Pang v. Samsung Elecs. Am., Inc.
Pang v. Samsung Elecs. Am., Inc.
Opinion of the Court
Defendant Samsung Electronics America, Inc.'s ("Samsung") motion to compel arbitration came on for hearing before this court on February 27, 2019. Plaintiffs appeared through their counsel, Michael Woerner. Defendant appeared through its counsel, Michael McCarthy and Robert Herrington. Having read the papers filed by the parties and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby GRANTS IN PART and DENIES IN PART defendant's motion, for the following reasons.
BACKGROUND
Plaintiffs Lynette Pang, Timo Masalin, and Cindy Seminatore bring this putative false advertising and warranty class action against Samsung. Generally, plaintiffs allege that, contrary to Samsung's representations and advertising, the rear cameras on various Samsung smartphones-the Galaxy S7, Galaxy S7 Edge, Galaxy S7 Active, the Galaxy S8 and Note 8 (the "devices")-are not high quality because the lenses spontaneously shatter (the "defect"), rendering the camera all but useless. Plaintiffs' warranty claims allege that Samsung failed to honor its warranty by requiring consumers whose phone exhibited the alleged defect to pay for the repair.
On November 20, 2018, plaintiffs filed their Second Amended Class Action Complaint (the "SAC"), which added plaintiff Cindy Seminatore as a named plaintiff. See Dkt. 53, SAC. Seminatore was added as a named plaintiff because, unlike Pang and Masalin, Seminatore did not opt out of the Samsung arbitration agreement that accompanied her phone purchase. Id. ¶ 47.
Other than that difference, Seminatore's experience was largely similar to Pang and Masalin's. On November 19, 2016, Seminatore purchased a Samsung Galaxy S7 from T-Mobile. Id. ¶ 46. On December 4, 2016, "Seminatore discovered the cover of the rear-facing camera was shattered in the shape of a circle[,]" even though "the phone had merely been charging, undisturbed on her counter." Id. ¶¶ 48-49; Dkt. 62, Cindy Seminatore Decl. ¶¶ 10-11. "Upon discovering the shattered lens cover, [ ] Seminatore immediately took the phone to T-Mobile, which refused to repair or replace the device." SAC ¶ 49; Seminatore Decl. ¶¶ 13-14. T-Mobile directed Seminatore to contact Samsung and Seminatore *636did so the next day, on December 5, 2016. Seminatore Decl. ¶¶ 15-16; SAC ¶ 50. During her phone call with Samsung support, "Samsung's representative informed Seminatore that the device was 'in warranty' and directed [her] to mail [her] device to a Samsung repair center in Plano, Texas," which Seminatore did. Seminatore Decl. ¶¶ 17-18; SAC ¶ 50. On January 30, 2017, however, "Samsung updated [Seminatore's] service ticket to indicate that the damage to the device was [ ] 'out of warranty.' " Seminatore Decl. ¶ 19; SAC ¶ 51. Samsung informed Seminatore that the repair fee was $ 182.89 and that if she did not pay that fee, Samsung would dispose of the device. Seminatore Decl. ¶¶ 20-22; SAC ¶¶ 51-52. Because Seminatore was not given an option to have the device returned unrepaired, she agreed to pay the repair fee. Seminatore Decl. ¶¶ 22-23; SAC ¶ 52.
As noted, the Galaxy S7's packaging includes the following relevant features. The middle of the second to last paragraph on the back of the box states, in tiny text that contrasts badly with the black box, "Device purchase subject to additional Samsung Terms and Conditions." Dkt. 59-2, McBeth Ex. B. Upon opening the box, the purchaser finds a textless black envelope under the device. McBeth Ex. I. Within the black envelope, there are four booklets. McBeth Ex. J. The second of which is issued by Samsung (as opposed to T-Mobile) and its cover states: "Health & Safety and Warranty Guide" (the "Guidebook"). Id.
As the cover of the Guidebook indicates, the Guidebook includes health and safety information, as well as information about Samsung's Limited Warranty. See generally id. Ex. C. The first page of the Guidebook states "Please read this manual before operating your device and keep it for future reference. This document contains important terms and conditions with respect to your device. By using your device, you accept those terms and conditions." Id. at ECF p. 7.
Based on the Arbitration Agreement, Samsung now moves to compel Seminatore to arbitrate all claims she asserts in this action, including warranty claims based on Samsung's Limited Warranty. Plaintiffs respond only that the Arbitration Agreement is unenforceable as to Seminatore because she never agreed to arbitrate. Specifically, plaintiffs argue that that Seminatore never accepted Samsung's offer to arbitrate as she did not know an offer was made because Samsung's offer was inconspicuous.
DISCUSSION
A. Legal Standard
"The party seeking arbitration bears the burden of proving the existence *637of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability." Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev. (US), LLC,
The "first principle" that underlies the U.S. Supreme Court's arbitration decisions is that "[a]rbitration is strictly a matter of consent and thus is a way to resolve those disputes-but only those disputes-that the parties have agreed to submit to arbitration[.]" Granite Rock Co. v. Int'l B'hd of Teamsters,
Under the FAA, any party bound to an arbitration agreement that falls within the scope of the FAA may bring a motion in federal district court to compel arbitration and stay the proceeding pending resolution of the arbitration.
