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Norcia v. Samsung Telecommunications America, LLC

United States Court of Appeals, Ninth Circuit

January 19, 2017

Daniel Norcia, on his own behalf and on behalf of all others similarly situated, Plaintiff-Appellee,
v.
Samsung Telecommunications America, LLC, a New York Corporation; Samsung Electronics America, Inc., a New Jersey corporation, Defendants-Appellants.

          Argued and Submitted October 17, 2016 San Francisco, California

         Appeal from the United States District Court for the Northern District of California, D.C. No. 3:14-cv-00582-JD James Donato, District Judge, Presiding

          John R. Hurley (argued), Eduardo G. Roy, Daniel C. Quintero, and Jill Dessalines, Prometheus Partners L.L.P., San Francisco, California, for Plaintiff-Appellee.

          Sean D. Unger (argued), John P. Phillips, and Ryan C. Nier, Paul Hastings LLP, San Francisco, California, for Defendants-Appellants.

          Before: Sidney R. Thomas, Chief Judge, and Carlos T. Bea and Sandra S. Ikuta, Circuit Judges.

         SUMMARY[*]

         Arbitration / California Law

         The panel affirmed the district court's order denying Samsung's motion to compel arbitration of a class action complaint alleging that Samsung made misrepresentations as to the performance of the Galaxy S4 phone.

         Samsung moved to compel arbitration of the dispute on the ground that an arbitration provision, which was contained in a warranty brochure included in the Galaxy S4 box, was binding on plaintiff.

         The panel applied California law. The panel rejected Samsung's theory that the Product and Safety & Warranty Information brochure in the Galaxy S4 box created a binding contract between plaintiffs and Samsung to arbitrate the claims in plaintiff's complaint. The panel further held that Samsung failed to demonstrate the applicability of any exception to the general California rule that an offeree's silence did not constitute consent. The panel further held that the brochure was not enforceable as an in-the-box contract.

         The panel rejected Samsung's argument that plaintiff agreed to arbitrate his claims by signing a Customer Agreement with Verizon Wireless. The panel noted that Samsung was not a signatory to the agreement. The panel concluded that Samsung failed to bear its burden of establishing that it was a third-party beneficiary of the Customer Agreement, and therefore Samsung could not enforce the arbitration provision in the agreement.

          OPINION

          IKUTA, Circuit Judge:

         Daniel Norcia filed a class action complaint against Samsung Telecommunications America, LLC, and Samsung Electronics America, Inc., (collectively, "Samsung"), alleging that Samsung made misrepresentations as to the performance of the Galaxy S4 phone. Samsung moved to compel arbitration of the dispute on the ground that an arbitration provision, which was contained in a warranty brochure included in the Galaxy S4 box, was binding on Norcia. We affirm the district court's denial of Samsung's motion.

         I

         On May 23, 2013, Norcia entered a Verizon Wireless store in San Francisco, California, to purchase a Samsung Galaxy S4 phone. Norcia paid for the phone at the register, and a Verizon Wireless employee provided a receipt entitled "Customer Agreement" followed by the name and address of the Verizon Wireless store. The receipt stated the order location, Norcia's mobile number, the product identification number, and the contract end date. Under the heading "Items, " the receipt stated "WAR6002 1 YR. MFG. WARRANTY." Under the heading "Agreement, " the receipt included three provisions, including a statement (in all capital letters):

I agree to the current Verizon Wireless Customer Agreement, including the calling plan, (with extended limited warranty/service contract, if applicable), and other terms and conditions for services and selected features I have agreed to purchase as reflected on the receipt, and which have been presented to me by the sales representative and which I had the opportunity to review.

         The receipt also stated (in all capital letters): "I understand that I am agreeing to . . . settlement of disputes by arbitration and other means instead of jury trials, and other important terms in the Customer Agreement." The Customer Agreement did not reference Samsung or any other party. Norcia signed the Customer Agreement, and Verizon Wireless emailed him a copy.

         After signing the Customer Agreement, Norcia and a Verizon Wireless employee took the Galaxy S4 phone, still in its sealed Samsung box, to a table. The front of the product box stated "Samsung Galaxy S4." The back of the box stated: "Package Contains . . . Product Safety & Warranty Brochure." The Verizon Wireless employee opened the box, unpacked the phone and materials, and helped Norcia transfer his contacts from his old phone to the new phone. Norcia took the phone, the phone charger, and the headphones with him as he left the store, but he declined the offer by the Verizon Wireless employee to take the box and the rest of its contents.

         The Samsung Galaxy S4 box contained, among other things, a "Product Safety & Warranty Information" brochure. The 101-page brochure consisted of two sections. Section 1 contained a wide range of health and safety information, while Section 2 contained Samsung's "Standard Limited Warranty" and "End User License Agreement for Software." The Standard Limited Warranty section explained the scope of Samsung's express warranty. In addition to explaining Samsung's obligations, the procedure for obtaining warranty ...


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