Apple loses bid to move consumer privacy suit to arbitration

Apple Inc. must continue fighting a consumer privacy lawsuit in open court and can’t move it behind the closed doors of private arbitration, a judge ruled, turning aside a request from the tech giant.

Companies generally prefer arbitration since it’s quicker, they have a say in the selection of the judges and the rulings are final with only limited rights to appeal. The cases are also dealt with on an individual basis, raising the costs to plaintiffs who can’t share expenses as in class-action cases, where their fees may also be contingent on winning the case.

U.S. District Judge Lorna G. Schofield in New York on Tuesday rejected Apple’s and co-defendant T-Mobile USA Inc.’s argument that provisions in T-Mobile’s terms and conditions require consumer disputes to be arbitrated.

Consumers claim an iPhone operating system flaw, coupled with recycled T-Mobile phone numbers, gave third parties unauthorized access to users’ communications. The breach violates both companies’ promise that iMessage and Facetime features were secure, they said in the complaint.

Schofield said she’ll make a final ruling on one plaintiff’s claims against T-Mobile after further questions about his agreement to arbitrate with the company are resolved. She rejected Apple’s attempt to push a different consumer’s claims against the iPhone maker into arbitration.“Apple is not a party to the T-Mobile agreement, and Apple has not shown” that it can enforce it, Schofield ruled.

Lawyers for the consumers -- Darren Oved, Aaron J. Solomon and Christopher Rados -- hailed the ruling as a victory, saying in a statement that the judge “recognized the significant merit and far-reaching impact of plaintiffs’ claims for a broad class of iPhone users.”The case is Ohanian v. Apple Inc., 20-cv-05162, U.S. District Court, Southern District of New York (Manhattan).