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Apple Gets iCloud Subscription Deception Suit Tossed, for Now

May 9, 2022, 4:52 PM

Apple Inc. ducked, for now, a proposed class suit alleging it tricks customers about the costs of iCloud storage, when a federal court in California said the customers failed to adequately explain how the company’s recurring charge notification was deficient or how they were fooled.

William Rutter and others alleged Apple deceives consumers into thinking they can maintain their data storage for free, but in reality they quickly exceed the free 5 gigabyte limit and then must pay for an increasingly costly service.

They didn’t support their claims under California’s auto renewal law, which requires certain disclosures and customer consent before a subscription is renewed, the U.S. District Court for the Northern District of California said May 6.

Claims that Apple didn’t obtain consent fail because there was no plausible explanation for how iCloud users who pay for storage didn’t agree to do so, Judge Haywood S. Gilliam Jr. said.

The consumers acknowledged that the iCloud Terms and Conditions are provided to each user before they subscribe to iCloud. The terms say that when customers upgrade their storage, Apple will charge their Apple ID-linked payment method on a recurring basis for the costs associated with the plan they choose, the court said.

Rutter and the others also failed to support claims that Apple didn’t properly disclose its iCloud cancellation policy, the court said, pointing out that the terms include the cancellation policy and a description of where and how users can cancel the service.

Nor did the consumers include enough detail to satisfy the heightened pleading standard applicable to their claims under California consumer protection statutes, it said.

The customers also alleged Apple breached a promise to explain how users could stay under the free initial 5 GB storage ceiling. These contract-based claims fail because the consumers didn’t identify a provision in the iCloud Terms and Conditions that promises users any form of data storage advice, the court said.

They may amend their complaint, it said.

Hershenson Rosenberg-Wohl PC and Ward & Cooper LLC represents Rutter. Morrison & Foerster LLP represents Apple.

The case is Rutter v. Apple, Inc., N.D. Cal., No. 4:21-cv-04077, 5/6/22.

To contact the reporter on this story: Julie Steinberg in Washington at jsteinberg@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com