Class action lawsuit over iPhone/AT&T exclusivity gets certified -- should it go to court?

The class action lawsuit against AT&T's US iPhone exclusivity has been certified, which means a judge thinks it meets the legal requirements to go forward. If you remember back, The crux of suit states that customer contracts are 2 years, but the AT&T exclusivity is 5 years -- so customers were falsely lured to AT&T for 5 years, not 2 -- if they want to keep iPhones, that is. The lawsuit seeks to include all current AT&T iPhone customers.

Now, whether or not that original 5 year exclusivity has changed over the past few years is anyone's guess -- the only people who know that for sure are the AT&T and Apple higher ups that sign the contracts. In this day and age, contracts change constantly.

My opinion? I don't know if a court will buy this as falsely leading on customers. Most carriers don't ever specify how long their exclusivity deals are, it's all hearsay until they announce it. Yes, the iPhone deal is unique in length (I don't believe any carrier has ever had an exclusive anywhere even close to the length AT&T scored with Apple), but I don't necessarily know if I believe it misleads customers. When the first iPhone was released, the 5 year deal was already publicized, even if it was hearsay, and people still bought iPhones. And honestly, if you get an iPhone, no one's forcing you to get another one. If you upgrade and lock yourself in, that's pretty much your decision, your hand isn't forced.

We'll watch this one but I personally don't think it will go very far.

[Engadget]

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Allyson Kazmucha

Senior editor for iMore. I can take apart an iPhone in less than 6 minutes. I also like coffee and Harry Potter more than anyone really should.

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Class action lawsuit over iPhone/AT&T exclusivity gets certified -- should it go to court?

39 Comments

I agree. People always have the freedom to stop using ATT or any other carrier. Just because Apple choose to make GSM phones and attach itself to a less than ideal partner doesn't mean customers were deceived or hooked to long-term contracts. Just another stupid ridiculous lawsuit.

To me the real issues is there is no way to buy one out of contract the easy way. What if I am out of contract and want an iPhone? Why should i be forced to sign a new contrar if I am willing to pay retail for the phone?

All this does is give some ambulance chasing lawyer(s) free publicity. They couldn't care less if they win the suit or not.

I agree too. When I decided to get the iPhone I knew what I was getting myself into. I did my research and knew exactly what to expect both good and bad. I don't blame Apple nor AT&T for the choice I've made and IF the exclusivity does end sometime I'll look into my options. Like before I'll do what I can to be a smart consumer and make my own judgment.

@Omar
I have bought an iPhone pot of contract with ease before. All you do is walk into the AT&T store and say " I want to buy an iPhone off contract" if you're willing to $700 for it they will sell it to u.

The difference is that after your 2 years, you still do not have a choice as to what carrier to use your iphone on. If you decide you no longer wish to use AT&T's service, your prettty much stuck with a brick for a phone. Without jailbreaking to unlock of course. With my old Motorola phones on AT&T, after my contract was up or renewed, AT&T provided me with unlock codes. Both of those phones were unlocked and are now being used on t-mobiles network by family members. Exclusivity should mean you only have 1 option when purchasing the phone and signing up for service. Once you have fulfilled your end of the contract, Apple or AT&T should provide a legal way to unlock your device.

When you sign that contract, you are stuck to it. The only way out if AT&T lied to you and stated you were only signing a two year contract. Do not think that happened. I know they have you over a barrel so to speak, but you do not have to buy or sign. It may not be fair, but you have the choice. Read what you sign.

"If you decide you no longer wish to use AT&T’s service, your prettty much stuck with a brick for a phone."
Thank you! This is all it boils down to. At&t and Apple are purposely preventing the iphone from working with compatible GSM networks after your commitment to using at&t is over. If you think this is OK you are probably someone who doesnt plan to leave at&t. Its not a technical limitation, but an agreement to keep the phone locked to at&t.

"The only way out if AT&T lied to you and stated you were only signing a two year contract."
Umm, you are only signing a 2 year contract. Its not a 3, or 4, or 5 year contract. It is a 2 year contract.
"If you think this is OK you are probably someone who doesnt plan to leave at&t."
I do not plan to leave AT&T and still do NOT think this is ok. I feel after 2 years, you have fulfilled your end of the agreement and should have the right to take your hardware to any carrier that can support it.

