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Apple has not succeeded in overturning a lawsuit that alleges CEO Tim Cook defrauded shareholders by withholding knowledge of falling demand in China.
The lawsuit references Apple's November 2018 analyst call, in which Cook said that Apple was seeing what he described as sales pressure in some markets. However, he then stated, "I would not put China in that category."
U.S. District Judge Yvonne Gonzalez Rogers said jurors could reasonably infer that Cook was discussing Apple's sales outlook in China, not past performance or the impact of currency changes. according to Reuters.
Rogers also noted that Apple knew China's economy had slowed, and data suggested that demand could fall. Failure to disclose the data would have unnecessarily put investors at risk.
In late 2020, the shareholders were told they could bring a class-action suit against Apple over Cook's comments.
The lawsuit officially gained class action status in February of 2022. Shareholders, including Norfolk County Council, believe the revised guidance was too late, and that Apple should've foreseen the issue, given that it took action to deal with it in China just days after Cook's remarks.
After being informed in November 2020 that the shareholders could bring a proposed class-action suit over accusations the company concealed falling sales demand, the group's proposal was granted.
At the time, Judge Yvonne Gonzalez-Rogers advised Apple had failed to dismiss the council's efforts to turn the lawsuit into a class-action suit, referring to Apple's arguments on the matter as "distortions."
Norfolk County Council is involved as it runs the Norfolk Pension Fund, valued at multiple billions of pounds. In the original lawsuit, it was claimed the fund lost close to $1 million over the comments.
The change to a class action suit does more than enable more shareholders to join in against Apple, as it also reduces the standard of proof required by claimants. Under a "presumption of reliance," the council wouldn't need to demonstrate that it made trading decisions after hearing Cook's analyst call comments.
According to Apple, Cook's comments were a statement of opinion, and therefore protected. The claim "fails to plead any actionably false or misleading statement," according to Apple's attorneys.
It's not yet clear when the trial will take place.
