David Noble v. Samsung Electronics America In
682 F. App'x 113
| 3rd Cir. | 2017Background
- Noble bought a Samsung Galaxy Gear S smartwatch that advertised 24–48 hour battery life but allegedly lasted ~4 hours; after multiple replacements he sued on behalf of a putative class.
- Each watch box contained a 143‑page “Health and Safety and Warranty Guide” (the Guide); its cover called it a “manual” and directed users to read it before operating the device.
- The Guide’s table of contents and index made no reference to an arbitration agreement; an arbitration clause (the Clause) appeared beginning on page 97 and extended to page 102, including a 30‑day opt‑out.
- Samsung moved to compel arbitration under the Clause; the District Court denied the motion, finding the Clause unreasonably hidden and that Noble lacked reasonable notice and mutual assent.
- On appeal, the Third Circuit reviewed de novo whether there was a valid arbitration agreement under New Jersey contract law and affirmed the denial, holding no meeting of the minds because the Clause was not reasonably conspicuous.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement existed | Noble: no mutual assent because the arbitration clause was buried and not reasonably noticeable | Samsung: Clause in the enclosed Guide is binding; consumer had notice because Guide was in the box and clause was in all caps and contained opt‑out | Held: No valid arbitration agreement — Clause was unreasonably hidden; no reasonable notice or meeting of the minds |
| Whether the Guide’s warranty context made arbitration conspicuous | Noble: a warranty/manual does not put a consumer on notice of a bilateral arbitration contract | Samsung: the Clause is part of the warranty/package materials and should bind purchasers | Held: The warranty/manual label did not render the arbitration clause conspicuous or transform the document into a bilateral contract |
| Whether consumers can be bound without reading terms when contained in in‑the‑box materials | Noble: consumers are not bound if the document’s contractual nature is not obvious | Samsung: placement in box suffices to give notice | Held: Consumers may be bound only when reasonable notice exists; burial on page 97 failed that test |
| Enforceability of opt‑out procedure as safeguard of conspicuity | Noble: opt‑out does not cure lack of notice because consumer must first find clause | Samsung: 30‑day opt‑out shows fairness and opportunity to reject | Held: Opt‑out provision does not cure the fundamental lack of reasonable notice or conspicuity |
Key Cases Cited
- Quilloin v. Tenet HealthSystem Phila., Inc., 673 F.3d 221 (3d Cir. 2012) (plenary review of arbitration‑agreement validity)
- Guidotti v. Legal Helpers Debt Resolution, LLC, 716 F.3d 764 (3d Cir. 2013) (standard for deciding pre‑discovery motions to compel arbitration)
- CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165 (3d Cir. 2014) (courts may consider substance of contracts that purport to compel arbitration)
- Puleo v. Chase Bank USA, N.A., 605 F.3d 172 (3d Cir. 2010) (distinguishing threshold arbitrability questions)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (state contract law governs arbitration‑agreement validity)
- Specht v. Netscape Commc’ns Corp., 306 F.3d 17 (2d Cir. 2002) (inconspicuous contractual terms in a noncontractual appearing document do not bind offerees)
- Norcia v. Samsung Telecomms. Am., LLC, 845 F.3d 1279 (9th Cir. 2017) (arbitration clause in an in‑box warranty brochure held not binding under similar reasoning)
- Caspi v. Microsoft Network, L.L.C., 732 A.2d 528 (N.J. Super. Ct. App. Div. 1999) (contractual terms must not be proffered with design to conceal)
- Hoffman v. Supplements Togo Mgmt., LLC, 18 A.3d 210 (N.J. Super. Ct. App. Div. 2011) (reasonable notice requirement for off‑premises or electronic agreements)