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‘High Hill to Climb’ in Apple Class Action

SAN FRANCISCO (CN) - Customers who accuse Apple of concealing its use of refurbished parts and products in warranty claims face a "high hill to climb" for class certification, a federal judge said Wednesday.

Lead plaintiff Patricia Sue Adkins sued Apple in November 2013, claiming it falsely represented that its AppleCare warranty plans guaranteed customers new parts and products for repairs and replacements.

During a Wednesday hearing, U.S. District Judge William Orrick rattled off a long list of problems he has with the plaintiffs' motion for class certification and overall case, including concerns about adequacy of counsel.

"The way this case has been litigated from the get-go has been very troublesome," Orrick said.

The judge took issue with the way some plaintiffs, including former lead plaintiff Adkins, left the case while new plaintiffs who bought plans under different circumstances were added. Orrick also was concerned about discovery issues and that the motion for a class certification hearing was delayed repeatedly.

The plaintiffs' new attorney, Curtis Cutter, assured Orrick that he and his law firm - Kershaw, Cutter & Rattinoff - are seasoned in class action litigation and can rally the resources of other firms to take on Apple.

"We're committed to this case," Cutter said. "We're going to see this case through. I think the merits are strong, and we're used to these fights."

But Apple attorney Penelope Preovolos said the case has dragged on for nearly two years, and that the plaintiffs have not provided a shred of evidence that any customers did not receive the service they were promised under the AppleCare and AppleCare+ warranties.

The extended warranty plans promise repairs with "new or refurbished parts" and replacements that are "new or equivalent to new in performance and reliability," according to the plaintiffs' third amended complaint.

"The product at issue here is the service plan," Cutter said. "That service plan contains a core false statement: that the phones you receive are new or equivalent to new. That's false. By Apple's own admission, less than half of the phones you get are likely to be new."

Cutter said that Apple fails to disclose its use of refurbished parts and replacements until after it has "taken your money," when it issues post-sale emails and receipts to customers.

Preovolos countered that Apple expends extraordinary resources on manufacturing high-quality products and that the "remanufacturing process" is practically identical to the process of building a new iPhone.

"There's no evidence in the record that people would have understood new or equivalent to new to mean anything other than refurbished," Preovolos said.

The Apple attorney added that one plaintiff, Fabrienne English, acknowledged in a deposition that she did not understand the phrase "new or equivalent to new in performance and reliability."

"There was no common understanding or common exposure to these terms," Preovolos said.

Orrick cited a major problem with the motion for class certification: that Apple traced the serial number of English's replacement phone and found that she had received a new phone for her warranty replacement, not a used one.

"If Mrs. English got a new phone instead of a used one, I see adequacy problems with that," Orrick said.

Cutter responded that the plaintiffs can find another class representative who did get a used phone under that plan to add to the case. He said that does not change the fact that English bought a warranty plan under the false pretense that repairs and replacements would be made with new parts and products.

"She received a lottery ticket for potentially a new phone, potentially a used phone," Cutter said. He said a subclass of plaintiffs who received used phones as replacements can be part of the larger class that overpaid for falsely presented warranty plans.

But Orrick said the plaintiffs seem to lack sufficient evidence to show a uniformity of conduct by Apple, which is required for class certification.

"I don't think there's a theory of liability that provides a basis for certifying a class," Orrick said.

Cutter, given the last word in the hour-long debate, said the plaintiffs have "more than enough evidence" to show that Apple's core phrase of "new or like-new" for warranty repairs and replacements is materially false.

Orrick said he will outline the next steps for both parties in the case when he issues his ruling on the motion for class certification.

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