Samsung defeats consumers’ mass arbitration demand in US appeals court
By Mike Scarcella
July 2 (Reuters) -A U.S. appeals court has reversed a decision that would have required Samsung Electronics to pay millions of dollars in arbitration fees to respond to thousands of consumer privacy claims.
In a case that could help define the scope of consumer mass arbitration, the Chicago-based 7th U.S. Circuit Court of Appeals on Monday overturned a lower court decision that said Samsung must arbitrate the consumers’ claims and pay administrative fees in the process.
The unanimous three-judge panel said the plaintiffs had not shown they had valid arbitration agreements. The panel also said the order requiring Samsung to pay administrative fees was beyond the power of the trial judge.
Samsung and lawyers for the consumers did not immediately respond to requests for comment.
The appeals court’s order was a setback for tens of thousands of Illinois consumers who sought to pursue their privacy claims through arbitration rather than in court.
The plaintiffs sued Samsung in U.S. federal court in 2022, seeking an order compelling the device maker to arbitrate claims that it was violating a state law that curbs the collection and use of personal biometric information such as facial scans and fingerprints.
Samsung has denied the allegations, calling them "frivolous."
Samsung in its appeal challenged the consumers’ contention that they had valid arbitration agreements. The company also disputed that it had refused to arbitrate.
The appeals court said the consumers had not presented enough information to confirm they were Samsung purchasers. The court said a spreadsheet of names and addresses was not enough to prove the consumers were Samsung customers.
Consumer information such as receipts and order numbers would have proved an arbitration agreement, the appeals panel said.
The consumers had argued that the court had no power to hear the appeal since the trial judge ordered the dispute into arbitration. They also argued that they should be given a chance in the lower court to prove that the 35,651 Illinois consumers who filed arbitration demands had valid agreements.
“The consumers had the opportunity to present their evidence, and they failed to do so,” wrote Circuit Judge Thomas Kirsch II, joined by Chief Judge Diane Sykes and Circuit Judge Frank Easterbrook.
The appeals court said that the status of the case“does not allow second chances.”
The case is Paula Wallrich et al v. Samsung Electronics America et al, 7th U.S. Circuit Court of Appeals, No. 23-2842.
For Wallrich: Deepak Gupta of Gupta Wessler
For Samsung: Shay Dvoretzky of Skadden, Arps, Slate, Meagher & Flom
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