Apple’s misleading use of “episode” to describe promo clips could lead to liability (w/o its contract)

Zaragoza v. Apple Inc., 2019 WL 1171161, No. 18-cv-06139-PJH
(N.D. Cal. Mar. 13, 2019)
Plaintiffs sued Apple for how it sells TV seasons on its
iTunes store. The home page for each season “provides general information about
the season and three purchasing options,” which include buying individual
episodes, buying an existing full season, and buying all current and future
episodes of an as-yet-to-be-completed season (Season Pass). Apple represents
the number of “Episodes” available in a season on each season’s home page, with
individual video clips in a horizontally scrolling list along the bottom, with
cost information and text along with a thumbnail image.

Plaintiffs alleged that Apple delivers fewer than the
advertised number of episodes with its “Buy Season” or “Season Pass” options,
because Apple counts both promotional videos and what consumers allegedly
understand the word “episode” to mean—plot-based episodes of a television
show—in its advertised number of episodes. Plaintiffs thus received fewer
episodes than they believed they were purchasing, and also received a smaller
discount by buying the entire season than they believed they were getting
compared to buying individual episodes. For example, plaintiff Zaragoza
purchased a season of “Genius: Edison” that advertised “13 Episodes” at the
time of purchase, but only six of those 13 were plot-based episodes, and seven
were promotional videos. By season’s end, Zaragoza received only four more plot-based
episodes and iTunes was advertising “22 Episodes,” which included ten
plot-based episodes and 12 promotional videos. Likewise, iTunes ultimately advertised
“17 Episodes” for the first season of “Killing Eve,” but only eight of those
videos were actually “episodes,” as plaintiffs allegedly understood the term.
Each “episode” can also be selected, which then presents
more detail about it, including a title, the “episode number,” the length of
the video clip, its individual price, and a written description.
Apple argued that plaintiffs’ interpretation of “episode”
was implausible and that a reasonable consumer had to understand that “episode”
includes advertisements, trailers, promotional videos, and other videos that
are not part of the show’s narrative. Apple contended that its scrollable list
of videos appearing immediately below the word “Episode” provided context that
necessarily dispels any belief to the contrary.
This was not the “rare situation” where plaintiffs’ alleged
understanding of the word “Episodes” was implausible as a matter of law. “It is
plausible that consumers understand the word ‘Episode’—particularly in the
context of a description of a season of a television series—to mean an episode
that is part of the television show’s season, and not a commercial for the show
or another type of promotional or behind-the-scenes video. Reviewing the word’s
definition in readily-available dictionaries confirms that plaintiffs’ alleged
understanding could be found reasonable by a trier of fact.” [Notably, those
dictionary definitions didn’t suggest that Apple’s interpretation was also
reasonable.] Though context does matter, the court wasn’t willing to hold that,
as a matter of law, a reasonable consumer must scroll through the list of
videos in sufficient detail to view the curative information. Moreover, there
was a factual issue about what consumers of the Season Pass feature would be
able to view in the list of videos when making their purchases. “The Apple TV
appears to make no representation about how many future episodes there will be,
but rather reports only on the total number of video clips associated with a
show’s season at the time the consumer views that season’s home page.” If it
said there were 10 episodes at the time of purchase and there were 5 narrative
episodes and 5 promo videos at the time, a reasonable consumer might expect
that 10 episodes was the total number of narrative episodes in the season.
Moreover, there were factual questions “concerning how much a consumer would
have to investigate into the Apple TV menu structures to be exposed to much of
the allegedly-curative information Apple describes.”
Apple also argued that it didn’t sell “goods or services”
within the meaning of the CLRA, but only licenses to view content. The CLRA definitions
say “(a) “Goods” means tangible chattels bought or leased for use primarily for
personal, family, or household purposes, … (b) “Services” means work, labor,
and services for other than a commercial or business use….” And it provides that
it “shall be liberally construed and applied to promote its underlying
purposes, which are to protect consumers against unfair and deceptive business
practices and to provide efficient and economical procedures to secure such
protection.” The complaint alleged that the “Season Pass” was a service, including
a promise to offer current and future episodes for viewing on an ongoing basis
as the season progresses. The court refused to take judicial notice of the
alleged contract between the parties. Though these purchases weren’t “tangible
chattels,” plaintiffs plausibly alleged a purchase of services and there was at
least a factual dispute. [We call VOD a service, even if it inherently involves
“licenses” as well.]
Warranty claims survived for similar reasons, though the
California U.C.C. applies only to contracts for the sale of “goods.” Unlike
under the CLRA, goods are “all things (including specially manufactured goods)
which are movable at the time of identification to the contract for sale[.]” Courts
look to the “essence of the agreement” and “have generally found that
‘mass-produced, standardized, or generally available software, even with
modifications and ancillary services included in the agreement, is a good that
is covered by the UCC.’ ” Plaintiffs adequately alleged that the essence of the
agreement concerned the sale of the episodes. (See also the “Buy Now” button
and this
very helpful article by Aaron Perzanowski & Chris Jay Hoofnagle
.)
“Episode” could be an affirmation of fact or promise relating to the goods sold
and therefore a warranty.

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