iPhone 'Locking' by Apple Violates Antitrust Laws

LAUREN PAULSON [email protected] 827 C RANSOM AVE BROOKINGS, OR 97415 503 470 9709 (‘out of service’) !Plaintiff Pro Se !

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

LAUREN PAULSON, et al.for ) himself and all others similarly ) situated, ) CASE NO: ) Plaintiffs, ) CLASS ACTION ) COMPLAINT ) v. ) ) DEMAND FOR JURY ) TRIAL APPLE INC., SPRINT INC ) T-MOBILE INC., AT&TM INC., ) U.S. CELLULAR INC., JOHN DOE ) COMPUTER, JANE DOES ) COMPUTER, ) Defendants ) ——————————————— ) ! Plaintiff, Lauren Paulson, for himself and for this class action

complaint alleges upon personal knowledge as to himself, as to his own

action, and upon information and belief as follows:

CLASS ACTION COMPLAINTPage � of �1 39

mailto:[email protected]

!!

NATURE OF ACTION

1. This is an antitrust class action pursuant to section 2 of the

Sherman Antitrust Act of 1890, 15 USC Section 2(2004) (the “Sherman

Act”), brought by Plaintiff on his own behalf and on behalf of a class of

persons similarly situated, those being persons who purchased an Apple

iPhone from Defendant Apple Inc. (“Apple”) or AT&T Mobility, LLC

(“ATTM”), Sprint, T-Mobile, U.S. Cellular or elsewhere, and then

purchased wireless voice and data services for the iPhone from October

19, 2008, through the present (the “Class Period”).

A. Summary of Material Facts

2. Apple launched its iPhone on or about June 29, 2007. Prior

to launch, Apple entered into secret agreements with the Defendants and

each of them that “locked” these iPhones to the Defendants as the

exclusive providers of cell phone voice and data services for iPhone

customers through the duration of those consumer services and contracts

to present. (“Exclusivity Agreements”) As part of the agreements,


Apple shared in the revenues and profits of the Defendants and each of

them with respect to the iPhones launched all in bald-face restraint of

trade. The Plaintiff and other class members who purchased iPhones

were not informed and did not knowingly agree to the use of their

iPhones being so locked for any known duration of “exclusivity”. This

undisclosed ‘exclusivity’ effectively locked iPhone users into using

certain Defendants and others for a period of time to present, contrary to

those users’ knowledge, wishes and expectations.

3. To enforce Defendant’s exclusivity, Apple and the

Defendants, among other things, programmed and installed software

locks or used a locking mechanism on each iPhone it sold or serviced

that prevented the purchaser from switching to another carrier that

competed with one or all of these Defendants and Jane and John Doe

Defendants. Under an exemption to the Digital Millennium Copyright

Act of 1998, 17 USC Section 1201 (2008) (“The Agreements and

DMCA) and other consent agreements of the industry, cell phone

consumers have an absolute legal right to modify their phones to use the

network of the carrier of their choice through arms-length fee and


service duration negotiations. The Defendants have prevented iPhone

customers from exercising those legal rights by locking the iPhones and

refusing to give customers the software codes and SIM cards needed to

unlock them.

4. Under the Defendants agreements with one another and with

Apple, the latter retained exclusive control over the design, features and

operating software for the iPhone, including the code and protocols that

“locks” iPhones to these Defendants at Apple’s whim.

5. Through these actions, the Defendants have unlawfully

stifled competition, reduced output and consumer choice, and artificially

increased prices in the aftermarkets for iPhone voice and data services.

B. Summary of Claims

6. In pursuit and furtherance of its unlawful anticompetitive

activities, these Defendants: (a) failed to obtain iPhone consumers’

contractual consent to the Exclusivity Agreements between and among

them, the effect of which was to lock consumers into remaining with

their existing carriers or other Defendants when they wanted to obtain

alternative services; (b) failed to obtain iPhone consumer’s contractual


consent to the Exclusivity Agreements and to having their iPhones

“locked” to any of the other carriers through Subscriber Identity

Modules (“SIM cards”), thereby preventing iPhone purchasers from

using any cell phone voice and data service provider other than these

Defendants and each of them; (c) and failed to obtain iPhone consumers

contractual consent to make unavailable to them the “unlock code” that

would enable the consumers to use a service other than these Defendants

or alternative carriers even though these Defendants routinely provide

such unlock codes for other types of cell phones.

