Apple won’t escape class action over Tim Cook’s China sales comment

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Apple shareholders lawsuit class action overview: 

• Who: Apple must face a class action lawsuit alleging its CEO misled investors. 
• Why: A judge rejected Apple’s motion to dismiss the class action.
• Where: The Apple shareholders lawsuit class action is active in a California federal court.

Apple must face a class action lawsuit alleging its CEO Tim Cook misled investors in 2018, after a California federal judge rejected its motion to dismiss the shareholders’ claims.

On June 26, U.S. District Judge Yvonne Gonzalez Rogers ruled in favor of the plaintiff investors in deciding that that lawsuit against the tech giant could proceed, Reuters reports.

The lawsuit stems from comments Cook made on a Nov. 1, 2018, analyst call.

According to investors, Cook misled investors when he said that while Apple faced sales pressure in markets such as Brazil, India, Russia and Turkey, where currencies had weakened, “I would not put China in that category.”

Apple told suppliers a few days later to curb production, and on Jan. 2, 2019, unexpectedly slashed its quarterly revenue forecast by up to $9 billion, blaming U.S.-China trade tensions, Reuters reports. 

The move allegedly led to a $74 billion dip in Apple’s market value the next day. The lowered revenue forecast was Apple’s first since the iPhone’s launch in 2007, and the company’s shares fell 10%.

Judge rejects Apple’s defense argument

Apple argued Cook’s comments were a statement of opinion, and therefore protected. 

However, the court did not agree.

Judge Rogers said in her order that jurors could reasonably infer Cook was discussing Apple’s sales outlook in China, not past performance or the impact of currency changes, as argued by the tech giant. 

Judge Rogers also noted Apple knew China’s economy had slowed, and data suggested demand could fall. Knowing this and not telling investors was potentially a violation of the law, she said. 

The lawsuit officially gained class action status in February 2022. 

Meanwhile, Apple will pay $100 million and make sweeping changes to its App Store as part of a class action settlement resolving claims it violated antitrust laws with its app development monopoly.

App developers filed an antitrust class action lawsuit against Apple in 2019, claiming the tech giant maintained an unlawful monopoly on distribution services. 

What do you think of the claims against Apple in this case? Let us know in the comments! 

The Apple shareholders’ class action lawsuit is In re: Apple Inc Securities Litigation, Case No. 19-02033, in the U.S. District Court for the Northern District of California. 

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