LEGAL ISSUES Section Editors: Bruce Strauch (The Citadel, Emeritus) <bruce.strauch@gmail.com> Jack Montgomery (Western Kentucky University) <jack.montgomery@wku.edu>
Legally Speaking — To Buy or To Rent? Does the Court have the Answer? Column Editor: Anthony Paganelli (Western Kentucky University) <Anthony.Paganelli@wku.edu>
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magine, you purchase a rare signed Beatles album from Apple Records and a year later Paul McCartney arrives at your house and takes it from you, because the contract between McCartney and Apple Records expired. While this is an extreme example of a recent class action suit filed against Apple, Inc. on August 13, 2020 in the U.S. District Court for the Eastern District of California, the suit filed by David Andino claimed that he purchased digital content through various Apple platforms, which Apple eventually revoked access to the purchased digital content. The lawsuit noted that consumers have two options to either “rent” or “buy” digital content from the various platforms available that includes, computers, tablets, smartphones, or other electronic devices that can operate the “Apps” that provide the digital content. In general, the cost for renting a digital movie from Apple TV is approximately $5.99 according to the lawsuit. The terms for the rental allows the consumer 30 days to view the content. Once, the consumer begins to watch the content, the consumer has 48 hours to watch the content before the agreement is terminated. The lawsuit also explained the approximate cost to purchase a movie is $19.99, which the suit mentioned the ability for consumers to “buy” a television episode for $3.99 or entire television series for $29.99. These options to “buy” digital content also includes musical compositions from either one composition or an entire album at various costs. The class action compliant argues that the Apple option to “buy” is misleading, because Apple can revoke access to the content “at any time and for any reason.” The document provided examples of other instances where Apple revoked access to the content. In addition, the plaintiffs noted the major differences in prices regarding the “rent” and “buy” options. The suit claims that Apple made an excessive profit selling content at the “buy” price rather than the “rent” option, which consumers would have purchased at the cheaper price if they had known the digital content would later be revoked. Support for the argument included examples of previous instances where Apple revoked digital content from consumers, which was later reinstated following customer complaints in 2018. According to Archer (2018), Apple claims the agreement between Apple and the movie
30 Against the Grain / June 2021
companies allows the movie companies to withdraw digital content from iTunes. Based on this agreement, the Plaintiff claims that Apple knew that the digital content could not be purchased entirely, therefore Apple should not have provided the option to “buy.” Apple continued this business practice model knowing that the consumer could not actually own the digital content, because the movie company owns the content. Apple eventually changed the Terms of Sale to include the clause “no refund” following several complaints about revoked digital content, which Apple contended that the reason for revoked material was based on the region the consumer lived. For example, a person in Canada may have a different agreement based on the movie studio’s policy for the region, which Apple claimed as the reason for revoked digital content.
Apple’s Motion to Dismiss Based on the transaction options for either renting or buying digital content through Apple’s various platforms, the plaintiff claimed the business practice is unfair and deceptive, which Apple filed a motion to dismiss on December 16, 2020. According to Apple’s motion to dismiss, they claimed that the defendant “lacks Article III standing to assert the claims in the Complaint or to seek injunctive relief because he has not alleged any concrete, particularized, and actual or imminent injury,” “the plaintiff fails to state a claim because he does not plausibly allege that he purchased any good or service or suffered an injury as the result of any misrepresentation or omission by Apple, much less plead with the specificity required to assert these claims,” “The plaintiff’s claims for equitable relief must be dismissed because the plaintiff fails to allege that the legal remedy under CLRA (Consumers Legal Remedies Act) is inadequate,” and “The plaintiff fails to plausibly allege that Apple was unjustly enriched.” In regards to the first argument, the motion for dismissal claimed that the plaintiff had not purchased any digital content and therefore did not suffer any injuries. The defendants noted that the plaintiff relied on the Forbes article to determine the possibilities of losing purchased digital content, which also
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