Apple, Jobs, AT&T sued over iPhone price cut, rebates

In the suit, filed Sept. 24 in the United States District Court for the Eastern District of New York, Queens resident Dongmei Li accuses the parties of price discrimination, underselling, discrimination in rebates, deceptive actions, and other wrongdoings for their role in the Sept. 5th price drop on iPhone, which saw the handset's price tag slashed an unprecedented $200 less than two months after its debut.

Li was among the thousands who waited hours in line on June 29, 2007 for her chance to purchase one of the touch-screen devices, according to the suit. When she reached the front of the line, her local Apple store only had 4GB models remaining, which she purchased anyway despite having intended to buy the larger-capacitied 8GB model.

She, like thousands of others, the suit claims, is now the victim of price discrimination in that she cannot resell her iPhone for the same profit as customers who purchased the device after price drop. Similarly, she cannot trade up to 8GB model she had initially hoped to obtain and is now left with a product that has been discontinued.

Li also feels cheated by Apple's rebate policy because she was only offered a $100 store credit towards a future Apple store purchase when those customers who bought the same iPhone within a two week window period immediately preceding the cut received the full $200 refund under the company's price protection policy.

Li included in her 8-page complaint historical stock graphs that show Apple's share price to have risen in between the time it released iPhone in late June and when the company instated the price cut. She argues that this is proof that there was no sound reason for the cut, which she equated to "underselling."

"Market conditions did not require Apple to change its price," Li's attorney, C. Jean Wang of Wang Law Offices, PLLC wrote in the filing. "iPhone was selling very well because Apple's stocks were increasing since August 16, 2007 and rose as high as $144.16 on September 4, 2007, the day before Apple announced that it was cutting the price of iPhone."

The lawsuit goes on to accuse Apple, Jobs and AT&T of forcing customers into 2-year service agreements with AT&T and imposing hefty $175 termination fees. These requirements are unfair, the suit continues, because customers who purchased the iPhone later in the year were able to utilize unlocking solutions that allowed them to forgo such terms and fees.

Given Apple's since stated stance on this matter — and the recent consequences faced by users of unlocked iPhones in recent days — it would seem this portion of the suit is now of lesser merit.

For those claims which the Court is still likely to take into account, Li is requesting compensatory damages in the amount of $1 million, punitive damages in the amount to be determined at trial, and a court order that she is entitled to "threefold her damages , the costs involved in maintaining this action, and attorney's fees."