7. These Defendants violated section 2 of the Sherman Act by

conspiring among each other to monopolize the present and aftermarket

voice and data services of the Apple iPhone in a manner that harmed

competition and injured consumers by reducing output and increasing

prices in iPhone aftermarket and by the actions aforesaid and below said

all in illegal restraint of trade as described herein.

8. Plaintiff and class members seek declaratory and injunctive

relief, actual damages, treble damages, exemplary damages, punitive

damages for outrageous conduct beyond socially tolerable conduct,


costs, attorney fees and other damages according to proof at trial. As for

equitable relief, Plaintiff’s seek an immediate order: (a.) restoring

Plaintiff’s phone service, (b.) restraining from conspiring with these

Defendants or others including Third-Party vendors from hindering any

iPhones from being ‘unlocked’, from selling iPhones that are

programmed in any way to prevent or hinder consumers from unlocking

their SIM cards; (c.) requiring Apple to provide the iPhone SIM unlock

codes and protocols to members of the class and other iPhone consumers

immediately upon any consumer request, within twenty-four hours of

consumer’s request without qualification or limitation of any sort

whatsoever, (d.) restraining the Defendants from selling or distributing

locked iPhones without adequately disclosing in writing, in at least 18

point type in a separate document disclosing the fact they are locked to

only work with SIM cards which requires the consumers consent along

with a written and printed consumer signature with the consumer’s

current address with a copy of same going to the consumer’s state

attorney general office who shall keep an index of said agreements and

disclosures. Each Defendant shall be required to furnish each consumer


with a one-page step-by-step instruction on the unlocking procedures

equipment and protocols capable of being understood by a twelve year-

old child schooled in the art and science of computers.

THE PARTIES

9. Plaintiff, Lauren Paulson is an individual residing in Curry

County, Oregon, who, on or about February 06, 2012 purchased an

Apple iPhone 4s at the Apple store at Pioneer Square Portland, Oregon

and paid for voice and data service for his iPhone at Sprint’s and T-

Mobile’s stated rates during the Class Period. The Plaintiff’s iPhone 4s

is designed by Apple to be able to operate on any domestic carrier’s

network.

10. Defendants and each of them transact business in the United

States in known and unknown locations locally and throughout the

nation. Defendant Apple is a California corporation with its principal

place of business located at 1 Infinite Loop, Cupertino, California

95014. Apple and the other Defendants regularly conduct and transact

business in this District or the Portland, Oregon District as well as


throughout the United States. Apple manufactures, markets and sells the

iPhone, among other devices all over the world.

!JURISDICTION AND VENUE

11. This Court has federal question jurisdiction pursuant to the

Sherman Act, the Clayton Antitrust Act of 1914, 15 USC Section 15 and

pursuant to 28 USC Sections 1331 and 1337.

12. This Court also has jurisdiction pursuant to 28 USC Section

1332(e)(2) because sufficient diversity of citizenship exists between

parties in this action, the aggregate amount in controversy exceeds

$420,000,000 and there are more than 100 members in the proposed

class.

13. Venue is proper in this District because a majority of the

Defendants transact business throughout the United States including this

District.

!FACTUAL ALLEGATIONS

A. Plaintiff’s Injuries:


14. On or about 2009, Plaintiff had his wireless voice and data

telephone service with Sprint. Plaintiff purchased various devices from

Sprint including telephones, modems, Wi-Fi ‘hot spots’ and routers.

Suddenly, on or about September, 2011, without notice warning nor

consent, Sprint eliminated Defendant Paulson’s unlimited data plan,

unilaterally changing the data plan to a limited one. This caused

Defendant Paulson’s monthly bill to go from about $60 to $90 per month

to about $600 to $900 per month. Paulson began exploring options. The

Plaintiff purchased his iPhone on February 06, 2012. There was no

notice of the ‘locking’ issue and Plaintiff had no prior knowledge that his

telephone would be locked to Sprint. Indeed, the Plaintiff had formally

reported Sprint’s unconscionable fee charges above to Sara Noble of the

Oregon Public Utility Commission and the Oregon Attorney General.

15. On or about April, 2012 Paulson switched his telephone

service from Sprint to T-Mobile. T-Mobile switched the SIM card to T-

Mobile through the services of a Third-Party Retail Computer Store on

April 18, 2012 and Paulson began his telephone service with T-Mobile


using an automatic pay process through Paulson’s bank. Plaintiff’s

telephone service continued with T-Mobile, without fanfare until:

16. On or about April 25, 2014 T-Mobile unilaterally terminated

Paulson’s telephone service without notice or other cause to do so.

