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DEFENDANT APPLE INC.’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

CASE NO. 5:17-CV-00551-LHK (NC) 

Gibson, Dunn & 

Crutcher LLP 

JOSHUA H. LERNER, SBN 220755 

jlerner@gibsondunn.com 

GIBSON, DUNN & CRUTCHER LLP 

555 Mission Street, Suite 3000 

San Francisco, CA 94105-0921 

Telephone: 415.393.8200 

Facsimile: 415.393.8306 

Attorneys For Defendant APPLE INC. 

EUGENE NOVIKOV, SBN 257849 

enovikov@durietangri.com 

DURIE TANGRI LLP 

217 Leidesdorff Street 

San Francisco, CA 94111 

Telephone: 415.362.6666 

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 (NC) 

DEFENDANT APPLE INC.’S PROPOSED 

FINDINGS OF FACT AND CONCLUSIONS 

OF LAW 

Ctrm: 8 – 4th Floor 

Judge: Honorable Lucy H. Koh 

 

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DEFENDANT APPLE INC.’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

CASE NO. 5:17-CV-00551-LHK (NC) 

Gibson, Dunn & 

Crutcher LLP 

PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

Pursuant to the Court’s Pretrial Conference Order (Dkt. 374) Defendant Apple Inc. (“Apple”) 

respectfully submits its first Proposed Findings of Fact and Conclusions of Law concerning Plaintiffs’ 

claim for restitution under California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code 

§ 17200. By submitting these Proposed Findings of Fact and Conclusions of Law, Apple does not 

admit the truth of any of Plaintiffs’ factual allegations described here, as Plaintiffs bear the burden of 

proof at trial. Apple retains all rights to supplement, modify, and expand upon these in its second 

proposed findings of fact and conclusions of law to be submitted after trial pursuant to the Court’s 

Pretrial Conference Order. See Dkt. 374 at 2. 

I. FINDINGS OF FACT 

1. Apple is a corporation organized under the laws of the State of California, with its 

headquarters in Cupertino, California. 

2. iPhone was designed and sold by Apple. It was first released in 2007. The operating 

system of iPhone is called iOS. During development of the original iOS in 2007, Apple set expiration 

dates for certificates used in the iOS system, including an expiration date of April 16, 2014 for a 

certificate called the iPhone Device Sub-CA Certificate. 

3. Apple released iPhone 4 on June 24, 2010. iPhone 4 was the first iPhone device to offer 

FaceTime, which enabled iPhone users to make video calls. When FaceTime launched, it used the 

iPhone Device Sub-CA certificate to verify that a bona fide iPhone user was on the other side of the call 

being connected. Apple released iPhone 4S on October 14, 2011. 

4. Because FaceTime used the iPhone Device Sub-CA certificate as part of the process of 

connecting calls, and because that certificate was set to expire on April 16, 2014, FaceTime would have 

stopped working on that date absent a fix. 

5. On September 18, 2013, Apple released iOS 7. Apple provided iOS 7 free of charge to 

users of iPhone 4, iPhone 4S, and other models. iOS 7 provided numerous additional functions and 

enhancements. On November 14, 2013, Apple released iOS 7.0.4, which fixed the problem that—if not 

corrected—would have caused interruption to FaceTime when the iPhone Device Sub-CA certificate 

eventually expired. The fix allowed FaceTime to continue working without interruption. 

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DEFENDANT APPLE INC.’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

CASE NO. 5:17-CV-00551-LHK (NC) 

Gibson, Dunn & 

Crutcher LLP 

6. On April 16, 2014, the iPhone Device Sub-CA certificate expired. When the iPhone 

Device Sub-CA certificate expired on April 16, 2014, FaceTime stopped working for owners of Apple’s 

iPhone 4 and iPhone 4S devices who had not taken advantage of the free upgrade to iOS 7 and were still 

running Apple’s iOS 6 or an earlier version of iOS. 

7. Users who had previously updated the operating system on their iPhone devices to iOS 

7.0.4 or later did not experience any FaceTime interruption. Users of iPhone 4 and iPhone 4S who 

experienced a FaceTime interruption were able to immediately download an update to the then-current 

version of iOS 7, which restored FaceTime functionality to their devices. 

