In re Samsung Galaxy Smartphone Marketing and Sales Practices Litigation., No. 5:2016cv06391 - Document 88 (N.D. Cal. 2018)

Court Description: ORDER GRANTING WITH LEAVE TO AMEND 69 MOTION TO DISMISS FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT. Signed by Judge Beth Labson Freeman on 3/30/2018. (blflc4S, COURT STAFF) (Filed on 3/30/2018)
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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 8 IN RE SAMSUNG GALAXY SMARTPHONE MARKETING AND SALES PRACTICES LITIGATION 9 10 Case No. 16-cv-06391-BLF ORDER GRANTING WITH LEAVE TO AMEND MOTION TO DISMISS FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT [Re: ECF 69] United States District Court Northern District of California 11 12 In this putative consumer class action, Plaintiffs Demetrius Martin, Omar Atebar, Esther 13 Vega, Jesus Vega, Lizett Anguiano, Tomas Hernandez, Greg Robison, Dale Holzworth, Eric 14 Pirverdian, Tomig Salmasian, Michael Kouyoumdjian, Dior Dee, Cory Raymond, and Jesus 15 16 Sanchez (collectively, “Plaintiffs”) assert claims against Samsung Electronics America, Inc. and Samsung Electronics Co., Ltd. (collectively, “Samsung”) for alleged defects in their phones. In a 17 separate order, the Court concludes that certain Plaintiffs agreed to arbitrate their dispute with 18 Samsung. Here, the Court addresses Samsung’s Motion to Dismiss the First Amended 19 Consolidated Class Action Complaint, Mot., ECF 69, for Plaintiffs whose phones are not subject 20 to arbitration. For the reasons stated on the record at the March 29, 2018 hearing and summarized 21 below, the Court GRANTS WITH LEAVE TO AMEND Samsung’s motion to dismiss. 22 I. BACKGROUND 23 The Court offers a very brief factual and procedural background. For purposes of this 24 25 26 27 28 order, four phones are at issue—the Galaxy S7 (“S7”), the Galaxy S6 (“S6”), the Galaxy S6 Edge (“S6 Edge”), and the Galaxy Note5 (“Note5”). In the First Amended Consolidated Class Action Complaint (“FAC”), ECF 65, Plaintiffs allege that these phones “pose a risk of overheating, fire and explosion” based in part on Samsung’s recall of the Samsung Galaxy Note7. FAC ¶ 37. Plaintiffs bring causes of action for violations of California, Massachusetts, and Maryland 1 2 consumer-protection laws as well as unjust enrichment. FAC ¶¶ 143–85, 198–201. Samsung 3 moved to compel arbitration on the ground that Plaintiffs assented to an arbitration clause. ECF 4 67. In a concurrently filed order, the Court concludes that the phones of the Massachusetts 5 Plaintiff and some of the California Plaintiffs are subject to arbitration, and the Court grants a stay 6 of the proceedings pending arbitration. Here, the Court addresses Samsung’s motion to dismiss as 7 to the remaining Plaintiffs—namely, Maryland Plaintiff Robison and California Plaintiffs Atebar 8 (as to the Note5), Jesus Vega, Anguiano, Hernandez, Pirverdian, Salmasian, Dee, and Sanchez. 9 III. DISCUSSION A. 11 United States District Court Northern District of California 10 Samsung moves to dismiss Maryland Plaintiff Robison’s claims on the ground that he has 12 failed to sufficiently allege that this Court may exercise personal jurisdiction over Samsung. Mot. 13 7–8. The Court agrees that the present allegations are insufficient to establish either general or 14 specific jurisdiction over Samsung Electronics America or Samsung Electronics Co. 15 Personal Jurisdiction A court may exercise general jurisdiction only when the defendant’s “affiliations with the 16 State are so ‘continuous and systematic’ as to render [the defendant] essentially at home in the 17 forum State.” Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014) (quoting Goodyear Dunlop 18 Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). For corporate defendants, like the 19 Samsung entities, the place of incorporation and the principal place of business are the paradigm 20 places for general jurisdiction. Id. at 760. Here, those locations are not in California—Samsung 21 Electronics Co. is headquartered and incorporated in the Republic of Korea, and Samsung 22 Electronics America is headquartered in New Jersey and incorporated in New York. FAC ¶¶ 25– 23 26. Although Plaintiffs plead that both Samsung entities “conduct substantial business in 24 California,” id. ¶¶ 7–8, the Supreme Court has recognized that general jurisdiction does not lie just 25 because a defendant “engages in a substantial, continuous, and systematic course of business” in 26 the forum. See Daimler, 134 S. Ct. at 761 (citations omitted). Plaintiffs fall short of showing that 27 this Court may properly exercise general jurisdiction over Samsung. 28 2 1 Nor have Plaintiffs sufficiently alleged that this Court may exercise specific jurisdiction 2 over Samsung for Plaintiff Robison’s claims. Specific jurisdiction is based on the defendant’s 3 connections to the state with regard to the particular controversy at issue. Bristol-Myers Squibb 4 Co. v. Superior Court of California, San Francisco County, 137 S. Ct. 1773, 1780–81 (2017); 5 Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (“[T]he defendant’s suit-related conduct must 6 create a substantial connection with the forum State.”). In Bristol-Myers, the Supreme Court held 7 that non-forum residents in a mass tort action had not established specific jurisdiction over the 8 defendant as to their state-law claims alleging that they had been injured by the defendant’s drug. 9 137 S. Ct. at 1782. Specifically, the Court reasoned that the non-residents’ suit was not sufficiently connected to the forum because the non-residents did not allege that they had bought 11 United States District Court Northern District of California 10 or been injured by the drug in the forum or that the defendant created or manufactured the drug in 12 the forum. Id. at 1781–82. Plaintiff Robison’s contacts are indistinguishable: he is a Maryland 13 resident who purchased his S6 in Maryland and suffered all of his injuries in Maryland. FAC 14 ¶ 16. He also seeks to represent a class of plaintiffs who reside in and purchased their phones in 15 Maryland. Id. ¶ 107. With regard to Plaintiff Robison’s claims, specific jurisdiction is lacking 16 because the FAC does not allege that Samsung performed any relevant action in California. 17 Plaintiffs note that Bristol-Myers involved a state mass action, whereas this case involves a 18 federal class action. Whether Bristol-Myers applies to federal class actions is an open question. 19 See In re Nexus 6P Prod. Liab. Litig., No. 17-CV-02185-BLF, 2018 WL 827958, at *3 n.2 (N.D. 20 Cal. Feb. 12, 2018). However, Plaintiffs identify no authority where a court has determined that 21 Bristol-Myers does not apply to a named plaintiff seeking to represent a statewide class of non- 22 forum residents proceeding under non-forum law. Indeed, one of Plaintiffs’ cited cases 23 distinguishes between named and unnamed plaintiffs. Fitzhenry-Russell v. Dr. Pepper Snapple 24 Grp., Inc., No. 17-CV-00564 NC, 2017 WL 4224723, at *5 (N.D. Cal. Sept. 22, 2017). At this 25 stage, this Court is inclined to conclude that named Maryland Plaintiff Robison must satisfy the 26 standards set forth in Bristol-Myers, particularly because the Court’s authority to hear this case 27 under Federal Rule of Civil Procedure 4(k)(1)(A) is derivative of California’s long-arm statute. 