Paulson’s monthly payments to T-Mobile were current. The Plaintiff has

not had telephone service since that T-Mobile service termination; now

almost a month ago. Judicial notice may be taken that merger

discussions between Sprint and T-Mobile began about the same time.

This was a crucial telephone service termination because Paulson

is the caregiver for an individual located about two miles from Paulson’s

residence who was only able to contact Paulson by telephone. During

the month of April to May, 2014, the disabled individual has had

multiple health episodes, but was unable to contact Paulson by telephone

in order to obtain needed episodic and emergency health care. The

individual does not drive.

17. Plaintiff contacted Defendants in order to get his iPhone

unlocked, but at all times material hereto, Defendant’s refused and


continue to refuse to restore Paulson’s telephone service without a phone

device purchase from them and each of them.

18. At all times material hereto, Defendants had various

Exclusivity Agreements with each other which required consumers and

members of this class to purchase a new or alternate telephone if they

switch carriers. At no time did the Defendants disclose or provide notice

of such their agreements to require consumers to purchase new

telephone devices if a consumer changed carriers.

19. Upon information and belief these Defendants can easily

provide unlock codes and SIM cards for cell phones other than the

iPhone if requested by a consumer. At various times the Plaintiff

formally requested said unlocking from these Defendants and each of

them in April and May of 2014 and each Defendant formally refused.

B. The Cell Phone Industry

20. Cellular telephone service began to be offered to consumers in

1983. Cellular telephones operate using radio frequency channels

allocated by the Federal Communications Commission (“FCC”).

Geographical service areas are sometimes known as ‘cells’ and are


serviced by base stations using low-power radio telephone equipment,

sometimes known as ‘cell towers’. The cell towers connect to a Mobile

Telephone Switching Office (“MTSO”), which controls the switching

between cell phones and land line phones, accessed through the public-

switched telephone network and to other cell telephones.

21. In cellular service there are two main competing network

technologies: Global System for Mobile Communications (‘GSM’) and

Code Division Multiple Access (‘CDMA’). GSM is the product of an

international organization founded in 1987 dedicated to providing,

developing and overseeing a worldwide wireless standard. CDMA is an

alternative technological platform, developed by Qualcomm, Inc., used

in much of North America and parts of Asia.

22. To enable cell phones to send and receive various signals and

services requiring higher data transfer speeds, both CDMA and GSM

carriers adopted technologies to comply with what the industry refers to

as 3rd and 4th generation, or 3G or 4G standards. These technologies

require the cell phone to operate on a separate 3G or 4G network. Later

versions of the iPhone operate on both 3G and 4G networks.


23. Of the cellular phone service providers in the United States,

ATTM, T-Mobile, Sprint and Verizon (collectively the ‘Major Carriers’)

have the most substantial national networks. Other suppliers are

relegated to be resellers of cellular telephone service which they

purchase from these four Major Carriers. ATTM and T-Mobile operate

GSM networks while Sprint and Verizon operate CDMA networks.

24. Unlike personal computers where manufacturers and software

developers can offer products directly to the consumer without having to

gain the approval of Internet service providers and without paying those

providers for access; the wireless carriers and Defendants herein have

used their ability to grant or deny access to their wireless networks to

control both the type of cell phone hardware and software that can be

manufactured and to extract payments from manufacturers granted

access to their networks and customers.

25. The anticompetitive nature of the wireless telephone market

that the carriers have created and facilitated gave rise to the commercial

context in which Apple is able to act in restraint of trade and commit the


other wrongs including perpetration of wide-spread fraud on the

consumers of wireless telephone services of the United States.

C. The Defendant’s Unlawful Restraint of Trade

26. As stated above, ATTM and T-Mobile iPhones use GSM

technology. GSM iPhones use what is known as ‘SIM” cards. The

removable SIM card allows phones to be instantly activated, (a SIM

card is here portrayed:)

and may be interchanged, swapped out and upgraded, all without

carrier intervention. The SIM card itself is tied to the network rather


than to the actual iPhone unless altered by Apple. Cell phones that are

SIM card-enabled generally can be used with any GSM carrier.

