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Noble v. Samsung Elecs. Am., Inc. - 682 F. App'x 113 (3d Cir. 2017)

Rule:

A meeting of the minds, or mutual assent, requires that the parties have an understanding of the terms to which they have agreed. That necessarily requires reasonable notice to each contracting party of the contractual terms. Once there is reasonable notice, a party is bound by those terms, even if he failed to read them. But, when the writing does not appear to be a contract and the terms are not called to the attention of the recipient, there is no reasonable notice and the terms cannot be binding. Therefore, contractual terms, including an arbitration clause, will only be binding when they are reasonably conspicuous, rather than proffered unfairly, or with a design to conceal or de-emphasize its provisions.

Facts:

Noble purchased his Samsung Smartwatch from an AT&T store after seeing advertisements saying that the device's battery lasted 24 to 48 hours with typical use. But Noble's Smartwatch battery lasted only about four hours, so he returned the Smartwatch and received a new one. The second Smartwatch suffered from the same battery problem, so Noble again went back to the AT&T store and, this time, was directed to ship the Smartwatch to Samsung. Samsung then sent Noble a third Smartwatch with equally poor battery life. Noble filed a Complaint on behalf of himself and others similarly situated, alleging six causes of action based on (1) the New Jersey Consumer Fraud Act ("NJCFA"), (2) common law fraud, (3) negligent misrepresentation, (4) breach of an express warranty, (5) breach of the implied warranty of merchantability, and (6) unjust enrichment. All of those claims arose out of what is said to be Samsung's "fraudulent and deceptive marketing and pricing" related to the battery life of the Smartwatch. Samsung moved to compel arbitration on all of Noble's individual claims and to dismiss his class claims, citing the purported arbitration clause in a 143-page document included in the Smartwatch boxes that Noble received, titled "Health and Safety and Warranty Guide”. The District Court held that Samsung had not provided reasonable notice of the arbitration provision and, consequently, Noble could not be treated as if he had assented to it.

Issue:

Was the arbitration clause binding?

Answer:

No.

Conclusion:

The Court held that the document in which the purported arbitration clause was included did not appear to be a bilateral contract, and the terms were buried in a manner that gave no hint to a consumer that an arbitration provision was within where the outside of the "Health and Safety and Warranty Guide" did not include any language indicating that bilateral contractual terms or conditions were inside, let alone an arbitration agreement. The district court correctly concluded that there was no mutual assent here because appellee lacked reasonable notice of the arbitration provision.

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