28 The Court therefore GRANTS Samsung’s motion to dismiss Plaintiff Robison’s claims for lack of 3 1 personal jurisdiction.1 Nevertheless, given that the law is still evolving in this area, the Court is 2 willing to consider any developments that take place during the pendency of the stay. 3 B. Article III Standing 4 Samsung raises two successful challenges to Article III standing.2 First, Plaintiff Jesus 5 Vega lacks Article III standing to sue. Mot. 8–9. Unlike most of the other Plaintiffs, Plaintiff 6 Jesus Vega does not allege that he “purchased” his phone; instead, the FAC provides that he 7 “came into possession” of a Note5. FAC ¶ 13. As explained in a separate submission to the 8 Court, Plaintiff Atebar purchased the device for Jesus Vega, and Jesus Vega pays one-third of the 9 monthly cost for T-Mobile phone service. Murphy Decl., ECF 75-2, Ex. 2 ¶¶ 2–3. On these facts, Plaintiff Jesus Vega has not established that he suffered any concrete injury in fact caused by 11 United States District Court Northern District of California 10 Samsung’s conduct. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). The FAC does not 12 plead that the overheating defect interfered with Plaintiff Jesus Vega’s phone service, FAC ¶ 83, 13 but that is all that Plaintiff Jesus Vega paid for. Instead, as Plaintiffs appear to acknowledge in 14 their opposition, the phone purchaser (Plaintiff Atebar) is the appropriate person to pursue claims 15 that the Note5 is defective. Accordingly, the Court GRANTS Samsung’s motion to dismiss 16 Plaintiff Jesus Vega’s claims.3 17 Second, no Plaintiff adequately establishes standing to seek injunctive relief. Mot. 11–12. 18 After Plaintiffs filed their FAC, the Ninth Circuit decided Davidson v. Kimberly-Clark Corp., 873 19 F.3d 1103 (9th Cir. 2017). There, the court identified two circumstances in which a consumer 20 misled by false advertising may demonstrate standing for prospective relief: (1) “she will be 21 unable to rely on the product’s advertising or labeling in the future, and so will not purchase the 22 product although she would like to” and (2) “she might purchase the product in the future, despite 23 1 24 25 26 27 28 For the same reasons, Samsung would not be subject to personal jurisdiction in this action as to Massachusetts Plaintiff Holzworth’s claims. In the separate order, the Court concludes that the S7 Edge product purchased by Plaintiff Holzworth is subject to arbitration. 2 Because the plaintiffs and products involved may change in any forthcoming amendment, the Court does not here address Samsung’s separate argument that Plaintiffs lack standing to bring claims regarding phones they did not purchase. Mot. 10–11. 3 Plaintiff Atebar also purchased Plaintiff Esther Vega’s S7; thus, Plaintiff Esther Vega would not have standing to maintain the claims in this action. FAC ¶¶ 12, 82; Murphy Decl., Ex. 2 ¶¶ 2–3. As discussed in the separate order, the Court concludes that the S7 product acquired by Plaintiff Esther Vega is subject to arbitration. 4 1 the fact it was once marred by false advertising or labeling, as she may reasonably, but incorrectly, 2 assume the product was improved.” Id. at 1115. Plaintiffs’ allegations do not fit within either of 3 those categories or otherwise provide that Plaintiffs “suffer[ed] an ‘actual and imminent, not 4 conjectural or hypothetical’ threat of future harm.” Id. (quoting Summers v. Earth Island Inst., 5 555 U.S. 488, 493 (2009)). Accordingly, the Court GRANTS Samsung’s motion to dismiss on 6 this ground. C. 7 Failure to State a Claim 1. 8 Consumer Protection Statutes Samsung raises two legitimate, interrelated bases on which Plaintiffs’ consumer-protection 9 claims fail.4 First, Plaintiffs have not adequately pled that each model of Samsung phone at issue 11 United States District Court Northern District of California 10 suffers from a defect. In particular, Plaintiffs have not identified any particular defect in their 12 phones. Instead, the FAC makes the bare assertion that each model of phone at issue “is unsafe 13 for its intended use by reason of defects in its design, engineering, development, manufacturing, 14 testing, production, and/or assembly.” FAC ¶¶ 72–73, 76–77. Such vague, conclusory pleading 15 leaves unclear whether Plaintiffs allege a single universal defect across all phones, or multiple 16 distinct defects in each model, and whether all of the overheating incidents were due to a common 17 defect, or some independent cause specific to the phone at issue. Indeed, the FAC admits that the 18 models have manufacturing differences, such as batteries with different capacities. Id. ¶ 35. 