So? When you buy a Sprint Phone you must buy a Verizon CDMA phone if you wish to switch to VzW after the 2 year agreement with Sprint.
So what we are saying is if you use CDMA the rules are different for you then if your on GSM...

Btw if i use a Droid X on VzW and after the 2 year agreement i want to go to Sprint I must buy new equipment... These are just facts. the CDMA phone's are software locked to their respective carriers and in fact CDMA carriers opted to go away from Sim cards so they could insure total control over their phones.

A lawsuit w/ a really good case, that I hope wins, is for that ridiculous $20 tethering fee the AT-AT wants. That & the bait & switch iPad 3G data plans, because they did tout the ability to turn unlimited on & off. Though that's just as much Apple b/c they couldn't have not known about it and it was in the fine print, even on the Stevenote.
@ Mike & DT - I agree, no plans to leave the AT-AT but they have no right to keep you chained after the two years are up. One guy wanted to use his on an Australian network after his contract was up but they wouldn't help him.

i might not be right but didn't wasn't t mobile the exclusive carrier for the sidekick line for like ever?

I agree with "And honestly, if you get an iPhone, no one’s forcing you to get another one. If you upgrade and lock yourself in, that’s pretty much your decision, your hand isn’t forced." and same goes for those who bitch about ATTs network. You choose to get the iphone. You choose to come to ATT to get the iphone. No one forced you to sign the papers to ATTs contract.

Does it matter that it is locked to AT&T? Are there any other 3GPP UMTS networks in the USA that has the frequencies supported by The Iphone?

"Are there any other 3GPP UMTS networks in the USA that has the frequencies supported by The Iphone?"
Yes. I believe T-Mobile's network.
I don't see how AT&T will lose this case, but it would be good for the government to step in an force the carriers to allow all phones to be unlocked for a nominal fee. That's what happened in Australia, and it benefited consumers and the industry greatly. The sooner we can all use our phones anywhere and the sooner the carriers become IPSs, the better.

The merit of the lawsuit lies in the fact that AT&T doesn't unlock iPhones. If you buy an iPhone and wait out your two years, you have to wait even longer because they won't unlock it. Once it's no longer exclusive, they likely will since there's little benefit to keep it.
Right now, iPhone owners are locked to AT&T unless they go through a 3rd party (and the DMCA would argue illegal) unlocking process. That warrants mentioning, I think. The failure to do so warrants a punishment.

I'm really bewildered at some of the comments here. Again, I attribute these to people who enjoy their AT&T service and data plans and can't imagine any valid reason people would want to use their iphone in some other manner.
However, after the 2 year commitment to using AT&T service is over, you should be allowed to take your phone internationally and pay for a prepaid SIM in that country, without still being locked into using AT&T (and therefore having to pay AT&T's high international rates). You should also be allowed to take your phone to another carrier, which is what AT&T allows on virtually 99% of their other phones.
This argument about how you are not forced to buy an iphone is silly. This assumes companies have no liability for their practices because you weren't forced to buy their product in the first place, which is most certainly not the case. It is true you are not forced to buy an iphone, but if you do choose to, you as the consumer are protected under various rights.
Finally, it is not just the case that AT&T is not willing to provide the unlock, but that Apple actively attempts to defeat software that unlocks the phone through each update. Why? If you buy an iphone through AT&T subsidized, and you unlock it and cancel your contract then AT&T makes their $ back on the phone. Why should Apple care where you go with your damn phone?

there is no merit to this case and it will not go far. customers received exactly what the contract called for. a phone and two years of service. It's contract law. the four corners of the document don't promise access to other iphones. They still have a phone. They still can use the at&t service. the still own the phone.
people may not like exclusivity. But that fact does not make it an unlawful contract. And there is a practical matter. If no claims of future access to iphones was made by AT$t in the contract, to rule this contract unlawful would make all cellphone contracts with exclusivity unlawful without such clauses. I highly doubt they'd do that.
the other thing is this would not make end exclusivity contracts. All future contracts would just ad a clause stating that the signer understands no promise of access to future versions of any phone brand.

