Anthony Bartling v. Apple Inc. ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 29 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: APPLE PROCESSOR LITIGATION, No. 19-16720
______________________________
D.C. Nos. 5:18-cv-00147-EJD
ANTHONY BARTLING; et al., 5:18-cv-00271-EJD
Plaintiffs-Appellants,
MEMORANDUM*
v.
APPLE INC.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Edward J. Davila, District Judge, Presiding
Argued and Submitted November 18, 2020
San Francisco, California
Before: TASHIMA, NGUYEN, and HURWITZ, Circuit Judges.
Dissent by Judge TASHIMA
Plaintiffs in this putative class action are purchasers of Apple products who
assert various state-law causes of action for consumer fraud, unfair practices, and
unjust enrichment. They allege that Apple failed to disclose that their devices were
*
This disposition is not appropriate for publication and is not precedent except
as provided by Ninth Circuit Rule 36-3.
potentially vulnerable to hacking and that the patches Apple applied to address the
vulnerabilities degraded the devices’ performance. The district court granted
Apple’s Rule 12(b)(1) motion to dismiss for lack of standing. Reviewing de novo,
In re Zappos.com, Inc., 888 F.3d 1020, 1024 (9th Cir. 2018), cert. denied sub nom.
Zappos.com, Inc. v. Stevens, 139 S. Ct. 1373 (2019), we vacate in part and remand
for further proceedings.
1. “To have Article III standing, ‘a plaintiff must show (1) it has suffered
an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent,
not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged
action of the defendant; and (3) it is likely, as opposed to merely speculative, that
the injury will be redressed by a favorable decision.’” Id. (quoting Friends of the
Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180–81 (2000)).
“Each element of standing must be supported with the manner and degree of
evidence required at the successive stage of the litigation.” Maya v. Centex Corp.,
658 F.3d 1060, 1068 (9th Cir. 2011) (cleaned up). At the pleading stage, the court
“must accept as true all material allegations of the complaint and must construe the
complaint in favor of the complaining party.” Id. (cleaned up). “[G]eneral factual
allegations of injury resulting from the defendant’s conduct may suffice, but such
allegations must permit the court to infer more than the mere possibility of injury.”
Ctr. for Biological Diversity v. Bernhardt, 946 F.3d 553, 560 (9th Cir. 2019)
2
(cleaned up). “Plaintiffs need only one viable basis for standing.” In re Zappos.com,
888 F.3d at 1030 n.15.
Plaintiffs met that modest burden. The allegations in the operative complaint
that Plaintiffs’ devices declined in resale value after Apple announced the
vulnerabilities and installed the patches suffice to plead an economic injury that is
“concrete and particularized.” See, e.g., Maya, 658 F.3d at 1071. The complaint
alleges that a regression analysis of 76,000 transactions in the secondary smartphone
market showed a decline in the value of devices owned by the Plaintiffs after the
announcement of the vulnerabilities and patching, and concluded that the decline
was caused by these events. Whatever the merits or eventual admissibility of the
analysis, at the pleading stage it provides a metric from which an effect on the resale
value of Plaintiffs’ devices can be plausibly inferred. Assuming Apple’s alleged
actions and omissions give rise to a claim upon which relief can be granted, an issue
the district court pretermitted, the alleged injury is “fairly traceable” to that conduct.
See Mendia v. Garcia, 768 F.3d 1009, 1012-15 (9th Cir. 2014). Other factors may
have caused the decline in value, but Plaintiffs allege that the regression analysis
controlled for such factors, an allegation that we must accept at this stage. And,
Plaintiffs’ claimed injury, if proved, would be redressable through damages.
2. Although we can “affirm the dismissal upon any basis fairly supported
by the record,” Burgert v. Lokelani Bernice Pauahi Bishop Tr., 200 F.3d 661, 663
3
(9th Cir. 2000), we decline to address Apple’s Rule 12(b)(6) arguments in the first
instance, leaving that task to the district court on remand.1
VACATED IN PART AND REMANDED.
1
We need not address Plaintiffs’ remaining arguments for standing and deny
Apple’s motion for judicial notice (Dkt. 18).
4
FILED
Bartling v. Apple Inc., No. 19-16720
DEC 29 2020
TASHIMA, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I dissent.
The gravamen of Plaintiffs’ complaint is summarized by the majority as
Plaintiffs’ allegation “that Apple failed to disclose that [Plaintiffs’] devices were
potentially vulnerable to hacking and that the patches Apple applied to address the
vulnerabilities degraded the devices’ performance.” Maj. Memo. at 1–2. The
majority concludes that this allegation is sufficient to show that Plaintiffs “suffered
an injury in fact that is concrete and particularized, and actual or imminent, not
conjectural or hypothetical.” Id. at 2 (cleaned up). I disagree. To begin, that
Plaintiffs’ “devices were potentially vulnerable to hacking” is not an actual injury
that is concrete and particularized. Every device is potentially vulnerable to
hacking. It is, rather, conjectural and hypothetical, not concrete and particularized.
The actual injury then must be “that the patches Apple applied . . . degraded
the devices’ performance.” Id. But, to determine whether Apple’s patches
amounted to an actual injury, we must consider the alternative – not applying the
patches and leaving the devices “vulnerable to hacking.” The complaint alleges
that installing the patches caused Plaintiffs’ devices to “decline[] in resale value,”
which the majority concludes is sufficient “to plead an economic injury.” Id. at 3.
But Plaintiffs’ complaint does not tell us whether leaving the devices vulnerable to
hacking, without patches, would or would not also result in a decline in resale
value and, if so, by how much.
As I understand Plaintiffs’ regression analysis, it does not separate out how
much of the drop in resale value is attributable to the disclosure of the devices’
security vulnerability, which is not a concrete, compensable injury, and how much
is attributable to the patch update. Moreover, Plaintiffs’ analysis does not purport
to show whether the patch update lessened or increased the drop in resale value.
Without such further allegations, it is impossible to tell whether the patching
tradeoff had a net positive or negative effect, i.e., whether the decline in resale
value is attributable to the discovery of the devices’ vulnerability to hacking and
not to the application of the patches. I would thus conclude, as did the district
court, that Plaintiffs have failed plausibly to allege an injury in fact.
Because, on this record, I would affirm the district court’s order dismissing
the complaint for Plaintiffs’ lack of Article III standing, I respectfully dissent.
-2-