Norfolk CC has won the first round of a legal battle with Apple, which the council claims ‘misrepresented’ the state of its business, leading to pension fund loses.
The council has been involved in a legal fight with the tech giant for at least two years after the Norfolk Pension Fund lost a reported $1m (£740,000) due to its investment in Apple shares.
The local authority, which has brought the action on behalf of its pension fund, alleges that Apple ‘misrepresented’ its business in China during a conference call for analysts and investors in 2018.
According to a document from the US court, in response to an analyst who raised concerns about ‘deceleration’ in emerging markets such as India, Turkey, Russia and Brazil, Apple’s chief executive officer Tim Cook said he ‘d[id]n’t see it as some sort of issue that is common’ among all emerging markets, as ‘each one of the emerging markets has a bit of a different story’.
He then allegedly added: ‘I would not put China in that category.’
Norfolk argues that while he was claiming that China’s economy was not at risk of deceleration, Mr Cook already knew that – to quote the court document – the US-China trade tensions and economic conditions in China were 'negatively impacting sales and demand for Apple products, particularly iPhones’.
In January 2019, Mr Cook wrote to investors to inform them that revenue for the first quarter of 2019 was expected to be $84bn – contrary to Apple’s guidance range of $89bn to $93bn announced the previous November – due to ‘deceleration’ in China’s economy.
The court ruled that the local authority's case against the $3tn firm can be considered a ‘class action,’ which means that Norfolk can act as a representative of any other shareholder in the same position as them.
This is expected to improve the council’s chances of winning the case.
A spokesperson for the local authority emphasised the council was fully indemnified against costs arising in the case and that there was no exposure for taxpayers in Norfolk.
Apple denies wrongdoing, and has argued that Mr Cook's comments were protected statements of opinion and not regulated financial guidance.