8. Plaintiffs Christina Grace and Ken Potter (“Plaintiffs”) are residents of California. Both 

Plaintiffs declined the free option to upgrade their iPhone 4 or 4S devices to iOS 7.

9. Plaintiffs assert that Apple intentionally caused the FaceTime feature to stop working 

on Plaintiffs’ and Class Members’ iPhone 4 and iPhone 4S devices and that this constituted an “unfair” 

business practice in violation of California’s Unfair Competition Law (the “UCL”), Cal. Bus. & Prof. 

Code § 17200. 

10. Plaintiffs have offered no evidence to show that Apple intentionally caused FaceTime 

to stop functioning on their iPhone 4 and 4S devices or on any class members’ iPhone 4 and 4S devices. 

To the contrary, the evidence demonstrates that Apple diligently worked to avoid and ultimately provide 

a solution to the FaceTime outage (contained in the free-of-charge iOS 7 update). 

11. Plaintiffs have also offered no evidence that iOS 7 was incompatible with their iPhone 

4 and 4S devices or with any of class members’ iPhone 4 and 4S devices. 

12. Moreover, iPhone customers, including Plaintiffs here, were made aware that iOSreliant functions like FaceTime may not be available indefinitely for the working life of their iPhones 

and that Apple may modify and update the software at Apple’s discretion, including the update to the 

lapse in FaceTime for users running its older iOS 6 software. 

13. Plaintiffs have also offered no evidence to show that Apple’s conduct here was on 

balance “unfair” when considering Apple’s justifications for the conduct under the circumstances. 

Plaintiffs have also offered no evidence to show that the gravity of the harm to them outweighs those 

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DEFENDANT APPLE INC.’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

CASE NO. 5:17-CV-00551-LHK (NC) 

Gibson, Dunn & 

Crutcher LLP 

justifications. Plaintiffs have also offered no evidence to show that they suffered any loss, or that they 

are entitled to restitution of any funds in Apple’s possession in which they have a possessory interest. 

14. After considering the evidence admitted at trial, the Court finds that Plaintiffs failed to 

prove by a preponderance of the evidence that Apple’s conduct was unfair such that Apple may be held 

liable for unfair business practices pursuant to the UCL. Plaintiffs also failed to prove by a 

preponderance of the evidence that Apple violated any laws or offended any public policy tethered to 

specific constitutional, statutory, or regulatory provisions. Moreover, after weighing the utility of 

Apple’s conduct against the gravity of the alleged harm to the alleged victims, the Court finds that 

Plaintiffs failed to prove by a preponderance of the evidence that Apple engaged in immoral, unethical, 

oppressive, or unscrupulous business practices. Plaintiffs also failed to prove by a preponderance of the 

evidence that the consumer injury is substantial, and that any harm here is not outweighed by the 

countervailing benefits. Finally, Plaintiffs have offered no evidence to show they are entitled to 

restitution. 

15. Apple has also presented uncontroverted evidence that Plaintiffs waived any right to 

complain and/or are estopped from complaining about the need to upgrade their iOS software in order 

to avoid an interruption to FaceTime. All Plaintiffs agreed to the iOS 6 Software License Agreement, 

in which they acknowledged that iOS software may be updated or replaced, that updates may not include 

all existing functions, and that services may be interrupted. In addition, the evidence compels the 

conclusion that Apple acted in good faith by diligently working to avoid and provide a solution to the 

FaceTime interruption issue. 

II. CONCLUSIONS OF LAW 

1. California’s UCL prohibits unfair competition, including “any unlawful, unfair or 

fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” Cal. Bus & 

Prof. Code § 17200. Because a “UCL action is equitable in nature,” the Court, rather than a jury, must 

decide whether there was a UCL violation. Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 

1134, 1144 (2003). As such, under the UCL, “[p]revailing plaintiffs are generally limited to injunctive 

relief and restitution.” Zhang v. Superior Court, 57 Cal. 4th 364, 371 (2013). In the instant case, the 

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DEFENDANT APPLE INC.’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

CASE NO. 5:17-CV-00551-LHK (NC) 

Gibson, Dunn & 

Crutcher LLP 

Court previously declined to certify an injunctive class under Rule 23(b)(2), and as result, Plaintiffs may 

seek only restitution under the UCL. 

