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Samsung Telecommunications America LLC will not be able to arbitrate a class action lawsuit, alleging that the tech giant made false claims about the speed of its Galaxy S4 smartphones. The California federal judge, who denied the arbitration said that the language Samsung used in its arbitration provision was not legally binding because no contract was ever actually formed.
Calling Samsung’s language used in its arbitration provision in its warranty booklet something on the level of “stealth tactics,” U.S. District Judge James Donato said that the provision could not be enforced because it was stated as an answer to a question in the Galaxy S4’s warranty booklet about how consumers are supposed to solve disputes.
Donato explained that for a contract to exist, it has to be mutually agreed upon.
“Contracts cannot be formed on the basis of stealth drafting,” Donato wrote. Citing 2002 decision, Specht v. Netscape Commc’ns. Corp. he wrote “‘ an offeree, regardless of apparent manifestation of his consent, is not bound by inconspicuous contractual provisions of which he was unaware, contained in a document whose contractual nature is not obvious.'”
Plaintiff Daniel Norcia filed the Samsung class action lawsuit in February, claiming that his Samsung Galaxy S4 lacked the performance, speed and memory that Samsung advertised that the smartphone contained.
Samsung wants to have the matter handled through arbitration, not through the court, and it asked the California federal judge to force the issue into arbitration because it says that “Norcia agreed to arbitrate this dispute under terms contained in Samsung’s warranty for the phone, and moved to compel arbitration.”
The tech giant claims that those terms were laid out in the warranty booklet that came with the phone that Norcia purchased, even though he opted not to take the booklet with him at the time of purchase.
“Mr. Norcia claimed that he never received the warranty booklet containing the arbitration provision because the Verizon salesperson had unboxed the phone and handed the phone to Mr. Norcia without the packaging that contained the warranty booklet,” Donato wrote.
Norcia admitted that he denied the box, which apparently contained the warranty booklet, even though he says he never did see the booklet with the box because he knew how to use the phone and he said he also understood “the term ‘warranty’ to mean that ‘a product is covered if something happens to it.'”
The two parties could not come to an agreement to arbitrate so “the court held a bench trial to resolve the issue.”
Even though during the trial it was established that “Norcia voluntarily declined the box and must therefore be treated as though he received it and the warranty booklet, the inconspicuous placement of the arbitration provisions in the warranty booklet, and Samsung’s failure to inform consumers in any way about the proposal to require arbitration, bar a finding that a valid and enforceable contract to arbitrate was formed,” Judge Donato concluded in his ruling.
Besides putting the arbitration language in question and answer form, Judge Donato also said that that Samsung did not describe the arbitration provisions as a “contract.” In addition, Samsung did not require its customers to sign this apparent “contract.”
“Without any words alerting consumers that Samsung’s arbitration term was a ‘contract’ or ‘agreement,’ and without anywhere requiring consumers like Mr. Norcia to sign in order to accept the arbitration provision or at least to acknowledge having received it, the conclusion must be that no reasonable person would ‘know that a proposal has been made to him,'” Donato added.
Daniel Norcia is represented by John R. Hurley, Daniel Chris Quintero and Eduardo Gregory Roy of Prometheus Partners LLP.
Samsung is represented by John Paul Phillips and Sean David Unger of Paul Hastings LLP.
The Samsung False Advertising Class Action Lawsuit is Norcia v. Samsung Telecommunications America LLC et al., Case No. 3:14-cv-00582, in U.S. District Court for the Northern District of California.
UPDATE: On Jan. 19, 2017, the Ninth Circuit unanimously ruled against Samsung’s bid to force arbitration in two separate class action lawsuits filed in California.
UPDATE 2: On Jan. 31, 2019, a Samsung Galaxy owner is seeking Class certification in his lawsuit alleging that the company rigged its smartphones to run faster in pre-sale speed tests.
UPDATE 3: On Sept. 26, 2019, Samsung agreed to pay $2.8 million to resolve class action claims that the company misled customers about their Galaxy S4 speeds.
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3 thoughts onSamsung Can’t Arbitrate Galaxy S4 Class Action, Federal Judge Says
UPDATE: On Jan. 19, 2017, the Ninth Circuit unanimously ruled against Samsung’s bid to force arbitration in two separate class action lawsuits filed in California.
I have the S4 and I keep getting a SIM card error. When I telephoned AT&T they told me to contact Samsung. When I telephoned Samsung, they told me to contact my carrier or buy a new phone. I asked to speak with a supervisor and they put me on hold. After holding for 30 mins I hung up. Totally unprofessional. Lastly, I own a Gear Fit watch and it does not monitor my heart rate. (Apple Watch does) . An internet search revealed that it does not work on dark skin people or tattoos. I believe their advertisement is misleading.
I have this phone & tablet how can I get help with this