[00:00:00] Speaker 03:
Good morning, Your Honor.

[00:00:01] Speaker 03:
My name is Roy Catrielle, counsel for plaintiff and appellant Lisa Bodenberg in the putative class.

[00:00:07] Speaker 03:
And I'd like to reserve four minutes of my time for rebuttal.

[00:00:10] Speaker 04:
We'll try to help you, but watch the clock, please.

[00:00:12] Speaker 03:
Thank you.

[00:00:13] Speaker 03:
And apropos time allocation, if during the course of this argument, Your Honor has become so engaged with my argument that you say that we will allocate you additional time of five minutes.

[00:00:25] Speaker 03:
I would understand... That's not going to happen.

[00:00:28] Speaker 05:
I was going to say, you got the wrong presiding judge for that.

[00:00:31] Speaker 05:
Fair enough.

[00:00:33] Speaker 05:
But if Your Honor... Maybe you could start by letting me know for sure.

[00:00:38] Speaker 05:
It's my understanding you agree that the iCloud legal agreement here is unambiguous.

[00:00:44] Speaker 02:
That is our position, yes, Your Honor.

[00:00:46] Speaker 05:
So if it's unambiguous then the court just reads the language of the agreement and determines what it says, correct?

[00:00:54] Speaker 05:
That is true.

[00:00:55] Speaker 05:
And then it seems to me that we are looking for the objective intent of the language as evidenced by words rather than the subjective intent of the parties, correct?

[00:01:08] Speaker 05:
Absolutely.

[00:01:09] Speaker 05:
in California.

[00:01:10] Speaker 05:
Well, I want to make sure because whole Idaho does it our own way and so I want to make sure I'm on the right.

[00:01:17] Speaker 05:
So, and the interpretation of these words must get their ordinary and popular sense under California law.

[00:01:24] Speaker 02:
That is true as well.

[00:01:26] Speaker 05:
And we're really talking about the language.

[00:01:29] Speaker 05:
Your account is allocated 5 GB of storage capacity as described in the iCloud feature pages.

[00:01:38] Speaker 05:
Additional storage is available for purchases described below, correct?

[00:01:43] Speaker 02:
That is the heart of the contract case, yes.

[00:01:47] Speaker 05:
Well, under that phrase, it seems to me that Apple should have provided you with more or supplemental storage in the amount, in addition to the amount that all accounts are already given, right?

[00:02:01] Speaker 02:
That is exactly our position.

[00:02:03] Speaker 05:
You got the additional storage.

[00:02:04] Speaker 05:
You got 200 GB storage, which is 195 GB more than five.

[00:02:11] Speaker 05:
So you got exactly what you were promised.

[00:02:15] Speaker 03:
Not quite, Your Honor, respectfully.

[00:02:16] Speaker 05:
Because another if I'm reading the language of the contract as we just went through, I mean, I look at it and I say to myself, they say they should get additional storage.

[00:02:29] Speaker 05:
Additional says more.

[00:02:31] Speaker 05:
They got more.

[00:02:32] Speaker 05:
That's exactly what they were promised.

[00:02:36] Speaker 03:
except that there's another section of the contract, Section 3A, which we also highlight in our complaint and in our motion to dismiss, and that says how much more you are supposed to get.

[00:02:47] Speaker 03:
Section 3A, which is found at excerpts of Record 131, says, for details about plans and pricing, please visit this page.

[00:02:55] Speaker 03:
And that's the price page, which is incorporated into the contract.

[00:02:58] Speaker 05:
Well, but even there, doesn't it say that the language of the contract will provide additional storage, not an additional 200 GB of storage?

[00:03:10] Speaker 05:
Respectfully, no, because I think... Where is the language which says they'll get an additional 200 GB of storage?

[00:03:19] Speaker 05:
I don't read that anyplace.

[00:03:21] Speaker 03:
Let me see if I can take you to the way we're reading it.

[00:03:25] Speaker 03:
Section 1C of the contract says,

[00:03:27] Speaker 03:
that your account is automatically allocated 5 GB of storage.

[00:03:32] Speaker 05:
That's what it says.

[00:03:33] Speaker 03:
Additional storage is available for purchase.

[00:03:36] Speaker 03:
That means of necessity that the only thing you are purchasing is the more storage.

[00:03:41] Speaker 03:
If additional means more, then what that language says is this is what's available for purchase.

[00:03:47] Speaker 05:
That's the way you interpret that.

[00:03:49] Speaker 03:
Yes, and we believe it's a reasonable interpretation.

[00:03:52] Speaker 05:
We believe that the... When it doesn't say you'll get an additional 200 GB, it just says additional.

[00:04:00] Speaker 03:
It says you can purchase additional storage and the amount of additional storage and the price at which you will purchase it is set forth in this page.

[00:04:08] Speaker 03:
And what that page tells you is that if you pay monthly 99 cents, you will get 50 gigabytes of additional storage.

