“Apple Can’t Force Arbitration in Consumer Privacy Lawsuit, Federal Judge Rules”

Tom McParland of New York Law Journal discusses in this article the Southern District of New York’s decision in Ohanian v. Apple Inc., in which the court rejected Apple’s contention that the doctrine of equitable estoppel enabled it to compel arbitration of a proposed class action alleging “that Apple’s operating-system flaw, combined with T-Mobile’s practice of recycling old phone numbers, caused users’ private photos, videos and texts to be shared with other customers via their iMessage and FaceTime apps.”

Writing for the court, U.S. District Judge Lorna Schofield held that under applicable Florida law, Apple was incorrect to argue that “claims merely need to ‘arise’ from an agreement with a ‘broad’ arbitration clause for equitable estoppel to apply.” Instead, according to Judge Schofield, “courts have construed arbitration clauses to include non-signatories where claims alleged against the non-signatories were derived from the agreements or where there was an agency relationship between the signatory and non-signatory.”

On the facts alleged, Judge Schofield held that Apple failed to satisfy that standard. For one thing, “[t]he Complaint neither alleges any claims against Apple that “make reference to or presume the existence of a written agreement,” nor, in asserting the claims, “rel[ies] on the terms of the written agreement.” Secondly, the allegations did not assert “substantially interdependent and concerted misconduct by a signatory and nonsignatory,” insofar as “[t]he Complaint makes separate allegations about Apple and its conduct, including Apple’s alleged knowledge and deliberate concealment of security breaches,” and “describe[s] how Apple’s and T-Mobile’s actions independently caused harm, inadvertently compounding the problems.”

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