Apple Agrees to Pay $14.8M to iCloud Subscribers in Class-Action Lawsuit

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In 2019, Apple was hit with yet another class-action lawsuit, alleging that the company had breached its contract with its users by storing some iCloud data on third-party servers.

The complaint, filed by plaintiffs Andrea M. Williams and James Stewart in August 2019, also maintained that Apple had violated California’s Unfair Competition Law (UCL) and False Advertising Law (FAL).

As with most class action lawsuits, this one took a while to wind its way through the courts. In October of the same year, Apple filed a Motion to Dismiss, which the court partially granted in March 2020; the court ruled that the breach of contract claim could proceed but dismissed the California UCL and FAL claims.

The plaintiffs amended those claims in April, and after Apple once again moved to have those claims dismissed, the court finally threw them out with prejudice in November.

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However, the breach of contract claim continued to be valid, and it appears that Apple has agreed to settle out of court to the tune of $14.8 million “for breach of contract regarding the iCloud Service that Apple provides to its users.”

Naturally, Apple has denied any wrongdoing in this settlement, which is par for the course when it comes to these types of agreements.

Apple maintains that it did nothing wrong and denies that it breached the iCloud Terms and Conditions with any user. Apple asserts numerous defenses to the claims in this case. The proposed Settlement to resolve this Lawsuit is not an admission of guilt or any wrongdoing of any kind by Apple, and it is not an admission by Apple of the truth of any of the allegations in the Lawsuit.Exhibit 4 to Settlement Agreement

In the settlement agreement, Apple adds that it “continues to vigorously deny all the material allegations in the Action,” but has nonetheless concluded that it is in the company’s best interests to settle to avoid the legal expenses, the complications of the case, and “the distractions of continued litigation.”

Who’s Included in the Settlement?

According to the published terms of the settlement, users who “paid for iCloud at any point between September 16, 2015, and January 31, 2016” and had a U.S. mailing address associated with their iCloud account will be automatically eligible for a payout.

If you fall into this category, there’s also nothing else you need to do to join the settlement. If you’re still an iCloud subscriber when the payout comes, it should automatically be credited to your Apple account:

If, at the time the Class Payment is distributed, you are a subscriber to any monthly paid iCloud plan, and you have a U.S. mailing address associated with your plan, you will automatically receive the Class Payment to the Apple account that pays for your current monthly iCloud subscription.Williams v. Apple Inc. Settlement Information

Those who no longer subscribe to a paid iCloud plan will receive a payment by check to the mailing address last associated with their iCloud account. The same procedure applies to current iCloud subscribers who no longer have a U.S. mailing address associated with their plan.

How Much Will I Get?

The payments will be a “pro-rata distribution of the Net Settlement Amount based on the overall payments made by each Subscriber Class Member for his or her iCloud subscription during the Subscriber Class Period.”

This means that the $14.8 million that Apple is paying out — minus all administrative and legal fees — will be equally distributed based on how much you spent during the 4.5 months of the class period.

Either way, the amount won’t exceed what you paid for iCloud storage during that time, so the most you can hope for is a full refund of 4.5 months of iCloud service. This means that users on the highest tier could get up to $45 back. However, considering that everyone in the U.S. who paid for iCloud during this period will share the settlement, you’ll likely get considerably less.

In early 2016, Apple Senior VP Eddy Cue told John Gruber in an interview that iCloud had reached 782 million users, although that almost certainly includes a large number of free accounts. For comparison, Cue revealed that Apple Music had 11 million paying subscribers at the time.

Even if only five percent of the total number of iCloud users were paying for the service — a number that seems low considering that the paltry 5GB of free storage isn’t enough to even backup most iPhones — that would still work out to just over 39 million paying customers. It’s pretty basic math to see that $14.8 million doesn’t amount to much when it’s divided among 39 million people.

As with most class action lawsuits, it’s the lawyers who will benefit the most from this. The attorneys’ fees won’t be set until after the Final Approval Hearing on August 4. However, the agreement already earmarks up to $2.4 million for “settlement administration functions” to cover the work involved in disbursing the funds.

As for the attorneys’ fees, all we know right now is that counsel for the plaintiff will have to apply to the court for its portion of the $14.8 million “for their Attorneys’ Fees and Costs incurred in connection with prosecuting the Action.” They have to file that motion by April 18 — 35 days before the exclusion deadline of May 23. Apple can still choose to oppose that request, however.

Lastly, while each class member may be lucky to get a buck or two out of this, James Stewart, one of the two plaintiffs who kicked this whole thing off, could end up doing much better. The other plaintiff, Andrea M. Williams, was previously declared by the court as “inadequate,” excluding her from representing the class and leaving Stewart as the only “Named Plaintiff.”

The agreement gives the class counsel the right to apply for a “Service Award” of $5,000 to recognize Stewart’s role in the proceedings. However, this is by no means a guaranteed payment — the lawyers still have to request it, the court has to approve it, and Apple reserves the right to object to it.

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