Apple kept iPhone recycling scandal secret for months

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.

9 Comments

  1. Mordechai Beizer said:
    Who cares if they were “rogue” employees? It’s still the company’s responsibility. Has Geep gone after the rogue employees? And what’s with the notion of filing a counter-suit, shouldn’t that just be Geep’s defense to the suit – “wasn’t us, just our rogue employees”. (Good luck with that line of argument.)

    4
    October 2, 2020
  2. Jerry Doyle said:
    In September 2019, Geep Canada merged with other firms to form Quantum Lifecycle Partners. This merger is being used by Quantum Lifecycle Partners as a mitigating factor relative to their liability in the matter. I suppose they are placing the focus on three former senior managers of Geep Canada who no longer are in the employ of Quantum Lifecycle.

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    October 2, 2020
    • Mordechai Beizer said:
      When Quantum acquired Geep they also acquired Geep’s liabilities. Just like Bayer is on the hook for Monsanto’s Roundup liabilities, Quantum is on the hook for this liability. If Geep did not disclose the issue to Quantum during due diligence, then Quantum might be able to recover from Geep’s former owners, but that doesn’t change the fact that Quantum is the entity that is liable to Apple.

      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.)

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      October 2, 2020
      • Jerry Doyle said:
        @Mordechai Beizer: Interestingly, the court filings are not by Quantum Lifecycle Partners, but by Geep. Merger? Still separate companies within Quantum?

        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.

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        October 2, 2020
        • Mordechai Beizer said:
          @Jerry, from the various articles it is not clear what the actual corporate structure is. Did Geep become a wholly owned subsidiary or did it just get absorbed into Quantum. But it really doesn’t matter. Apple had a contract with a corporation, not with individuals. That corporation, or its successor is liable. The disclosure that I was referring to does not change who is liable in any suit brought by Apple, that would be either Geep or it’s successor. If Geep did not disclose the issue to Quantum it merely opens the possibility for Quantum to go after someone else to try to recover the damages that they will have to pay to Apple (after they lose their case).

          In any event, this whole business of pointing to rogue employees is “obiter dicta” as the lawyers say.

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          October 2, 2020
  3. Fred Stein said:
    Scandal, yes.
    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.

    1
    October 2, 2020
  4. Fred Stein said:
    Question for Geep:

    How do you lose 100,000 plus devices and no one detects this?

    5
    October 2, 2020
    • Jerry Doyle said:
      @Fred Stein: “… 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.”

      1
      October 2, 2020

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