Apple (AAPL)

These federal and state court complaints allege that the Company’s iPod nano was defectively designed so that it scratches excessively during normal use, rendering the screen unreadable. The federal actions were coordinated in the United States District Court for the Northern District of California and assigned to the Hon. Ronald Whyte pursuant to an April 17, 2006, order of the Judicial Panel on Multidistrict Litigation. Plaintiffs filed a First Consolidated and Amended Master Complaint on September 21, 2006, alleging violations of California and other states’ consumer protection and warranty laws and claiming unjust enrichment. The Master Complaint alleges two putative plaintiff classes: (1) all U.S. residents (excluding California residents) who purchased an iPod nano that was not manufactured or designed using processes necessary to ensure normal resistance to scratching of the screen; and (2) all iPod nano purchasers other than U.S. residents who purchased an iPod nano that was not manufactured or designed using processes necessary to ensure normal resistance to scratching of the screen. Pursuant to stipulation, the Wimmer, Valencia, and Rappel federal complaints were dismissed without prejudice and the Mayo and Williamson complaints were administratively closed without prejudice. The Company answered the Master Complaint on November 20, 2006.

The two California state actions were coordinated on May 4, 2006, and assigned to the Hon. West in Los Angeles Superior Court. Plaintiffs filed a Consolidated Amended Class Action Complaint on June 8, 2006, alleging violations of California state consumer protection, unfair competition, false advertising, and warranty laws and claiming unjust enrichment. The Consolidated Complaint alleges a putative plaintiff class of all California residents who own an iPod nano containing a manufacturing defect that results in the nano being susceptible to excessive scratching. The Company answered the Consolidated Amended Complaint on October 6, 2006.

Two similar complaints, Carpentier v. Apple Canada, Inc., and Royer-Brennan v. Apple Computer, Inc. and Apple Canada, Inc. were filed in Montreal, Quebec, Canada on October 27, 2005 and November 9, 2005, respectively, seeking authorization to institute class actions on behalf of iPod nano purchasers in Quebec. The Royer-Brennan file was stayed in May 2006 in favor of the Carpentier file, in which Apple’s preliminary motion for leave to file evidence will be heard on December 18, 2006. No further dates have been set. A similar complaint, Mund v. Apple Canada Inc. and Apple Computer, Inc., was filed in Ontario, Canada on January 9, 2006 seeking authorization to institute a class action on behalf of iPod nano purchasers in Canada. In the two Quebec class actions, a motion to stay the Royer-Brennan case is stayed in favor of the previously filed Carpentier case. In the Ontario Action, Apple Canada Inc. and Apple Computer, Inc., have served Notices of Intent to defend. On December 18, 2006, plaintiff’s counsel advised that a substitution of attorneys will occur, most likely in January 2007. The file is now stayed, and the Company’s motion to examine petitioner and for leave to file evidence at certification will be set after the new counsel appears.

These federal and state court complaints allege that
the Company’s iPod nano was defectively designed so that it scratches
excessively during normal use, rendering the screen unreadable. The federal
actions were coordinated in the United States District Court for the Northern
District of California and assigned to the Hon. Ronald Whyte pursuant to an April 17,
2006, order of the Judicial Panel on Multidistrict Litigation. Plaintiffs filed
a First Consolidated and Amended Master Complaint on September 21, 2006, alleging
violations of California and other states’ consumer protection and warranty
laws and claiming unjust enrichment. The Master Complaint alleges two putative
plaintiff classes: (1) all U.S. residents (excluding California residents)
who purchased an iPod nano that was not manufactured or designed using
processes necessary to ensure normal resistance to scratching of the screen;
and (2) all iPod nano purchasers other than U.S. residents who purchased
an iPod nano that was not manufactured or designed using processes necessary to
ensure normal resistance to scratching of the screen. Pursuant to stipulation,
the Wimmer, Valencia, and Rappel federal complaints were dismissed without
prejudice and the Mayo and Williamson complaints were administratively closed
without prejudice. The Company answered the Master Complaint on November 20,
2006.

The two California state actions were coordinated on May 4,
2006, and assigned to the Hon. West in Los Angeles Superior Court. Plaintiffs
filed a Consolidated Amended Class Action Complaint on June 8, 2006,
alleging violations of California state consumer protection, unfair
competition, false advertising, and warranty laws and claiming unjust
enrichment. The Consolidated Complaint alleges a putative plaintiff class of
all California residents who own an iPod nano containing a manufacturing defect
that results in the nano being susceptible to excessive scratching. The Company
answered the Consolidated Amended Complaint on October 6, 2006.

Two similar complaints, Carpentier v. Apple Canada, Inc., and Royer-Brennan v. Apple Computer, Inc. and Apple Canada, Inc. were
filed in Montreal, Quebec, Canada on October 27, 2005 and November 9,
2005, respectively, seeking authorization to institute class actions on behalf
of iPod nano purchasers in Quebec. The Royer-Brennan file was stayed in May 2006
in favor of the Carpentier file, in which Apple’s preliminary motion for
leave to file evidence will be heard on December 18, 2006. No further
dates have been set. A similar complaint, Mund v. Apple Canada Inc.
and Apple Computer, Inc., was filed in Ontario, Canada on January 9,
2006 seeking authorization to institute a class action on behalf of iPod nano
purchasers in Canada. In the two Quebec class actions, a motion to stay the
Royer-Brennan case is stayed in favor of the previously filed Carpentier case. In
the Ontario Action, Apple Canada Inc. and Apple Computer, Inc., have
served Notices of Intent to defend. On December 18, 2006, plaintiff’s
counsel advised that a substitution of attorneys will occur, most likely in January 2007.
The file is now stayed, and the Company’s motion to examine petitioner and for
leave to file evidence at certification will be set after the new counsel
appears.