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Double-Billing Claims|Won’t Stick to Apple

SAN JOSE (CN) - Apple clearly discloses that multiple charges accompany multiple downloads of the same song, a federal judge ruled, dismissing claims with leave to amend.

Robert Herskowitz and Phoebe Juel hope to represent a class of customers who made repeated downloads of the same song from iTunes, only to discover that Apple charged them every time.

Juel says Apple charged her when she downloaded a song from Apple that she had already downloaded but could not locate on her computer. Herskowitz alleges he was charged more than once for the same product.

A federal judge consolidated their cases, which allege breach of contract, bad faith, violation of the Consumers Legal Remedies Act, fraud and unjust enrichment.

Apple argued in its motion to dismiss that the plaintiffs "do not and cannot point to any legal obligation requiring Apple to provide them with a second download of the same song free of charge. To the contrary, their agreement with Apple expressly bars that claim, and provided an express and exclusive remedy that plaintiffs ignore." That remedy is to contact Apple for assistance.

U.S. District Judge Lucy Koh agreed with Apple, noting that "the agreement in effect at the time of Juel's purchase contained an express provision that purchasers were not entitled to re-download a song free of charge."

Apple's Terms and Conditions state that "products may be downloaded only once and cannot be replaced if lost for any reason," the ruling states (emphasis in original). "Once a product is downloaded, it is your responsibility not to lose, destroy or damage it, and Apple shall not be liable if you do so."

Since Juel alleges that she downloaded a song again after she was unable to access it after the first download, and since the express terms of the agreement make clear that she was only entitled to download the song once, Koh found that Apple did not breach its contract with her.

Juel also does not allege that she contacted Apple when she was unable to access the song, which is Apple's "express and exclusive remedy" for "technical problems" with song downloads, according to the ruling.

The judge cited ambiguity in Herskowitz's contract argument in dismissing it.

"It is unclear from the face of the complaint whether Herskowitz is alleging a breach of contract claim based on: (1) the fact that Herskowitz purchased and downloaded one song for which Apple charged him twice, which may constitute a breach of contract claim; or (2) whether Herskowitz intentionally or unintentionally purchased and downloaded a single song twice, and was then charged by Apple twice, which - as discussed in regard to Juel - may not constitute a breach of contract claim," the ruling states. "Consequently the court does not find that Herskowitz has sufficiently alleged and shown facts that provide the grounds for his entitlement to relief."

She also cited the ambiguous nature of Herskowitz's California Legal Remedies Act and unfair competition claims, but granted him leave to amend all of them.

Giving Herskowitz a bit of advice, she said it might suffice for him to state a claim for unfairness under California's unfair competition law if his "allegation is that Apple charges individuals twice for a single purchase and single download."

"However, if Herskowitz's allegation is that Apple is required to issue refunds after customers download the same song multiple times, despite the clear provision warning customers to download a song only once and the provision providing for refunds under limited circumstances, the plausibility of such a claim is much weaker," she added.

Koh also tossed bad-faith claims with leave to amend. The implied covenant of good faith and fair dealing is "limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract," according to the ruling (emphasis in original).

As to the fraud claim, Juel "failed to allege the 'what,' 'when,' 'where,' and 'how' elements of a claim for fraud, particularly as they relate to Apple's alleged misrepresentations, scienter, intent to defraud, or Juel's justifiable reliance," according to the ruling.

While Juel referred to Apple's "misleading advertising campaign," she "does not point to any representation that Apple allowed customers to 'redownload' a song if they 'could not locate' for any other reason," Koh wrote. "In fact, as discussed previously, the agreement states expressly that iTunes songs 'may be downloaded only once and cannot be replaced if lost for any reason.'"

Juel also did not allege when and where she saw and relied on the alleged misrepresentations, the judge noted. Similarly, she did not allege any facts to support the notion that Apple had knowledge of an alleged misrepresentation or intent to defraud.

The ruling slaps at Juel for giving "little more than 'conclusory allegations' and 'unwarranted references.'"

"Without more, there is no basis for inferring that Apple made any false statements knowingly and with the intent to defraud the customers," Koh wrote, again granting leave to amend.

The court further notes that the plaintiffs are not allowed to allege claims brought on behalf of customers who bought products other than from the iTunes store because the terms and conditions for the iBookstore and other app stores are different from those for the iTunes store.

Herskowitz is represented by Joseph Tabacco Jr. of Berman DeValerio. Juel's lead attorney is Christopher Land of the Law Offices of John Kithas.

Apple is represented by Penelope Preovolos of Morrison & Foerster.

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