[00:04:15] Speaker 03:
The only thing that's available for sale and purchase is the additional storage.

[00:04:19] Speaker 03:
The five gigabytes is yours all along.

[00:04:21] Speaker 01:
Does it say you'll get 50 gigabytes additional storage?

[00:04:27] Speaker 03:
It says additional storage is available for purchase.

[00:04:30] Speaker 01:
But does it say 50 gigabytes of additional storage is what you're buying?

[00:04:34] Speaker 03:
It doesn't say, no, it just lists a price list of the additional storage.

[00:04:39] Speaker 03:
And if additional means more, and the only thing that's available for sale and purchase is the more, then our contention is that's what you're purchasing.

[00:04:47] Speaker 03:
And let me, if I could illustrate this with an example, because after all the words are to be given their ordinary meaning as understood in the daily lives.

[00:04:56] Speaker 03:
Council for Apple, before the district court said, well, this is akin to having several different cellular plans.

[00:05:02] Speaker 03:
If you buy a phone for $50 a month, you get 100 minutes.

[00:05:07] Speaker 03:
For $75 a month, you get 200 minutes.

[00:05:10] Speaker 03:
And so everybody would understand that you would get one or the other, depending on which one you chose.

[00:05:14] Speaker 03:
And that's all well and good.

[00:05:15] Speaker 03:
But that's not what this language says.

[00:05:17] Speaker 03:
What this language says is that when I buy my phone, it comes preloaded with 100 minutes automatically.

[00:05:23] Speaker 03:
If you want additional minutes, you can purchase that for $39.99.

[00:05:25] Speaker 03:
And so if you want 200 additional minutes, you can purchase that for $39.99.

[00:05:30] Speaker 03:
But no one would understand then that that 200 minutes would be as a substitute to what's already preloaded on the phone.

[00:05:37] Speaker 03:
That was mine all along.

[00:05:38] Speaker 03:
And so I began this argument, or I attempted to, a little bit humorously, I hope, but I was making the point that if you were to say during the course of this argument that we will allocate you an additional 10 minutes of argument time because we've engaged you or so on, nobody would understand that that 10 minutes would then take away the 15 minutes of argument that I already had at the outset.

[00:05:57] Speaker 03:
It's additional.

[00:05:58] Speaker 03:
That's how the word is used in common parlance.

[00:06:01] Speaker 03:
And to buttress that point, it's not an argument of our own making.

[00:06:06] Speaker 03:
Because our complaint also referenced how players in the industry state that which Apple says should govern here.

[00:06:13] Speaker 03:
We posted an ad of Google.

[00:06:15] Speaker 03:
It's at paragraphs 33 and 34 of our complaint.

[00:06:17] Speaker 03:
And what Google says is, you get 15 gigabytes of free storage for Google One.

[00:06:22] Speaker 03:
If you want to upgrade and get additional storage, you can pay $9.99 or $8.99.

[00:06:26] Speaker 03:
And then they say, and then your total storage will increase to 100 gigabytes.

[00:06:31] Speaker 03:
Apple is urging the same result in reading here, but the language that they used is different than that which Google used, which makes it expressly clear.

[00:06:40] Speaker 03:
Here, I think this was dismissed on the pleadings, which means all we have to advance is a plausible interpretation of the contract.

[00:06:46] Speaker 03:
We didn't draft this.

[00:06:47] Speaker 03:
This is the most sophisticated company on earth.

[00:06:50] Speaker 03:
with a cadre of lawyers at their disposal.

[00:06:52] Speaker 03:
And this is how they chose to draft the contract.

[00:06:54] Speaker 03:
And so when we read it, we said, we all have five gigabytes.

[00:06:58] Speaker 03:
Now I'm purchasing more, which is what they mean additional means.

[00:07:01] Speaker 03:
And the more that I'm purchasing is 200 gigabytes more.

[00:07:05] Speaker 03:
They're saying, no, no, no.

[00:07:06] Speaker 03:
When you purchased that 200 gigabytes, we took away the five.

[00:07:09] Speaker 03:
So now all you have is 200.

[00:07:11] Speaker 03:
What happened to the five I had before?

[00:07:13] Speaker 04:
I was going to ask you this.

[00:07:14] Speaker 04:
Before the district court, you disputed that Rule 9 applies to the construction of the contract.

[00:07:19] Speaker 04:
Do you still dispute that?

[00:07:21] Speaker 03:
We dispute that it... Rule 9B, I should say.

[00:07:24] Speaker 03:
9B, correct.

[00:07:25] Speaker 03:
Pleading, pleading, heightened pleading with the particularity.

[00:07:28] Speaker 03:
We don't think it applies to the breach of contract case.

[00:07:31] Speaker 03:
We think we do concede that it applies to the consumer protection statutes to the extent that they, they make a claim for deceptive refraction.

[00:07:38] Speaker 04:
And to the degree it applies, how does that cut in this case?

[00:07:43] Speaker 03:
Well, I think that even if it were to apply to the breach of contract case.

