US Judge Denies Apple’s Request To Dismiss Lawsuit Regarding CEO Tim Cook’s Remark About China Sales
A class action lawsuit accusing Apple Chief Executive Tim Cook of defrauding shareholders by hiding the declining demand for iPhones in China was denied by an American court. Apple had sought to have the case dismissed.
After a one-day collapse that reduced Apple’s market value by $74 billion, shareholders backed by a British pension fund may now file a lawsuit, according to U.S. District Judge Yvonne Gonzalez Rogers’ ruling late Monday night.
The case was prompted by Cook’s statement on an analyst call on November 1, 2018, that although Apple was experiencing sales pressure in countries with weak currencies including Brazil, India, Russia, and Turkey, “I would not put China in that category.”
Apple abruptly cut its quarterly sales projection by up to $9 billion on January 2, 2019, citing trade concerns between the United States and China. A few days later, the company instructed suppliers to reduce manufacturing.
The next day, shares of Apple, located in Cupertino, California, plummeted 10% as a result of the company’s first decreased sales projection since the 2007 release of the iPhone.
Judge Rogers, located in Oakland, California, ruled that jurors may logically conclude that Cook was speaking about Apple’s sales prospects in China and not previous results or the effects of currency fluctuations.
The judge said that Apple was aware of China’s deteriorating economy and had information pointing to potential declines in demand before Cook’s remark.
According to Rogers, “a reasonable jury could find that failure to disclose these risks resulted in plaintiff’s harm.”
On Tuesday, demands for comment from Apple and its attorneys were not entertained.
The shareholders’ attorney, Shawn Williams, stated: “We are pleased with the ruling and look forward to presenting the facts to a jury.”
The Norfolk County Council, which is based in Norwich, England, and serves as the Norfolk Pension Fund’s administering authority, is the primary plaintiff.
Since January 2019, Apple’s share price has almost quintupled, giving the business a market worth of close to $3 trillion.
In re Apple Inc Securities Litigation, Northern District of California U.S. District Court, Case No. 19-02033.
