Van Zant v. Apple, Inc.

Filed 9/12/14
                           CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             SIXTH APPELLATE DISTRICT


INGRID VAN ZANT,                                   H039354
                                                  (Santa Clara County
        Plaintiff and Appellant,                   Super. Ct. No. 1-10-CV-177571)

        v.

APPLE INC.,

        Defendant and Respondent.


        This case concerns a question of procedure that may arise when a plaintiff sues a
manufacturer for marketing and selling allegedly defective smartphones: If the plaintiff
claims internal defects in the smartphone are the sole cause of its failure to perform as
advertised, is the network carrier for the smartphone a necessary party to the lawsuit?
We conclude the network carrier is not a necessary party.
        Plaintiff Ingrid Van Zant brought a class action lawsuit against defendant Apple
Inc. (Apple) alleging false advertising, breach of warranty, and other claims relating to
Apple’s marketing and sales of the iPhone 3G. Van Zant alleged that Apple falsely
advertised the iPhone 3G to be “twice as fast” as its predecessor, the iPhone 2G. She
claimed that hardware and software flaws inherent in the iPhone 3G prevented it from
performing as advertised. The trial court sustained Apple’s demurrer and granted its
motion to dismiss on the ground that Van Zant failed to join AT&T Mobility LLC
(ATTM)—the cellular network carrier for the iPhone 3G—as a necessary party under
Code of Civil Procedure section 389, subdivision (a).
       We hold that ATTM is not a necessary party. Accordingly, the trial court erred in
sustaining the demurrer and dismissing the action. We will reverse the judgment.
                      I. FACTUAL AND PROCEDURAL BACKGROUND
   A. Allegations of the Operative Complaint
       Van Zant filed her initial class action complaint in Santa Clara County Superior
Court on July 21, 2010. On September 21, 2012, she filed her first amended complaint—
the operative complaint—alleging seven causes of action: (1) violations of Business and
Professions Code section 17200 et seq.; (2) violations of Business and Professions Code
section 17500 et seq.; (3) breach of express warranty; (4) violation of the Song-Beverly
Consumer Warranty Act (Civ. Code, § 1792 et seq.); (5) negligence; (6) negligent
misrepresentation; and (7) unjust enrichment.1 Van Zant’s claims were brought “solely
and strictly against Apple and do not nor are intended to seek any redress from [ATTM],
operator of the 3G network on which the iPhone 3G was designed to operate.” The
putative class includes “All persons who purchased one or more iPhone 3Gs from Apple
and/or its authorized retailers in the State of California. Excluded from the Class are
[Apple], its officers and directors at all relevant times, members of immediate families
and their legal representatives, heirs, successors, or assigns and any entity in which
[Apple] has or had a controlling interest, and all individuals pursuing arbitration against
ATTM.”
       Van Zant alleges Apple falsely represented the iPhone 3G to be “twice as fast” as
the previous version of the iPhone. The complaint asserts: “Plaintiff undertook a side by
side comparison of the performance of the iPhone 3G and her previous iPhone and found
that the previous iPhone performed just as fast, or at times faster, then her new iPhone 3G
device. This side by side suggests that the problems with the iPhone 3G are not related to
the ATTM network, but with the device itself [sic].” She claims the iPhone 3G’s failure

