Consumer, Dealer Class Action Lawsuit Filed Against Apple (UPDATE)

A group of consumers and Apple resellers filed a class action lawsuit Thursday accusing Apple Computer of unfair and unlawful business practices, breach of contract, misappropriation of trade secrets, and violation of consumer warranty laws, documents obtained by The Mac Observer reveal.

The 26-page complaint, filed Thursday in San Francisco County Superior Court, was on behalf of Jack Branning, James Seybert, Stacey Blevins, Tom Siechert and Joe Weingarten. The plaintiffs are represented by two San Diego-based law firms and another firm headquartered in San Clemente, Calif.

Of the five plaintiffs, two are former Apple resellers. Records indicate Mr. Siechert is a former computer buyer in the procurement department of California State University, based in Fresno, Calif.

Mr. Weingarten is the former owner of Weingarten Gallery, a Apple resellers based in Dayton, Ohio, and is the head of the Apple Resellers Association, a organization for some 70 resellers across the U.S.

"Apple is pushing dealers to the point of where theyire going out of business because of their actions," Mr. Weingarten told The Mac Observer. "We had no choice but to go through with this suit."

Mr. Branning is a Macintosh owner and user from San Francisco. Mr. Seybert and Ms. Blevins are Apple products owners, also residing in California.

The suit accuses Apple of repackaging and selling refurbished machines to resellers and consumers as new products "when in fact they are used," the complaint states. Defendants in the case say they can prove the products were used because when they paid for AppleCare extended warranties, the contracts expired earlier than expected and Apple then admitted they were used.

Resellers also charged that Apple has unfairly and unlawfully withheld product from the reseller channel in an effort to stock the shelves of its own retail stores and reap more sales and profit. The dealers also alledged Apple has illegally priced its products to undercut independent dealers and have often sold products below cost to steal away business.

Other allegations include...

  • Unfairly shipping product to customers in a more timely fashion when dealers were told Apple had been out of stock for weeks.

  • Selling product to non-qualified educational and government clients at discount.

  • Disparaged and lied to other dealers and consumers "in an attempt to cover up its own culpability."

    In addition to these allegations, the two resellers say they can prove Apple has stolen customer contact information and has directly approached customers on those lists to sell to them direct at prices small resellers canit match.

    The suit says damages and losses to the three consumers in the case "do not exceed US$75,000." The defendants are requesting a jury trial.

    The filing of the suit came just hours after the House of Representatives voted 279 to 149 in favor of a bill that will curtail multimillion-dollar class action lawsuits against companies. Sources tell TMO the suit has "been lying in wait for the right time" to be filed before it became law.

    The GOP-controlled Senate passed the bill a week ago by a 72-26 vote. President Bush signed the bill Friday, describing class-action suits as often frivolous.

    The bill "will help protect people who are wrongfully harmed while reducing the frivolous lawsuits that clog our courts, hurt the economy, cost jobs, and burden American businesses," Mr. Bush said.

    Under the legislation, class-action suits seeking $5 million or more would be heard in state court only if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, and more than $5 million is at stake, the case would go to federal court.

    Consumer groups and trial lawyers fought against the bill, but lost their struggle when Republicans gained seats in last fall?s elections and Democrats defected on the issue. Democrats say Republicans just want to protect corporations from taking responsibility for their wrongdoing by keeping them clear of state courts that might issue multimillion-dollar verdicts against them.