[00:07:48] Speaker 03:
We singled out the specific sections of the contract that we are disputing, the language, the how.

[00:07:53] Speaker 03:
We also articulated and alleged the when, which is we bought and subscribed during every single month of the class period.

[00:07:59] Speaker 03:
Every single month is a new contract, because you can change the amount of storage that you subscribe to.

[00:08:03] Speaker 03:
You can withhold payment, cancel, and rejoin any time.

[00:08:06] Speaker 03:
And so we pled the who, the what, when, where.

[00:08:11] Speaker 03:
So even if that were to apply to all accounts, we maintain we've satisfied those.

[00:08:16] Speaker 03:
Taking that a step further, even if we had not, if the court were so to hold, we could do so.

[00:08:22] Speaker 03:
And so dismissing with prejudice without granting us leave to amend to do that, if that were necessary, I think was also erroneous.

[00:08:28] Speaker 03:
And we would submit that at the very least, we ought to be given that chance.

[00:08:31] Speaker 03:
Although we believe we shouldn't have to because we've done so.

[00:08:35] Speaker 03:
And it doesn't apply to the breach of contract case.

[00:08:37] Speaker 03:
Now, I think with respect to the ads, because I don't want to leave the court with the mis- a couple of points here.

[00:08:42] Speaker 03:
This is a fully integrated contract.

[00:08:44] Speaker 03:
a fully integrated contract in two occasions.

[00:08:47] Speaker 03:
The preamble to the contract, the very first section, is the one that Apple chose to be the only one that's all capitalized.

[00:08:53] Speaker 03:
It admonishes consumers that they should look to the contract and only to the contract and nothing else.

[00:08:58] Speaker 03:
Section 10C of the contract then has a full integration clause saying this supersedes anything else that we've told you before.

[00:09:04] Speaker 03:
The district court didn't do that.

[00:09:05] Speaker 03:
It went straight to the ads.

[00:09:07] Speaker 03:
Apple didn't do that.

[00:09:08] Speaker 03:
And that's not me saying it.

[00:09:09] Speaker 03:
You can scour the 23 pages of their motion to dismiss.

[00:09:12] Speaker 03:
And you know the amazing thing about that?

[00:09:14] Speaker 03:
They don't cite to one portion of the contract at all.

[00:09:17] Speaker 03:
They don't quote a single word of the contract.

[00:09:19] Speaker 03:
They go straight to the ads.

[00:09:21] Speaker 03:
And that's not an oversight.

[00:09:23] Speaker 03:
I think what that tells us is that Apple didn't believe when arguing in the motion to dismiss that the language of the contract is what they needed to get them there.

[00:09:30] Speaker 03:
They had to refer to the ads.

[00:09:32] Speaker 01:
Let me just summarize your answer to Judge Smith's question.

[00:09:37] Speaker 01:
And the question was, where in the agreement does it say additional 200 gigabytes?

[00:09:42] Speaker 01:
Your answer is it's in section 3A plus the price page.

[00:09:51] Speaker 01:
Is that right?

[00:09:53] Speaker 03:
Almost.

[00:09:54] Speaker 03:
We start with 1C.

[00:09:55] Speaker 01:
OK.

[00:09:56] Speaker 01:
Starts with 1C.

[00:09:57] Speaker 03:
1C tells you the only thing that's available for purchase.

[00:10:00] Speaker 03:
Your account has automatically allocated 5 gigabytes of storage

[00:10:05] Speaker 03:
And then the next sentence, what's available for purchase?

[00:10:08] Speaker 03:
Additional storage is available for purchase.

[00:10:12] Speaker 03:
And then, so the only thing that you can buy is that component which is additional by that terms.

[00:10:18] Speaker 03:
At least that's a reasonable interpretation we maintain.

[00:10:20] Speaker 03:
Now to know how much additional, Section 3A says look at this price list.

[00:10:25] Speaker 03:
And that price list, since the only thing that's for sale, the only thing it could be offering is how much of additional you get for what price?

[00:10:31] Speaker 03:
50 gigabytes additional for 99 cents a month.

[00:10:36] Speaker 04:
I want to be sure I know exactly what language you're referring to in the iCloud legal agreement that you believe is false or misleading.

[00:10:43] Speaker 04:
What specific language are you contending is false or misleading?

[00:10:47] Speaker 03:
Well, that language which I just alluded to, Section 1C,

[00:10:52] Speaker 03:
especially when put together with the price list at Section 3A, because they're representing that what you're purchasing is more additional.

[00:10:59] Speaker 03:
The amount that you're purchasing is... So what specific language?

[00:11:02] Speaker 04:
More additional?

[00:11:02] Speaker 04:
What is it?

[00:11:03] Speaker 03:
Well, they don't use more.

[00:11:04] Speaker 03:
They use additional.

[00:11:04] Speaker 03:
And by the way, our submission is additional doesn't just necessarily mean just more.

