AT&T, Apple Want iPhone 3G Suit Dismissed

AT&T (NYSE: T) and Apple (NASDAQ: AAPL) want a New York court to dismiss a class-action suit claiming allegations about iPhone 3G problems don’t belong in a federal court and should be moved into an arbitration hearing.

In their filings, both Apple and AT&T disputed the lawsuit’s charges that they misrepresented the device’s performance on AT&T’s 3G network and said the case ought to be taken up outside of court. They said doing so would comply with AT&T’s user agreement, which stipulates that handset complaints would be handled in an arbitration process.

AT&T added in court documents that its arbitration process has been cited by at least one legal expert as excessively generous and open.

“To [our] knowledge, [our] provision is the most pro-consumer arbitration provision in the country,” AT&T said in its court filing, which notes that it pays all legal fees in arbitration, offers a minimum $5,000 settlement, limits penalties on a finding of a “frivolous” complaint to $125 and supports arbitration taking place at the plaintiff’s location.

The latest twist in the iPhone 3G’s legal travails comes as the holiday buying season arrives in full force — amid a depressed economic climate that has carriers and handset makers worried about end-of-year revenue. Last week, AT&T said that it would lay off 12,000 in a reorganization effort to save money. At the same time, however, the company said it is still banking on its wireless business remaining one of its healthiest.

The suit, filed Sept. 29 by Avi Koschitzki in New York State Supreme Court, initially alleged that Apple and AT&T misrepresented the device’s speed on the carrier’s network.

Koschitzki’s lawyers, who did not return calls by press time, amended the complaint on Nov. 12 to include a claim that the iPhone’s casing cracks too easily. The plaintiffs seek statutory, compensatory and punitive damages and want a jury trial.

Current court documents do not include a timeline for Koschitzki’s attorneys to respond to the arbitration and dismissal request.

Apple and AT&T did not respond with comments by press time. Both companies have told they do not comment on pending legal action.

Since the iPhone 3G’s debut in June, there has been a smattering of court actions claiming faulty network connectivity issues. The New York suit is the lone lawsuit that includes AT&T as a defendant.

Two Alabama residents filed suit in last August claiming the smartphone does not fulfill promised performance and connectivity expectations. The court has since dismissed two of their three lawsuit claims but ruled the plaintiffs can move forward to seek compensation for what they claim are faulty devices.

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