27. Thus, the hardware of all GSM compatible cell phones give

consumers some degree of choice to switch among GSM carriers’

wireless networks by enabling them to replace their SIM card, a process

that the average individual consumer can do easily with no training by

following a few simple instruction in a matter of minutes. SIM cards are

very inexpensive, now costing less than a few dollars. When the card is

changed to the SIM card of another carrier, the cell phone is

immediately usable on the other carrier’s network. To switch from

ATTM and T-Mobile, or the other way around, all that is required is this

simple change of the SIM card.

28. These Defendants acting in concert including their trade

associations and standards-setting industry organizations such as the

CDMA Development Group, the Telecommunications Industry

Association, the Third Generation Partnership Project, the Alliance for

Telecommunications, the Open Mobile Alliance, the CSM Association,

the Universal Wireless Communications Consortium, the Cellular


Telephone Industry Association and other Jane or John Doe Defendants

have agreed to implement (“Programing Lock”) features which

effectively “locked” individual iPhones so they could not be used

without the “unlocking” code. GSM carriers obtain a locking code

(normally six digits) unique to each cell phone from the cell phone

manufacturer. Absent obtaining the unlocking code from their GSM

carrier, consumers who purchase a telephone manufactured to work with

one of the two GSM Major Carriers cannot switch to another carrier

without buying an entirely new phone.

29. The two GSM carriers, ATTM and T-Mobile. adopted a SIM-

lock standard that locked each GSM phone to a particular SIM card,

thereby preventing consumers from simply changing their SIM cards to

switch carriers. The ‘unlock’ code can be provided instantly to the

consumers over the telephone, but these Defendants refuse in order to

force consumers to purchase new telephones.

30. The U.S. Register of Copyrights has concluded that “…the

access controls [on cell phones] do not appear to actually be deployed in

order to protect the interests of the copyright owner or the value or


integrity of the copyrighted work; rather they are used by wireless

carriers to limit the ability of subscribers to switch to other carriers,

a business decision that has nothing whatsoever to do with the

interests protected by copyright.” Exemption to Prohibition of

Copyright Protection Systems for Access Control Technologies, 71 Fed.

Reg. 68472, 68476 (Nov. 27, 2006) (emphasis added)

31. When Apple was thus unable to continue locking iPhones

through the SIM card Program Locks through legal means, it engaged in

a scheme with the other Defendants to continue locking the iPhone

unlawfully, directly and through these Defendants and each of them.

Further, these Defendants conspired among each other to refuse to

provide the simple unlocking facilities and unlocking code from them,

the Jane and John Doe Computer Third Party providers nor to their

consumer customers — the Plaintiff and the Class. In a further

conspiracy to perpetuate this fraud on the public, a Defendant trade

association purported to facilitate the unlocking of these phones and

services that are in restraint of trade:


On February 11, 2014, CTIA-The Wireless Association adopted six

standards on unlocking into the CTIA's Consumer Code for Wireless

Service. Implementation of these six standards by major mobile wireless

service providers is supposed to give consumers greater freedom and

flexibility in unlocking their iPhones when in reality these standards are

continuing scheme by the Defendants to obfuscate the ability of consumers to

unlock their iPhones. Participating wireless service providers will

implement at least three of these six standards by May 11, 2014, and all of

these standards by February 11, 2015.

This is another sham. None of the Defendants are following this path

to unlocking nor do they intend to. It is the opposite. On or about May, 2012

the Plaintiff personally canvased the Defendant’s and each of them. All of

them refuse to unlock the Plaintiff’s iPhone nor commence telephone service

to the Plaintiff without the purchase of a new or replacement telephone

device. In a pervasive and organized lie, the Defendants and each of them in

a conspiracy to withhold the truth from the iPhone buying public through the

insidious and pervasive nationwide fiction that “….your particular iPhone

cannot be unlocked”. The Plaintiff can provide the exact name of the

Defendant employee and the exact address of the Defendant employee


http://www.ctia.org/policy-initiatives/voluntary-guidelines/consumer-code-for-wireless-service

perpetrating this fraud on the public. Moreover, the Plaintiff can provide the

exact ‘chat’ dialogue record where the Defendant’s employees are

perpetrating this insidious and pervasive fraud on the iPhone buying public

every day, all day to all iPhone consumers. All to sell telephones!

32. Secretly, and in unlawful restraint of trade, Apple conspired

with these Defendants and others to share in the revenue with the voice

and data services provided to Defendants from iPhone revenue through

this scheme of these Defendants refusing to unlock iPhones.

