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Priano-Keyser v. Apple, Inc.

United States District Court, D. New Jersey

December 31, 2019

GINA PRIANO-KEYSER, on behalf of herself and all others similarly situated, Plaintiff,
v.
APPLE, INC., Defendant.

          OPINION

          Kevin McNulty, United States District Judge.

         Gina Priano-Keyser, on behalf of herself and a class of New Jersey purchasers, brings this putative class action against Apple, Inc. ("Apple") for damages, restitution, and injunctive relief relating to alleged defects in Second Generation and Third Generation models of the Apple Watch. The class action complaint ("CAC") asserts three causes of action, for violations of the New Jersey Consumer Fraud Act, N.J. Stat. Ann. § 56:8-1, et seq. ("NJCFA"), breach of express warranty, and breach of the implied warranty of merchantability.

         Now before the Court is Apple's motion to dismiss certain claims for lack of Article III standing, pursuant to Federal Rule of Civil Procedure 12(b)(1), and for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6) (DE 10). For the reasons set forth below, the motion is granted in part and denied in part.

         I. Facts[1]

         This Court has subject matter jurisdiction based on diversity of citizenship, pursuant to 28 U.S.C. § 1332(a). For purposes of a motion to dismiss, all well-pleaded facts stated in the CAC are assumed to be true. See Section II.a, infra.

         Since April 2015, Apple has manufactured and sold "smart watches," which allow a wearer to download apps, send and receive text messages, track the watch's location, and receive phone calls, among other features. (CAC ¶¶ 2, 31.) The first smart watches were known as "First Generation" watches. Since then, Apple has released additional generations, which include "Series 1" and "Series 2" watches, which were released in September 2016, and "Series 3" watches, which were released in September 2017. (Id. ¶¶ 2, 5 and 7.) The different Series have different capabilities; for example, the Series 2 and 3 watches were advertised as water resistant up to 50 meters, and Series 3 watches featured faster performance than Series 2 watches. (Id. ¶¶ 29, 32-33.) In general, the watches were advertised as "activity-oriented devices"; in promotional images, watch-wearers are shown participating in various physical activities, such as running, hiking, climbing, dancing, swimming, and surfing. (Id. ¶¶ 32-34.)

         Apple provides a limited warranty for its watches, running for one year from the original purchase date (the "Limited Warranty"). (Id. ¶ 36.) The terms of Apple's Limited Warranty, generally the same for all models, state as follows:

WHAT IS COVERED BY THIS WARRANTY?
Apple Inc. of One Apple Park Way, Cupertino, California, U.S.A. 95014 ("Apple") warrants the Apple-branded hardware product and Apple-branded accessories contained in the original packaging ("Apple Product") against defects in materials and workmanship when used normally in accordance with Apple's published guidelines for a period of ONE (1) YEAR from the date of original retail purchase by the end user purchaser ("Warranty Period"). Apple's published guidelines include but are not limited to information contained in technical specifications, user manuals and service communications.
WHAT IS NOT COVERED BY THIS WARRANTY?
.... This Warranty does not apply: (a) to consumable parts, such as batteries or protective coatings that are designed to diminish over time, unless failure has occurred due to a defect in materials or workmanship; (b) to cosmetic damage, including but not limited to scratches, dents and broken plastic on ports unless failure has occurred due to a defect in materials or workmanship; . . . (d) to damage caused by accident, abuse, misuse, fire, earthquake or other external cause; . . . (h) to defects caused by normal wear and tear or otherwise due to the normal aging of the Apple Product . . .

(Id. ¶ 37.)[2]

         Apple's website states that an Apple Watch is considered "out of warranty" when it is (1) past the eligible warranty term; (2) "has an issue that's not covered under warranty or consumer law, such as accidental damage"; and (3) if such service is not covered by an AppleCare plan. (Id. ¶ 38.)

         On or about October 15, 2017, Plaintiff purchased a Series 3, 38 mm gold, aluminum case Apple Watch. (Id. ¶ 49.) On or around July 4, 2018, while the watch was in the charger, the watch screen unexpectedly detached from the watch body. (Id. ¶ 50.) At that time, Plaintiff saw that there was a long, deep, jagged crack spanning the length of the bottom section of the screen. (Id.) Plaintiffs daughter pushed the screen back into place but the watch was no longer functional. (Id.) Plaintiff brought the watch to a Genius Bar[3] appointment on August 10, 2018, where she was informed that the watch would need to be screened, diagnosed, and repaired at an Apple depot. (Id. ¶ 51.) On August 13, 2018, Plaintiff was told that Apple would not cover the cost of the repair of the watch under its Limited Warranty, and that fixing the watch would cost Plaintiff $229. (Id. ¶¶ 52-53.) Plaintiff declined to pay out-of-pocket to repair her watch and has been unable to use the watch since July 2018. (Id. ¶ 53.)

