Bernstein Shur Business and Commercial Litigation Newsletter #69

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January 2017 | Issue 69

Our January recap highlights cases addressed to a successful challenge of an “in-the-box” warranty brochure, a class action asserted against Facebook, President Trump’s first appointment to the U.S. Supreme Court, and other news that will have an impact on business and litigation.

Ninth Circuit holds that an “in-the-box” warranty brochure did not create a binding arbitration agreement.

At the trial court level, the plaintiff filed a class-action complaint against Samsung Electronics, alleging that the company made misrepresentations about the Galaxy S4 smartphone. The plaintiff purchased the smartphone in a Verizon store and left the packaging in the store. Samsung sought to compel arbitration of the plaintiff’s claim, on the basis that the smartphone box contained a warranty brochure with a provision requiring arbitration of disputes arising from the sale, condition, or performance of the product. Distinguishing between warranty law and contract law, the Ninth Circuit, applying California law, determined that the plaintiff did not assent to the arbitration clause. The court reasoned that a reasonable consumer would not have been on notice that the warranty brochure included an arbitration agreement, or that failure to opt-out of an arbitration clause in a warranty would have resulted in agreement to arbitrate non-warranty claims. Accordingly, the Ninth Circuit upheld the dismissal of Samsung’s request to compel arbitration.

A federal judge has ruled that a putative class action lawsuit alleging that Facebook violated the Telephone Consumer Protection Act (“TCPA”) by sending unsolicited text message reminders could go forward.

The TCPA generally prohibits any person or company from using autodialing equipment to make unsolicited telephone calls or unsolicited text messages. In the underlying case, Facebook was alleged to have sent text message reminders to members regarding the birth dates of Facebook friends. Facebook defended the action by arguing that it did not use autodialing equipment and that the plaintiff consented to receiving such messages by signing up for Facebook service and linking his cell phone to his account. The court rejected both arguments, noting that the plaintiff had offered detailed allegations that Facebook’s systems sent text messages without human intervention. In addition, the court noted that the plaintiff had repeatedly alleged that he indicated in the Notification Settings of his Facebook account that he did not consent to receiving any text messages from Facebook. With the case moving forward, the Court will now determine whether to certify the case as a class action. Given the ubiquity of Facebook, the size of the class could be significant.

President Trump will unveil his first nominee to the United States Supreme Court tonight at 8 p.m.

Trump’s nominee to High Court will fill the seat vacated by the death of Justice Antonin Scalia nearly one year ago. Among those rumored to be under consideration are: Judge Neil Gorsuch of the Tenth Circuit Court of Appeals; Judge Thomas Hardiman of the Third Circuit Court of Appeals, and Judge William Pryor of the Eleventh Circuit Court of Appeals. President Trump has indicated that his nominee is highly respected and will have strong conservative credentials. However, Trump’s selection may face resistance from Senate Democrats, who last year were unsuccessful in securing the appointment of Judge Merrick Garland to Justice Scalia’s seat.

Computer manufacturer Acer has agreed to pay more than $115,000 to New York’s Attorney General to resolve claims after a data breach on its website exposed more than 35,000 credit card numbers.

Announcing the settlement, New York Attorney General Eric Schneider stated that numerous vulnerabilities on Acer’s website allowed attackers to view and access customer information. The breach was discovered after an investigation of fraudulent charges by Discover Card revealed that Acer was listed as the last merchant on many accounts that otherwise contained legitimate transactions. The settlement requires Acer to implement new security policies, including correction of material risks and the designation of an employee responsible for a security and privacy program.

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