2. The UCL creates a cause of action for business practices that are (1) unlawful, (2) unfair, 

or (3) fraudulent. Each “prong” of the UCL provides a “separate and distinct theory of liability.” Lozano 

v. AT & T Wireless Servs., Inc., 504 F.3d 718, 731 (9th Cir. 2007). Plaintiffs here proceed only under 

the unfair prong of the UCL. Grace v. Apple, Inc., No. 17-CV-00551-LHK, 2019 WL 3944988, at *10 

(N.D. Cal. Aug. 21, 2019). 

3. While the precise definition of “unfair” in the consumer context is somewhat unsettled, 

the conduct at issue must either (1) “offend [ ] an established public policy or [be] immoral, unethical, 

oppressive, unscrupulous or substantially injurious to consumers” (Bardin v. Daimlerchrysler 

Corp., 136 Cal. App. 4th 1255, 1268 (2006)); (2) be “tethered to specific constitutional, statutory or 

regulatory provisions” (id. at 1271); or (3) cause “substantial” consumer injury that “is not outweighed 

by countervailing benefits” and which consumers could themselves not “have reasonably avoided.” 

Daugherty v. Am. Honda Motor Co., Inc., 144 Cal. App. 4th 824, 839 (2006). 

4. Plaintiffs “rely upon the [third] ‘balancing test.’” Grace v. Apple Inc., No. 17-CV00551, 2017 WL 3232464, at *14–15 (N.D. Cal. July 28, 2017). Under the balancing inquiry, “[t]he 

test of whether a business practice is unfair ‘involves an examination of [that 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.’” S. Bay Chevrolet v. Gen. Motors Acceptance Corp., 72 Cal. App. 4th 861, 886 (1999). 

The Court therefore will use that framework to analyze the evidence. 

5. Plaintiffs have failed to meet their burden that Apple’s conduct, on balance, was unfair 

to impose liability under the UCL as an “unfair business” practice. As a result, Plaintiffs also have 

failed to meet their burden to show they are entitled to any restitution. 

6. Courts refuse to impose liability for “unfairness” where the defendant offers “reasons” 

to show its conduct was “justif[ied]” by legitimate concerns. S. Bay Chevrolet, 72 Cal. App. 4th at 886; 

accord Family Home & Fin. Ctr., Inc. v. Fed. Home Loan Mortg. Corp., 461 F. Supp. 2d 1188, 1195–

97 (C.D. Cal. 2006), aff’d, 525 F.3d 822 (9th Cir. 2008) (practice not unfair given “legitimate business 

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DEFENDANT APPLE INC.’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

CASE NO. 5:17-CV-00551-LHK (NC) 

Gibson, Dunn & 

Crutcher LLP 

reason[s]” for it); Puentes v. Wells Fargo Home Mortg., Inc., 160 Cal. App. 4th 638, 649–50 (2008) 

(holding that “evidence that any injury to some consumers was offset by countervailing benefits to 

consumers and competition” precluded UCL unfairness claim). 

7. Apple’s conduct here was “justif[ied]” by “legitimate business reason[s]”: Apple 

presented evidence that delivering a fix for the expiration of a hard-coded security certificate 

programmed into iPhone as part of a software update was the most practical solution that did not pose 

risks to network security. Family Home, 461 F. Supp. 2d at 1195 (holding that a practice was not unfair 

where it was “the only feasible way of ensuring that similar loans are not purchased in the future”); 

Puentes, 160 Cal. App. 4th at 649–50 (legitimate “market” realities justified allegedly unfair practice); 

Walker v. Countrywide Home Loans, Inc., 98 Cal. App. 4th 1158, 1176 (2002) (alleged unfair charge 

“not an unreasonable amount to protect the real estate security from damage or deterioration” in larger 

business scheme). The evidence confirmed that Apple’s iOS network’s security depends on a one-way, 

one-device system for updates that would make Plaintiffs’ preferred method (i.e., creating a special 

iOS 6 release for iPhone 4 and 4S users who do not want to upgrade to iOS 7) unworkable from a 

security perspective because it would increase the risk to Apple’s consumers of security breaches or 

large-scale network interruptions. That interest in security surely is substantial. Plaintiffs offered 

nothing to dispute it. 

