Pang et al v. Samsung Electronics America, Inc.

Filing 42

ORDER by Judge Phyllis J. Hamilton denying 32 Motion to Dismiss; denying 31 Motion to Strike. (pjhlc2, COURT STAFF) (Filed on 9/19/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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LYNETTE PANG, et al.,

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v.
SAMSUNG ELECTRONICS AMERICA,
INC.,
Defendant.

United States District Court
Northern District of California

Case No. 18-cv-01882-PJH

Plaintiffs,

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ORDER DENYING DEFENDANT'S
MOTION TO DISMISS AND DENYING
DEFENDANT'S MOTION TO STRIKE
CLASS ALLEGATIONS
Re: Dkt. Nos. 31, 32

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Defendant Samsung Electronics America, Inc.’s (“Samsung”) motion to dismiss

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the First Amended Complaint (the “FAC”) and motion to strike class allegations came on

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for hearing before this court on September 12, 2018. Plaintiffs Lynette Pang and Timo

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Masalin appeared through their counsel, Michael Woerner and Mathew Gerend.

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Defendant appeared through its counsel, Robert Herrington. Having read the papers

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filed by the parties and carefully considered their arguments and the relevant legal

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authority, and good cause appearing, the court hereby DENIES defendant’s motions, for

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the reasons stated at the hearing and as briefly summarized below.

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The gist of plaintiffs’ allegations is that Samsung misled consumers by touting the

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performance of the rear-camera on several models of its Galaxy branded smartphone

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devices when in fact the camera suffered from a serious defect. Specifically, plaintiffs

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allege that the glass covering the rear camera lens “spontaneously shatters,” rendering

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the rear-camera unusable. FAC ¶¶ 8-9, 27. Plaintiffs allege that despite knowing about

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this defect and knowing that the quality of a smartphone’s camera could drive a

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consumer’s purchasing decision, Samsung’s advertising campaign, including press

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releases and its website, id. ¶¶ 5-11, 45-52, represented the Galaxy smartphones as

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“professional-grade” and capable of taking “crisp and vivid” photos. Id. ¶¶ 19-27.

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Plaintiffs further allege that though the alleged defect would manifest within one year—

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the length of Samsung’s limited warranty—Samsung falsely represented that the alleged

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defect was not covered by the warranty and, accordingly, required consumers to pay for

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any repair. Id. ¶¶ 53-56.
Based on these allegations, plaintiffs seek to represent a class of “All persons and

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entities in the State of California who purchased or leased a Samsung Galaxy S7, Galaxy

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S7 Edge, Galaxy S7 Active, Galaxy S8, or Galaxy Note 8.” FAC ¶ 57. On behalf of that

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class, plaintiffs assert causes of action for: (i) violation of the Consumers Legal Remedy

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United States District Court
Northern District of California

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Act, Cal. Civ. Code §§ 1750, et seq. (the “CLRA”); (ii) Breach of Express Warranty under

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the Song-Beverly Act, Cal. Civ. Code § 1790 et seq.; (iii) Breach of Implied Warranty of

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Merchantability under the Song-Beverly Act, Cal. Civ. Code § 1790 et seq.; (iv) Breach of

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Express Warranty under Cal. Comm. Code § 2313; (v) Breach of Implied Warranty under

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Cal. Comm. Code § 2314; (vi) Violations of California’s Unfair Competition Law, Cal. Bus.

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& Prof. Code §§ 17200, et seq. (the “UCL”); and (vii) Unjust Enrichment under California

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common law.

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A motion to dismiss under Rule 12(b)(6) tests for the legal sufficiency of the claims

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alleged in the complaint. Ileto v. Glock, 349 F.3d 1191, 1199-1200 (9th Cir. 2003).

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Under the minimal notice pleading requirements of Federal Rule of Civil Procedure 8,

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which requires that a complaint include a “short and plain statement of the claim showing

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that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), a complaint may be

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dismissed under Rule 12(b)(6) if the plaintiff fails to state a cognizable legal theory, or

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has not alleged sufficient facts to support a cognizable legal theory. Somers v. Apple,

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Inc., 729 F.3d 953, 959 (9th Cir. 2013). Further, the Ninth Circuit has “specifically ruled

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that Rule 9(b)'s heightened pleading standards apply to claims for violations of the CLRA

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and UCL” because they sound in fraud. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125-

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26 (9th Cir. 2009) (fraud requires a misrepresentation, knowledge, intent to

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defraud/induce reliance, justifiable reliance, and damages).

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As stated at the hearing, the court finds that plaintiffs have pled facts sufficient to

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survive defendant’s motion to dismiss. “By identifying a clear common message in the

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advertising campaign and identifying numerous examples that repeat this message,

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plaintiffs have adequately notified defendants of the who, what, when, where and how of

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the misconduct charged.” In re Oreck Corp. Halo Vacuum and Air Purifiers Mktg. and

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Sales Practices Litig., No. ML 12-2317 CAS JEMx, 2012 WL 6062047, at *15 (C.D. Cal.