[00:11:11] Speaker 03:
It means in addition to.

[00:11:12] Speaker 03:
That's the dictionary definition.

[00:11:14] Speaker 03:
And it's not in addition to.

[00:11:16] Speaker 03:
They're not offering us that amount in addition to the five gigabytes.

[00:11:20] Speaker 03:
That's what Google does.

[00:11:21] Speaker 03:
But that's not what Apple does.

[00:11:22] Speaker 03:
They take away the five gigabytes.

[00:11:24] Speaker 03:
And that's the false understanding.

[00:11:25] Speaker 04:
Do you think you want to save some time?

[00:11:26] Speaker 03:
I will.

[00:11:27] Speaker 03:
Thank you, Your Honor.

[00:11:27] Speaker 03:
I have four minutes.

[00:11:28] Speaker 03:
Thank you.

[00:11:29] Speaker 03:
Well, not quite.

[00:11:30] Speaker 04:
But you've got three and a half.

[00:11:31] Speaker 05:
I would ask one question before you sit down.

[00:11:33] Speaker 02:
Yes, Your Honor.

[00:11:35] Speaker 05:
Given what my good colleague Judge Smith talked to you about nine, rule nine, it seems to me that rule nine would require a higher pleading standard.

[00:11:47] Speaker 05:
But not only that, but if we're looking at the parole evidence rule from California, that would be one part of the parole evidence rule to get in additional documents to the contract we have in front of us, wouldn't it not?

[00:12:03] Speaker 05:
Because under the parole evidence rule in California, one can get additional terms of the agreement in if there are circumstances invalidating the contract or avoiding it or avoidable or unenforceable such as fraud or illegality.

[00:12:21] Speaker 05:
We can look at other parts, other things outside the contract, correct?

[00:12:27] Speaker 03:
That is certainly a correct recitation of law.

[00:12:29] Speaker 05:
My quarrel with that would be... Well, but honest truth is, if you have to plead misleading, which you do, if you've got to get to the consumer protection claims, we certainly can look at other documents.

[00:12:43] Speaker 03:
You can certainly look at those, Your Honor.

[00:12:44] Speaker 03:
What I submit you cannot do and what the cases, including the White Side v. Kimberly-Clark say, is that it would be error to look at it

[00:12:51] Speaker 03:
at the pleading stage in a doctrine of incorporation by reference where we don't get to submit contrary evidence.

[00:12:56] Speaker 03:
That is, those documents are taken as truthful, full stop, and then it's used to dismiss our complaint.

[00:13:02] Speaker 03:
Absolutely, we maintain that the parties should be given an opportunity to provide evidence, but evidence comes in through discovery.

[00:13:09] Speaker 03:
What the district court did here, which we submit was erroneous as it says.

[00:13:12] Speaker 05:
Well, what the district court did here is the district court said, I'm going to look at these documents and then went through the procedure

[00:13:20] Speaker 05:
that they went through to try to get them in and look at them.

[00:13:23] Speaker 05:
And I'm just trying to understand your idea of the rule in California, because I know the rule in Idaho, but I want to make sure that I understand your interpretation of the California rule.

[00:13:36] Speaker 03:
Yes, but my submission would be that with respect to not only to what I just said about it being improper to do so, to take it as truthful and not allow us to submit contrary evidence, which would have to happen in discovery,

[00:13:48] Speaker 03:
but also that in so far as the breach of contract case.

[00:13:51] Speaker 03:
We didn't plead a case for fraud in the inducement.

[00:13:53] Speaker 03:
This is a straight breach of contract.

[00:13:55] Speaker 05:
You promised X, you did Y. If you're going to go to your UCL claims or your

[00:14:03] Speaker 05:
your, if you will, consumer protection claims, you've got to have, it's got to be more than a mere possibility of misunderstanding, and it's got to come up with something.

[00:14:13] Speaker 05:
So it seems to me that those claims are fraud based, subject to Rule 9B.

[00:14:19] Speaker 03:
Correct.

[00:14:20] Speaker 03:
But the ad that we're alleging was fraudulent is the contract because it's posted on the website.

[00:14:26] Speaker 03:
And I don't think it's an answer at the pleading stage, certainly, for Apple to say,

[00:14:30] Speaker 03:
But whatever you think, however you think misleading this document is, if you were to look at some other document over here that we never provide a signal to and we never tell you to look at, in fact we tell you the opposite, say don't look anywhere else.

[00:14:41] Speaker 03:
then that would explain things.

[00:14:43] Speaker 03:
We don't think it explains, but that's their position.

[00:14:45] Speaker 03:
I don't know of any rule that says, if you're misleading in one ad, well, if you go to our 40th ad somewhere else, and we never signaled you to go there, then you would understand it, so you have no case.

[00:14:56] Speaker 03:
And that is essentially what we maintain happened here.

[00:14:58] Speaker 03:
And we think it's... I'm sorry to interrupt your time, and... Okay, we'll let you get to the time you had left before my colleague talked to you, so it's a great bonus.