33. Even though carriers typically engage in a two year contract

with consumers, these Defendants unlawfully conspired to not unlock

iPhones for five years in order to force consumers to stay with the

Defendants as their carrier beyond the normal contractual period because

their iPhones were useless elsewhere and to so increase this revenue-

sharing fund. In summary, there were three angles in this consumer

ruse: First, the carrier would unilaterally raise the fees charged to the

consumer while the consumer was locked to the carrier. Second, the

consumer would be required to purchase a new phone device if the

consumer attempts to avoid those ‘new’ carrier charges under the ‘old’


consumer contract to stay with that carrier for two years; by attempting

to switch carriers. Third, the revenue-sharing period was extended from

the two-year consumer contract period by three years due to the secret

agreement not to furnish unlocking for the five year duration. In short,

these Defendants get the consumer coming and going and going.

34. Meanwhile, the Defendant carriers then unilaterally changed

the data plan provided to consumers in order to generate expanded

revenues for all the Defendants because the consumer was unable to

obtain telephone service elsewhere without purchasing a new telephone;

meanwhile the consumer’s telephone bills from their extant carrier could

increase ten-fold or more from the ‘new’ data fee charges.

35. Apple and these Defendants agreed to never provide the

unlock codes to iPhone consumers who wished to replace the iPhone

SIM card either for international travel or to lawfully switch to another

carrier until after their five-year price-fixing revenue sharing agreement

had expired.

36. Unbeknownst to consumers, Apple was selling their iPhones at

the five-year price-fixed amounts; the remainder sale amount made up


by the other Defendants in order to enable these schemes in restraint of

trade aforesaid and under other terms among the Defendants themselves

and under terms not disclosed to the Plaintiff, the Class nor to consumers

nationally.

37. The early termination fees charged by these Defendants are

also in illegal restraint of trade inasmuch as there is no mutuality i.e.. the

carrier may unilaterally change the terms of the agreement or change the

fees into exorbitant (even unlimited) amounts, but the consumer is not in

an equal bargaining position to similarly change the terms of the

agreement or amounts of monthly fees paid. In short, these Defendants

can change ‘The Deal’any time they want, but the Plaintiff, and

members of the Class-consumer cannot. That is an unconscionable

contract of adhesion perpetrating a fraud on the consumer and illegal

under both state and federal law.

38. The Defendants and each of them illegally conspired and

unlawfully agreed to take united action to prevent users from

circumventing the SIM card lock protocol. A central purpose of these

agreements of the Defendants is to suppress lawful competition among


cell phone consumers to extend the locking beyond their original five

year plan.

39. These Defendants also conspired to increase the aftermarket

prices for iPhones by advising their consumers to advertise and sell their

‘locked’ iPhones on eBay or Amazon or other sites to consumers who

want cheaper iPhones that are locked with their extant carriers due to the

two-year fee agreement.

40. These Defendants conspired to forestall development of an

iPhone CDMA version to stifle competition between ATTM, Sprint, T-

Mobile and Verizon on the alternative platforms. Apple is easily able to

develop an iPhone for use on CDMA networks in addition to the GSM

compatibility. A schoolboy did it immediately after the open iPhone

market began.

41. The iPhone lock out is complete due the overall scheme of

these Defendants and each of them as described herein. No carrier and

few computer stores will agree to obtain or follow the unlocking code so

a consumer’s iPhone may be unlocked and used with an alternate carrier.


This renders a consumer’s iPhone useless and worthless (except in the

artificially inflated aftermarket).

42. None of these illegal acts or schemes have been disclosed to

the Plaintiff nor to the Class of consumers. In fact, the carriers have

enacted comprehensive networks to prevent consumers from knowing

the true facts recited above.

CLASS ALLEGATIONS

43. Plaintiffs bring this action as a class action on behalf of

themselves and all others similarly situated for the purpose of asserting

claims alleged in this Complaint on a common basis. Plaintiff’s

proposed class (‘Class) is defined under the Federal Rules of Civil

Procedure 23(b)(2) and (3), and Plaintiff’s propose to act as

representatives of the following class comprised of:

All persons, exclusive of Apple, the Defendants and their employees, who purchased an iPhone anywhere in the United States at any time, and who then also paid for voice or data service from any of the Defendants during the Class Period. ! 44. The Class for whose benefit this action is brought is so

numerous that joinder of all members is not practical.


45. Plaintiffs are unable to state the exact number of Class

members without discovery of the Defendant’s records, but, on

information and belief hereby state that it exceeds ten million consumers

and purchasers of iPhones sold for use on the Defendant’s networks

during the Class Period.

