In Noble v. Samsung Electronics America, Inc., the plaintiff, after purchasing a smartwatch that advertised “24 to 48 hours with typical use,” found that the device’s batter only lasted for a few hours.  When he determined that other customers were experiencing the same issue, he filed a class action complaint in federal court.  Samsung then sought to compel arbitration based on a clause in the “Health and Safety and Warranty Guide,” which is included in every box when purchased.

On appeal, the Third Circuit ruled that the plaintiff had not been given notice of the arbitration provision because it was not “reasonably conspicuous.”  From the opinion:

From David Noble’s point of view, perhaps the only thing more frustrating than the weak battery in his Samsung Galaxy Gear S Smartwatch has been Samsung’s effort to force him into arbitration after he brought suit. That effort failed in the District Court, but Samsung now appeals from the denial of its motion to compel arbitration in this putative class action. It argues that a reference to arbitration located on the ninety-seventh page of the “Health and Safety and Warranty Guide” contained within the Smartwatch package is a binding contract under New Jersey law and therefore entitles it to have Noble’s claims decided by an arbitrator. The District Court rejected that argument, and, because we do too, we will affirm.

Ultimately, the only manner in which a consumer could receive notice of the Clause at issue here would be to read ninety-seven pages into the Guide where the Clause appears, or to happen upon page ninety-seven by luck. While it may sometimes be presumed that consumers agree to contractual provisions of which they are on notice, that presumption is warranted only where there is a reasonable basis to conclude that consumers will have understood the document contained a bilateral agreement. Because the contractual provision here appears on the ninety-seventh page of a “Health and Safety and Warranty Guide” that gives no notice of something claiming to be a binding bilateral agreement and waiver of legal rights, we will not presume that consumers read or had notice of that purportedly binding agreement.  The District Court correctly concluded that there was no mutual assent here because Noble lacked reasonable notice of the arbitration provision. The Clause, in short, is not a valid contractual term.

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Jennifer Morinigo

The American Law Institute

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