Apple Loses Lawsuit as judge in the United States denied Apple’s request to dismiss a class-action lawsuit that accuses Chief Executive Tim Cook of deceiving shareholders by hiding dwindling demand for iPhones in China. The complaint was brought against Apple in the name of the company’s stockholders.
The judgment made late Monday night by U.S. District Judge Yvonne Gonzalez Rogers paves the way for shareholders of Apple, led by a British pension fund, to sue the company for a one-day collapse that wiped out $74 billion of the company’s market worth.
The comment that led to the lawsuit was made by Cook during an analyst call on November 1, 2018, where he stated that while Apple faced sales pressure in markets such as Brazil, India, Russia, and Turkey, where currencies have dropped, “I would not put China in that category.”
Apple abruptly lowered its quarterly sales prediction on January 2, 2019, by up to $9 billion, claiming U.S.-China trade tensions as the cause. A few days later, the company issued a directive to its suppliers to reduce production.
The revenue estimate reduction was the first one made by Apple since the introduction of the iPhone in 2007, and the following day, shares of the business based in Cupertino, California, dropped by 10%.
Rogers, who is headquartered in Oakland, California, stated that the jurors may reasonably infer that Cook was addressing Apple’s sales prospects in China, and not the company’s historical performance or the impact of changes in the value of the yuan.
The judge also stated that previous to Cook’s comment, Apple was aware that China’s economy had been slowing and that the company possessed evidence indicating that demand could fall.
“A reasonable jury could find that failure to disclose these risks caused the plaintiff’s harm,” Rogers said in his opinion.
On Tuesday, neither Apple nor its attorneys provided an instant response to demands for comment that were made. The shareholders’ attorneys did not respond right away to similar requests when they were made.
The Norfolk County Council in its capacity as the Administering Authority of the Norfolk Pension Fund is the primary plaintiff in this case. This council is based in Norwich, England.
Since January 2019, the price of an Apple share has almost quintupled, which has resulted in the company’s market worth approaching $3 trillion.
The case has been given the number 19-02033, and it is currently being heard in the United States District Court for the Northern District of California.