despite purchasing a bundled iPhone, she would nonetheless be charged a sales-tax reimbursement on the undisclosed full, unbundled price of the iPhone was a substantial factor in causing Plaintiff not to seek out and avail herself of the opportunity to save money by purchasing the exact same bundled iPhone at Wal-Mart or another retailer who only collected sales-tax reimbursement on the bundled price of the iPhone.

See also, -rr'U 53, 66, 92, 106, 118 and 136.

Also, this argument is against the analysis of Bower. "Bower did not allege that she could have obtained a bundled transaction for a new cellular telephone-the telephone that she selected-at a lower price from another source." Bower, 196 Cal.App.4th at 1555. "Bower did not allege that she could have obtained a bundled transaction for the new cellular telephone that she wanted at a lower price from another source. Bower, 196 Cal.App.4th at 1556. Under Bower allegations/proof that Plaintiff could have acquired a different product "at a lower price from another source" are insufficient to satisfy the standing requirement. To prove standing, the Bower requires that Plaintiff establish she could have purchased her exact same iPhones at Walmart. Plaintiff's reliance on Kwiksetfor her arguments to the contrary are unpersuasive as Kwikset is distinguishable for the reasons set forth above.

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. . 8ASE TITLE: Adame vs. Apple Inc CASE NO; 37-2010-00096876-CU-BT-CTL

Plaintiff's raises several arguments with respect to the implications of the Wa!mart evidence. Plaintiffs argument that Walmart would have increased its supply of iPhones to meet customer demand is the type of conjecture and hypothesis Bower holds cannot establish injury in fact/actual damages. Plaintiffs arguments for omitting purchasers of certain iPhones from the class do not address the problems with the class representative's inability to establish standing and with Plaintiff's inability to prove damages with respect to the remaining class members (as a result of the limiting evidence from Walmart). The other arguments Plaintiff raises demonstrate that individualized issues predominate.

The court does not address the other arguments Apple raises, including those based on reliance and causation, because the court does not find these issues dispositive. As such, the court does not address Plaintiffs responsive arguments.

Based on the foregoing the court finds Plaintiff fails to establish that moving forward with this matter at a class action proceeding is "superior to alternate means for a fair and efficient adjudication of the litigation." Sav-On, 34 Cal.4th at 332. Accordingly, the court decertifies this matter as a class action.

IT IS SO ORDERED.

DATE: 11/08/2017 DEPT: C-62

Judge Ronald l. Styn

MINUTE ORDER Page 7 Calendar No_


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SHORT TITLE: Adame vs. Apple Inc

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