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Dec. 3, 2012). Further, the FAC adequately alleges that the named plaintiffs relied on
that advertising campaign when purchasing their devices. Compare FAC ¶ 19-20 (press

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United States District Court
Northern District of California

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release) to FAC ¶ 29 (Masalin purchased her phone because he believed the

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smartphone’s “Dual Pixel Sensor technology” would allow “him to take clear and detailed

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photos”); compare FAC ¶ 25 (press release) to FAC ¶ 36 (Pang purchased her phone

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because of “the camera functionality” and its ability to take “professional-quality

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photographs”).

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For the reasons stated at the hearing, the court also finds that plaintiffs have

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adequately alleged implied and express warranty claims under the Song-Beverly Act and

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Cal. Comm. Code § 2313 & § 2314.

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Accordingly, the court DENIES defendant’s motion to dismiss in its entirety.

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Defendant also filed a motion to strike the FAC’s class allegations. As noted

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above, plaintiffs seek to represent a class of “All persons and entities in the State of

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California who purchased or leased a Samsung Galaxy S7, Galaxy S7 Edge, Galaxy S7

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Active, Galaxy S8, or Galaxy Note 8.” FAC ¶ 57. Defendant’s motion to strike is

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premised on two undisputed facts. First, the challenged Galaxy smartphones were

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accompanied by “Terms and Conditions,” which, inter alia, included an arbitration clause.

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Second, both named plaintiffs timely and successfully opted-out of the arbitration

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agreement. See Dkt. 31-1, Ex. C (Masalin’s opt-out email), Ex. D (Pang’s opt-out email).

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Thus, according to Samsung, because the named plaintiffs are not subject to the
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arbitration agreement, they cannot represent putative class members who are subject to

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the arbitration agreement and, accordingly, the court should strike the FAC’s class

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allegations. Samsung also submitted evidence that the vast majority of putative class

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members have not opted out of the arbitration agreement. See Dkt. 39-1.

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As indicated at the hearing, the court has serious concerns about the scope of

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plaintiffs’ proposed class because in contrast to a majority of the putative class members,

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the named plaintiffs are not subject to an arbitration agreement. However, the court does

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not believe that defendant’s motion to strike—supported by external evidence—is the

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appropriate vehicle for resolving those concerns. As Samsung admitted during the
hearing on this motion, Samsung does not seek to strike the FAC’s class allegations in

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United States District Court
Northern District of California

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their entirety. Indeed, Samsung candidly recognized that the named plaintiffs may be

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appropriate representatives for a class consisting of purchasers that, like the named

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plaintiffs, opted out of the arbitration agreement. Samsung’s motion to strike therefore

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does not seek to strike class allegations, so much as limit the scope of the proposed

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class or amend the class definition. That request falls outside the purview of a Rule 12(f)

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motion. Fed. R. Civ. P. 12(f) (“The court may strike from a pleading an insufficient

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defense or any redundant, immaterial, impertinent, or scandalous matter.”). Accordingly,

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the court DENIES defendant’s motion to strike.

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That said, the court does believe that Samsung’s challenge to the scope of

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plaintiffs’ proposed class should be resolved before class-wide merits discovery begins.

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After reconsidering the most efficient way to proceed, the court VACATES the previous

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deadlines in favor of the below schedule.

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Within 30 days of this order, plaintiffs may file a motion for leave to amend the

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FAC in order to add a named plaintiff that has not opted out of the arbitration provision

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that accompanied his or her Galaxy smartphone purchase. If plaintiffs file that motion,

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plaintiffs’ proposed amended complaint should appropriately delineate between putative

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class members who are or are not subject to a potentially enforceable arbitration

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agreement.
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If plaintiffs fail to file a motion for leave to amend within 30 days, Samsung may file

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a motion to deny class certification—a motion that Samsung believes the Ninth Circuit

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approved of in Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 941 (9th Cir.

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2009). Samsung must file its Vinole motion within 90 days of this order, i.e., 60 days

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after plaintiffs’ motion for leave to amend would have been due.

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However, if plaintiffs’ motion for leave to amend is granted, then, as Samsung

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indicated, the appropriate next step would likely be a motion to compel, which would

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obviate the need for defendant’s proposed Vinole motion.

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The court reiterates that though discovery is open, it is limited to topics relevant to
defendant’s proposed Vinole motion.

United States District Court
Northern District of California

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IT IS SO ORDERED.

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Dated: September 19, 2018

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__________________________________
PHYLLIS J. HAMILTON
United States District Judge

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