PLAINTIFFS’ PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW

Case No. 5:17-cv-00551-LHK

1788995 1 - APPLE FACETIME

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ALLAN STEYER (State Bar No. 100318) 

JILL M. MANNING (State Bar No. 178849) 

D. SCOTT MACRAE (State Bar No. 104663) 

STEYER LOWENTHAL BOODROOKAS 

 ALVAREZ & SMITH LLP 

235 Pine Street, 15th Floor 

San Francisco, CA 94104 

Telephone: (415) 424-3400 

asteyer@steyerlaw.com

jmanning@steyerlaw.com

smacrae@steyerlaw.com

DANIEL L. WARSHAW (State Bar No. 185365) 

ALEXANDER L. SIMON (State Bar No. 305734) 

PEARSON, SIMON & WARSHAW, LLP

15165 Ventura Boulevard, Suite 400 

Sherman Oaks, CA 91403 

Telephone: (818) 788-8300 

dwarshaw@pswlaw.com

asimon@pswlaw.com 

[Additional counsel listed on signature page] 

Counsel for Plaintiffs and the Class 

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

CHRISTINA GRACE AND KEN POTTER, 

Individually and on Behalf of All Others 

Similarly Situated,

Plaintiffs,

v. 

APPLE INC.,

Defendant.

Case No. 5:17-cv-00551-LHK

CLASS ACTION

PLAINTIFFS’ PROPOSED 

FINDINGS OF FACT AND 

CONCLUSIONS OF LAW

Case 5:17-cv-00551-LHK Document 406 Filed 03/06/20 Page 1 of 9
 

PLAINTIFFS’ PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW

Case No. 5:17-cv-00551-LHK

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 Plaintiffs submit the following proposed findings of fact and conclusions of law. 

FINDINGS OF FACT

1.1 iPhone Background

1. Apple Inc. (“Apple”) is a California corporation. 

2. Apple designs, markets and sells iPhone devices. 

3. Apple released the iPhone 4 device on June 24, 2010. 

4. Apple released the iPhone 4S device on October 14, 2011. 

5. iPhone devices operate through the iOS operating system and have an iOS version 

preinstalled on them, and iPhone users may install newer iOS versions and updates thereto. 

6. Apple released iOS 6 on September 19, 2012. 

7. Apple released iOS 7 on September 18, 2013. 

1.2 iOS Security

1. iOS uses digital certificates, which help ensure security for transmitted data. 

2. Certificates are designed with expiration dates for security reasons.

3. When a certificate expires, services that check its expiration date will fail.

4. Apple designed FaceTime to use the iPhone Device CA (the “Certificate”).

1.3 FaceTime

8. The iPhone 4 was the first iPhone device to offer FaceTime, a conferencing 

feature that allows iPhone users to engage in real-time video and audio calls. 

9. FaceTime has been widely used since its introduction in 2010, with an estimated 

15 to 20 million FaceTime calls daily in 2013. 

10. Apple prominently promoted FaceTime in its iPhone 4 advertising campaign. 

11. FaceTime was one of the most important features driving customers’ decision to 

purchase iPhone 4 and 4S devices. 

12. Initially, FaceTime connected real-time video and audio calls in one of two ways: 

(1) the peer-to-peer method (“P2P”), or (2) the relay method. 

13. The P2P method connected FaceTime calls by directly connecting users’ devices; 

the relay method connected FaceTime calls through servers that relayed data to the devices.

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PLAINTIFFS’ PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW

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30. By October 2013, Apple’s PKI team was aware that FaceTime, which checked the 

expiration date of the Certificate, would fail when the Certificate expired. 

31. Apple referred to the pending Certificate expiration as a “time bomb.” 

32. Apple could have resolved the Certificate expiration issue for iOS 6 users by 

“changing the [FaceTime] code.”

33. Apple also could have “created new certificates for at least portions of the chain 

and used those with updated expiration dates” to resolve the issue for iOS 6 users. 

34. Apple developed a fix to avoid a FaceTime outage only in iOS 7, not in earlier 

iOS versions. 

