Apple Class Action Suit Settlement Delayed
Apple (AAPL) did a bad thing when it released iOS 10.2.1 on January 23, 2017. The operating system update contained code that the company had added to reduce complaints of battery-related shutdowns on the iPhone 6s, and while the update did reduce the shutdowns by ~80% it did so in a way that reduced the phone’s performance. When the iPhone 6s was operating with weak batteries, processor intensive operations would push the previous OS to provide the necessary power to the CPU but the weak batteries would sense the excessive draw and signal the OS to shut down before the batteries would be fully depleted. The ‘fix’ in iOS 10.2.1 now told the CPU not to perform those functions at full speed but at a slower rate, drawing less power from the batteries and no longer causing a shutdown. The fix worked, but it also produced a noticeable slowdown in iPhone performance and by the end of 2017 Apple was apologizing for the undocumented change and lowered the price on replacement batteries as a way to assuage user ire.
Unfortunately for Apple, iPhone fans were not satisfied by the apology or cheaper batteries and the internet was then consumed with #batterygate, creating a class action lawsuit that was brought against the company for not disclosing that it had slowed iPhone performance without informing users. The suit was recently settled with each complainant to receive ~$25, with Apple’s total cost of ~$500m. The company was happy to close the book on an embarrassing event that caused considerable damage to its reputation and legislative focus on its consumer related practices, but the federal judge that ruled in the case was told by the 9th Circuit Court of Appeals that he must review the settlement again due to the fact that he applied the wrong ‘standards’ to the final award. While the appeals court did not rule on the settlement itself, it cited the judge’s “presumption of reasonableness” as a misstep in assigning the fines and court costs.
While the legalese makes it difficult to understand the gist of the appeals ruling, it seems to indicate that the judge should not have assumed that the settlement was reasonable before he assigned court costs ($80.6m). The settlement and award required a certification that the legal requirements of class member notification were completed, with over 95m class action notices sent to persons with potentially eligible devices. However, those who brought the settlement to the appeals court believe that the notices, which were sent to all iPhones with a registered ID, did not cover the actual owners, as businesses could be owners of corporate phones purchased through carriers. As Apple does not track corporate ownership of its phones purchased through carriers, the complainants allege that there were potential class action participants who were not contacted, and the appeals court agreed pushing the settlement back to the lower court.
Unfortunately for Apple, iPhone fans were not satisfied by the apology or cheaper batteries and the internet was then consumed with #batterygate, creating a class action lawsuit that was brought against the company for not disclosing that it had slowed iPhone performance without informing users. The suit was recently settled with each complainant to receive ~$25, with Apple’s total cost of ~$500m. The company was happy to close the book on an embarrassing event that caused considerable damage to its reputation and legislative focus on its consumer related practices, but the federal judge that ruled in the case was told by the 9th Circuit Court of Appeals that he must review the settlement again due to the fact that he applied the wrong ‘standards’ to the final award. While the appeals court did not rule on the settlement itself, it cited the judge’s “presumption of reasonableness” as a misstep in assigning the fines and court costs.
While the legalese makes it difficult to understand the gist of the appeals ruling, it seems to indicate that the judge should not have assumed that the settlement was reasonable before he assigned court costs ($80.6m). The settlement and award required a certification that the legal requirements of class member notification were completed, with over 95m class action notices sent to persons with potentially eligible devices. However, those who brought the settlement to the appeals court believe that the notices, which were sent to all iPhones with a registered ID, did not cover the actual owners, as businesses could be owners of corporate phones purchased through carriers. As Apple does not track corporate ownership of its phones purchased through carriers, the complainants allege that there were potential class action participants who were not contacted, and the appeals court agreed pushing the settlement back to the lower court.
Of course, this next review will cost more in legal fees, court time, and draw out the settlement longer, but that is the price we pay for a legal system that strives to satisfy every possible legal argument, even if 99% of the potential class action participants were notified. The few who did not like the settlement, particularly the legal costs assigned by the judge, have been able to hold off the final say in this long, drawn-out lawsuit, despite pretty much everybody else being satisfied. Such is the state of litigation in the US today. “Justice is justly represented blind, because she sees no difference in the parties concerned. She has but one scale and weight, for rich and poor, great and small.” – William Penn
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