Apple 2008 Annual Report Download - page 29

Table of Contents
Birdsong v. Apple Computer, Inc.
This action alleges that the Company’s iPod music players, and the ear bud headphones sold with them, are inherently defective in design and
are sold without adequate warnings concerning the risk of noise-induced hearing loss by iPod users. The Birdsong action was initially filed on
January 30, 2006 in the United States District Court for the Western District of Louisiana asserting Louisiana causes of action on behalf of a
purported Louisiana class of iPod purchasers. A similar action (Patterson v. Apple Computer, Inc.) was filed on January 31, 2006 in the United
States District Court for the Northern District of California asserting California causes of action on behalf of a purported class of all iPod
purchasers within the four-year period before January 31, 2006. The Birdsong action was transferred to the Northern District of California, and
the Patterson action was dismissed. An amended complaint was subsequently filed in Birdsong, dropping the Louisiana law-based claims and
adding California law-based claims equivalent to those in Patterson. After the Company filed a motion to dismiss on November 3, 2006,
plaintiffs agreed not to oppose the motion and filed a second amended complaint on January 16, 2007. That complaint alleges California law-
based claims for breaches of implied and express warranties, violations of California Business & Professions Code §17200 (unfair competition),
California Business & Professions Code §17500 (false advertising), the Consumer Legal Remedies Act and negligent misrepresentation on
behalf of a putative nationwide class and a Louisiana law-based claim for redhibition for a Louisiana sub-
class. On March 1, 2007, the Company
filed a motion to dismiss the California law-based claims, which was heard on June 4, 2007. On December 14, 2007, the Court issued an order
granting the Company’s motion, with leave to amend the complaint. Plaintiffs filed a third amended complaint on January 11, 2008. On
February 15, 2008, the Company filed a motion to dismiss the third amended complaint. On June 16, 2008, the Court granted the Company’s
motion to dismiss the third amended complaint with prejudice. On July 11, 2008, plaintiffs filed a notice of appeal. Plaintiffs’ appeal is pending.
A similar complaint, Royer-Brennan v. Apple Computer, Inc. and Apple Canada, Inc., was filed in Montreal, Quebec, Canada, on February 1,
2006, seeking authorization to institute a class action on behalf of iPod purchasers in Quebec. At the request of plaintiffs’ counsel, the Court has
postponed class certification proceedings in this action indefinitely.
Branning et al. v. Apple Computer, Inc.
Plaintiffs originally filed this purported class action in San Francisco County Superior Court on February 17, 2005. The initial complaint alleged
violations of California Business & Professions Code §17200 (unfair competition) and violation of the Consumer Legal Remedies Act regarding
a variety of purportedly unfair and unlawful conduct including, but not limited to, allegedly selling used computers as new and failing to honor
warranties. Plaintiffs also brought causes of action for misappropriation of trade secrets, breach of contract and violation of the Song-Beverly
Consumer Warranty Act. Plaintiffs requested unspecified damages and other relief. On May 9, 2005, the Court granted the Company’
s motion to
transfer the case to Santa Clara County Superior Court. On May 2, 2005, plaintiffs filed an amended complaint adding two new named plaintiffs
and three new causes of action including a claim for treble damages under the Cartwright Act (California Business & Professions Code §16700
et seq.) and a claim for false advertising. The Company filed a demurrer to the amended complaint, which the Court sustained in its entirety on
November 10, 2005. The Court granted plaintiffs leave to amend and they filed an amended complaint on December 29, 2005. Plaintiffs
’
amended complaint added three plaintiffs and alleged many of the same factual claims as the previous complaints, such as alleged selling of used
equipment as new, alleged failure to honor warranties and service contracts for the consumer plaintiffs, and alleged fraud related to the opening
of the Apple retail stores. Plaintiffs continued to assert causes of action for unfair competition (§17200), violations of the Consumer Legal
Remedies Act, breach of contract, misappropriation of trade secrets, violations of the Cartwright Act, and alleged new causes of action for fraud,
conversion, and breach of the implied covenant of good faith and fair dealing. The Company filed a demurrer to the amended complaint on
January 31, 2006, which the Court sustained on March 3, 2006 on sixteen of seventeen causes of action. Plaintiffs filed an amended complaint
adding one new plaintiff. The Company filed a demurrer, which was granted in part on September 9, 2006. Plaintiffs filed a further amended
complaint on September 21, 2006. On October 2, 2006, the Company filed an answer denying all allegations and asserting numerous affirmative
defenses. On November 30, 2007, the Company filed a motion for judgment on the
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