35. On November 14, 2013, Apple released iOS 7.0.4, in which Apple programmed 

FaceTime to ignore the Certificate expiration date, such that FaceTime would not fail. 

36. iOS 7 caused performance degradation and functionality impairment on iPhone 4 

and 4S devices, including issues with the Wi-Fi and Bluetooth controller, reduced battery life, 

lagged application functionality, a poor user interface, and system crashes. The impairments 

were measurable, substantial and widely reported, and were tracked and documented by Apple. 

37. Users who transitioned to iOS 7 could not revert back to earlier versions of iOS. 

38. To avoid impairing their device’s functionality, millions of iPhone 4 and 4s users 

resisted migrating to iOS 7 after its release, such that Apple’s fees to Akamai remained high. 

1.5 The FaceTime Break

39. At 22:54:45 GMT on April 16, 2014, the Certificate expired, resulting in the 

inability to use FaceTime for all of the millions of Apple customers whose iPhone 4 and 4s 

devices were operating on a pre-iOS 7 version of iOS (the “Break”). 

40. By allowing the Certificate to expire on April 16, 2014, Apple intentionally 

deviated from its “standard practice” of re-issuing digital certificates prior to their expiration.

41. In his notes from April 17, 2014, Apple engineer Dallas DeAtley wrote, “iPhone 

Device CA expired, hilarity ensues.”

42. Apple decided “to issue a new Sub-CA to iMessage to keep it working.” 

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3. Apple’s intentional conduct caused Plaintiffs to suffer a permanent loss of 

FaceTime on their devices on April 16, 2014, and in turn a significant diminution in value to 

their devices. Plaintiffs have thus established economic injury and have standing under the UCL. 

III. PLAINTIFFS HAVE ESTABLISHED UNFAIRNESS UNDER THE UCL

4. The UCL creates a cause of action for unfair business practices. Lozano v. AT&T 

Wireless Servs., Inc., 504 F.3d 718, 731 (9th Cir. 2007). The UCL’s coverage is “sweeping, and 

its standard for wrongful business conduct is intentionally broad.” Fraley v. Facebook, Inc., 830 

F. Supp. 2d 785, 810 (N.D. Cal. 2011) (citation and quotations omitted). Under the UCL, “a 

practice may be deemed unfair even if not specifically proscribed by some other law.” In re 

Carrier IQ, Inc., 78 F. Supp. 3d 1051, 1115 (N.D. Cal. 2015). 

5. The “balancing test” to determine unfairness under the UCL “involves an 

examination of [a business practice’s] impact on its alleged victim, balanced against the reasons, 

justifications and motives of the alleged wrongdoer. In brief, the court must weigh the utility of 

the defendant’s conduct against the gravity of the harm to the alleged victim.” Pirozzi v. Apple, 

Inc., 966 F. Supp. 2d 909, 922 (N.D. Cal. 2013). Unfairness is established by demonstrating the 

business practice is ‘immoral, unethical, oppressive, unscrupulous or substantially injurious” to 

consumers. In re Anthem, Inc. Data Breach Litig., 162 F. Supp. 3d 953, 990 (N.D. Cal. 2016). 

6. The Break was “substantially injurious” to millions of Apple iPhone 4 and 4S 

users, as it significantly decreased the value of their devices. Further, Apple’s conduct, including 

but not limited to, ignoring entreaties from its employees to consider the serious harm the Break 

would cause, mocking the millions of Break victims, then lying about the Break, was immoral, 

unethical, oppressive, unscrupulous, and unfair. Apple’s sole justification for the Break was to 

reduce its relay costs to boost its profits. Apple has presented no evidence demonstrating its 

conduct “has any utility, much less that its utility outweighs the gravity of the harm to Plaintiffs.” 

Fraley, 830 F. Supp. 2d at 813. See also Copart, Inc. v. Sparta Consulting, Inc., 339 F. Supp. 3d 

959, 994 (E.D. Cal. 2018) (affirming jury finding of unfairness where “the gravity of the harm 

was quite large . . . [and] Defendants did not argue for the utility of any of their conduct”). 

