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`UNITED STATES DISTRICT.COURT
`EASTERN DISTRICT OF NEW YORK
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`ROSLYN WILLIAMS, CHAIM LERMAN
`CHRISTINA GONZALEZ, AND JAMES VORRASI,
`Individually, and on behalf of others similarly situated,
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`BROO/(L YN OFF/
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`· Plah1tJff~, :. ·
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`· , .
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`15 CV 07381 (SJ)
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`ORDER ON MOTION
`TO DISMISS
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`- against -
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`APPLE INC.,
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`Defendant.
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`JOHNSON, Senior District Judge: .
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`Apple 'Inc. ·('.'Apple") moves to dismiss the complaint of Roslyn Williams,
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`Chaim Lerman, Christina Gonzalez, and James Vorrasi (collectively, "Plaintiffs").
`Williams, Lerman, and Gonzalez (the "Ne~ York Plaintiffs") sued Apple under New
`York's Consumer Protecticm · 1aWk :·~Vorrasi ·sued Apple under New Jersey's
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`Consumer Fraud Act. Based on the submissions of the parties and for the reasons
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`stated below, the motion to dismiss is DENIED.
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`I.
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`Background
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`Plaintiffs .claim they were deceived into downloading iOS 9, an Apple
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`operating system, which· either. completely crippled or greatly diminished the value
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`of their iPhone 4s devices. Plaintiffs ·claim that they were made to believe that iOS
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`Case 1:15-cv-07381-LB Document 35 Filed 11/01/17 Page 2 of 12 PageID #: 224
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`9 was either necessary to the continued security and operation of their devices or that
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`it would improve their devices' operation. They claim Apple knew from its own
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`internal testing that iOS 9 would destroy or greatly diminish the value of iPhone 4s
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`devices. Yet, Apple not only failed to inform them of this eventuality, but also
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`actively marketed iOS 9 to iPhone 4s owners, sending update alerts to their devices.
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`When ·Plaintiffs followed the alerts, they were led to a download screen that
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`stated the following:
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`With this update your iPhone, iPad and iPod Touch [will] become
`more intelligent and proactive with powerful search and improved
`Siri features·.~. And, built ·iri apps become more powerful with
`detailed transit information in Maps, a redesigned Notes app, and
`an all-new News app. And improvement~ at the foundation of the
`operating system enhance performance; improve security and give
`you up to an hour of extra battery life.
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`(Docket Number ("Okt..1No.") Dkt. No. 30-2.; Ex.: 5). Plaintiffs claim that no
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`reasonable consumer would have thought that this message meant that iOS 9 would
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`destroy their device. .
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`FollowingHb¢::dQwnload scr.een; Plaintiffs encountered the iOS 9 User
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`Agreement. 1 The agreement claims that iOS 9 is being offered on an "AS IS" and
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`"AS AVAILABLE" basis with "ALL FAUL TS AND WITHOUT WARRANTY OF
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`ANY KIND." (Dkt..No. 30-1,at ?)i(~mphasi~l'in~original). "INSTALLATION OF
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`THIS iOS SOJ:TW ARE MAY AFFECT. THE AVAILABILITY AND USABILITY
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`1 It remains unclear how long this agreement would have been on the iPhone 4s's 3.5-inch screen;
`on a standard letter-size paper, the agreement is 11 pages long.
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`Case 1:15-cv-07381-LB Document 35 Filed 11/01/17 Page 3 of 12 PageID #: 225
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`OF THIRD PARTY SOFTWARE, APPLICATIONS OR THIRD PARTY
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`SERVICES, AS WELL AS APPLE PRODUCTS AND SERVICES." (!4.) The
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`agreement further! state.s that the user ·be!ars the "SOLE RISK" of the satisfactory
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`quality, performance, accuracy and effort of iOS 9. (Id. at 6-7). Again, Plaintiffs
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`claim that no reasonable consumer would haye thought that this agreement meant
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`that iOS 9 would destroy their device.
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`Gonzalez claims that after she downloaded iOS 9, her phone immediately
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`"crashed and froze completely." (Dkt. No. 18, ~ 11, 22). She could not access any
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`functions whatsoever,·nQt even the basic call and text features. (Id.) As a result, she
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`had to purchase a new iPhone. Williams claims that although her device did not quite
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`'give up the ghost' like Gonzalez's, so many of the device's core functions, like
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`phone, text, and email, failed so frequently that the device was de facto unusable.
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`(Id. at~ 22). As''a result, she als9 purchased"a new iPhone. Lerman and Vorrasi
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`claim to have experienced the same problems as Williams but simply refused to
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`spend hundreds of dollars on a new device. (Id.)