@DT there are no "various rights" giving consumers the rights not within the contract they signed. And there is no right to take your phone to another carrier.
This isn't about what people want. This is a contract law case. Any claim hast to stand up to contract law analysis.

Since the 3G frequencies are not the same, the aspect of tmobile providing the same level of service is mute.
Are you now wanting to force all device makers to include all CDMA and GSM frequencies including 3G/3.5G/4G? Will this mean that no phone can be exclusive to any carrier? Will someone sue htc and sprint over the evo or moto and verizon for the droid x and incredible? RIM and verizon for storm series?
Might as well sue GM cause Ford has the Mustang.

Can't wait till the do but it on another carrier. Then these people that have deep hate for AT&T can beat it. I myself I'm sticking with the best where I live. AT&T

It's not a brick, sell it on eBay and make money! My 3GS sold for more than the 4 cost me! Seriously, while we'd all like something for free, the reality is that, for many of us, there is only one GSM net in the US. Some people may live in overlap T-Mobile and ATT areas, but not the majority. T-mob is excellent, but has a small footprint. The fundamental issue goes back to the non standard way in which cellular in the US developed. GSM vs CDMA. 5 yrs or 2 yrs. I went into the relationship with ATT with my eyes open and I change phones every couple of years...sooner if ATT fails to fix their system. This lawsuit is a frivolous waste of time and taxpayer $$ that is consistent with our overly litigious society. The objection to exclusivity goes against all that we stand for in the US; freedom of choice, open markets and competition. There's no restraint of trade. ATT and Apple entered into a legal business relationship. Breaking the exclusivity in no way guarantees that Verizon will get the iPhone nor does it guarantee the ability to use an iPhone on a competing network.

This whole case makes me cringe at how involved our government is in our lives. What happened to "one republic, for which it stands"?? Agh! Socialism is starting to overcome us. And people aren't seeing it. The last I heard you could buy unlocked iPhones through... Correct me if I made a mistake here.

Weird. I tried to say "The last I heard you could buy unlocked iPhones through Apple." but it erased apple. Sorry.

@Woody
"Since the 3G frequencies are not the same, the aspect of tmobile providing the same level of service is mute."
Well, if TMobile provided the same level of service as AT&T then, yes, in many parts of the country it would be mute.
http://instantrimshot.com/

I don't see AT&T/Apple losing this case, as people can just switch carriers after they're two year contract is up if they're not happy with AT&T's service. You don't HAVE to have the iPhone for a phone, you could get an Android, Blackberry or Windows Mobile phone, all three which are available on all major carriers. I have a feeling that's what the judge would say.

So are Droid customers going to file suit against verizon in a few years? After all, I'm stuck to verizon with my Moto Droid, AT&T won't/can't activate it. No, because everyone wants an iPhone. As much as people bit*h and complain about the iPhone everybody wants one. They just come up with all of these reasons not to get one: "I hate AT&T" "iPhone is closed" "Apple is evil." Blah, blah, blah...

The point is that after your contract ends you have a phone which you paid hundreds of dollars for and which AT&T still requires yo to use on their network. So the logic that you can just throw the phone away and buy a new phone is not the same thing as being able to move to another carrier with your phone that you paid off. If AT&T allowed you to unlock the phone (as is required in Europe) then the 2 year [5 year] lock in wouldn't mean anything... But, since AT&T refuses to allow you to unlock the phone from their network you are "forced" to continue with AT&T or toss the phone or jailbreak it. The best solution would be for the AT&T folks to just let people leave rather than try to mug them. Being unethical and pissing off your customers is hardly ever a good plan.

Response to Hakala: No you can't get an unlocked phone even for full price from Apple... If you have an American iPhone is has to be locked to AT&T.

From Woody's comment earlier: "Might as well sue GM cause Ford has the Mustang." < BAHAHAHAHA!!!! Nice I love this.
This is true. I personally don't give two craps about AT&T being the sole carrier. I look at it as it's the best network for the iPhone to operate on. If you go to T-Mobile, you loose GPS. Yea AT&T may be crappy in areas but when you got coverage, you have a bad ass performing iPhone!
Why would you want to be on VZW old CDMA technology network or what have you? If u want to always have coverage, sell your iPhone and go buy a completely locked down and totally controlled crappy Verizon phone with their VZW software! I love iPhone and the best network for it is AT&T.
Your thoughts?