       1
       Subsequent references to Van Zant’s “complaint” refer to the first amended
complaint unless otherwise stated.

                                              2
to perform as advertised stems from defects inherent in the iPhone 3G: “Because of
hardware and software flaws inherent in the iPhone 3G, the iPhone 3G was incapable of
meeting the promised performance standards Apple represented during its multimillion
dollar advertising campaign, and the iPhone 3G would have failed to deliver on these
promises regardless of the performance of the ATTM 3G network.” Specifically, Van
Zant claims the poor performance was due either to internal hardware that demanded too
much power or software flaws in the device’s algorithms. She alleges that “These
hardware and software flaws resulted in the iPhone 3G failing to deliver on Apple’s
‘twice as fast’ performance promise, and the slower performance received by actual
iPhone 3G users would have been experienced regardless of the performance of the
ATTM network. As a result, this Complaint seeks redress solely and exclusively against
Apple and does not implicate the performance speeds of the ATTM 3G network.”
   B. The Federal Multi-District Litigation (MDL)
       Van Zant’s lawsuit in this case was preceded by litigation in federal court, wherein
other plaintiffs around the country brought 13 lawsuits against both Apple and ATTM.
Those actions raised similar but not identical claims to those at issue here regarding the
advertising and performance of the iPhone 3G. In 2009, the Judicial Panel on
Multidistrict Litigation (MDL) transferred the federal actions to the United States District
Court for the Northern District of California.2 Because the trial court in this case relied in
part on the federal district court’s rulings in the MDL case, we briefly summarize the
MDL proceedings.
       In 2009, the MDL plaintiffs filed a class action master complaint alleging that
“Both Apple and ATTM uniformly advertised the iPhone 3G as ‘Twice as Fast’ in
comparison to the ‘2G’ EDGE network on which the earlier iPhone operated. Through

       2
        Apple requests that we take judicial notice of the district court’s orders, its
docket, and three of the MDL plaintiffs’ master complaints. We grant Apple’s request.
(Evid. Code, §§ 452, subd. (d), 459, subd. (a).)

                                              3
marketing to consumers, and even by the very name of the phone itself, [Apple and
ATTM] engaged in a campaign to represent to consumers that the new iPhone would be
significantly faster with regard to upload and download transfer rates and, therefore,
superior to the predecessor iPhone, which operated on the slower 2G network.” (In re
Apple iPhone 3G Products Liability Litigation (N.D. Cal. 2010) 728 F.Supp.2d 1065,
1068.) The MDL plaintiffs claimed that both Apple and ATTM made false and
misleading representations, and that both Apple and ATTM “profited by selling iPhone
3G devices without the appropriate infrastructure in place and the presence of defective
hardware and software in the iPhone 3G.” (Ibid.) The MDL plaintiffs also claimed that
“Apple and ATTM acted in concert to sell the iPhone 3G and either knew, should have
known, or were obligated to understand that they were trying to sell more iPhone 3G
devices than the existing ATTM 3G network could handle, and the iPhone 3G itself
suffered from defective hardware and software.” (Ibid.)
       The putative class of MDL plaintiffs consisted of “All persons in the United States
of America, or in California and such other states within the United States as the Court
determines to be appropriate, who purchased an iPhone 3G and entered into an ATTM
3G service contract between July 11, 2008 and the present.” The complaint set forth
13 causes of action under state law, and one claim under the federal Magnuson-Moss
Warranty Act, 15 U.S.C. section 2301 et seq. (In re Apple iPhone 3G Products Liability
Litigation, supra, 728 F.Supp.2d at p. 1068.)
       Both Apple and ATTM moved for dismissal of the MDL complaint, and ATTM
moved to compel arbitration. (In re Apple iPhone 3G Products Liability Litigation,
supra, 728 F.Supp.2d at p. 1067.) The district court found that all claims against ATTM
were preempted by federal law under the Federal Communications Act and thereby
granted ATTM’s motion to dismiss with prejudice. (Id. at p. 1077.) However, the court
granted leave to amend the complaint for claims under the Federal Communications Act.
The court also granted Apple’s motion to dismiss on the ground that ATTM was an