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`Defendants move to dismiss Plaintiffs' claims arguing, among other things,
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`that the iOS 9 User Agreement bars any suit regarding the satisfactory operation of
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`iOS 9 or its compatibility with any device. Plaintiffs assert that nothing in the
`agreement disclafmro~''h\ilke·~\a; user :~w~e of the potential that iOS 9 will destroy
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`their device, nor should a mere disclaimer entitle Apple to intentionally damage their
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`devices under the guise of an update that will "enhance performance."
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`II.
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`Discussion
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`A.
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`Standards of review
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`To survive a motion to dismiss, a complaint must contain sufficient facts that,
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`if accepted as true, would "state: a claim to relief that is plausible on its face."
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`Ashcroft v. Igbal, 556 U.S. 662, 678 (2009). A claim is facially plausible where "the
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`plaintiff pleads factual content that allows the court to draw the reasonable inference
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`that the defendant is liable for the misconduct alleged." Igbal, 556 U.S. at 678. The
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`complaint must contain "more than labels" and conclusory assertions. Bell Atl.
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`Corp. v. Twombly, 550 U.S. 544, 570 (2007).
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`B.
`N.Y. G.B.L. §§ 349 & 350
`New York prohibits "t d]eceptive ·acts or practices in the conduct of any
`business, trade or:·commerce o{in' the'fu~isH1Wg·~tany service in this state." N.Y.
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`G.B.L. § 349. New York also prohibits ."[f]alse advertising in the conduct of any
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`business, trade, or commerce or in the furnishing of any service in this state." N. Y.
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`G.B.L. § 350. To prove a violation of Section 349 or 350, a plaintiff must show that
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`the defendant engaged in consumer-oriented conduct that was materially misleading
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`and that the plaintiff suffered an injury as a result of that deceptive act or practice.
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`See Oswego Laborers'.Local 214 Pension Fund.v. Marine Midland Bank, 85 N.Y.2d
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`Case 1:15-cv-07381-LB Document 35 Filed 11/01/17 Page 5 of 12 PageID #: 227
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`20, 25 (1995); Koch v. Aker. Merrall & Condit Co., 18 N.Y.3d 940, 941 (2012); see
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`also Orlander v. Staples·. Inc., 802 F.3d 289, 300 (2d Cir. 2015).2
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`A practice. is·mat~riallymisleading where it is"~'likely to mislead a reasonable
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`consumer acting reasonably under the circumstances." Stutman v. Chem. Bank, 95
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`N.Y.2d 24, 29 (2000). A plaintiff need not prove that the "defendant acted
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`intentionally or with scienter." Watts v. _Jacks~n Hewitt Tax Service Inc., 579 F.
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`Supp. 2d 3 34, 34 7 (E.D .N. Y. 2008). But there can be no claim of deceptive practices
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`"when the alleged practice was fully disclosed." Id.
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`In assessing the adequacy of pleadings under Sections 349 and 350, courts
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`may take into account the parties' relative bargaining positions and access to
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`information. See Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 343-44
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`(1999); Sims v. First Consumers Nat'l Bank, 303 A.D.2d 288, 290 (N.Y. App. Div.
`2003). For example,-~wnen a defendant excfusively possesses information that a
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`reasonable consumer would want to know and could not discover without difficulty,
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`failure to disclose can constitute a deceptive or misleading practice. See Oswego, 85
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`N.Y.2d at 27; Watts, 579 F. Supp.)d at 347.
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`An injury under Sections 349 and 350 must be "actual, although not
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`necessarily pecuniary, harm." Oswego, 85 N.Y.2d.at 26; see also Small v. Lorillard
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`Tobacco Co., 94 N.Y.2d 43, 56 (1999); Orlander, 802 F.3d at 302. And although
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`2 Apple does not dispute that th~ practices at issue were consumer oriented. As such, this Court
`assumes Plaintiffs have properly pleaded that element.
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`"reliance is not an element of a § 349 claim," Stutman, 95 N.Y.2d at 29, a plaintiff
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`must prove that the material misrepresentation or omission caused the injury. See
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`Oswego, 85 N.Y.2d at 26; Stutman, 95 N.Y.2d at 30.
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`I .
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`Material ~isrepresentation
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`The New York Plaintiffs alleged that the download screen makes material
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`misrepresentations oy stating that }OS 9 will "enhance performance" and make their
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`devices "more intelligent" when iOS 9 actually destroys (or at least greatly
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`diminishes the value of) iPhone 4s devices. This allegation is sufficient to satisfy the
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`material misrepresentation element.,
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`Alternatively, the New York Plaintiffs also 'satisfied this element by alleging
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`that iOS 9 was harmful due to factors within Apple's control and that Apple knew
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`about its harmfulness from pre-relea5e testing yet failed to disclose that harm. See
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`Goshen v. Mutual Life Ins. Co. ofN.Y., 98 N.Y.2d 314, 326-27 (2002).
