By Slash Lane

Published: 08:00 AM EST

A new class-action lawsuit claims Apple knowingly profited from faulty iPhone 3Gs that couldn't stay connected to the faster 3G network, costing buyers inferior service and missed opportunities to use an alternative provider.

California resident Jason Medway filed the 14-page complaint in a Northern California court this week on behalf of himself and thousands of other California customers who purchased the iPhone 3G.

The suit revives claims that the smartphone, launched last June, has a defect that keeps it from maintaining a signal on AT&T's 3G network.  Medway alleges Apple is aware of the problem yet continues to advertise the device's high speed while ignoring complaints and requests to remedy the situation.

"Despite knowledge that the iPhone 3G cannot maintain consistent 3G service, defendant continues to solicit new orders in a multimillion-dollar television and print advertising campaign for the iPhone 3G," the complaint says.  "Apple simply replicated the problems by providing consumers with replacement phones and thus subject to the same issues which prompted the replacements."

The suit goes on to argue that, as a result of Apple's misrepresentations, "thousands of consumers who purchased Apple's iPhone 3G and accompanying 3G service from AT&T have experienced broken promises regarding the phone's transmission speeds."

Attorneys for Medway are seeking damages for thousands of class members in excess of $5 million.  The complaint claims the plaintiffs should receive full restitution, including the "disgorgement" of all profits Apple received from sales of the device plus interest at the "highest rate allowable by law", along with attorneys' fees.

The complaint is the latest in a long saga dating back to last August that's pitted the iPhone maker against customers who believe the iPhone's 3G performance is subpar.  In early December Apple argued in response to one such suit that "no reasonable person" would take the statements in iPhone 3G ads as fact.  The response was preceded by a succession of lawsuits that claimed Apple and AT&T over-saturated the network, exploited its customers, fell short of promised performance, deceived customers of the real download speed, and even failed to warn about the "defective" third-party apps found on the App Store.

Ironically, an independent study commissioned by Wired last year concluded that iPhone data speed problems "have more to do with carriers' networks than with Apple's handsets."

AT&T, however, is not named as a defendant in Medway's suit.