Apple must face US shareholder lawsuit over CEO's iPhone, China comments
'...It is simply implausible that Cook would not have known that iPhone demand in China was falling mere days before cutting production lines," the judge wrote
A federal judge said Apple Inc must face part of a lawsuit claiming it fraudulently concealed falling demand for iPhones, especially in China, leading to tens of billions of dollars in shareholder losses.
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While dismissing most claims, U.S. District Judge Yvonne Gonzalez Rogers ruled late Tuesday that shareholders can sue over Chief Executive Tim Cook’s comments touting strong iPhone demand on a Nov. 1, 2018 analyst call, only a few days before Apple told its largest manufacturers to curb production.
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“Absent some natural disaster or other intervening reason, it is simply implausible that Cook would not have known that iPhone demand in China was falling mere days before cutting production lines,” Rogers wrote.
Apple CEO Tim Cook speak to the press during a tour of the Flextronics computer manufacturing facility, with US President Donald Trump, where Apple's Mac Pros are assembled in Austin, Texas, on November 20, 2019. (Photo by MANDEL NGAN/AFP via Getty I
The Oakland, California-based judge also said a decision by Apple to stop reporting iPhone unit sales “plausibly suggests that defendants expected unit sales to decline.”
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While dismissing most claims, U.S. District Judge Yvonne Gonzalez Rogers ruled late Tuesday that shareholders can sue over Chief Executive Tim Cook’s comments touting strong iPhone demand on a Nov. 1, 2018 analyst call, only a few days before Apple told its largest manufacturers to curb production.
“Absent some natural disaster or other intervening reason, it is simply implausible that Cook would not have known that iPhone demand in China was falling mere days before cutting production lines,” Rogers wrote.
In this Feb. 26, 2020, photo, a worker polishes iPhones in an Apple store in Beijing. (AP Photo/Ng Han Guan)
The Oakland, California-based judge also said a decision by Apple to stop reporting iPhone unit sales “plausibly suggests that defendants expected unit sales to decline.”
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By mid-November 2018, Apple had told the manufacturers Foxconn and Pagatron to halt plans for new iPhone production lines, and a key supplier had been told to materially reduce shipments, the complaint said.
The case is In re Apple Inc Securities Litigation, U.S. District Court, Northern District of California, No. 19-02033.
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