Apple Faces New Lawsuit

For the second time in slightly more than two years, Apple, Cupertino, Calif., was slapped with a class-action lawsuit accusing the company of behavior that makes it difficult or even impossible for its resellers to stay in business.

The latest suit, filed in San Francisco Superior Court Feb. 17, alleges that Apple sold used equipment to resellers as new; poached resellers' customers after acquiring "trade secret" customer lists from authorized dealers; and improperly calculated the time period of service contracts, prematurely claiming they expired.

The new suit also reiterates a previous complaint from a lawsuit filed Dec. 13, 2002, by Thomas Santos, president of reseller MacAdams Computing, alleging that Apple withholds new products from dealers for several months, providing its own retail stores with merchandise first. That suit is awaiting the discovery phase.

Reseller sources said this inventory practice by Apple is part of the vendor's plan to phase out its authorized dealers in favor of its own retail stores. They also said the rollout of Apple stores was calculated from the beginning to put dealers—historically an integral part of Apple's distribution channel—out of business.

An Apple spokesman said the vendor does not comment on pending litigation.

One of the plaintiffs in the new suit, Joe Weingarten, a former Apple reseller who now heads up the 50-member Macintosh Reseller Association, said the goal of the lawsuit is to force Apple to treat its authorized dealers fairly and prevent the vendor from engaging in practices that will sink its reseller channel.

"Our overall goal is to make Apple become a responsible corporate entity," Weingarten told CRN. "What we want out of this suit is a level of responsibility and fair treatment by Apple to its [dealers], instead of activities aimed directly at the destruction of the dealer chain."

MacAdams' Santos told CRN he is in the process of clearing out his Apple retail store in San Francisco after closing it in January, a move directly caused by the difficulty he had acquiring inventory from Apple. The vendor also revoked his dealership authorization after he filed the 2002 lawsuit, Santos said.

Kevin Langdon, CEO of Apple reseller Crywolf Computers, San Diego, said that while he has experienced similar frustrations with inventory lag time, he does not see it as a deliberate move by Apple against the dealer channel.

"The products that matter to me, the business products, I have at launch," he said.

In fact, Langdon said his company has benefited from the existence of Apple's own retail stores, receiving numerous referrals from them for service and product sales.