In a recent decision by the United States Court of Appeals for the Third Circuit, the court held that a mandatory arbitration clause was unenforceable under New Jersey law, where the clause was buried in a 143-page product instruction manual, and not conspicuous enough to alert the purchaser as to its existence. In so doing, the court may have helped to even the playing field between consumers and product manufacturers.
In Noble v. Samsung Electronics, No. 16-1903 (3d Cir. March 3, 2017), the plaintiff/appellee was the class representative in a class action seeking damages for the defendant/appellant’s (Samsung) alleged misrepresentation as to the life of the battery in its Samsung Smartwatch. Samsung moved to compel arbitration of the suit, citing to a provision on page 97 of a small, 143-page document in the Smartwatch box, titled, “Health and Safety and Warranty Guide.” Although the language in question clearly stated that all disputes arising from the purchase of the product were to be resolved through final and binding arbitration, the trial court held that the arbitration clause was “unreasonably hidden” and denied Samsung’s motion. Samsung appealed to the Third Circuit.
On appeal, the Third Circuit affirmed the lower court’s decision, holding that, “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.’” The court specifically found that, “the document in which the [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.”
The Third Circuit’s decision in Noble may afford some leverage to consumers who wonder exactly what rights they are signing away in all that “fine print.” While no guarantee of the ultimate outcome in a court of law, the court’s decision at least offers some assurance that consumers will, in fact, have their day in court.