8. Moreover, Apple’s conduct (and Apple’s iOS update process generally) benefits all its 

consumers by reducing security risks and improving performance network-wide. Courts routinely 

consider such “benefit[s]” to consumers or stakeholders from the alleged unfair practice. E.g., In re Ins. 

Installment Fee Cases, 211 Cal. App. 4th 1395, 1418–19 (2012) (“The installment fee is not unfair . . . . 

any harm in paying the installment fee is outweighed by the benefit to the insured of being able to pay 

premiums in installments instead of in large lump-sum payments.”); Family Home, 461 F. Supp. 2d 

at 1197 (considering “benefits” to public from practice); Puentes, 160 Cal. App. 4th at 648–49 (granting 

summary judgment on UCL unfairness claim in part given “practice [at issue] benefited many 

consumers”). 

9. Providing such fixes as part of software updates is common industry practice. Donohue 

v. Apple, Inc., 871 F. Supp. 2d 913, 928 (N.D. Cal. 2012) (considering industry standards in fairness 

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DEFENDANT APPLE INC.’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

CASE NO. 5:17-CV-00551-LHK (NC) 

Gibson, Dunn & 

Crutcher LLP 

calculus); Puentes, 160 Cal. App. 4th at 648 (practice not unfair where “lenders nationwide uniformly 

employ the same practice”). Apple in fact exceeds the industry standard. Apple’s hardware often 

outlasts it competitors in terms of compatibility with current software; notably, iPhone 4 and 4S devices 

have to date outlasted any phone on the market in this respect. 

10. No evidence supports Plaintiffs’ assertion that Apple had an improper “motive” for its 

conduct. S. Bay Chevrolet, 72 Cal. App. 4th at 886 (defendant’s motive informs UCL unfairness 

analysis). Apple not only alerted consumers about the limitations on the iOS software and its potential 

impact on FaceTime but also provided a solution free of charge. 

11. No evidence supports the notion that Apple intentionally broke FaceTime for any 

reason. No evidence supports Plaintiffs’ theory that Apple wanted customers to suffer a FaceTime 

outage or to have an inferior experience with a new iOS. Moreover, although Plaintiffs’ theory rests on 

the assumption that the performance of iOS 7 was inferior to that of iOS 6 on their devices (Dkt. 65 at 

18), Plaintiffs have failed to adduce evidence that all class members experienced any such alleged 

performance issues. For this reason, Plaintiffs have also failed to prove the injury-in-fact of every class 

member, as Article III requires. See Ramirez v. TransUnion LLC, No. 17-17244, 2020 WL 946973, at 

*8 (9th Cir. Feb. 27, 2020) (holding “that each member of a class certified under Rule 23 must satisfy 

the bare minimum of Article III standing at the final judgment stage of a class action in order to recover 

monetary damages in federal court”).

12. Plaintiffs moreover were notified in advance of the possibility that future updates would 

be necessary to continue using functions like FaceTime. The UCL “may not be violated under 

circumstances where, as here, both [parties] know, understand, agree and expect” the limitations in the 

iOS software. S. Bay Chevrolet, 72 Cal. App. 4th at 888. Here, too, “substantial evidence indicate[s 

that Apple and Plaintiffs] entered into . . . agreements knowing, understanding, agreeing and expecting 

that” their iPhones and the iOS software which controls FaceTime and other iPhone functions would 

not work indefinitely for the working life of the iPhone hardware. Id. Apple (via the Software License 

Agreement) had cautioned consumers that it could not guarantee that all “iOS”-reliant functions like 

FaceTime would keep working indefinitely. The first page of the Software License Agreement makes 

clear that “Apple, at its discretion, may make available future iOS Software Updates for [Plaintiffs’] 