Plaintiffs have thus established unfairness under the UCL. 

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IV. PLAINTIFFS HAVE ESTABLISHED RESTITUTION UNDER THE UCL

7. Restitution is available under the UCL. Zhang v. Superior Court, 57 Cal. 4th 364, 

371 (2013). “The object of restitution is to restore the status quo by returning to the plaintiff 

funds in which he or she has an ownership interest.” Korea Supply Co. v. Lockheed Martin 

Corp., 29 Cal. 4th 1134, 1149 (2003). “Under the UCL, an individual may recover profits 

unfairly obtained to the extent that these profits represent monies given to the defendant or 

benefits in which the plaintiff has an ownership interest.” Id. at 1148; see also In re Toyota 

Motor Corp. Unintended Marketing, Sales Practices, and Product Liability Litig., 754 F. Supp. 

2d 1145, 1166 (C.D. Cal. 2010) (“[U]nder a ‘benefit of the bargain’ theory, Plaintiffs must allege 

overpayment, loss in value, or loss of usefulness.” (citation and quotations omitted)). 

8. Because Apple accepted full payment for Plaintiffs’ fully-functional devices and 

later permanently and intentionally broke FaceTime, Plaintiffs are entitled to an amount of those 

“profits unfairly obtained” at purchase that is equal to the diminution in value to their devices 

caused by Apple’s unfair misconduct. See Korea Supply, 29 Cal. 4th at 1148. 

V. PLAINTIFFS’ DAMAGES MODEL PROPERLY MEASURES RESTITUTION 

UNDER THE UCL

9. The UCL requires “only that some reasonable basis of computation of damages be 

used, and the damages may be computed even if the result reached is an approximation.” 

Lambert v. Nutraceutical Corp., 870 F.3d 1170, 1183 (9th Cir. 2017), rev’d and remanded on 

other grounds, 138 S. Ct. 2675 (2018). A proper UCL damages model measures damages 

attributable to a plaintiff’s theory of liability. Comcast Corp. v. Behrend, 569 U.S. 27, 35 (2013). 

10. Plaintiffs’ damages model properly calculates restitution under the UCL because 

it measures the diminution in value caused by the FaceTime Break as reflected by the decrease in 

the resale price of Plaintiffs’ and Class Members’ iPhone 4 and 4S devices. 

Date: March 6, 2020 STEYER LOWENTHAL BOODROOKAS

ALVAREZ & SMITH LLP 

By: /s/ Jill M. Manning 

 Jill M. Manning 

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Allan Steyer (State Bar No. 100318) 

Jill M. Manning (State Bar No. 178849) 

D. Scott Macrae (State Bar No. 104663) 

235 Pine Street, 15th Floor 

San Francisco, CA 94104 

Telephone: (415) 424-3400 

asteyer@steyerlaw.com

jmanning@steyerlaw.com

smacrae@steyerlaw.com

PEARSON, SIMON & WARSHAW, LLP

Daniel L. Warshaw (State Bar No. 185365) 

Alexander L. Simon (State Bar No. 305734) 

15165 Ventura Boulevard, Suite 400 

Sherman Oaks, CA 91403 

Telephone: (818) 788-8300 

dwarshaw@pswlaw.com 

asimon@pswlaw.com 

FRIEDMAN OSTER & TEJTEL PLLC

David F.E. Tejtel (pro hac vice) 

New York State Bar No. 4760123 

493 Bedford Center Road, Suite 2D 

Bedford Hills, NY 10507 

Telephone: (646) 661-5881 

dtejtel@fotpllc.com

CALDWELL CASSADY & CURRY

Bradley W. Caldwell (pro hac vice) 

Jason D. Cassady (pro hac vice) 

John Austin Curry (pro hac vice) 

2121 N. Pearl Street, 12th Floor 

Dallas, Texas 75201 

Telephone: (214) 888-4848 

bcaldwell@caldwellcc.com

jcassady@caldwellcc.com

acurry@caldwellcc.com

Counsel for Plaintiffs and the Class

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