Apple to pay $14.8M for misleading iCloud storage claims

A class of Apple Inc. customers asked a federal court to grant an unopposed motion for preliminary approval of a $14.8 million settlement to resolve claims that the company misled users about how its iCloud service stored their data.

U.S. Magistrate Judge Laurel Beeler scheduled a hearing for the motion on Feb. 17 in San Francisco.

The motion was filed by Del Mar based attorney Roy A. Katriel of The Katriel Law Firm and San Francisco attorney Azra Z. Mehdi of The Mehdi Firm, who represent named plaintiffs Andrea M. Williams and James Stewart. Williams et al., v. Apple Inc., 3:19-cv-4700-LB, (N.D. Cal., filed Aug. 12, 2019).

One unique aspect of this settlement is that, according to the motion for preliminary approval, compensation to the class members will occur without the need to file any claim forms or proof of purchase, because Apple keeps track of its iCloud subscribers. Thus, Apple has the contact information to inform and send the appropriate class payments to the class members.

In the first amended complaint, Katriel accused Apple of breach of contract, violations of California's False Advertising Law and the Unfair Competition Law.

"Throughout the class period, Apple sold subscriptions to the putative class members by which Apple represented to class members that, in exchange for paying Apple the iCloud monthly subscription fees, Apple would provide them with cloud storage," Katriel wrote.

"In truth and in fact, however, Apple lacked the necessary infrastructure to provide this service at the time it sold it. Unbeknownst to plaintiffs and the putative class members, instead of storing class members' data on Apple cloud servers and facilities, Apple actually stored users' data on cloud facilities owned and operated by other entities, like Amazon, Microsoft or Google -- all undisclosed to these class members who paid and entrusted Apple to store their data," Katriel wrote.

Katriel also said in the amended complaint that choosing a cloud storage provider is a serious decision for users because people are trusting a company with sensitive information such as photos, documents and emails.

"Touting itself as the provider of the iCloud service (when, in fact, Apple was merely reselling cloud storage space on cloud facilities of other entities) allowed Apple ... to charge a premium for its iCloud service because subscribers placed a value on having the 'Apple' brand as the provider of the storage service for their most sensitive data." he wrote

Attorneys for Apple declined to comment. Katriel and Mehdi did not respond to emails and calls requesting comment.