NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 5 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
PAUL ORSHAN; et al., No. 18-17329
Plaintiffs-Appellants, D.C. No. 5:14-cv-05659-EJD
v.
MEMORANDUM*
APPLE INC.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Edward J. Davila, District Judge, Presiding
Submitted April 17, 2020**
San Francisco, California
Before: BERZON and IKUTA, Circuit Judges, and LEMELLE,*** District Judge.
Plaintiffs allege that Apple’s representations and omissions as to the storage
capacities of its devices misled consumers in violation of California’s Unfair
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Ivan L.R. Lemelle, United States District Judge for the
Eastern District of Louisiana, sitting by designation.
Competition Law (“UCL”), Cal. Bus. Prof. Code § 17200 et eq., its False
Advertising Law (“FAL”), id. § 17500 et seq., and its Consumer Legal Remedies
Act (“CLRA”), Cal. Civ. Code. § 1750 et seq. The district court dismissed
Plaintiffs’ claims. We reverse the dismissal in part and remand for further
proceedings.
1. Claims under the California consumer protection statutes here at issue are
governed by a “reasonable consumer” standard. Becerra v. Dr. Pepper/Seven Up,
Inc., 945 F.3d 1225, 1228 (9th Cir. 2019). To prevail, plaintiffs must show that “a
significant portion of the general consuming public or of targeted consumers,
acting reasonably under the circumstances, could be misled.” Lavie v. Proctor &
Gamble Co., 129 Cal. Rptr. 2d 486, 495 (Ct. App. 2003). Whether a particular
business practice could mislead reasonable consumers is usually a question of fact
for the jury, and resolution of that question on a motion to dismiss is “rare.”
Williams v. Gerber Prods. Co., 552 F.3d 934, 939 (9th Cir. 2008).
Plaintiffs’ theory that they expected to be able to use the full 16 GB of
advertised storage capacity and their alternative theory—that they did not expect to
be denied for their own use the 18.1-21.3% of the 16 GB storage capacity that is
estimated to be unavailable—are not resolvable at the pleading stage. Consumers
with a wide range of technological needs and varying degrees of technological
sophistication purchase Apple’s products. It is not possible to determine without
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factual development whether it is reasonable for iPhone and iPad consumers to
have expected that they would not be denied use of such a substantial portion of
the advertised storage capacity, nor is it clear whether, if reasonable, such
expectations are shared by a “significant portion of the general consuming public.”
Lavie, 129 Cal. Rptr. 2d at 495.
Apple’s “actual formatted capacity less” disclaimer does not alter this
analysis. We have previously held that an otherwise deceptive representation is not
dispelled by the inclusion of fine print providing additional disclosures. Williams,
552 F.3d at 939. Moreover, “less” does not say how much less, and so gives rise a
second inquiry—whether a reasonable consumer who does read the disclaimer
would contemplate “less” to be as much as the approximately 20% decrease here
alleged.
Nor does Ebner v. Fresh, Inc. resolve the case in Apple’s favor. 838 F.3d
958 (9th Cir. 2016). There, we dismissed California consumer protection claims
without discovery where plaintiffs alleged that only 75% of the advertised net
weight of lip balm could be accessed through the ordinary use of the dispenser tube
in which the lip balm was sold. Id. at 965-66. But the court there emphasized that
“[a] rational consumer would not simply assume that the tube contains no further
product when he or she can plainly see the surface of the bullet,” and the remaining
25% could be accessed, albeit not in the usual way. Id. Here, by contrast, we are
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unable to conclude, at this stage, whether a reasonable consumer would expect that
around 20% of a device’s advertised storage capacity would be inaccessible, and
the unavailable storage capacity cannot be accessed, the complaint alleges, without
forgoing Apple’s warranties on the product.
2. The district court held that Plaintiffs’ alternative theory of deception
failed to satisfy the heightened pleading requirements of Federal Rule of Civil
Procedure 9(b). We disagree.
Rule 9(b) requires plaintiffs with claims sounding in fraud or mistake to
“state with particularity the circumstances constituting fraud or mistake.” Fed. R.
Civ. P. 9(b). The allegations “must be specific enough to give the defendants
notice of the particular misconduct which is alleged to constitute the fraud
charged.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007).
The complaint here furnishes ample notice of the conduct challenged as
deceptive: Apple’s representation that its devices offered 16 GB of storage
capacity, together with its “actual formatted capacity less” disclaimer, and,
additionally, its alleged failure to disclose that the iOS 8 upgrade would consume
storage capacity that had previously been available.
REVERSED AND REMANDED.
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