Apple sued Geep Canada for selling scrap iPhones in January. The news broke this week.
From AppleInsider’s “Apple sues recycler for allegedly reselling 100,000 devices it was hired to scrap” posted Thursday:
Apple alleges in a lawsuit that Geep Canada sold approximately 100,000 iPhones, iPads, and Apple Watches, which the recycler had received to be stripped down and recycled.
Apple has long been working to increase how much it recycles, and even as it attempts to move more of that process in house, it still continues to rely on certain partner companies. Since 2014, that’s included Geep Canada, the electronics recycling firm which Apple is reportedly now suing.
According to The Logic, Apple estimates that Geep Canada stole around 100,000 iPhones, iPads, and Apple Watches that it had been hired to recycle.
Geep does not deny the thefts, but has filed a counter suit claiming that they were conducted by three “rogue” employees without the knowledge of the company. Apple argues that these employees were in fact senior management at the firm.
Although the case has only now been publicly revealed, Apple filed its suit in January 2020 while Geep filed its countersuit in July. Seemingly, Apple discovered the alleged thefts at the end of 2017 or start of 2018, and at some point after that ceased working with Geep.
My take: Kudos to Toronto-based The Logic for the scoop.
I got a crash course on this back in 1995 when I sold my company to Wang Laboratories. Wang got sued on a patent infringement issue which they tried to pass off to my partner and I. Unfortunately for Wang, we had fully disclosed the issue to them during due diligence. Serve, no return. (It was from a patent troll, nothing came of it but Wang wanted it to be our problem.)
Quantum Lifecycle Partners told The Logic that, “…the lawsuit is between Geep and Apple and we have no knowledge regarding the details.”
Then the article goes on to say, “…According to Geep’s court filings, the company is looking for the three employees to pay damages and costs, if Apple wins.”
It is confusing. I suspect if Quantum is on the “hook,” as you say, then what Quantum knew, when Quantum knew it and should due diligence have afforded Quantum to know it, goes a long way in deciding if mitigating factors come into play relative to Quantum’s degree of liability, if any.
In any event, this whole business of pointing to rogue employees is “obiter dicta” as the lawyers say.
Impact?
The theft occurred from 2015 to 2017. That says that Apple gave Geep a lot of time to settle this. Apple are now seeking $27M.
Real impact? While the resold devices increased the number on new customers-for-life for Apple, most were no doubt defective as in worn out battery or cracked screens. That would result in poor UX.
“That would result in poor UX.”
I read somewhere the stolen devices were “refurbished”. Depending on the problem (a cracked screen is an easy fix, for example, and so is a new battery), the stolen devices could be nearly as good as new. I worked at Apple’s Elk Grove facility where used devices were graded and sorted. The “discards” themselves were sorted into those capable of refurbishment or not (brand new out-of-the-box iPads with inscriptions were “discards” that could be refurbished and sold as used by third parties, for example, as could flawless “buyers remorse” products).
Obviously, these stolen items were the lowest grade discards, but an industrious outfit could glean from them and produce quite decent used products. But they weren’t deemed good enough by Apple graders, and Apple wanted them recycled, because their rep for quality is extremely important to them.
BTW, the security for those doing the grading was a complete PITA. If you forgot to take off your Apple Watch twice a quarter when you checked in you were summarily dismissed, for example.
How do you lose 100,000 plus devices and no one detects this?
The article says the devices were not lost, but stolen by three former Geep senior executives who concocted a scheme (theft) to sell the devices on the open market. They even had the devices moved and stored in a warehouse area where there were no security cameras. It was an inside worker who caught on to what the three senior executives were up to who “blew the whistle.”