Explicit images and videos were uploaded to Facebook and other places, and made to look as if they had been posted by her.
Apple was not named in the lawsuit but its involvement came to light in an unrelated case.
It has now confirmed the incident and apologised.
In a statement, Apple said: "We take the privacy and security of our customers' data extremely seriously and have a number of protocols in place to ensure data is protected throughout the repair process.
"When we learned of this egregious violation of our policies at one of our vendors in 2016, we took immediate action and have since continued to strengthen our vendor protocols," it added.
The incident, first reported by the Telegraph, happened five years ago when a woman studying at the University of Oregon sent her iPhone for repair with Pegatron Technology Service, an Apple repair contractor.
Apple reportedly investigated and fired the two technicians involved.
But it also reportedly demanded confidentiality and its role in the case was only identified during a legal fight between Pegatron and its insurers, over the compensation it paid to Apple.
In 2019, in a similar case an Apple Store employee allegedly texted himself an intimate photo of a woman, taken from her phone after she took the device to be repaired. Apple immediately launched an investigation and said the individual was no longer at the company.
The incident will add weight to the growing Right to Repair movement in the US, which argues that devices such as iPhones should not be locked into official repair shops.
Some 20 states have proposed Right to Repair legislation, which would force Apple and other manufacturers to make tools and components available to third party technicians.