46. There are questions of law and fact common to the Class

which predominate over any questions affecting only individual

members. They are:

a. Whether Apple failed to obtain consumers’ contractual

consent to the fact that Apple had entered into the agreements with the

other Defendants aforesaid;

b. Whether the Defendants failed to notify consumers they

would be unable to switch carriers during the times in question;

c. Whether the Defendants continue to conspire to retain any

and all iPhones to be locked from use with alternative carriers;

d. Whether the Defendants charged exorbitant fees while

consumers were locked to them, knowing consumers would be unable to

obtain service elsewhere without purchasing a new phone;


e. Whether these Defendants failed to obtain consumers

contractual consent to the fact they would not provide consumers with

unlock codes for their iPhones so that the iPhones could be used with

alternative carriers; and

f. Whether these Defendants violated the laws against antitrust and

violated section 2 of the Sherman Act by conspiring to monopolize the

current market and the aftermarket for iPhone wireless voice and data

services;

47. Each of these common questions of law and fact are identical

for each and every member of the Class;

48. Plaintiff is a member of the Class he seeks to represent, and

the claims arise from the same factual and legal basis as those of the

Class; they assert the same legal theories as do all Class members;

49. Plaintiff’s will thoroughly and adequately protect the interests

of the Class, and seek qualified and competent pro bono legal

representation to represent themselves and those similarly situated.


50. The prosecution of separate actions by individual Class

members would create a risk of inconsistent adjudications and would

cause needless expenditure of judicial resources.

51. Plaintiffs are typical of the Class in that their claims, like those

of the Class, are based on the same unconscionable and fraudulent

business practices and the same legal theories.

52. These Defendants have acted on grounds generally applicable

to the grievances of the consumers who form the Class.

53. A class action is superior to all other available methods for the

fair and efficient adjudication of the controversy.

RELEVANT MARKET ALLEGATIONS

54. The iPhone is a unique, premium priced product that generates

a unique aftermarket for voice and data services that can be used only on

iPhones. During at least the Class Period, the price of iPhones was not

responsive to an increase in iPhone service because:

a. consumers who purchased an iPhone could not, at the

point of sale, reasonably or accurately inform themselves of its ‘lifecycle


costs’ (that is, the combined cost of the handset and its required services,

parts and applications over the iPhone’s lifetime); and

b. consumers unknowingly were “locked into” the iPhone

due to its high price tag and would incur significant costs to switch to

another brand of handset. The aftermarket for iPhone voice and data

services are thus economically distinct product markets, and the service

product that is sold within those markets has no acceptable substitutes.

The geographic scope of the iPhone voice and data services aftermarket

is national.

55. The relevant aftermarket is the aftermarket for wireless voice

and data services (the ‘iPhone Voice and Data Services Aftermarket’).

56. The iPhone Voice and Data Services Aftermarket came into

existence immediately upon the sale of the first iPhones, because:

a. the iPhone Voice and Data Services Aftermarket is

derivative of the iPhone market;

b. no Plaintiff or member of the Class knowingly

contractually agreed to permit the Defendants and each of them to

impose any restrictions in this aftermarket;


c. the Plaintiffs and members of the Class should have been

able to terminate service with the other Defendants at anytime;

d. no Plaintiffs or members of the Class knowingly agreed

with anyone to not purchase and use voice and data services from

providers other than these Defendants, including the Jane Doe and John

Doe Defendants.

COUNT ONE

Conspiracy to Monopolize the iPhone Voice and Data Services Aftermarket in Violation of Section 2 of the Sherman Act

(Seeking Damages and Equitable Relief) ! 57. Plaintiffs and the Class reallege and incorporate paragraphs 1

through 56 above as if fully set forth here.

58. These Defendants, and each of them knowingly and

intentionally conspired with the other Defendants with specific intent to

monopolize the iPhone Voice and Data Services market and aftermarket.

In furtherance of the conspiracy these Defendants agreed, without

Plaintiffs and the Class knowledge or consent to make themselves the

exclusive providers of voice and data services for the iPhone for five

years, contrary to Plaintiff and the Class reasonable expectations that


they could switch to another carrier at any time; certainly at the end of

their two year previous carrier agreements, if there are any.

59. These Defendants unlawfully achieved an economically

significant degree of market power in the iPhone Voice and Data

Services market and Aftermarket as a result of the conspiracy and

effectively foreclosed new and potential entrants from the market or

from them gaining their naturally competitive market shares.

