Existing users, 
Plaintiffs Gain Ground in iPhone Lawsuit Against Apple and AT&T
Posted 6 October 2008 @ 6am in News
Apple and AT&T have been hit with more iPhone lawsuits than you can count on one hand. One of the suits, filed in Northern California and presided over by Judge James Ware, is proving a problem for the duo, who have made several unsucessful dismissal attempts.
Judge Ware declared, in his 32-page decision, that both AT&T and Apple were liable for violating rules in the state of California that are designed to preserve fair competition, and that Apple alone was responsible for abuse, computer trespass and fraud by violating federal and California law. However, it did not state full acceptance of the original plaintiffs complaint; it dismissed other claims in jurisdictions outside of the state of California. Overall thoughm the Judge was very harsh in his words to Apple and AT&T.
This lawsuit was originally filed in 2007 after the release of the iPhone 2G by Paul Holman and Lucy Rivello and listed in the original complaint:
- AT&Ts unfair exclusive to the iPhone until 2012
- Hidden costs of ownership
- Locked phone not usable on other carrier networks
- No access to third party software on the iPhone
- Engineering of iPhone 1.1.1 update and other updates to break modified iPhones
Some of the highlights:
- AT&T cannot force plaintiffs to use arbitration instead of a full civil trial, because the AT&T service contract forcing arbitration was unconscionable under state laws in California, New York, and Washington. Note that arbitration is over 90% of the time in favor of the business vs. the consumer to the point many are seeking to have arbitration shutdown or severely reconfigured.
- The lawsuit can proceed against Apple under antitrust law regarding voice and data services for restricting iPhone owners ability to use their iPhones on competing non-AT&T networks (i.e. T-Mobile)
- The lawsuit can proceed against Apple under antitrust laws regarding iPhone applications due to Apple’s restrictions on iPhone owners ability to use third-party iPhone applications that are not approved first by Apple.
- The lawsuit can proceed against Apple for damaging unlocked iPhones with new versions of iPhone OS software 1.1.1 or higher under the common law, as well as the Computer Fraud Abuse Act and the California Penal Code.
This case could, however unlikely, have some ripple effects felt throughout the cellular phone industry in the United States. It could change the way Apple and AT&T sell and market the iPhone. We would probably see some serious changes in contract terms, device unlocking for use on other mobile carriers, a more open iTunes App Store, etc.
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4 Comments
Posted by MARKINNYC
6 October 2008 @ 1pm
When the first G2 iPhones came out and I stood in line in SOHO to get a pair of them, I wondered then if someone would see the obvious potential for a class action suit against both AT&T and Apple for anti-trust violations. This suit hasn’t called it that - but when a judge rules that the arbitration clause is “unconscionable” under CA state law - he’s no longer having a mild discussion. He’s angry at what the clause contained or how it was structured to be blatantly unfair to the consumer. Angry judges and juries are NOT something Apple wants to contend with at this juncture.(Remember McDonalds corporation and their hot coffee judgement? Getting an award sufficiently large to punish a major corporation requires tens of millions of dollars and the judges are not afraid to make such awards if the behavior was outrageous or severe enough to potentially harm millions of customers! (You could look at the lawsuit even with a 20 million dollar total cost (10m for damages and 10m in attorney’s fees… as an additional $2 dollar per unit tax. If I were the judge I’d probably think that while 20m is a lot of money, it’s not sufficient to compensate the 10 million purchasers for being stuck with AT&T and funding an illegal kickback scheme between Apple and AT&T.) Time will tell! But I’m glad it has finally happened. After all, the guys who make my refrigerator don’t try to tell me where to buy the food I put in it or the electricity that runs it!
What makes Apple so “special” they can flaunt the US anti trust laws?
Posted by stevesaun10
7 October 2008 @ 1pm
Mark,
I couldn’t have said it better. I wanted an iPhone but purchased an iPod Touch instead because of the contractual hocus-pocus Apple and AT&T are pulling. Most of my business associates have done likewise; it doesn’t take an MBA to figure out just how much this is costing a potential customer.
Posted by mawells787
16 October 2008 @ 8am
Mark & Steve,
Ok, my question is wouldn’t this apply to now Verizon and the blackberry storm? they are doing the exact same thing they are locking the phone to be exclusive on verizon in the US. What is the difference between that and the iphone? Or any other phone sold exclusively to a company. As far as cost goes an iphone on AT&T will cost you the same as a blackberry on AT&T or on Verizon, they don’t charge more just because of the phone. My co-worker has a blackberry curve he was going to get an iphone when he found out it the monthly cost was the same but he decided not too because he knows he would drop the iphone.
Posted by FraudFighterPro
21 October 2008 @ 10am
@mawells787
There is different technology at play. The iPhone is a GSM phone. You should be able to put a SIM card in it from any carrier and use the phone on that carrier’s network. There is not anything the carrier would have to do if the SIM is activated.
Verizon, is CDMA. There is no SIM chip, so the only other network you could use the Verizon phone on is Sprint as it is the only other CDMA network in the US. There are none in Europe and a handful in Asia.
In theory you are correct, but there is not that much demand for people on Verizon to move their phone to Sprint, or the other way around. iPhone and GSM is a bigger opportunity for a lawsuit as it is really global in nature.
If the plaintiffs win, i bet you will be able to move VZW phones to Sprint.