[00:15:06] Speaker 04:
Thank you.

[00:15:07] Speaker 04:
All right, let's hear from Apple.

[00:15:15] Speaker 00:
Good morning.

[00:15:16] Speaker 00:
Matt Powers on behalf of defendant and appellee Apple, and may it please the court.

[00:15:26] Speaker 00:
I suspect I agree with the court's interpretation of some of the issues here, so I'll try to keep this short.

[00:15:33] Speaker 00:
The trial court's order was entirely correct.

[00:15:36] Speaker 00:
All of the claims were properly dismissed.

[00:15:39] Speaker 00:
The contract language here,

[00:15:41] Speaker 00:
And in particular, the page from Apple's website that the plaintiffs themselves agree is part of the contract.

[00:15:49] Speaker 00:
It's the page they attach to their complaint that they call the price list is unambiguous and cannot reasonably be read in the way that the appellants contend.

[00:16:03] Speaker 00:
Judge Reyes, you asked, where is the language additional 200 gigabytes?

[00:16:08] Speaker 00:
The answer is that language does not exist.

[00:16:11] Speaker 00:
in any of the agreements or any portion of the agreements.

[00:16:15] Speaker 00:
And the assertion, at least in the papers, that the trial court relied on the extrinsic evidence, and to be clear, the extrinsic evidence we're talking about here were simply images from Apple's website, the home page on Apple's website, for the very iCloud service that the plaintiffs were suing over.

[00:16:39] Speaker 00:
We would submit that it should not be controversial in any way to take judicial notice of the advertisements in a claim over a false advertising claim.

[00:16:53] Speaker 00:
But to be clear, the trial court did not rely on those homepages of Apple's iCloud service for purposes of her analysis of the contract.

[00:17:02] Speaker 00:
Her analysis was based, you can read it in the order, exclusively on

[00:17:07] Speaker 00:
the terms of service and then the portion of the website that everyone agreed was part of the contract.

[00:17:13] Speaker 05:
So if we just eliminate our look at those and this is de novo review then we haven't violated any rule, right?

[00:17:21] Speaker 04:
Correct, correct.

[00:17:23] Speaker 04:
Can you give us any analogous case

[00:17:26] Speaker 04:
in which the district court deemed a website incorporated by reference under the circumstances.

[00:17:31] Speaker 00:
So that's an interesting question, Your Honor.

[00:17:33] Speaker 00:
The trial court here both took judicial notice of the documents because they met the requirements for judicial notice publicly available, not subject to dispute.

[00:17:43] Speaker 00:
This isn't a case where there's some dispute as to whether these were authentic or covered the right time period, those kinds of things.

[00:17:49] Speaker 00:
Zero dispute about any of that.

[00:17:51] Speaker 00:
And so the court took judicial notice

[00:17:53] Speaker 05:
The court also then... I'm not sure the court took judicial notice.

[00:17:57] Speaker 05:
It seemed to me the court incorporated it by reference.

[00:18:01] Speaker 00:
Judge Smith, if you read the court's order, Judge Thompson did both.

[00:18:05] Speaker 00:
She did both things.

[00:18:07] Speaker 00:
She talked both about judicial notice and incorporation by reference.

[00:18:11] Speaker 05:
This is the first time I've really looked into incorporation by reference very strongly, because it seemed to me that's where she went.

[00:18:20] Speaker 05:
Now, I was going to say, I don't know whether she can get it by incorporation by reference.

[00:18:24] Speaker 05:
If she doesn't go to judicial notice, I'm not sure she can't get the documents in.

[00:18:28] Speaker 00:
Well, there are similar doctrines.

[00:18:30] Speaker 00:
But they're different, I agree.

[00:18:32] Speaker 05:
But these webpages bear no relation to the webpages referenced in the complaint, other than they were published on the same website.

[00:18:40] Speaker 00:
Well, I don't, I would push back on bear no relation.

[00:18:44] Speaker 05:
I think that... Well, all they do is be published on the same website.

[00:18:49] Speaker 05:
Otherwise, they don't have any reference to the same.

[00:18:52] Speaker 05:
I mean, reading them both, I'm just telling you.

[00:18:54] Speaker 00:
You're correct.

[00:18:55] Speaker 05:
That's my interpretation.

[00:18:56] Speaker 05:
So if you're not going to get to

[00:18:59] Speaker 05:
Judicial notice, I don't know how you're gonna get him in that's why my question was if we don't look at any of it I guess we're okay, if it's de novo review correct if you don't look at any of it.

[00:19:10] Speaker 00:
It's it's okay.

[00:19:11] Speaker 00:
I would I would say The the ads I think are certainly judicially noticeable in this kind of case I think if you look at the trial court's order she did apply both analyses and

[00:19:23] Speaker 00:
The incorporation by reference doctrine is different.

[00:19:27] Speaker 00:
I agree it's a harder case to make.