60. These Defendants, and each of them, by their conspiracy

reduced output and competition and resulted in artificially increased

prices in the iPhone Voice and Data Services Aftermarket and, thus,

harmed competition generally in that market.

61. Plaintiffs and the Class were injured in fact by the Defendant’s

conspiracy and each of them, because they were deprived of alternatives

for voice and data services and forced to pay supra-competitive prices

for iPhone and data services.

62. The Defendant’s conspiracy aforesaid to monopolize the

iPhone Voice and Data Services Market and Aftermarket violated

Section 2 of the Sherman Act, and its anticompetitive practices are


continuing and will continue unless they are permanently enjoined.

Plaintiffs and the Class have suffered massive economic injury to them

as a direct and proximate result of these Defendant’s conspiracy and they

are therefore liable for treble damages, costs and attorney fees in

amounts to be proven at trial.

COUNT TWO

(Outrageous Conduct — State Law Violation)

63. Some of these factual matters occurred in the State of Oregon.

Oregon law allows for proceedings against a party for ‘Outrageous

Conduct’ or for conduct outside the realm that is socially tolerable.

64. The Plaintiff, also a Senior, is a caretaker, for a long-time

friend who is a Senior who lives at another location and who is

disabled. At all times pertinent here, that disabled person had several

health episodes requiring medical care for which the Plaintiff would be

‘on call’ to provide assistance and transportation for which the only

means of communications between the Plaintiff and his disabled friend

is by telephone. Due to the actions of the Defendants described above,

this Senior disabled friend was unable to contact the Plaintiff in order to


provide appropriate assistance for recent health episodes. The disabled

man cannot drive. The Plaintiff does not have access to another

telephone and has no land line.

65. The Defendants and each of them, knew of Plaintiff’s

extraordinary need for a working telephone as described above, yet

failed to continue the Plaintiff’s telephone service for which he had

prepaid through monthly automatic deductions from Plaintiff’s bank

account.

66. These actions of the Defendants are socially intolerable

behavior in the extreme justifying punitive damages as an example to

others who might be tempted to engage in unlawful and illegal restraint

of trade of an essential service to the public and to seniors who are

disabled and depend on uninterrupted telephone service.

COUNT THREE

(Mandatory Injunction)

67. The Plaintiff hereby respectfully requests the Court to issue an

immediate mandatory injunction by way of an Emergency

Temporary Restraining Order requiring the Defendants, and each


of them to immediately restore the Plaintiff’s telephone service to

the Plaintiff’s above described iPhone during the pendency of these

proceedings and afterwards. Balancing the gravity of the potential

harm to Seniors and the disabled who are without telephone service

with the likelihood of success in this blatant and awful price-fixing

scheme weighs heavily in favor of the Plaintiff.

68. Such an immediate restoration of telephone service can cause

these Defendant’s no harm since the Plaintiff has, upon information and

belief prepaid for telephone service to and including the present due to

the fact the monthly fee is automatically deducted from Plaintiff’s

checking account and that monthly deduction would only cease if

Plaintiff provided his bank with appropriate notice which he HAS NOT

done.

COUNT FOUR

(Common Law Fraud)

69. The Plaintiff realleges paragraphs 1 through 69 as though fully

set forth here.


70. The Defendants fraudulent scheme is an appalling example of

corporate greed and collusion vertically from some of the largest

companies in the world, to mid-level corporations to street retail

operations. As described above, Apple, one of the most sophisticated

companies in the world, rich with ill-begotten cash* stolen from

innocent consumers through an insidious revenue sharing gambit with

ATTM and others while secretly locking consumers to fraudulent

carriers who attempt to lock their customers into a two-year contract

arrangement with a secret agreement with Apple to share revenue for a

five-year locked in period. None of this is disclosed to consumers.

Telephone use is an essential service to consumers lives, happiness and

safety no less than food and shelter.

71. The Defendants, and each of them intended that the consumers

rely on the fraudulent and secret agreements among themselves all to

their detriment.