                                             4
“indispensible party” under Federal Rule of Civil Procedure 19, subdivision (b). (Id. at
p. 1076.)
       Before amending their complaint, the MDL plaintiffs moved for reconsideration of
the order granting Apple’s motion to dismiss. The district court denied the motion and
reaffirmed its ruling that the action could not proceed against Apple without ATTM since
the latter was an indispensable party. (In re Apple iPhone 3G Products Liability
Litigation (N.D. Cal., Dec. 1, 2011, MDL C 09-02045 JW) 2011 WL 6019217.)
       In December 2010, in light of an intervening change in federal preemption law,
the district court granted the MDL plaintiffs’ motion for leave to file a third amended
master complaint. At the same time, the court stayed the proceedings pending the
outcome of the United States Supreme Court’s then-forthcoming decision in AT&T
Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740, 1744 (Concepcion), which held that
California’s judicial rule regarding the unconscionability of class arbitration waivers is
preempted by the Federal Arbitration Act. (In re Apple iPhone 3G Products Liability
Litigation (N.D. Cal., Dec. 9, 2010, C 09-02045 JW) 2010 WL 9517400.) The order to
stay the proceedings was based on the court’s previous finding that “ ‘the claims against
Defendant Apple are inextricably tied to the claims against Defendant ATTM.’ ” (Id. at
p. *2, fn. omitted.)
       In April 2011, the United States Supreme Court in Concepcion upheld the validity
of ATTM’s arbitration agreement, including the class action waiver. (Concepcion, supra,
131 S.Ct. at p. 1740.) The district court then lifted its stay of the MDL proceedings. (In
re Apple iPhone 3G Products Liability Litigation, supra, 2011 WL 6019217.) In
September 2011, the MDL plaintiffs filed a fourth amended master complaint alleging
claims solely against Apple, without naming ATTM as a defendant. (Ibid.) Apple again
moved to dismiss the complaint on the ground, among others, that the plaintiffs had failed
to join ATTM as a necessary party under Federal Rule of Civil Procedure 19. The
district court once again reaffirmed its ruling that ATTM was an indispensable party,

                                              5
notwithstanding the fact that the plaintiffs had removed all references to ATTM from
their complaint. The court observed that the complaint was still “based on the core
allegation that the 3G network could not accommodate iPhone 3G users, and that
Plaintiffs were deceived into paying higher rates for service which could not be delivered
on the 3G network.” (Ibid.) The court found that “Plaintiffs have simply deleted
references to ATTM that appeared in their previous Complaint without altering the
gravamen of their allegations. These cosmetic modifications to the Complaint are
unavailing. . . .” (Ibid.) Accordingly, the court granted Apple’s motion to dismiss and
ordered the MDL plaintiffs to file an amended complaint naming ATTM as a defendant.
       On December 19, 2011, the MDL plaintiffs filed a fifth amended master complaint
naming both Apple and ATTM as Defendants. (In re Apple iPhone 3G Products
Liability Litigation (N.D. Cal. 2012) 859 F.Supp.2d 1084, 1088.) Both Apple and ATTM
moved to compel arbitration on an individual, non-class basis. (Id. at pp. 1088-1089.)
The court granted both motions and stayed the proceedings to allow the plaintiffs to
pursue arbitration. (Id. at p. 1097.) The plaintiffs moved to amend the order to allow for
an interlocutory appeal to the Ninth Circuit Court of Appeals, but the district court denied
that motion on July 19, 2012. The district court’s docket shows no subsequent litigation
as of the filing of this opinion.3
   C. Proceedings in the State Trial Court
       After Van Zant filed her initial complaint in 2010, Apple demurred under Code of
Civil Procedure section 430.10, subdivision (d), and moved to dismiss the initial
complaint on the ground that ATTM was a necessary party under Code of Civil
Procedure section 389. Apple urged the court to adopt the reasoning of the federal
district court’s rulings that ATTM was a necessary and indispensable party in the MDL
proceedings. Apple argued that Van Zant’s complaint was “effectively identical” to the

       3
       We take judicial notice of the district court’s docket and its order of July 19,
2012. (Evid. Code, §§ 452, subd. (d), 459, subd. (a).)

                                             6
MDL plaintiffs’ complaint and that the legal issues were therefore identical in both cases.
In its moving papers, Apple included the MDL third amended master complaint with a
request for judicial notice. At the same time, Apple moved in the alternative to stay the
proceedings pending resolution of the federal MDL proceedings. On May 19, 2011, the
trial court granted the motion to stay, and the court continued the demurrer and motion to
dismiss. The court also granted Apple’s request for judicial notice of the MDL third
amended master complaint.
       In 2012, after the federal district court granted the MDL defendants’ motion to
compel arbitration, the state trial court lifted the stay in this case. Apple then renewed its
demurrer and motion to dismiss on the same grounds previously asserted.
       The trial court sustained the demurrer with leave to amend. In doing so, the court
considered the federal court’s rulings that ATTM was a necessary and indispensable
party in the MDL. The court found that “a ruling that allows Plaintiff to proceed without
ATTM would conflict with the rulings of the federal MDL court—which is the very
circumstance the Court sought to avoid by staying this action in the first place.” Based
on the MDL complaint and Van Zant’s initial complaint, the court found that “the issues
of 3G network connectivity and speed are necessarily intertwined with the issue of
whether the iPhone 3G was inadequate to perform ‘twice as fast’ as advertised.” The
court further found that “the iPhone does not have any speed independent of the network
on which it operates.” The court concluded: “Because the [MDL action and the Van
Zant action] share these common issues regarding network connectivity and capabilities,
ATTM has an interest relating to the subject of this action against Apple, and ATTM’s
absence may leave Apple subject to a risk of inconsistent obligations between this action
and the arbitration involving the MDL plaintiffs. Merely excluding the MDL plaintiffs
from the putative class would not eliminate the risk of conflicting rulings as to Apple on
its ‘twice as fast’ advertising, the allegations of which implicate network connectivity and
capabilities.”