[00:19:30] Speaker 00:
I don't think it's correct, respectfully, your honor, that these are just completely unrelated web pages.

[00:19:35] Speaker 00:
You're certainly right.

[00:19:36] Speaker 00:
There's no internal reference to those pages.

[00:19:38] Speaker 00:
But they are the homepages on Apple's website for the very service that's at issue in the case.

[00:19:44] Speaker 00:
So I don't think it's as aggressive maybe as the court believes to incorporate those documents by reference.

[00:19:51] Speaker 00:
particularly where the ads are also referenced, the advertisements that the plaintiff is claiming to sue over, were also referenced in the complaint.

[00:19:58] Speaker 00:
And so in those circumstances, I think a case could be made for incorporation by reference.

[00:20:03] Speaker 00:
However, I think that it is a clearly correct, not an abuse of discretion to take judicial notice of the documents here, particularly in a false advertising case.

[00:20:15] Speaker 00:
And then the last point I'll make, unless the court has further questions, is

[00:20:21] Speaker 00:
The application of the reasonable consumer test to the fraud claims was, in our view, should also be entirely uncontroversial.

[00:20:31] Speaker 00:
There's some discussion in the papers about the Whiteside case, another Kimberly-Clark case, the Williams v. Gerber case that involved front of label, back of label packaging.

[00:20:43] Speaker 00:
And there was an interesting discussion in the Whiteside case about this sort of developing jurisprudence over how do you deal with

[00:20:49] Speaker 00:
prominent statements on the front of a package that are then qualified by statements elsewhere on the back of a package.

[00:20:57] Speaker 00:
And the application of the reasonable consumer test here seems entirely uncontroversial.

[00:21:06] Speaker 00:
To the extent there is an application of that front of the label, back of the label jurisprudence to our case, the plaintiffs are asking the court

[00:21:19] Speaker 00:
to focus only on the back of the label, only look at these contract terms, don't look at the advertisements and the home page for the service that the plaintiff is the plaintiff appellant is suing over.

[00:21:31] Speaker 04:
You mentioned the Whitesides case.

[00:21:32] Speaker 04:
Whitesides case indicates that the dismissals of cases the pleading state should be rare.

[00:21:40] Speaker 04:
What about this case makes it rare that would fit within the Whitesides admonition?

[00:21:45] Speaker 00:
Because just like in the Whitesides case itself, there is no reasonable consumer, much less a substantial percentage of the targeted consumers for this kind of product, would read what the plaintiffs call the price list, which is, again, no dispute that is part of the contract.

[00:22:07] Speaker 00:
It's in the record at page 144.

[00:22:09] Speaker 00:
There's an image of it.

[00:22:11] Speaker 00:
It says in very clear terms what

[00:22:14] Speaker 00:
What price you pay for each tier of iCloud storage, just like with a cell phone plan, it doesn't say 200 gigabytes of additional storage.

[00:22:23] Speaker 00:
It says this plan has iCloud with 200 gigabytes of storage, with 200 gigabytes of storage.

[00:22:32] Speaker 00:
That language can't reasonably be interpreted, much less by a substantial percentage of consumers, to mean what you really get is 55 or 205 gigabytes of storage.

[00:22:42] Speaker 00:
And so the Whiteside case itself found that some of the packaging at issue, the packaging that had an asterisk next to the language at issue on the front, that those were not misleading to reasonable consumers because it would indicate to a consumer, hey, go look at the back of the package where there's this clarifying language.

[00:23:03] Speaker 00:
And so yes, it's rare, but I think this is the kind of case, really an archetypal kind of case, where the language is so clear

[00:23:12] Speaker 00:
that the court should be able to make these kinds of adjudications on the pleading.

[00:23:16] Speaker 04:
If you were writing this contract, de novo, would you make any changes to clarify what the public would understand?

[00:23:23] Speaker 04:
If so, what?

[00:23:26] Speaker 00:
I don't... I mean, you could always add language to make things even more clear.

[00:23:31] Speaker 00:
I think the language here is very clear.

[00:23:33] Speaker 00:
I don't know what else could be added.

[00:23:37] Speaker 00:
I'm sure I could come up with something.

[00:23:39] Speaker 00:
I don't think any additional language is needed.

[00:23:42] Speaker 00:
We're not the ones reading terms into the agreement.

[00:23:45] Speaker 00:
So I guess I would push back, Your Honor.

[00:23:47] Speaker 00:
I'm sure I could think of something, but I don't think that should be the proper standard for interpreting an agreement.

[00:23:53] Speaker 00:
Would it be possible to make something more clear?

[00:23:55] Speaker 00:
That's going to be true in virtually every case.

[00:23:58] Speaker 00:
And so I think the test ought to be, is the interpretation the parties are proposing, is the agreement ambiguous, and is the interpretation

[00:24:08] Speaker 00:
in accordance with the court's precedents, a reasonable one under the circumstances.

