Class Can Keep Fighting 3G IPad ‘Bait and Switch’

(CN) - IPad owners who dodged arbitration over claims related to their 3G-outfitted devices still have a shot at a false-advertising class action against AT&T and Apple, a federal judge ruled.

Apple launched the 3G-enabled iPad on April 30, 2010, with AT&T Mobility as exclusive provider of 3G data service. Though they pushed unlimited 3G data plans to prospective buyers, the companies announced weeks after the launch that they would discontinue the unlimited data plan.

Consumers then filed a class action for fraud, false advertising and other claims, saying the promise of an unlimited 3G data plan induced them into buying the more expensive, 3G-enabled iPads, which cost $130 more than iPads without 3G.

Last year, U.S. District Judge Ronald Whyte forced most of the plaintiffs into arbitration. One plaintiff, Joe Hanna, who never accepted AT&T's arbitration agreement because he never bought an iPad data plan, was allowed to proceed.

After Hanna filed a First Amended Master Consolidated Complaint, AT&T moved to strike the class allegations or deny class certification. The wireless provider claims that class certification is improper since the court has allowed Hanna alone to proceed.

Whyte refused Tuesday, agreeing that the case should proceed to discovery.

AT&T argued "that certification of fraud claims is improper where the class includes those who may never have been exposed to the allegedly false statements or when there are multiple reasons a consumer might buy a product, implying that materiality would vary from consumer to consumer," the 14-page ruling states.

Noting the availability of various data plans, however, Whyte said that "there is no basis to assume that the availability of the unlimited data plan in particular would have been material to all class members."

"Here, plaintiff has alleged that the key misrepresentation - that purchasers of a 3G-capable iPad could later upgrade to the unlimited data plan and switch in and out of the plan - was made on a consistent basis by defendants to the entire class," he added.

AT&T can fight class certification again at a later date, the court said.

"In light of plaintiffs' representation that Hanna is seeking relief from ATTM only on behalf of the non-subscriber class, the court understands the prayer to mean that plaintiffs seek an order requiring ATTM to restore the unlimited data plan to the non-subscriber class and requiring Apple to restore the unlimited data plan to the Apple class," Whyte wrote, abbreviating AT&T Mobility. "That does not conflict with the court's order compelling arbitration of the other plaintiffs' claims against ATTM. Thus, the motion to strike the prayer for relief is denied."

Whyte ordered a case management conference for July 13, and said the parties must file an agreed-upon discovery plan or any revised proposals by July 6.

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