@iJake
1) Verizon Wireless has better coverage and more 3G coverage.
2) CDMA2000 has a further range than GSM
3) CDMA2000 works better indoors as the signal has better penetration than GSM.
4) CDMA2000 drops less calls and has better call quality than GSM.
5) Most of Verizon's regular phones are locked down, but not their smartphones. The iPhone is probably the most locked down (by Apple, they tell you what you can and can't do with it) smartphone unless you jail break it. Blackberry is just as bad though. And with Android, Verizon is becoming more open.
I have a feeling that this is started by the people who already have iPhones and are iPhone fanboys, want to continue using iPhones but don't want to be on AT&T

Personally, I am upset about this isue. A little bit at least. Fact is, once you've successfully completed the term of your AT&T contract, you're lefT with a very expensive handset, that you dutifully paid for, which you can no longer use as a phone unless you renew your contract with AT&T. If you want to then take it over to T-Mobile, whose network can run it, you can't because AT&T won't give you the unlock code.
In simple point-of-fact, this violates the spirit of the agreement you entered into with AT&T (for those of you dispensing arm-chair contract law knowledge, I can tell you, as a contracts lawyer, that the actual words written on the contract only tell part of the story - spirit and intent are other huge factors the judge must consider - and a judge did certify this a class action, which means that the judge found that the merits of the case and the evidence submitted persuaded him/her that the suit had merit and ought to be presented to a jury). Also, in addition to the refusal to unlock being against the spirit of the service contract, it's also representative of a change in standard AT&T buiness practices that customers are used to and may have relied on when signing their contract, since AT&T always issued unlock codes at the customer's request when a sservice contract's term elapsed. To change that procedure without telling anyone amounts to a type of fraud.
As for the people asking if this will then lead to people suing Verizon over Droid or Sprint over Evo, the answer is no. A ruling against Apple/AT&T would set a precedent that would invalidate the same clauses by other carriers.
Personally, I don't like the whole exclusivity thing at all. I get why they do it, but I don't have to like it. I'm a BlackBerry guy from way back and it just upsets me that I can't have a BB Storm because Verizon has the exclusive, and I can't have a BB Torch because it's exclusive to AT&T! It just irks me, you know?

You only need to take a look at Europe to see what is being missed in the USA.

  1. All phones use the same GSM standard and if unlocked they are interchangeable with all the networks.
  2. All phones that are sold locked are entitled to be unlocked after the contract is completed. This was enforced by European law.
  3. Because of these things there is REAL competition in Europe.

I took my unofficially unlocked iPhone to the UK got a no contract "pay-as-you-go" sim card. For $15 I had 100 mins or texts (NO paying separate plans for talk and text). ALSO I had full access to the 3G internet with tethering included (200 MB cap). For an additional fees I could have had unlimited data ($15/mnth) and also unlimited talk/text ($15/mnth).
So for $45/month I would be way, way better off that AT&T and I would have absolutely no commitment. The rates and perks only get better when you sign a contract.
REAL open markets (i.e when the customer is not locked down by technology) result in REAL competition which benefits the consumer.
The same is true for cable and internet services in the UK. What used to be $60+ has come down to ~$30 because the markets got opened up from 1 provider to 3+ providers.
Open markets and competition is a great thing but sometimes you need a little legislation to make sure that the big guys are running things fairly.

This is the thing. No where when you sign up and buy an iphone4 do they tell you that OH, by the way whether you finish your contract or pay to terminate your service and then actually OWN your iphone4. U will not be able to get the unlock code from apple or at&t because they have this exclusivity agreement. And maybe when that deal ends (in who knows how long), you might be able to get the unlock code.
I'm really annoyed by this because I'm moving abroad permanently, so when I pay the $325 or whatever the EFT is....I now have a very nice completely useless phone. I'm not trying to screw them, I was more than happy to pay the EFT, I just want to be able to use my phone abroad since I own it after all.
No where do they advertise this kind of information to consumers, why? Because then nobody would ever buy an iphone. I feel misled.