Apple Loses Bid to Dismiss Data Collection Privacy Suit

Apple Inc. (AAPL) lost its bid to dismiss a privacy lawsuit claiming the company improperly collected and shared customers’ personal information after a judge ruled the iPhone maker violated an order to turn over documents.

U.S. District Judge Lucy H. Koh said in a ruling that she was “disturbed” to learn that in its court filings seeking dismissal of the case, Apple relied on documents that it was required, and failed, to disclose to lawyers for the customers.

Calling the company’s conduct “unacceptable,” Koh said “the court cannot rely on Apple’s representations about its compliance with its discovery obligations.”

Ashlie Beringer, a lawyer for Apple, said at a Feb. 28 hearing that it had produced all required documents, yet the company was still reviewing e-mails of Steve Jobs and other senior executives three days later, the judge said.

Apple’s claim that the executives weren’t actively involved in the data collection issue is “surprising in light of the e- mail showing that Steve Jobs, then Apple CEO, personally demanded that Apple software engineers immediately design and release a software update” to remedy the problem, Koh wrote in yesterday’s ruling.

IPhones, IPads

Customers alleged in their complaint that Apple collected information on their locations through iPhones and iPads, even after the device’s geo-location feature was turned off. In the Jobs e-mail that Koh referenced, the company’s late co-founder directed engineers to fix a “bug” that overrode users’ setting of the location services to off, according to the ruling.

Photographer: SeongJoon Cho/Bloomberg

An Apple Inc. iPhone 4S smartphone is arranged for a photograph next to the company's logo in Seoul. The lawsuit accuses Apple of collecting data on the locations of customers through iPhones, even after the geo-location feature was turned off. Close

An Apple Inc. iPhone 4S smartphone is arranged for a photograph next to the company's... Read More

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Photographer: SeongJoon Cho/Bloomberg

An Apple Inc. iPhone 4S smartphone is arranged for a photograph next to the company's logo in Seoul. The lawsuit accuses Apple of collecting data on the locations of customers through iPhones, even after the geo-location feature was turned off.

Beringer said at a March 5 hearing before U.S. Magistrate Judge Paul Grewal that it was a “mistake” for the company not to produce e-mails from Jobs, Phil Schiller, its marketing chief, and Scott Forstall, the former head of mobile software, in violation of Grewal’s November order. Grewal is helping Koh with the case.

In response, Grewal ruled that Apple must show in detail how it’s complying with court orders to turn over evidence in the case because he can no longer rely on what the company tells him about the exchanges of information. In her ruling, Koh said Apple can’t file another motion to dismiss the case, or summary judgment motion, until she is satisfied Apple had complied with its discovery obligations.

Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment.

The case is In re Apple Inc. iPhone/iPad Application Consumer Privacy Litigation, 11-md-02250, U.S. District Court, Northern District of California (San Jose).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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