Five Things to Know About Apple's $500M Throttling Settlement
Apple Inc. has agreed to pay between $310 million and $500 million to settle class actions alleging that it surreptitiously slowed older iPhones with software upgrades. The deal would include potentially $25 payments to class members and $93 million in attorney fees.
March 02, 2020 at 04:33 PM
5 minute read
The original version of this story was published on The Recorder
Apple Inc. has agreed to pay up to $500 million to settle class actions alleging that it surreptitiously slowed older iPhones with software upgrades.
Apple said it admitted no wrongdoing but agreed to settle "to eliminate the burdens, distractions, expense and uncertainty of protracted litigation," according to the settlement agreement filed Feb. 28. In a motion for preliminary approval of the settlement, plaintiffs attorneys Joseph Cotchett, principal at Cotchett, Pitre & McCarthy in Burlingame, California, and Laurence King, of Kaplan Fox & Kilsheimer in Oakland, California, who are co-lead counsel of the multidistrict litigation, said that iPhone customers, as class members, would be eligible for $25 payments under the settlement.
"The settlement provides substantial relief to Apple consumers and, going forward, will help ensure that customers are fully informed when asked to update their products," wrote Cotchett in an email. He said the deal was one of the largest consumer product settlements, excluding automobile defect cases such as the Volkswagen emissions scandal.
"This historic settlement represents years of investigation and hotly contested litigation," wrote Mark Molumphy, another principal at Cotchett Pitre. "We are extremely proud to submit this resolution to the court and, if approved, providing immediate cash payments to impacted Apple customers."
Apple representatives and its lawyers, Ted Boutrous and Christopher Chorba, both Los Angeles partners at Gibson, Dunn & Crutcher, did not respond to a request for comment. In court documents, Apple had insisted that the decreased performance speed was necessary in order to stop unexpected shutdowns.
The settlement goes before U.S. District Judge Edward Davila in San Jose, California, on April 3. The deal is subject to the Northern District of California's 2018 guidelines for class actions, as well as Federal Rule 23 of Civil Procedure.
Here are five notable aspects of the settlement:
1. Class members might receive $25 or much, much more.
The settlement includes a non-reversionary fund valued at a $310 million minimum and maximum of $500 million, but the $25 payment depends on how many class members make claims. According to court documents, claims of less than $310 million could result in payments of up to $500 per class member. Claims exceeding $500 million would result in less than $25. The $25 is in addition to a $50 credit Apple offered soon after admitting in 2018 to installing software updates in older iPhones that slowed their battery life.
2. The number of law firms on the case doubled.
Plaintiffs attorneys estimated they would seek $93 million, or 30% of the $310 million fund. The fees, they wrote, include a lodestar of nearly $30 million, which excludes work spent after Nov. 30 or in the related California state court litigation. Davila appointed 39 lawyers to lead the cases—one of the largest leadership teams in recent multidistrict litigation—but more than twice that number of law firms signed the settlement agreement. Molumphy said the additional firms include those that filed cases in California state courts, included in the settlement, or after creation of the MDL.
3. The case originally covered an international class.
The settlement excludes all iPhone users outside the United States. Although the second amended class action included class members from the United States and 39 other countries, plaintiffs lawyers cited "the substantial uncertainty as to the propriety of a worldwide class." They also noted that Davila, in his second dismissal order issued last year, was amenable to some of Apple's concerns involving non-U.S. class members. "Those claims can still be pursued by residents of those other countries in those other countries, or here," Molumphy said. "They're just not part of this class action settlement." The settlement includes service awards of $1,500 to $3,500 for 132 named plaintiffs.
4. The settlement withstood sanctions.
According to the motion for preliminary approval, plaintiffs lawyers conducted 19 depositions and produced more than 7 million pages of documents, but, last year, Davila sanctioned Cotchett and Molumphy for disclosing confidential information at a hearing, a move that Apple had called a "blatant and very serious violation" of a protective order. Davila had not certified the class or ruled on summary judgment, so "it is not an overstatement to say that named plaintiffs faced significant risk," they wrote in the motion.
5. Lawyers expect a potentially high claim rate.
The motion cited a 2019 study by the Federal Trade Commission that found claims rates in 124 consumer class actions fell between 4% and 5%. "Here, class counsel expect the claims rate to be at the high end of the range, or greater, taking into consideration not only defendant's brand recognition, but also the fact that the settlement administrator will be providing direct notice to settlement class members, as well as the substantial media coverage of the issues in the case," the motion says.
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