Illinois Federal Court Orders Samsung To Defend 806 Individual BIPA Claims In Arbitration And Pay $311,000 In Arbitration Filing Fees (2024)
Duane Morris Takeaways: On February 15, 2024, the Judge Harry Leinenweber of the U.S. District Court for the NorthernDistrict of Illinois granted a motion to compel arbitration in Hoeg et al. v. Samsung Electronics of America, Inc., Case No. 23-CV-1951 (N.D. Ill. Feb. 15, 2024), and sent 806 individual privacy claims to arbitration and ordered Samsung to pay $311,000 to cover its share of arbitration filing fees in those matters. The decision highlights the potential downsides of class action waivers in arbitration agreements, as well as the importance of coupling a class action waiver with a well-crafted mass arbitration provision designed to streamline arbitration proceedings and, hopefully, limit exposure and litigation costs.
Samsung required customers to execute agreements to binding arbitration and those agreements waive the right to pursue class claims. The arbitration agreements provided that electronic acceptance, opening product packaging, product usage, or product retention amounted to acceptance of the arbitration agreement.
In 2022, 806 customers, all of whom alleged they had purchased and used Samsung products, filed individual arbitration actions against Samsung alleging violations of the Illinois Biometric Privacy Act (“BIPA”). After Samsung failed to pay $311,000 in arbitration filing fees due in the matters, AAA administratively closed the cases in January 2023. The plaintiffs then moved to compel arbitration.
The Court’s Decision
The Court granted the motion to compel arbitration and, in doing so, was highly critical of Samsung’s tactics in seeking to stall the prosecution of the claims. The Court found that the plaintiffs alleged they purchased and used Samsung products, and thereby assented to arbitration. While Samsung argued those allegations were conclusory and did not show the existence of agreements to arbitrate, the Court noted that Samsung’s approach “flips the evidentiary burden on its head” because, as the party opposing arbitration, it was Samsung’s burden to dispute the existence of an agreement to arbitrate. Id. at 9.
As to its failure to pay the arbitration filing fees, the Court expressed great displeasure with Samsung, noting that its “repeated failure to pay after multiple deadlines, without any showing of hardship, is a classic refusal to pay scheme in violation of Section 4” of the Federal Arbitration Act. Id. at 15. The Court also highlighted that Samsung’s tactics had delayed plaintiffs’ prosecution of their claims for two years. The Court further denied Samsung’s request that the matters be stayed so that it could pursue an appeal and ordered Samsung to pay the outstanding arbitration fees.
Implications Of The Decision
The Hoeg decision highlights the potential downsides of class action waivers, which have spurred the plaintiffs’ bar to pursue hundreds or even thousands of individual arbitrations all at once. The decision also underscores the importance of adding a mass arbitration provision to an arbitration agreement. Such a provision, if well-crafted, may serve to streamline those proceedings, facilitate resolution, and limit exposure. Some jurisdictions have enacted laws aimed at punishing a retailer’s or employer’s failure to pay arbitration fees. For example, in California, if arbitration fees are not timely paid, it results in a material breach of the arbitration agreement and could lead to the imposition of sanctions including “the reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.” (Cal. Civil Code § 1281.99.)
Illinois Federal Court Orders Samsung To Defend 806 Individual BIPA Claims In Arbitration And Pay $311,000 In Arbitration Filing Fees. On February 15, 2024, the Judge Harry Leinenweber of the U.S. District Court for the Northern District of Illinois granted a motion to compel
motion to compel
A motion to compel asks the court to order either the opposing party or a third party to take some action. This sort of motion most commonly deals with discovery disputes, when a party who has propounded discovery to either the opposing party or a third party believes that the discovery responses are insufficient.
https://en.wikipedia.org › wiki › Motion_to_compel
In some instances, you may be able to sue if you signed a valid arbitration agreement. While courts generally favor arbitration agreements, they will allow you to file a lawsuit if either you didn't understand your rights or your claims fall outside the arbitration provision's scope.
The Illinois Uniform Arbitration Act provides that a written agreement to submit any existing or future controversy to arbitration is enforceable and irrevocable in this state. The court can stay an arbitration proceeding if a party can show that there is no agreement to arbitrate.
Most arbitration is driven by a pre-dispute contract entered into by the parties, in which they agree that if a dispute should arise, it will never get into the court system. The Federal Arbitration Act, coupled with the state arbitration law of the place of arbitration, generally governs the process.
Arbitration is a mandatory but non-binding informal hearing where a neutral arbitrator, or panel of arbitrators, is selected to hear the evidence in your case.
Consumers are more likely to win in arbitration than in court. This research from ndp | analytics demonstrates that in disputes initiated by a consumer, consumers fare much better in arbitration than they do in litigation.
Quicker Resolution: One of the biggest benefits of arbitration is how quickly disputes can be settled. Without the need for a drawn-out litigation process, parties can expect a faster resolution. Lower Cost: Arbitration is generally considered less expensive than going through the courts.
This law provides that arbitration agreements are generally valid and enforceable. The major exception to this provision is that the arbitration agreement is not enforceable if it violates the general law of contracts – which applies to all contracts under the law of the state that governs the agreement.
Some contracts give you the right to opt out of the forced arbitration clause within a certain period of time, often 30 to 60 days, after signing the agreement by notifying the company that you wish to opt out.
Cases that are $50,000 or less must go into arbitration. Examples include a personal injury case from an automobile accident, a disagreement about a contract, or some other type of case that doesn't involve criminal charges.
In forced arbitration, a company requires a consumer or employee to submit any dispute that may arise to binding arbitration as a condition of employment or buying a product or service. The employee or consumer is required to waive their right to sue, to participate in a class action lawsuit, or to appeal.
The arbitrator's final decision on the case is called the “award.” This is like a judge's or jury's decision in a court case. Once the arbitrator decides that all of the parties' evidence and arguments have been presented, the arbitrator will close the hearings. This means no more evidence or arguments will be allowed.
Discovery of relevant documents, objects and tangible things should be diligently pursued before trial pursuant to Rule 214. Under the new paragraph, a Rule 237(b) request to produce at trial will be expressly limited to those documents, objects and tangible things produced during discovery.
A copy of the arbitrator's written Notice of Decision will be mailed to each party. If neither party appeals within twenty (20) days, the arbitrator's decision will become a judgment of the court. After you received your copy of the judgment, you must make a written demand of the other party to pay the judgment amount.
A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable save upon such grounds as exist for the revocation of any contract, including failure to comply ...
In some arbitrations, the parties may require little assistance or encouragement beyond a reminder that settlement remains an option. In other cases, parties may take fundamentally incompatible positions on key issues and some progress is needed before settlement can sensibly be proposed.
The FAA permits an arbitrator to award punitive damages. However, parties to a FAA-governed arbitration may also agree to exclude punitive damages directly (by expressly agreeing to do so) or indirectly (by invoking New York's arbitration limitations, including the Garrity rule).
If you lose the case, it's very hard to challenge a decision the arbitrator has made. You can't appeal if you simply disagree with the decision. If you think the case wasn't handled properly, you should get advice about what to do next. You may be able to make an appeal to court on a point of law.
Instead, if a party wins in the arbitration and the other party does not do what the award says, the winning party may go to court to “confirm” the arbitration award. Under AAA rules, parties to AAA cases agree that the arbitration award can be entered as a judgment in any federal or state court with jurisdiction.
Introduction: My name is Horacio Brakus JD, I am a lively, splendid, jolly, vivacious, vast, cheerful, agreeable person who loves writing and wants to share my knowledge and understanding with you.
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