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`Apple argues that neither of these constitutes a material misrepresentation.
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`First, Apple claims, cJ~~p~te its. down~oad ,~creen representations, its disclaimers bar
`the instant claim~~· .T3ut Apple knows. well that disclaimers cannot, at the motion to
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`dismiss stage, bar a Section 349 suit because disclaimers do not establish a defense
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`as a matter of law. See Koch, 802 F.3d at 941; Goshen, 98 N.Y.2d at 326; Gaidon,
`94 N.Y.2d at 345';· ~Koch v. ·Greenberg, 626 Fed. App'x 335, 340 (2d Cir. 2015)
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`(summary' order).
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`Second, Apple claims.the iOS 9 User Agreement fully discloses the allegedly
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`deceptive conduct, 'foreclosing any claim of misrepresentation. This argument is a
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`variant of the first. Apple is arguing that no reasonable consumer would have been
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`misled by its conduct in light o~ the disclosures made in the agreement. But by this
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`Court's reading,.-~ reasonable· consumer,. could find that the agreement does not
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`disclose that the iOS 9 software would (or could) render their iPhone 4s inoperable.
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`Furthermore, the agreement appears directly after the download screen. A
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`reasonable consumer under these circumstances would read the agreement in light of
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`the download screen's representations, concluding that iOS 9 was safe - after all,
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`Apple told consumers to· download it for the express purpose of improving their
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`devices.
`Finally, ApJ1~ argues that th~ representations in the download screen were
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`not misleading. The download screen says "improvements at the foundation of the
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`operating system enhance performance, improve security and give you up to an hour
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`of extra batterf life." {Dkt. No. 30-2~ :at Ex. ·s) (emphasis added). Plaintiffs allege
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`that the ·phrase "enhance performance"· is misleading since the update actually
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`destroyed their devices. Apple claims that Plaintiffs' isolation of "enhance
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`performance" inappropriately takes that phrase ~but ~f context. But the Court is hard-
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`pressed to find any context which makes "enhance performance" compatible with
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`"destroys iPhone 4s devices."
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`Conveniently
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`then, Apple alternatively claims
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`iOS 9 did enhance
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`performance: by improving security and extending battery life. In essence, Apple
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`claims that "enhance pe1Jormance" has no me~ing by itself. This is a shocking
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`argument to make on the heels of a claim that "enhance performance" was taken out
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`of context - and·: therefore had at least some meaning, even if different than the
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`meaning ascribed to· it by Plaintiffs. But the contradiction is of no moment. The
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`plain language of the download screen precludes such an interpretation. The
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`download screen uses the conjunction and with a comma. It is reasonable to think
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`that "enhances performance, improves security and [extends battery life]," means
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`that the download will do all three~
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`Even if "enhance performance" only meant improving security and extending
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`battery life, that argument still does not defeat the New York Plaintiffs' claims since
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`inducing a consumer to doWI1load iOS 9 while knowing that it will destroy their
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`device implicates Sections 349 and 350.
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`The New York Plaintiffs have sufficiently pleaded injury in that they claim
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`iOS 9 irreversibly3 destroyed, or greatly diminished the value of, their device.
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`Apple's opposition to this prong is without ment.
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`3 It is important to note that the iOS 9 download was irreversible. Once applied to a device,
`Plaintiffs could not revert to their prior operating system .
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`Causation
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`Finally, the New York Plaintiffs have sufficiently pleaded causation. Apple
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`misled them into believing iOS 9 would :enhance the performance of their devices
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`through representations it made in its download screen. As a result, they downloaded
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`the software, which destroyed, or greatly diminished the value of, their devices.
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`Apple concedes Plaintiffs encountered the download screen prior to downloading
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`iOS 9 and that it makes· the above representations. As such, Apple's causation
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`arguments are without merit. Therefore, the New York Plaintiffs' Sections 349 and
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`350 claims are plausible.
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`C.
`New Jersey Consumer Fraud Act ("CFA") claims
`To establish a: Consumer Fraud Act claim in New Jersey, a plaintiff must
`plead: (1) untawful conduct!; (2) ~certMnab)1~1·i1·ass·; and (3) a causal relationship
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`between the unlawful conduct and the ascertainable loss. See Bosland v. Warnock
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`Dodge, Inc., 197 N.J. 543, 557 (2009). UnlaWful conduct is any "unconscionable
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`commercial practice,
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`deception, · - fraud,
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`false
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`pretense,
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`false
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`promise,
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`misrepresentation, or knowing concealment, suppression, or omission of any
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`material fact with intent that oth~rs rely ... whether or not any person has in fact been
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`misled, deceived ~r dru;naged thereby.", ~LJ.S.A. 56:8-2. The prime ingredient is the
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`capacity to mislead. See Fenwick v. KayAm. Jeep, Inc., 72 N.J. 372, 378 (1977).