                                              7
       On September 21, 2012, Van Zant filed her first amended complaint without
adding ATTM as a defendant. Apple again demurred and moved to dismiss the
complaint on the same grounds previously asserted. At a hearing on the matter, the trial
court stated its intent to sustain the demurrer and told Van Zant it would order her to add
ATTM as a party. Counsel for Van Zant informed the court that he could not ethically
and in good faith add ATTM given his belief that ATTM had not wronged Van Zant.
       In a written order dated January 31, 2013, the trial court sustained the demurrer
with leave to amend to add ATTM as a defendant. However, based on Van Zant’s refusal
to add ATTM, the court also granted Apple’s motion to dismiss. The court reiterated the
reasoning of its prior ruling, finding again that “the claims against Apple are necessarily
intertwined with the issue of 3G connectivity, thereby necessarily implicating the
operator of the only 3G network on which the iPhone 3G operated.”
       The record in this matter shows no evidence of any person pursuing arbitration
against either Apple or ATTM in connection with the MDL proceedings. At a motion
hearing in the trial court on August 17, 2012, counsel for Van Zant informed the court
that none of the MDL plaintiffs had demanded arbitration. Apple’s counsel stated, “We
don’t know who is going to arbitrate.” Similarly, the trial court stated, “I can’t say
what’s going to happen in the MDL proceeding, and I don’t know whether the plaintiffs
there are going to proceed in arbitration.”
                                        II. DISCUSSION
   A. Legal Standards
       A defendant may object to a complaint by demurrer on the ground that there is “a
defect or misjoinder of parties.” (Code Civ. Proc., § 430.10, subd. (d).) “In reviewing
the ruling on a demurrer, ‘ “[w]e treat the demurrer as admitting all material facts
properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . We
also consider matters which may be judicially noticed.” . . . Further, we give the
complaint a reasonable interpretation, reading it as a whole and its parts in their

                                              8
context.’ ” (Countrywide Home Loans, Inc. v. Superior Court (1999)
69 Cal.App.4th 785, 791 (Countrywide) [quoting (Blank v. Kirwan (1985) 39 Cal.3d 311,
318].)
         Code of Civil Procedure section 389 (section 389) governs joinder of parties.
Subdivision (a) of that provision (section 389(a)) provides: “A person who is subject to
service of process and whose joinder will not deprive the court of jurisdiction over the
subject matter of the action shall be joined as a party in the action if (1) in his absence
complete relief cannot be accorded among those already parties or (2) he claims an
interest relating to the subject of the action and is so situated that the disposition of the
action in his absence may (i) as a practical matter impair or impede his ability to protect
that interest or (ii) leave any of the persons already parties subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed
interest. If he has not been so joined, the court shall order that he be made a party.” A
party that must be joined under this provision is deemed a “necessary” party.4
(Countrywide, supra, 69 Cal.App.4th at p. 791.) Because the language of section 389
tracks the language of its federal counterpart, Federal Rule of Civil Procedure 19, we may
look to federal precedents applying the federal rule as a guide to application of the state
statute. (Id. at p. 792.)




         4
        If a party deemed necessary under subdivision (a) cannot be made a party, “the
court shall determine whether in equity and good conscience the action should proceed
among the parties before it, or should be dismissed without prejudice, the absent person
being thus regarded as indispensable.” (Code Civ. Proc., § 389, subd. (b).) The parties
agree that subdivision (b) is not at issue in this case.