         Plaintiff alleges that her experience is identical to those of thousands of Apple Watch owners. (Id. ¶ 56.) In the CAC, Plaintiff has reproduced quotes from other consumers who have complained of this issue on Apple's "Communities" forum. (See Id. ¶ 56.) Those posts generally complain of the same issue: that the screen shatters or detaches from the body of the watch, and that Apple refuses to cover the cost of repair under its Limited Warranty. (Id.)

         Plaintiff alleges that all Apple smart watches contain a common defect and flaw, consisting of swelling lithium-ion (or "li-on") batteries, which causes Apple Watch screens to "crack, shatter, or detach from the body of the Watch (the 'Defect*)." (Id. ¶ 3, 45.) Specifically, the swollen battery puts upward pressure on the weakest point of the watch-the screen-which cracks along the perimeter, shatters, or fully detaches from the body of the watch. (Id. ¶ 46.) Plaintiff alleges that the Defect manifests itself suddenly, and is not the result of any damage or misuse on the part of the wearer. The CAC also alleges, however, that the Defect could be caused by aging or defective internal components of the watches. (Id. ¶ 3.) The Defect can pose a risk to consumers, and several putative class members have suffered scratches and burns due to the Defect. (Id. ¶ 47.)

         Plaintiff alleges that Apple knew about the Defect based on consumer complaints published on the "Communities" forum on Apple's own website. (Id. ¶ 5.) In April 2017, Apple acknowledged the swelling battery defect in First Generation Watches and, for those watches, extended its Limited Warranty from one year to three years. (Id. ¶ 6.) Apple also acknowledged the swelling battery defect in certain Series 2 watches, and, for qualifying watches, extended its Limited Warranty from one year to three years. (Id.)

         The CAC is less specific about the Series 3 watches, however. Plaintiff alleges generally that purchasers of Series 3 watches encountered the same Defect as the purchasers of the Series 1 and 2 watches and have likewise complained on Apple's community forum. The CAC is silent, however, as to whether Apple has acknowledged the swollen battery issue or extended the warranty for Series 3 watches. (Id. ¶¶ 7, 45.) Furthermore, although Apple has acknowledged the "swollen battery" issue in certain First- and Second-Generation Watches, it has refused to acknowledge that the swollen batteries are the cause of the Defect. (Id. ¶ 59.)

         The CAC alleges that Apple knew or should have known about the Defect, but actively concealed or failed to disclose it to Plaintiff (and putative class members). (Id. ¶ 8.) Plaintiff also alleges that Apple's internal policy is to deny the existence of the Defect or to claim that the Defect is the result of "accidental damages" caused by consumer. Apple has thus refused to have its Limited Warranty cover the cost of fixing the shattered or dislocated watch screens. (Id. ¶¶ 8, 10.) Plaintiff alleges that if she and other class members had known about the Defect at the time of purchase, they would not have bought the watches, or would have paid less for them. (Id. ¶ 12.)

         II. Legal Standard

         a. Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(1)

         "The burden of establishing federal jurisdiction rests with the party asserting its existence." Lincoln Ben. Life Co. v. AEI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (footnotes omitted) (citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n. 3, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006)). "Challenges to subject matter jurisdiction under Rule 12(b)(1) may be facial or factual." Id. (citing Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009) (quoting Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006)). A facial attack "concerns 'an alleged pleading deficiency' whereas a factual attack concerns 'the actual failure of [a plaintiffs] claims to comport [factually] with the jurisdictional prerequisites.” Id. (alterations in original) (citing CNA v. United States, 535 F.3d 132, 139 (3d Cir. 2008)) (quoting United States ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir.2007)).]

         This is a facial jurisdictional attack. The applicable standard is similar to the one that applies to a Rule 12(b)(6) motion. See Section II.b, infra. The court considers only the allegations of the complaint and documents referred to therein in the light most favorable to the plaintiff. Gould Elecs., Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000) (citing Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)).

         b. Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6)

         Federal Rule of Civil Procedure 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiffs obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Phillips v. Cnty. of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) (Rule 8 "requires a 'showing' rather than a blanket assertion of an entitlement to relief." (citation omitted)). Thus, the complaint's factual allegations must be sufficient to raise a plaintiffs right to relief above a speculative level, so that a claim is "plausible on its face." Twombly, 550 U.S. at 570; see also West Run Student Hous. Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013).

         That facial-plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement'... it asks for more than a sheer possibility." Id.

         Rule 12(b)(6) provides for the dismissal of a complaint if it fails to state a claim upon which relief can be granted. The defendant, as the moving party, bears the burden of showing that no claim has been stated. Animal Science Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. New Jersey Carpenters & the Trustees Thereof v. Tishman Const. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014).

         When deciding a motion to dismiss, a court typically does not consider matters outside the pleadings. However, a court may consider documents that are "integral to or explicitly relied upon in the complaint" or any “undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiffs claims are based on the document." In re Rockefeller Ctr. Props., Inc. Sec. Litig.,184 F.3d 280, 287 (3d Cir. 1999) (emphasis and citations omitted); see In re ...


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