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DEFENDANT APPLE INC.’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

CASE NO. 5:17-CV-00551-LHK (NC) 

Gibson, Dunn & 

Crutcher LLP 

iOS Device” and that the “‘Original iOS Software’ [on Plaintiffs’ iOS device] . . . may be updated or 

replaced by feature enhancements” through later “‘iOS Software Updates.’” Dkt. 35-1 ¶ 1(a)-(b). It 

also notes that “FaceTime . . . may not be available” at all times. Id. ¶ 4(d). That Apple provided for 

precisely that “upgrade” to fix the lapse in FaceTime thus cannot be an “unfair” practice. 

13. In sum, the evidence admitted at trial shows that Apple’s conduct was motivated by 

legitimate, independent business reasons, not any kind of plot to undermine FaceTime (and iPhone 

products) for consumers by intentionally having FaceTime fail. 

14. On the other hand, the “harm” to the Plaintiffs here is nonexistent.1 Plaintiffs do not 

dispute that the remedy for the FaceTime lapse was offered free of charge. And they have offered no 

evidence that updating to iOS 7 reduced the value of their devices or caused them any other kind of 

“harm.” “Because [Plaintiffs] reasonably could have avoided the alleged injury,” there is no “claim 

under the unfairness prong of the UCL.” Davis v. Ford Motor Credit Co. LLC, 179 Cal. App. 4th 581, 

598 (2009) (“the alleged injury here, namely, the imposition of successive late fees for successive 

months, reasonably could have been avoided had [plaintiff] made his monthly payments timely”); In re 

Ins. Installment Fee Cases, 211 Cal. App. 4th at 1419 (“[A]ny policyholder can avoid the ‘harm’ by 

opting to pay the premium in a lump sum rather than in installments.”). 

15. Finally, the evidence supports Apple’s equitable defenses of waiver, estoppel, and good 

faith. See Cortez v. Purolator Air Filtration Prod. Co., 23 Cal. 4th 163, 179–81 (2000) (recognizing 

that “good faith, waiver, and estoppel” may be asserted in defense of a UCL claim). Plaintiffs waived 

or are estopped from pursuing their claim because they agreed to the iOS 6 Software License Agreement, 

providing that iOS software may be updated or replaced, that updates may not include all existing 

functions, and that services may be interrupted. Moreover, Apple acted in good faith by diligently 

working to avoid and provide a solution to the FaceTime interruption issue. 

 

1

 That is particularly true with respect to the named Plaintiffs. Christina Grace admitted that she did 

not know about the certificate-related FaceTime issue with her iPhone 4 device before being asked 

by Plaintiffs’ lawyers to join this lawsuit. After April 16, 2014, Ken Potter actually updated his 

iPhone to iOS 7.1.1, which had FaceTime functionality. See Donohue v. Apple, Inc., 871 F. Supp. 

2d 913, 921 (N.D. Cal. 2012) (“The court remains extremely skeptical about plaintiff’s ability to 

prove diminution in value damages, particularly for purchasers of the iPhone 3G, 3GS and 4G for 

whom Apple’s software update ‘fixed’ the alleged defect.”). 

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DEFENDANT APPLE INC.’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

CASE NO. 5:17-CV-00551-LHK (NC) 

Gibson, Dunn & 

Crutcher LLP 

16. Plaintiffs’ theory of liability at bottom would make Apple a guarantor for the iOS 

software functions (like FaceTime) indefinitely without allowing Apple to issue the very software 

updates necessary to maintain the usability of such functions. That would be against public policy and 

would reduce benefits to consumers or competition by allowing plaintiffs’ attorneys to force courts to 

police technology companies’ routine decisions concerning their service, and thereby interfere with the 

pace of innovation. 

Dated: March 6, 2020 GIBSON, DUNN & CRUTCHER LLP 

By: /s/ Joshua H. Lerner Joshua H. Lerner 

Attorneys for Defendant APPLE INC. 

Case 5:17-cv-00551-LHK Document 407 Filed 03/06/20 Page 9 of 9