                                               9
       When a demurrer has been sustained for a failure to join under section 389, we
review the trial court’s ruling for an abuse of discretion.5 (Countrywide, 69 Cal.App.4th
at p. 792; People ex rel. Lungren v. Community Redevelopment Agency (1997)
56 Cal.App.4th 868, 875.) However, “ ‘[t]o the extent that the [trial] court’s
determination whether a party’s interest is impaired involves a question of law, we
review de novo.’ ” (Ibid. [quoting Pit River Home and Agr. Co-op. Ass’n v. United
States (9th Cir. 1994) 30 F.3d 1088, 1098].) Such questions of law include statutory
interpretations. (County of Imperial v. Superior Court (2007) 152 Cal.App.4th 13, 25
(Imperial).)
   B. ATTM is Not a Necessary Party Under Section 389(a)
       Van Zant contends the trial court erred by sustaining Apple’s demurrer because
ATTM is not a necessary party under section 389. We agree.
       As an initial matter, we note that no party claims—and the trial court did not
rule—that ATTM is a necessary party under subdivision (a)(1) of section 389. That
subdivision would require joinder only if “complete relief cannot be accorded” between
Apple and Van Zant in ATTM’s absence. This condition does not arise here. The sole
issue in this case is whether ATTM is a necessary party under subdivision (a)(2) of
section 389.
       1. ATTM “Claims an Interest” Relating to the Subject of This Action
       Subdivision (a)(2) of section 389 sets forth two prongs under which a party may
be deemed necessary—(a)(2)(i) and (a)(2)(ii). But both prongs are subject to the same
predicate condition: that the absent party “claims an interest relating to the subject of the


       5
         The weight of the authority supports an abuse of discretion standard of review,
but we would depart and apply a de novo standard when a ruling under section 389(a)
requires no factfinding and is instead based largely on a conclusion of law. (See Janney
Montgomery Scott, Inc. v. Shepard Niles, Inc. (3d Cir. 1993) 11 F.3d 399, 404.)
Arguably, this case presents such an instance, but we need not resolve this issue since we
would conclude the trial court erred under either standard.

                                             10
action. . . .” (Italics added.) By contrast, the trial court ruled that ATTM “has an interest
relating to the subject of this action.” (Italics added.) Van Zant argues that under
subdivision (a)(2), merely having an interest is insufficient; instead, the absent party must
affirmatively claim its interest. Van Zant relies on Hartenstine v. Superior Court (1987)
196 Cal.App.3d 206, 222. In that case, the court found that the State of California was
not a necessary party because it did not claim an interest relating to the subject of the
action. Van Zant further contends that Apple cannot claim an interest on ATTM’s behalf.
(Ibid.; Gibbs Wire and Steel Co., Inc. v. Johnson (D. Conn. 2009) 255 F.R.D. 326, 329 [a
party named in the litigation cannot assert the interest on an absent party’s behalf].)
       ATTM necessarily “claim[ed] an interest” in the subject of the MDL action by
litigating it in federal court. And the subject of the MDL action is closely related to the
subject of this action. Arguably, then, ATTM has implicitly claimed an interest in the
subject of this action. Therefore, we conclude that the trial court’s ruling that ATTM
claimed an interest in this case did not constitute an abuse of discretion.

       2. A Disposition in ATTM’s Absence Would Not Impair or Impede Its Ability to
          Protect Its Interests
       Under subdivision (a)(2)(i) of section 389, a party claiming an interest relating to
the subject of the action may be deemed necessary if the disposition of the action in his
absence may “as a practical matter impair or impede his ability to protect that interest.”
This provision “ ‘recognizes the importance of protecting the person whose joinder is in
question against the practical prejudice to him which may arise through a disposition of
the action in his absence.’ ” (Countrywide, supra, 69 Cal.App.4th at p. 793 [quoting Cal.
Law Revision Com. com., 14 West’s Ann. Code Civ. Proc. (1973 ed.) § 389, p. 224].)
Although the trial court made no ruling on this basis, Apple contends ATTM is a
necessary party under this subdivision. Apple argues that a disposition in this action in
ATTM’s absence would impair or impede ATTM’s interest in defending claims raised in
the MDL-related arbitration. Relying on Imperial, supra, 152 Cal.App.4th 13, Apple