Here, the parties' only dispute the first question: whether the parties formed a contract. "[W]e apply ordinary state-law principles that govern the formation of contracts to decide whether an agreement to arbitrate exists." Norcia v. Samsung Telecomm. Am., LLC,
The general rule under California law is that "silence or inaction does not constitute acceptance of an offer.... There are exceptions to this rule, however. An offeree's silence may be deemed to be consent to a contract when the offeree has a duty to respond to an offer and fails to act in the face of the duty."
"Even if there is an applicable exception to the general rule that silence does not constitute acceptance, courts have rejected the argument that an offeree's silence constitutes consent to a contract when the offeree reasonably did not know that an offer had been made." Norcia,
*638However, when an offer is accepted, "[a] party who is bound by a contract is bound by all its terms, whether or not the party was aware of them. A party cannot avoid the terms of a contract on the ground that he or she failed to read it before signing." Norcia,
B. Analysis
Samsung essentially raises two theories of contract formation to support its argument that Seminatore entered into a binding contract with Samsung to arbitrate her claims. First, Samsung argues that Seminatore should have known that the phone included an offer to contract because the offer was obvious. Second, Samsung argues that Seminatore invoked the warranty within 30 days of her purchase and in doing so accepted, or was on notice of, Samsung's offer, but nevertheless failed to opt out of the Arbitration Agreement.
1. Samsung's Offer to Arbitrate Was Not Conspicuous.
The court finds that Samsung's offer to arbitrate was not conspicuous to a reasonable consumer who purchased or used the Galaxy S7. That finding aligns with directly on point Ninth Circuit precedent and district court decisions considering nearly the exact same packaging and offer to arbitrate.
In Norcia, the Ninth Circuit confronted the question of whether the brochure in Samsung's Galaxy S4 box created a binding arbitration contract between Samsung and the consumer.
The Ninth Circuit concluded that the Norcia plaintiff did not agree to arbitrate.
Recent decisions in this circuit have applied Norcia to facts matching those presented here. In In re Samsung Smartphone Marketing and Sales Practices Litig.,
With respect to whether Seminatore had notice of the offer to arbitrate based only upon the device's packaging and the inclusion of the Guidebook, the court finds the above courts' analysis persuasive and, in the case of Norcia, binding.
2. A Reasonable Consumer Who Invokes The Limited Warranty Would Be On Notice Of The Offer to Arbitrate
All that said, the present facts are distinct from the above decisions in one important way: Seminatore invoked Samsung's Limited Warranty within the Arbitration Agreement's 30-day opt-out period. That fact, and her continued attempts to enforce that warranty in this action, puts this case outside the purview of Norcia. In fact, the Ninth Circuit emphasized that its decision might be different if the action involved a warranty dispute. Norcia,
Under the facts present here, the relevant question is whether a reasonable person in Seminatore's position-i.e., one who invoked the warranty within 30-days of purchase-would be on notice of Samsung's offer to arbitrate. Seminatore's invocation of Samsung's Limited Warranty makes this case meaningfully dissimilar to the decisions discussed above that essentially held that those plaintiffs had no reason *640to open the guidebooks accompanying their devices.
Further, Samsung's Arbitration Agreement is part of Samsung's Limited Warranty: "This product is covered under the applicable Samsung Limited Warranty INCLUDING ITS DISPUTE RESOLUTION PROCEDURE [.]" Ex. C. at 8 (emphasis added); see also id. (referring reader to the " 'Dispute Resolution Procedure and Arbitration and Opt-Out' section of the Limited Warranty"). That suggests either that arbitration is a condition of enforcing the Limited Warranty, see Norcia,
Lastly, the present situation does not clearly fall under the general rule that "silence or inaction does not constitute acceptance of an offer." Norcia,
CONCLUSION
For the foregoing reasons, defendant's motion to compel arbitration is GRANTED and Seminatore is hereby COMPELLED TO ARBITRATE all claims she asserts in this action. The court STAYS the action only with respect to Seminatore's claims. See
*641request for a stay of the entire action pending the resolution of Seminatore's arbitration is DENIED. See Congdon v. Uber Techs., Inc.,
IT IS SO ORDERED.
Henceforth, Exhibit C pin cites are to the ECF/PDF page numbers.
No party has requested that the court compel arbitration of only Seminatore's warranty claims. Nor have plaintiffs asked the court to keep Seminatore's non-warranty claims.
The court notes that Samsung's Arbitration Agreement's opt-out period begins to run on the date of "the first consumer purchase." Ex. C. at 8 (emphasis added). While the circumstances present here give the court no cause to reach the issue, the court notes that in certain circumstances that opt-out period may expire before a consumer receives fair notice of the existence of the arbitration agreement. That circumstance strikes this court has highly inequitable.
It is of no import that Seminatore attests she did not in fact read the Guidebook until nearly two months later. See Seminatore Decl. ¶ 25. A reasonable person would have done so and, in doing so, would have been put on notice of the Arbitration Agreement.
Reference
- Full Case Name
- Lynette PANG v. SAMSUNG ELECTRONICS AMERICA, INC.
- Cited By
- 1 case
- Status
- Published