iPad Data Plan Bait and Switch Class Claims Survive

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

AT&T Mobility was denied a request to strike class allegations by purchasers of 3G-enabled iPads claiming common law fraud and California consumer protection law violations by Apple and AT&T Mobility on a “bait and switch” theory with regard to the availability of a flexible unlimited data option, in a case before the federal district court in San Jose.

Flexible, Unlimited Data Plan

Apple’s and AT&T’s advertising, including statements by Apple CEO Steve Jobs, allegedly led the purchasers to believe that they would have the flexibility of switching in and out of an unlimited data plan based upon their monthly needs. Just weeks after the iPad's release, Apple and AT&T announced that they would discontinue providing the unlimited data plan.

The purchasers sought damages and injunctive relief, including an order mandating restoration of the advertised flexible, unlimited data for a reasonable period. AT&T failed to demonstrate lack of commonality and predominance, and that the proposed nationwide class and claims for injunctive relief were improper.

Common Questions

A purchaser who would be a member of the proposed AT&T non-subscriber class, not required to arbitrate claims against AT&T, identified common questions central to his claims that class members bought a 3G-capable iPad because of the unlimited data plan, according to the court. The purchaser alleged that the key misrepresentation—that purchasers of a 3G-capable iPad could later upgrade to the unlimited data plan and switch in and out of the plan—was made on a consistent basis by the defendants to the entire class. If the purchaser could prove his allegations, individualized inquiry might not be required to determine what particular channel a purchaser used to acquire his iPad, the court determined.

There was no evidence that purchasers who never activated their iPad’s for AT&T service were aware that AT&T reserved the right to change its data plans. No bar appeared to pursuing class-wide injunctive relief under the California Unfair Competition Law and False Advertising Law.

Nationwide Class

A nationwide class could not be held improper because there were too many preliminary questions that could not be resolved at this stage of the case, including whether California actually had significant contacts with the claims against AT&T, the strength of the interests those contacts would create, how many states' laws were implicated, and how many were materially different from California law, the court observed.

The opinion in Apple and AT&T iPad Unlimited Data Plan Litigation will be reported at CCH Advertising Law Guide ¶64,730.

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