                                             11
claims that ATTM’s interest may be impaired because evidence or findings in this case
could conflict with evidence or findings in the MDL arbitrations. Apple also contends
that “adverse findings about ATTM in this case could prompt additional plaintiffs to file
similar claims against ATTM.”
       Apple’s arguments fail for two reasons. First, nothing in the record evidences any
pending or ongoing arbitration proceedings against ATTM concerning the iPhone 3G.
Indeed, it appears such proceedings are unlikely. The federal district court granted the
MDL defendants’ motion to compel arbitration on an individual, non-class basis such that
MDL plaintiffs would be required to enter individually into costly arbitration with Apple
and ATTM. Given the limited recovery of damages available on an individual basis, the
pursuit of arbitration is hardly worthwhile. Counsel for Apple speculated that an
individual plaintiff might wish to complete arbitration for the right to appeal from the
district court’s orders, but counsel was unaware of any plaintiff actually doing so.
       Second, Apple does not claim, and cannot claim, that findings or rulings in this
action would have any preclusive effect on ATTM. In the absence of any preclusive
effect, the mere possibility of unfavorable evidentiary findings is insufficient to require
joinder. “The mere fact [. . .] that Party A, in a suit against Party B, intends to introduce
evidence that will indicate that a non-party, C, behaved improperly does not, by itself,
make C a necessary party. Given the vast range of potential insults and allegations of
impropriety that may be directed at non-parties in civil litigation, a contrary view would
greatly expand the universe of Rule 19(a) necessary parties.” (Pujol v. Shearson
American Exp., Inc. (1st Cir. 1989) 877 F.2d 132, 136.)
       Apple’s reliance on Imperial is unavailing. Imperial primarily concerned the
application of subdivision (b) section 389, not subdivision (a). (Imperial, supra,
152 Cal.App.4th at p. 36.) Furthermore, nothing in Imperial supports Apple’s contention
that the mere possibility of conflicting evidence or conflicting findings is sufficient to
“impair or impede” an absent party’s interest for the purpose of requiring joinder. To the

                                              12
contrary, Imperial underscores the pertinent language of subdivision (a)(2): it is “the
disposition of the action” the court must consider—not potential rulings or findings—in
determining whether the absent party’s interest may be impaired or impeded. (Italics
added.)
       Imperial concerned actions brought by Imperial County to challenge a water
transfer agreement between the San Diego County Water Authority and the Imperial
Irrigation District. (Imperial, supra, 152 Cal.App.4th at p. 18.) The trial court sustained
a demurrer for failure to join two indispensable parties. Those parties––California water
districts with certain rights to the water at issue––stood to acquire a large amount of
water under the challenged transfer agreement. (Id. at p. 22.) The county petitioned for a
writ of mandate, and the Court of Appeal denied the writ. The trial court found that a
judgment in favor of the county would prejudicially impact the absent water districts
because, among other consequences, “ ‘they would potentially loose [sic] 100,000 acre-
feet per year of water intended for them—water sufficient to serve at least 200,000
households.’ ” (Id. at p. 35.) Apple points to no such loss facing ATTM from a
judgment or disposition in this action. Accordingly, we find this argument without merit.
       3. There Is No Substantial Risk of Multiple or Inconsistent Obligations
       Under the second prong of subdivision (a)(2) of section 389, a party claiming an
interest relating to the subject of the action may be deemed necessary if the disposition of
the action in his absence may “leave any of the persons already parties subject to a
substantial risk of incurring double, multiple, or otherwise inconsistent obligations by
reason of his claimed interest.” (Italics added.) The trial court below relied on this
provision to sustain the demurrer, finding that “ATTM’s absence may leave Apple
subject to a risk of inconsistent obligations between this action and the arbitration
involving the MDL plaintiffs.” Similarly, the court found a “risk of conflicting rulings as
to Apple on its ‘twice as fast’ advertising, the allegations of which implicate network
connectivity and capabilities.”

