N.Y. woman sues Apple, Jobs over iPhone price cut

She wants $1M in compensatory damages and punitive damages on top of that

By Gregg Keizer

October 1, 2007 12:00 PM ET

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Computerworld - A woman from Queens, N.Y., sued Apple Inc. last week over the iPhone, saying that the company broke several laws when it cut the price of the device last month by $200 and then issued a $100 credit to some owners.

It was the first known lawsuit resulting from the 33% price cut, which raised a ruckus among iPhone users and forced Apple Inc. CEO Steve Jobs to apologize for how Apple had treated loyal customers.

In a complaint (download PDF) filed Sept. 24 with a New York federal court, Dongmei Li accused Apple, Jobs and Apple's wireless partner, AT&T Inc., of price discrimination, discrimination in offering rebates versus credits, underselling, unfair and deceptive practices, and other violations of federal laws.

Li, who said she had stood in line "for hours" on July 2 -- three days after the iPhone went on sale -- to buy an iPhone, claimed that Apple practiced price discrimination between early and later buyers when it cut the price of the 8GB model from $599 to $399 last month. "Apple's discrimination in price between early and later purchasers substantially caused the early purchasers to be injured because early purchasers cannot resell their iPhones for the same profit as later purchasers," Li's lawsuit stated.

Her suit also dinged Apple for giving some iPhone owners -- those who bought between Aug. 22 and Sept. 4 -- a $200 refund on the higher price they'd paid for their phones, while offering earlier customers a $100 in-store credit. As part of its price-protection policy, Apple did refund $200 to people who bought an iPhone in the two weeks leading up to Jobs' surprise Sept. 5 price cut announcement.

The lawsuit also accuses Apple of abandoning the lower-priced 4GB iPhone, the model that Li bought; locking early buyers into a two-year contract with AT&T, something later purchasers could conceivably skip by using one of several unlock hacks; and selling the iPhone at a loss.

Li's suit seeks compensatory damages of $1 million, plus punitive damages to be accessed by at trial.

Apple officials were not available for comment.

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