[00:24:11] Speaker 04:
And your view of Rule 9b and its application to this case is what?

[00:24:17] Speaker 00:
Rule 9b absolutely applies to the fraud claims, your honor.

[00:24:21] Speaker 01:
You mentioned that we should look outside the contract at the home page and the ads.

[00:24:27] Speaker 00:
So the ads that we're talking about are the home pages for the iCloud website.

[00:24:35] Speaker 01:
Well, let me ask you.

[00:24:37] Speaker 01:
The plaintiff's counsel pointed out that the contract says you only look at the contract itself.

[00:24:41] Speaker 00:
Right.

[00:24:45] Speaker 00:
So that goes back to this analysis that the courts have developed over front of the label, back of the label.

[00:24:53] Speaker 00:
Because what the plaintiffs are saying is, don't look at the home page for iCloud.

[00:24:59] Speaker 00:
Don't look at the ads.

[00:25:02] Speaker 00:
Because there's an integrated term in the contract, just look at that term.

[00:25:05] Speaker 01:
Well, my question is, does the contract say that you only look at the contract?

[00:25:09] Speaker 00:
The contract is an integrated agreement.

[00:25:11] Speaker 00:
It would be news to me, as a counsel who represents defendants in California and has so for 25 years, that a company could avoid any criticism or analysis of its advertising by putting in a term of service agreement, this is an integrated contract.

[00:25:30] Speaker 00:
That would be entirely new law, and it would be fundamentally inconsistent with this court's precedent

[00:25:35] Speaker 00:
both in the Williams v. Gerber case and in the Whitesides case that came out just last year.

[00:25:41] Speaker 00:
So I hope that answers, Judge, your question.

[00:25:45] Speaker 00:
Unless there are further questions also.

[00:25:47] Speaker 05:
I have no other questions.

[00:25:48] Speaker 04:
I think not.

[00:25:49] Speaker 04:
All right.

[00:25:49] Speaker 04:
Very well.

[00:25:50] Speaker 04:
Thank you.

[00:25:52] Speaker 04:
All right.

[00:25:53] Speaker 04:
Mr. Ketrielle, you've got three minutes and 32 seconds to do a wonderful job.

[00:26:00] Speaker 04:
Thank you, Your Honor.

[00:26:02] Speaker 03:
I'd like to pick up where my colleague left off.

[00:26:05] Speaker 03:
And Judge Reyes' question, doesn't the contract tell you don't look anywhere else?

[00:26:09] Speaker 03:
It does.

[00:26:10] Speaker 03:
And it doesn't do that simply by way of an integration clause, although it does certainly contain that.

[00:26:13] Speaker 03:
That's how it ends.

[00:26:14] Speaker 03:
It starts the contract with the following language, all capitalized.

[00:26:19] Speaker 03:
The only part of the contract Apple chose to capitalize in full.

[00:26:22] Speaker 03:
This legal agreement between you and Apple governs your use of the iCloud product, software services, and websites.

[00:26:28] Speaker 03:
It is important that you read and understand the following terms.

[00:26:32] Speaker 03:
By clicking Agree, you are agreeing that these terms

[00:26:35] Speaker 03:
will apply if you choose to access or use the service.

[00:26:38] Speaker 03:
And what they come here and tell you is, never mind what this says, let's look at the ads because they were on the website too.

[00:26:44] Speaker 03:
And I think Judge Ray has this question, at least as I interpret it to mean, doesn't that in effect eviscerate the integration clause or the parole evidence rule by saying, well, if you were to consider the contract despite this language, if you were to go and scour the website and then come upon these ads, then you'd understand what you're supposed to understand what they mean.

[00:27:02] Speaker 05:
Well, just a minute, just a minute.

[00:27:04] Speaker 05:
The language I read to you, which I'm interpreting and which I hope to interpret, doesn't end there.

[00:27:12] Speaker 05:
It goes on by saying, by you upgrading to the iCloud subscription service for more storage and additional features, Apple will automatically charge on a recurring basis the fee for the plan you choose.

[00:27:26] Speaker 05:
For details about the plan and pricing, please visit the website.

[00:27:33] Speaker 05:
In my book, that's the only reason you could have an attachment to your complaint and the only reason they argue for having what they're trying to put in because of the attachment to your complaint.

[00:27:45] Speaker 05:
Is that last language that says please visit the website, which gives it a louder version, if you will.

[00:27:54] Speaker 03:
So, Your Honor, no, I think that website isn't part of the contract.

[00:27:59] Speaker 05:
Well, I understand that it is.

[00:28:00] Speaker 03:
What they're trying to do is introduce other web pages, and that's what we dispute.

[00:28:04] Speaker 03:
Their ads are not that website.

[00:28:05] Speaker 03:
That website is the price list, and we agree fully.

[00:28:09] Speaker 03:
In fact, that's part of our case.

[00:28:10] Speaker 03:
That website says how much more storage you will get, and that's how we interpret it, because the only thing that's available for sale is the more storage.

