Apple Inc. has once again found itself in the crosshairs of legal scrutiny, this time settling a class-action lawsuit to the tune of $490 million.
However, this recent settlement is just one instance in a series of legal entanglements that the tech giant has faced over the years.
This latest lawsuit alleged that Chief Executive Tim Cook defrauded shareholders by concealing falling demand for iPhones in China. The saga began with Apple’s surprising announcement on January 2, 2019, revealing a significant slash in its quarterly revenue forecast by up to $9 billion, citing U.S.-China trade tensions as the primary culprit.
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Despite Cook’s prior reassurances to investors that China was not experiencing similar sales pressures as other markets, subsequent events unfolded that cast doubt on these assertions.
Following Cook’s remarks, Apple took the drastic step of instructing suppliers to curb production, marking the first revenue forecast cut since the iPhone’s inception in 2007. Consequently, Apple shares plummeted by 10%, eradicating a staggering $74 billion in market value.
In response to the lawsuit, Apple vehemently denied any wrongdoing but opted to settle to avoid the prolonged legal battle and associated costs. The settlement, subject to approval by U.S. District Judge Yvonne Gonzalez Rogers, is set at $490 million.
The case is titled In re Apple Inc Securities Litigation and is filed in the U.S. District Court, Northern District of California, under No. 19-02033.
However, this settlement is not an isolated incident. Apple has a history of resolving legal disputes outside of the courtroom, highlighting a recurring pattern in its approach to addressing legal challenges.
In 2014, Apple settled a class-action lawsuit related to e-book price-fixing allegations, agreeing to pay $400 million to consumers. This case stemmed from accusations that Apple conspired with publishers to fix e-book prices, resulting in inflated prices for consumers.
Similarly, in 2020, Apple settled another class-action lawsuit over its practice of slowing down older iPhones to preserve battery life. The settlement, totaling $500 million, addressed claims that Apple’s actions deceived consumers and led them to believe they needed to purchase newer iPhone models rather than simply replace the battery.
These instances, along with the recent settlement regarding iPhone demand concealment in China, underscore a recurrent theme in Apple’s legal strategy: a preference for settling out of court to mitigate potential reputational damage and financial liabilities.
The lead plaintiff in the case is the Norfolk County Council as Administering Authority of the Norfolk Pension Fund, located in Norwich, England. Lawyers representing the shareholders may seek fees of up to 25% of the settlement amount, per Reuters.
While Apple’s settlement history may raise questions about its corporate governance and practices, it also reflects the pragmatic approach adopted by many large corporations when faced with legal challenges. The Cupertino giant’s share price has more than quadrupled since January 2019, catapulting the company’s market value to over $2.6 trillion.