                                             13
       Neither the trial court nor Apple identifies any potential source of inconsistent
obligations other than arbitrations that may arise in the MDL action. As already noted
above, nothing in the record evidences any pending or ongoing arbitration against
ATTM, and the possibility of future arbitration is purely speculative. (In re Torcise (11th
Cir. 1997) 116 F.3d 860, 866 [purely speculative claims of multiple exposure do not pose
substantial risk of multiple, inconsistent obligations under Federal Rule of Civil
Procedure 19].) Such a speculative risk is not a “substantial risk.” “[A] ‘substantial risk’
means more than a theoretical possibility of the absent party’s asserting a claim that
would result in multiple liability. The risk must be substantial as a practical matter.”
(Union Carbide Corp. v. Superior Court (1984) 36 Cal.3d 15, 21.)
       Even if arbitration proceedings were pending or ongoing in the MDL action,
inconsistent rulings are not the same as inconsistent obligations. (Bacardí Intern. Ltd. v.
V. Suárez & Co., Inc. (1st Cir. 2013) 719 F.3d 1, 12.) “ ‘[I]nconsistent obligations occur
when a party is unable to comply with one court’s order without breaching another
court’s order concerning the same incident.’ [Citation.] In contrast, inconsistent
adjudications or results occur when a party wins on a claim in one forum and loses on
another claim from the same incident in another forum.” (Ibid. [quoting Delgado v.
Plaza Las Americas, Inc. (1st Cir. 1998) 139 F.3d 1, 3].) Because the putative class in
this action excludes “all individuals pursuing arbitration against ATTM,” Apple can fully
comply with the state court’s orders while simultaneously complying with any
obligations arising out of any MDL-related proceedings. Accordingly, the possibility of
arbitration presents no risk of inconsistent obligations for Apple.
       4. The Trial Court’s Findings Went Beyond the Four Corners of the Complaint
       Apple relies heavily on the trial court’s findings that “the issues of 3G network
connectivity and speed are necessarily intertwined” with the iPhone’s performance, and
that “the iPhone does not have any speed independent of the network on which it
operates.” We find no basis in the record to support these findings. The trial court

                                             14
apparently based these findings on the MDL complaints. But we are obligated to treat a
demurrer as “admitting all material facts properly pleaded.” (Countrywide, supra,
69 Cal.App.4th at p. 791.) “[P]roperly pleaded” refers to the pleadings in this case, not to
complaints filed by different plaintiffs in a separate proceeding.
       In this case, Van Zant alleges that the iPhone 3G’s performance deficiencies have
nothing to do with ATTM’s network. She claims that the problem is inherent in the
software and hardware of the iPhone 3G itself. Accepting this claim as true—as we
must—the issue of the iPhone 3G’s performance is not “necessarily intertwined” with the
functioning of ATTM’s network. Van Zant’s claim is analogous to a claim that her
television gets poor reception solely because its cable input port is defective; this claim
would not require her to sue her cable provider as a necessary party. At its core, Van
Zant’s complaint is no different from any other claim for defectively manufactured
technology. (See, e.g., Hewlett-Packard Co. v. Superior Court (2008)
167 Cal.App.4th 87, 89 [class action by computer buyers against manufacturer for selling
defective computers].)
       As to the finding that “the iPhone does not have any speed independent of the
network,” this also contradicts the allegations in the complaint. The complaint alleges
that iPhone 3G users may “browse the Internet, either on the wireless network or through
a WiFi connection that does not require connectivity to the wireless network.” (Italics
added.) If the iPhone 3G can operate without ATTM’s network, it necessarily has some
“speed independent of the network.”
       Apple cites to Van Zant’s initial complaint, which alleged that the iPhone 3G
suffered from “poor connectivity” to ATTM’s network. But the initial complaint never
claimed that ATTM bore any fault or liability for the iPhone 3G’s performance. To the
contrary, that complaint specifically alleged that the iPhone 3G’s “poor connectivity is
caused either by hardware flaws—the iPhone 3G demands too much power to operate
routinely at 3G bandwidth levels and the iPhone 3G lacks sufficient sensitivity or ability

