Samsung must face a class-action lawsuit by Galaxy S4 users who say the company misled them regarding the device's storage capacity and performance, the 9th Circuit Court of Appeals ruled Thursday.
The decision stems from a lawsuit filed in 2014 by Daniel Norcia, a California resident who purchased his device from a Verizon Wireless store. He alleged in a class-action complaint that Samsung advertised the device as having 16 Gigabytes of storage, but that preinstalled apps took up around half of that capacity. The complaint also alleged that Samsung programmed the devices to run faster than usual when they detect performance-measuring tools.
Samsung argued that the lawsuit belonged in arbitration for several reasons including that Norcia's agreement with Verizon called for arbitration of disputes.
The 9th Circuit ruled against Samsung on Thursday. "The Customer Agreement is an agreement between Verizon Wireless and its customer," a three-judge panel of the appellate said in the decision. "Samsung is not a signatory. While the agreement itself includes a number of terms governing the relationship between Norcia and Verizon Wireless, including an arbitration provision, nothing in the agreement references Samsung or any other party."
The opinion could play a role in a pending privacy battle between the ad network Turn and Verizon Wireless users. In that matter, Verizon Wireless subscribers Anthony Henson and William Cintron alleged in a class-action complaint that Turn violated a consumer protection law by using a controversial technology that enabled it to track consumers for online ad purposes.
Those allegations centered on Verizon's "supercookies" -- headers that Verizon previously injected into all unencrypted mobile traffic. The headers (50-character alphanumeric strings) enabled ad companies to compile profiles of users and serve them targeted ads. The UIDHs also are known as “zombie” cookies, or "supercookies" because they allow ad companies to recreate cookies that users delete.
Last year, U.S. District Court Judge Jeffrey White in the Northern District of California granted Turn's motion to send the matter to arbitration, based on the consumers' agreements with Verizon. White said at the time that he agreed with Turn that the consumers' allegations were closely connected to their subscriber agreements with Verizon -- which call for arbitration of all disputes.
Henson and Cintron recently asked the 9th Circuit to reverse that ruling, arguing that their arbitration agreements were with Verizon, not Turn. The ad network -- which recently settled Federal Trade Commission charges over the tracking technology -- argues that the consumers' case belongs in arbitration because their allegations are based on "interdependent and concerted conduct" by itself and Verizon. The 9th Circuit said last month that it may hold a hearing in that matter in April.