Apple’s disclosure reading “unduly restrictive” in collective proceedings
Apple’s attempt to block the disclosure of a French watchdog’s 2020 decision against it has failed. Here, we explore why its interpretation was deemed “unduly restrictive”, and how this might impact future collective proceedings.
It may be one of the world’s most dominant technology companies, but Apple is currently facing proposed collective proceedings amid claims that it abused its market power and leveraged its dominant position by engaging in unfair practices.
The Silicon Valley behemoth has already been dealt a blow by losing its attempt to block the disclosure of another similar case, decided by a French watchdog in 2020.
According to Proposed Class Representative Justin Gutmann (the ‘PCR’), Apple sold iPhones with defective batteries from 2015 onwards, despite knowing they were not fit for purpose. The company then introduced a new software update that, unbeknown to users, contained a power management tool that slowed the performance of older iPhones – a process known as ‘throttling’.
“Instead of doing the honourable and legal thing by their customers and offering a free replacement, repair service or compensation, Apple instead misled people by concealing a tool in software updates that slowed their devices by up to 58 per cent,” Gutmann said.
The software update itself was designed to prevent performance issues and stop devices from abruptly shutting down, but Gutmann says that Apple failed to make clear that the tool within the update would also slow the phones down. He believes the aggregate losses of the proposed class of around 26.1 million iPhone users are at least £853m. As such, Gutmann is applying for a Collective Proceedings Order (CPO).
Apple has made it clear that it will oppose the CPO’s grant. It may even seek summary disposal of the application.
The DGCCRF decision
In the first case management conference, held on 22 November 2022, Gutmann argued that the disclosure of a decision by a French watchdog in 2020 would be necessary to secure fair and expeditious conduct of the proceedings.
Gutmann is referring to a ruling by the French General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) on 7 February 2020, for which Apple was fined €25m. Full details are not in the public domain, but a press release issued at the time did include some information regarding the complaints against Apple. It stated, among other things, that the General Directorate had successfully proven Apple’s failure to inform iPhone users that iPhone Operating System (iOS) updates were likely to cause slower device performance. It also said that many consumers would have been forced to change their batteries, or even buy a new phone.
This decision essentially addressed the same exploitative conduct as that concerning current proceedings, Gutmann submitted.
Necessary or strictly necessary?
In response, Apple pointed to paragraph 6.28 of the Guide to Proceedings. This states that “the Tribunal does not encourage requests for disclosure as part of the application for a CPO. However, where it appears that specific and limited disclosure or the supply of information is necessary in order to determine whether the claims are suitable to be brought into collective proceedings, the Tribunal may direct that such disclosure or information may be supplied prior to the approval hearing.”
According to Apple, this demonstrated that the PCR must prove that the DGCCRF decision was necessary for his application to succeed and to obtain certification. “Necessary” meant “strictly necessary”, Apple suggested. Unless that necessity was shown, the application had to fail.
An unduly restrictive reading
Unfortunately for Apple, the CAT did not accept this narrow construction. It was, it felt, an impractical approach, largely because the CAT would not be able to assess conclusively what would be necessary for the certification hearing at that point in time.
“The point of principle that disclosure should not be ordered until it has been shown it is strictly necessary is, we have decided, an unduly restrictive reading of paragraph 6.28,” it said. “The suggestion that we should all be coming back on a day between now and the hearing of the certification to reargue this point seems extremely unattractive.”
How this will affect future disclosure applications in collective proceedings remains to be seen, but it does suggest that the bar for demonstrating necessity is not as high as some may assume it to be.
It is, however, clear that collective proceedings against tech giants like Apple will continue to present interesting talking points and are worth monitoring closely.
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