                                             15
to consistently access 3G network connectivity—or software flaws in the programmed
algorithms, or a combination of the two. Such flaws are separate and apart from the
operation of the 3G network.” (Italics added.)
       5. The Federal District Court’s Rulings Are Inapplicable in This Proceeding
       The trial court attached undue significance to the pleadings and rulings in the
MDL proceedings. Contrary to Apple’s assertion, Van Zant’s complaint departs from the
MDL allegations in several important ways. The MDL plaintiffs—who sued both Apple
and ATTM—alleged that both defendants had falsely marketed the iPhone 3G. The
MDL plaintiffs claimed that the performance deficiencies stemmed partly from defects in
ATTM’s network, not solely from the iPhone itself. (In re Apple iPhone 3G Products
Liability Litigation, supra, 728 F.Supp.2d at p. 1068.) The MDL plaintiffs specifically
claimed that Apple and ATTM “engaged in a campaign” and “acted in concert” to market
the iPhone misleadingly. (Ibid.) For these reasons, the argument that ATTM was a
necessary party in the MDL proceedings is substantially more persuasive than Apple’s
arguments here. (See Plymouth Yongle Tape (Shanghai) Co., Ltd. v. Plymouth Rubber
Co., LLC (D. Mass. 2009) 683 F.Supp.2d 102, 117 [customer was necessary and
indispensable party to claim of conspiracy where customer conspired with
manufacturer].)
       Even if ATTM shared some fault for the iPhone 3G’s allegedly poor performance,
“ ‘It has long been the rule that it is not necessary for all joint tortfeasors to be named as
defendants in a single lawsuit.’ ” (Countrywide, supra, 69 Cal.App.4th at p. 796 [quoting
Temple v. Synthes Corp. (1990) 498 U.S. 5, 7].) “As the legislative history of section 389
indicates, the ‘definition of persons to be joined is not couched in terms of the abstract
nature of their interests—“joint,” “[u]nited,” “separable,” or the like. . . . It should be
noted particularly . . . that the description is not at variance with the settled authorities
holding that a tortfeasor with the usual “joint-and-several” liability is merely a permissive
party to an action against another with like liability. . . . Joinder of these tortfeasors

                                               16
continues to be regulated by . . . [sections 378 and 379 of the Code of Civil Procedure].’ ”
(Ibid. [quoting Cal. Law Revision Com. com., 14 West’s Ann. Civ. Proc. Code, supra,
§ 389, p. 224], italics in original.) “Sections 378 and 379 address the permissive joinder
of plaintiffs and defendants, respectively. ‘Thus . . . the doctrine of joint and several
liability precludes characterizing a likely defendant as a party necessary to the plaintiff’s
action. . . .’ ” (Id. at p. 797 [quoting Singer Co. v. Superior Court (1986)
179 Cal.App.3d 875, 892].)
       For these reasons, we hold that ATTM is not a necessary party under section 389.
The trial court’s ruling to the contrary constituted an abuse of discretion. The trial court
thereby erred in sustaining the demurrer and granting the motion to dismiss.
Accordingly, we will reverse the judgment.
                                      III.   DISPOSITION
       The judgment is reversed. On remand, the trial court shall vacate its January 31,
2013 order sustaining Apple’s demurrer and granting Apple’s motion to dismiss. The
trial court shall enter a new and different order overruling the demurrer and denying the
motion to dismiss on the ground that Apple is not a necessary party under Code of Civil
Procedure section 389, subdivision (a).




                                              17
                            _________________________
                            MÁRQUEZ, J.


We concur:




_________________________
RUSHING, P. J.




_________________________
PREMO, J.




Van Zant v. Apple Inc.
H039354
Trial Court:                             Santa Clara County Superior Court
                                         Superior Court No.: 1-10-CV-177571

Trial Judge:                             The Honorable
                                         James P. Kleinberg


Attorneys for Plaintiff and Appellant    Alshuler Berzon LLP
Ingrid Van Zant:                         Jonathan Weissglass
                                         P. Casey Pitts

                                         Branstetter, Stranch & Jennings, PLLC
                                         Michael G. Stewart
                                         J. Gerard Stranch, IV
                                         James G. Stranch, III

Attorneys for Defendant and Respondent   Morrison & Foerster LLP
Apple Inc.:                              Miriam A. Vogel
                                         Penelope Preovolos
                                         Suzanna Brickman




Van Zant v. Apple Inc.
H039354