PO'd iPhone Owner Plays Price Discrimination Card

A New York woman is seeking US$1 million in damages from Apple (Nasdaq: AAPL) in a lawsuit over its surprise $200 cut in the price of an iPhone. Dongmei Li filed her complaint in the U.S. District Court, Eastern District of New York, on Sept. 24.

The suit alleges that the price reduction for the 8-gigabyte product was a violation of price discrimination laws. It argues that the move -- coming just two months after the iPhone raced out of the gate -- hurt early purchasers such as Li, who cannot resell the product for the same profit as people who bought the phone after the cut.

To be sure, some of Apple's customers, including some of its fanatically loyal early adopters, were clearly peeved by the surprise move -- and, to a lesser extent, by CEO Steve Jobs' initial indifference.

After receiving a wave of scathing e-mails, Jobs apologized to the customers and offered a rebate.

Settled Matter

Apple's response appeared to settle the matter -- assuming the company would not cut prices on another premium product so soon after its introduction. Indeed, many users seemed to understand the logic behind boosting holiday sales -- Jobs' rationale for the cut -- and to accept the price drift as one of the risks of early adoption.

Such reasoning is, in fact, reflected in the law. There are no statutes that guarantee the protections against so-called price discrimination that Li is claiming, Mark McCreary, a partner with Fox Rothschild, told TechNewsWorld.

"My initial reaction -- and, really, I shouldn't have been surprised by it -- was [amazement] that she found a lawyer to take the case at all. There is simply no merit to it," he said.

True Facts - So What?

The facts are true, he acknowledged, but that doesn't mean they translate into a supportable claim.

"This is a consumer transaction," McCreary emphasized. "No one was forced to buy the product, and there was never a guarantee that the price would remain constant for a period of time."

Ironically, the only group that possibly could have a viable claim would be Apple shareholders, he noted, because they were not provided with the expected revenues from the originally priced iPhone.

Still, "even they are probably benefiting from the price cut," said McCreary, "because it looks like Apple will sell more phones as a result."