Apple May Face Sanctions Over Documents in Privacy Suit

Apple Inc. (AAPL) may face court-ordered penalties over its information-sharing practices in a privacy lawsuit after the iPhone maker was previously scolded for “unacceptable” conduct.

U.S. Magistrate Judge Paul S. Grewal, at a hearing yesterday in San Jose, California, invited plaintiffs’ lawyers in the case to pursue sanctions against Apple after saying that the company’s document production “has more than doubled since the court got involved” in policing information-sharing obligations.

Grewal yesterday questioned Apple about e-mails or documents from employees that the company turned up only after the court ordered a review of its document-production process. Grewal told Apple lawyer Ashlie Beringer that it “doesn’t sound like you did a lick of work” to double-check whether workers properly determined which documents shouldn’t be turned over.

“We’ve gone through close to a dozen people that should’ve come up and didn’t come up” in original requests for information, Grewal said. “In light of that process, how am I to have any confidence that the procedure now is any better” than it was initially, Grewal asked.

The documents at issue “absolutely should’ve been collected and they were not,” Beringer said. “I was not asking the right questions” to cull the required evidence, she explained. “Absolutely that was a failure of management on my part, one that won’t happen again.”

‘Herculean Efforts’

Beringer said Apple has made “Herculean efforts over the last two weeks” to rectify the problem, and that after another filing late last night, the company’s document production is complete. Beringer declined to comment after the hearing.

Apple is accused in the lawsuit of improperly collecting data on the locations of customers through iPhones, even after the device’s geo-location feature was turned off, and sharing personal information with third parties.

Grewal told Cupertino, California-based Apple on March 6 to submit a detailed account of how it collects and evaluates the documents it’s required to give the plaintiffs. The company was required to identify search terms it used, the dates of searches, individuals subject to the searches, and how many documents it turned up. Apple has produced more than 2,000 additional documents.

On March 7, Apple lost its bid to dismiss the case after U.S. District Judge Lucy H. Koh, who is handling the case with Grewal, said in a ruling that she was “disturbed” to learn that in its court filings seeking the dismissal, Apple relied on documents that it was required, and failed, to disclose to lawyers for the customers.

‘Unacceptable’ Conduct

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

Separate from the document requests, plaintiffs are also seeking permission to proceed with the lawsuit on a group basis. Apple argued class-action status should be denied because plaintiffs haven’t shown that any users had personal information collected without their consent, and as a result, can’t show they suffered any harm.

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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