Apple Faces Multiple Lawsuits Over Throttled iPhones

Dozens of iPhone owners are taking Apple Inc. AAPL -2.56% to court over the company’s disclosure that it slowed down old phones to preserve battery life, in what could become one of the biggest legal challenges to the smartphone since its 2007 debut.

Some five dozen iPhone customers have filed at least 59 separate lawsuits since December accusing Apple of slowing their phones to spur people to buy new iPhones, according to court records. The lawsuits were filed after Apple said in December that its software updates reduced the performance of older phone models. They seek an unspecified financial award, attorneys’ fees and free iPhone battery replacements, as well as a corrective advertising campaign.

The lawsuits are seeking class-action status. Efforts to combine the cases into one class-action suit will kick off at a March 29 legal meeting in Atlanta, setting in motion an effort to have the class certified. A lead attorney and a court location also will be chosen.

Class-action lawsuits are frequently filed against big companies, but the large number of suits—legal experts say any more than 20 is a lot—is unusual. It is also roughly triple the number of suits filed in 2010 over the iPhone 4’s tendency to drop calls.

Apple settled the resulting class-action lawsuit in 2012, agreeing to either pay iPhone 4 owners $15 or give them a free case, according to Ira Rothken, an attorney who represented the plaintiffs. The total potential settlement amount was $315 million.

This latest surge of iPhone lawsuits could present Apple with unique challenges. The company is already battling to convince its users that its newest devices are worth $1,000 or more, as global demand for smartphones stagnates and people hold on to their devices longer.

Created with Highcharts 6.0.4Court OrderiPhone ownership has surged since Applesettled its last smartphone class action suit in2012iPhone ownership has surged since Apple settled its last smartphone class action suit in 2012U.S. iPhone users, in millionsSource: Kantar Worldpanel

While legal experts say the plaintiffs face an uphill battle, a multiyear court fight over the phone-throttling issue could force the secretive company to disclose sensitive information about its software development process, according to analysts.

Plus, a decision against Apple could require it and other tech companies to be more transparent about how their software or hardware features affect power or performance, said Mr. Rothken, who isn’t involved in this action. For years, companies have been able to avoid such disclosures, mainly because customers haven’t demanded them.

“Whatever affects Apple would affect anyone making battery devices,” Mr. Rothken said.

An Apple spokeswoman declined to comment. The company has previously said it would never do anything to intentionally shorten or degrade the life of any of its devices, adding that Apple’s goal is to make iPhones that last as long as possible.

The lawsuits could also prolong the negative publicity surrounding Apple’s slowing of the phones. “It’s the brand damage that is even more risky and expensive for Apple,” said Holger Mueller, a technology analyst with Constellation Research.

Apple also is being investigated by the Justice Department and Securities and Exchange Commission over potential securities violations related to its disclosure of the software updates that slowed older iPhones. It has faced questions from consumer and watchdog groups in France, Italy and China.

Apple’s predicament started late last year after the company, facing questions from users and analysts, said it introduced a software update that slowed down the performance of older iPhones with aged batteries to prevent such phones from unexpectedly shutting down. In late December, Apple apologized and said it would reduce the out-of-warranty cost of battery replacement to $29 from $79 for most customers.

Related

Some of the current lawsuits are alleging that Apple misrepresented the true nature and scope of the battery problems to customers, and failed to inform users that upgrading to new operating systems last year would force them to add a feature that slowed down the phone, according to court records.

“To encourage consumers to purchase the newest iPhone in such short intervals, Apple has to convince consumers to upgrade their device,” according to one complaint filed in federal court in Northern California. “One way to do that is by reducing the performance of older iPhones.”

Larry Pethick, a 50-year-old from Grand Rapids, Michigan, said his iPhone 6 started taking longer to load apps and activate the GPS last fall after updating to a new operating system. Although he said he lost his job in the fall of 2017, and didn’t want to spend $700 on a new phone, Mr. Pethick said buying a new phone was his only option.

“The biggest frustration was that an adjustment was made that severely inconvenienced me without me knowing about it,” Mr. Pethick said of Apple’s software update. He is expected to join a class-action suit against Apple in Northern Illinois.

Apple customers could find it difficult to win their case. Fraudulent-concealment claims, such as in the iPhone instance, are often hard to prove because courts typically want to preserve companies’ freedom to choose what to say, as long as it isn’t actively misleading, said Rebecca Tushnet, a professor at Harvard Law School.

Apple has done enough since acknowledging the software change to make clear that it was aiming to improve user performance, said Wayne Lam, a smartphone analyst with the research firm IHS Markit , adding that the class-action suit “won’t amount to a hill of beans.”

Meanwhile, Apple is already grappling with the true cost of the latest controversy. Barclays previously estimated Apple could lose $10.29 billion in revenue this year because of customers choosing to replace batteries instead of their iPhones.

Write to Tripp Mickle at Tripp.Mickle@wsj.com and Kirsten Grind at kirsten.grind@wsj.com

Source Article