Judge Denies Apple’s Request To End Lawsuit Regarding Tim Cook’s China Sales Remark
Apple’s attempt to dismiss a class-action lawsuit alleging that CEO Tim Cook deceived shareholders by hiding declining iPhone demand in China has been denied by a U.S. judge.
U.S. District Judge Yvonne Gonzalez Rogers’ ruling late Monday night opens the way for shareholders led by a British pension fund to sue over the one-day crash that wiped $74 billion off Apple’s market value.
The lawsuit stemmed from Cook’s comment on a November 1, 2018 analyst call that Apple was facing sales pressure in markets like Brazil, India, Russia and Turkey where currencies had weakened, “I wouldn’t put China in that category.”
Apple ordered suppliers to limit production a few days later, and on January 2, 2019, unexpectedly cut its quarterly revenue forecast by as much as $9 billion, blaming trade tensions between the United States and China.
The lowered revenue forecast was the first for Apple since the launch of the iPhone in 2007, and the Cupertino, California-based company’s shares fell 10% the next day.
Judge Rogers, who is based in Oakland, Calif., said jurors could reasonably conclude that Cook was discussing Apple’s sales prospects in China, not past performance or the impact of currency changes.
The judge also said that before Cook’s comment, Apple knew that China’s economy was slowing and had data that suggested demand was falling.
“An objective jury could find that the failure to disclose these risks caused harm to the plaintiff,” Rogers wrote.
Apple and its lawyers did not respond to requests for comment on Tuesday.
Shawn Williams, an attorney for the shareholders, said: “We are pleased with the decision and look forward to presenting the facts to the jury.”
The main claimant is Norfolk County Council as administrator of the Norfolk Pension Fund, based in Norwich, England.
Apple’s stock price has roughly quintupled since January 2019, giving the company a market value of nearly $3 trillion.
The matter is Apple Inc. Securities Litigation, US District Court, Northern District of California, No. 19-02033.