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`For affirmative acts of unlawful conduct, intent is not an element. See Cox
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`v. Sears Roebuck & Co., 138 N.J. 2, 17-18 (1994). But for omissions, plaintiffs must
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`allege that the defendant acted with knowledge; and intent is an element. Id.
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`Ascertainable loss is defined as a·definite, certain and measurable loss, rather
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`than one that is merely theoretical. See Thiedemann v. Mercedes-Benz USA, LLC.,
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`183 N.J. 234, 248 (2004). However, the loss need not yet have been experienced as
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`an out-of-pocket loss to the plaintiff. Id.· at 248-49; see also, Cox, 138 N.J. at 22-23
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`(noting that to demonstrate "loss'' a victim need not have actually spent money to
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`perform repairs to correct defendant's errors).
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`CF A claims:.must be pleaded with sufficient particularity and according to
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`Rule 9. See Maniscalco v. Brother Intern. Corp., 627 F.Supp.2d 494, 500 (D.N.J.
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`2009); see also FED. R. C1v. P. 9(b). at 500, 503. Therefore, Plaintiffs must "(l) detail
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`the statements (or omissions) that the plaintiffcontends are fraudulent, (2) identify
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`the speaker; (3) state where and when the'statements (or omissions) were made, and
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`(4) explain why the statements (or' 1 omissions) are fraudulent."
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`L.S. v.
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`Webloyalty.com, Inc., 673 F. App'x 100, 104 (2d Cir. 2016) (quoting Fin. Guar. Ins.
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`Co. v. Putnam Advisory Co., LLC, 783 F:3d 3·~5, 403 (2d Cir. 2015). However, no
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`special specificity is necessary for pleading ascertainable loss, knowledge or intent;
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`each may be pleaded generally. See Maniscalco, 627 F.Supp.2d at 500.
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`Vorrasi's Cf'!k~Wtim ii~ 1~iit~aliy 1~·mirrg} image of the New York Plaintiffs'
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`claims. He details the download screen misrepresentations and even provides a
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`picture of the image he encountered. He identifies Apple as the entity that made the
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`misrepresentations. He alleges that he received the ·misrepresentations just before he
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`downloaded iOS 9,"within the first or second week after its release on September 16,
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`2015. He alleges the reason the statements were fraudulent - the update does not
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`enhance performance; it greatly diminished the value of iPhone 4s devices. He
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`alleges that his! iPhone 4s de:vice was daµiaged and its value diminished. He also
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`alleges that Apple conducted pre-release testing and therefore knew that iOS 9 would
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`diminish the value of iPhone 4s devices. As such, according to Vorrasi, Apple
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`knowingly omitted material information in violation of CF A. Without remarking on
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`the substantive sufficiency of his arguments, his pleading certainly satisfies the Rule
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`9(b) particularity-pleading standard. See L.S. v. Webloyalty.com, Inc., 673 F. App'x
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`at 104.
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`In terms of substance, Vorrasi' s claims are sufficient for the same reasons as
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`the New York Plaintiffs' claims.
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`Vorrasi has pleaded an affirmative
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`misrepresentation (false download screen statements); a knowing omission (Apple
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`tested the product, knew it would harm 1Phone 4s devices and released it anyway);
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`intent (Apple purposely induced him to download iOS 9 using update alerts);
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`ascertainable loss (the value of his phone is diminished and he lost the benefit of his
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`bargain); and causation (he download~d ios 9· ~fter being misled by the download
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`screen and the damaged device was a direct result of the deception). Having satisfied
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`Rule 9(b) and having sufficiently pleaded a prima facie case for a violation of CFA,
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`there seems to be no reason why Vorrasi should not reach discovery.
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`Naturally, Apple disagrees. But Apple's retorts are more smoke than fire.
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`Apple simply regurgitates the same arguments that failed against the New York
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`Plaintiffs: the iOS 9 User Agreement bars the claim and the download screen makes
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`no misrepresentations. But now, Apple adds two new arguments: Vorrasi's omission
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`claim does not properly plead knowledge, and does not plead quantifiable loss. As
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`explained above, each of these arguments are without merit.
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`Conclusion
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`For the foregoing reasons, this Court DENIES Apple's motion to dismiss, as
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`Plaintiffs' claims are properly pleaded.
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`SO ORDERED.
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`Dated: October 26,2017
`Brooklyn, NY
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` . v: vi'j (it I'f
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`/s/ USDJ STERLING JOHNSON, JR.
`Sterling Johnson, Jr^
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