[00:28:18] Speaker 03:
Let me see if I can circle back for a moment.

[00:28:20] Speaker 03:
Actually, before I do that, Your Honor raised the question of judicial notice versus doctrine of incorporation by reference.

[00:28:25] Speaker 03:
The mere fact that something is publicly available, you've held in the Koja case, is not full stop the end of the inquiry for judicial notice.

[00:28:32] Speaker 03:
Because if that document is still subject to multiple interpretations, then it's improper to take judicial notice, though it be publicly available.

[00:28:39] Speaker 05:
Well, but you don't dispute the accuracy of the web pages.

[00:28:43] Speaker 05:
We don't dispute the accuracy.

[00:28:44] Speaker 05:
They're relevant to the claims about the public facing comments about the cloud storage.

[00:28:51] Speaker 05:
We've taken judicial notice of websites and images and other consumer protection cases.

[00:28:57] Speaker 05:
Right.

[00:28:57] Speaker 05:
Why wouldn't there be any judicial notice here?

[00:29:00] Speaker 03:
You would not take judicial notice here because the interpretation of what these ads, the extra ads that they're putting forth is not undisputed.

[00:29:09] Speaker 03:
It doesn't say here that by choosing iCloud Plus, which is a different plan, you automatically give back the iCloud you were already allocated for free.

[00:29:18] Speaker 03:
It says nothing of the kind.

[00:29:20] Speaker 03:
It does say you upgrade, but it tells you why you upgrade, because you get extra features that don't come with the five gigabytes of free storage you already have.

[00:29:32] Speaker 03:
evil that we're contesting against is that by taking it as judicial notice, it doesn't allow us to put on any contrary evidence.

[00:29:39] Speaker 03:
It allows Apple in its motion to dismiss to say, you have to consider this and you have to believe it full stop and not allow them an opportunity to put on any contrary evidence.

[00:29:48] Speaker 03:
We agree that maybe outside material comes in.

[00:29:51] Speaker 03:
The district court has to rule whether it's ambiguous, unambiguous whether there's fraud, but both sides get to put that in.

[00:29:57] Speaker 03:
By taking it under judicial notice or incorporation by reference, it cuts the inquiry unfairly.

[00:30:02] Speaker 03:
And that's what you held in Kimberly Clark, in Koja, in Brady, in the Trader Joe's case, and so on.

[00:30:09] Speaker 03:
Last sense I would say here.

[00:30:12] Speaker 03:
We began this argument here and in the district court by pointing to section 1C.

[00:30:16] Speaker 03:
Section 1C says, your account is automatically allocated 5 gigabytes of storage capacity.

[00:30:23] Speaker 03:
Additional storage is available for purchase.

[00:30:27] Speaker 03:
What is the meaning of additional storage?

[00:30:29] Speaker 03:
Our dictionary definition, we cited various sorts, it says, in addition to extra, supplementary.

[00:30:36] Speaker 03:
All right.

[00:30:37] Speaker 04:
We will let you go over time.

[00:30:38] Speaker 04:
Let me ask my colleague whether he either has additional questions.

[00:30:41] Speaker 01:
I've got a real quick question, a very short answer.

[00:30:44] Speaker 01:
What additional evidence would you put in?

[00:30:46] Speaker 01:
You talk about judicial notice.

[00:30:48] Speaker 01:
You didn't have a chance for... Sure.

[00:30:51] Speaker 01:
What additional evidence is there to put in?

[00:30:54] Speaker 03:
If we're talking strictly about the breach, it depends if we're talking about the breach of contract or the consumer protection.

[00:30:58] Speaker 01:
Just breach of contract.

[00:30:59] Speaker 03:
The breach of contract cases, I think that California law sets forth the tools that apply in interpreting contracts.

[00:31:05] Speaker 03:
And those could include customs in the industry.

[00:31:08] Speaker 03:
So we have ads from other providers.

[00:31:10] Speaker 03:
How they phrase it when they want to achieve the result that Apple does.

[00:31:14] Speaker 03:
We have the Google contracts, which we could have put in.

[00:31:17] Speaker 03:
We didn't think we had to because we think it's an unambiguous integrated contract.

[00:31:20] Speaker 03:
But the result that they achieve, there's a way to do it.

[00:31:23] Speaker 03:
Your honor asked Mr. Powers, how would he draft the contract today if he were doing it de novo?

[00:31:29] Speaker 03:
Well, here's an example.

[00:31:30] Speaker 03:
If they want to achieve the result that they now espouse, Google told us how to do it.

[00:31:35] Speaker 03:
Their language is different than Google's, and yet they want to achieve that same result, which would render the words of one contract superfluous.

[00:31:41] Speaker 03:
So that would be one example.

[00:31:43] Speaker 04:
Thank you.

[00:31:45] Speaker 04:
Thanks to both counsel for your argument.

[00:31:47] Speaker 04:
The case of Bodenberg versus Apple is submitted.