72. The consumers of iPhones relied on this fraudulent scheme of

these Defendants all to their harm of ten million dollars or such amounts

as are proved at trial.


http://www.forbes.com/sites/timworstall/2014/05/13/apple-does-not-have-more-cash-than-britain-and-israel-combined/

*A Forbes May 13, 2014 article points out that Apple does not have more cash than Britain and Israel Combined; rather has cash or cash equivalents of a mere $150 billion socked away from these Plaintiff consumers. ! 73. These Defendants and each of them made intentional

misrepresentations of material facts as above and below described

presented to the Plaintiffs and the Class by those Defendants to the

Plaintiff’s detriment. The Defendants and each of them made false

representations of present and past facts known to the Defendants and

each of them and concealed facts above and below described. The

Defendants and each of them were deceitful to the Plaintiffs and the

class as above described and below described and actually lied to the

Plaintiffs and to the class. The Defendants and each of them knew the

information used was false or intentionally maintained ignorance that is

or was the truth pertaining to any and all transactions with Plaintiff

consumers herein described. The Plaintiff’s and the Class were actually

induced by these Defendants and others to rely on the false and

fraudulent misrepresentations of the Defendants and each of them and

the Plaintiffs and the Class members acted upon those false and


http://www.forbes.com/sites/timworstall/2014/05/13/apple-does-not-have-more-cash-than-britain-and-israel-combined/

fraudulent misrepresentations of the Defendants. The Plaintiff

Consumers would not have agreed to this fraud had they known the

truth. The Plaintiff’s and the Class suffered actual damages due to the

actions of the Defendants and each of them in the amount of ten million

dollars or such amounts as are proved at trial. The Plaintiffs and each of

them have been grossly detrimentally impacted by the intentional

misrepresentations of the Defendants and each of them as described

above and below.

COUNT FIVE

(Unlawful Business Practices)

74. The Plaintiffs reallege paragraphs 1 through 74 as though fully

set forth herein.

75. The Defendants and each of them have violated state and

federal laws pertaining to business practices at the state level and at the

federal level. A person engages in an unlawful business practice when in

the course of the persons business, vocation or occupation the person:

!!CLASS ACTION COMPLAINTPage � of �35 39

(1)Employs any unconscionable tactic in connection with the sale, rental or other disposition of real estate, goods or services, or collection or enforcement of an obligation;!

76. The Defendants actions aforesaid have caused harm to the

Plaintiffs and the Class in an amount of ten million dollars or as such

amounts are proved at trial.

COUNT SIX

(Right to Jury Trial)

77. The Plaintiff and members of the Class are entitled to a jury

trial under both state law and under federal law.

78. Some of the actions aforesaid occurred in the State of Oregon.

Under the Oregon Constitution at Article I, section 17 states: “In all civil

cases the right of Trial by Jury shall remain inviolate.” This means the

right to a jury trial may not be taken away.

79. Similarly, the Plaintiff’s and the Class have a right to a jury

trial under the U.S. Constitution of the United States and under the

Seventh Amendment thereto:

“In Suits at common law, where the value in controversy shall

exceed twenty dollars, the right of trial by jury shall be preserved,


and no fact tried by a jury, shall be otherwise re-examined in any

Court of the United States, than according to the rules of the

common law.”

REQUESTS FOR RELIEF

WHEREFORE, Plaintiffs respectively request that the Court enter

judgment against the Defendants and each of them as follows:

a. Issuing an Immediate Temporary Restraining Order requiring

the Defendants to immediately restore iPhone telephone service to

Plaintiff’s above described iPhone;

b. Permanently enjoining these Defendants from lying to the

public that said described iPhone cannot be unlocked and to

immediately provide the unlocking code and other unlocking facilities

by the speediest means to consumers and the members of the Class

throughout the nation;

c. Permanently enjoining these Defendants from selling locked

iPhones that can only be used with one carrier;


d. Permanently enjoining these Defendants from conspiring to

monopolize the iPhone Voice and Data Services Market and

Aftermarket;

e. Awarding the Plaintiff and the Class treble damages for injuries

caused by these Defendant’s violations of the federal and state antitrust

laws;

f. Awarding the Plaintiff and the Class punitive damages for

socially intolerable conduct that is outrageous in the extreme;

g. Appointing pro bono counsel for the Plaintiffs;

h. Awarding Plaintiff’s and the Class reasonable attorneys’ fees

and costs; and

i. Granting such other and further relief as the Court may deem

just and proper.

///////////////////////////////////////////////////////////////////////////////////////////////////

!


! DEMAND FOR TRIAL BY JURY

! j. Plaintiff and the Class hereby demand a trial by jury.

!DATED: Monday, May 19, 2014

!! ___/S/___________________________________________ LAUREN PAULSON Pro Se and for The Class

!


iPhone 'Locking' by Apple Violates Antitrust Laws

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