19 Plaintiffs must provide a more precise description of each phone and the component or setup that 20 causes thermal runaway events in order to satisfy their burden at the pleading stage. See, e.g., 21 Punian v. Gillette Co., No. 14-CV-05028-LHK, 2016 WL 1029607, at *13 (N.D. Cal. Mar. 15, 22 2016) (“[A]lthough Plaintiff alleges that leakage is a ‘defect’ in Duralock Batteries, Plaintiff does 23 not allege that leakage is the result of any systematic design, technical, manufacturing, or other 24 flaw present in all Duralock Batteries.”). Second, Plaintiffs fail to sufficiently allege that Samsung had knowledge of the defect at 25 26 the time of sale to Plaintiffs. Plaintiffs rely on a scattered series of online reports, but many of 27 4 28 The Court does not address Samsung’s remaining arguments but notes that, in any amended pleading, Plaintiffs should be mindful of any potential deficiencies identified by Samsung. 5 those reports post-date individual Plaintiff’s purchases, concern phones other than those at issue 2 here, or involve overheating of phone chargers. FAC ¶¶ 51–52. “[A] handful of complaints do 3 not, by themselves, plausibly show that [the defendant] had knowledge of the defects and 4 concealed the defects from customers.” In re Nexus 6P Prod. Liab. Litig., No. 17-CV-02185- 5 BLF, 2018 WL 1156861, at *5 (N.D. Cal. Mar. 5, 2018). Plaintiffs also point to Samsung’s 6 decision to recall the Note7 based on consumer reports that the device exploded or burst into 7 flames, id. ¶ 38, but Plaintiffs fail to adequately connect the phones at issue here to the Note7, 8 especially in light of the FAC’s recognition of manufacturing differences between models, see, 9 e.g., id. ¶ 35. Moreover, only two Plaintiffs here personally experienced a “thermal runaway 10 event” as that term is defined in the FAC. See id. ¶ 40 (stating that a thermal runaway event 11 United States District Court Northern District of California 1 “generates high temperatures exceeding 1100 degrees Fahrenheit” leading “the battery [to] catch 12 fire or explode”). In these circumstances, Plaintiffs have not sufficiently alleged that Samsung 13 “was aware of a defect at the time of sale to survive [the] motion to dismiss.” Wilson v. Hewlett- 14 Packard Co., 668 F.3d 1136, 1145 (9th Cir. 2012). Accordingly, the Court GRANTS Samsung’s 15 motion to dismiss the consumer-protection claims. 2. 16 Unjust Enrichment Plaintiffs’ claim for unjust enrichment is also deficient because Plaintiffs do not identify 17 18 the applicable law. As this Court and other courts in this district have recognized, “due to 19 variances among state laws, failure to allege which state law governs a common law claim is 20 grounds for dismissal.” In re Nexus 6P, 2018 WL 1156861, at *25 (quoting Romero v. Flowers 21 Bakeries, LLC, No. 14-CV-05189-BLF, 2016 WL 469370, at *12 (N.D. Cal. Feb. 8, 2016)); In re 22 TFT–LCD (Flat Panel) Antitrust Litig., 781 F.Supp.2d 955, 966 (N.D. Cal. 2011) (“Several other 23 courts in this district have similarly held that a plaintiff must specify the state under which it 24 brings an unjust enrichment claim.”). Accordingly, the Court GRANTS Samsung’s motion to 25 dismiss Plaintiffs’ unjust enrichment claim. 26 IV. ORDER 27 For the foregoing reasons, IT IS HEREBY ORDERED that Samsung’s motion to dismiss 28 is GRANTED WITH LEAVE TO AMEND as to Plaintiffs Atebar (as to the Note5), Jesus Vega, 6 1 Anguiano, Hernandez, Robison, Pirverdian, Salmasian, Dee, and Sanchez. If Plaintiffs wish to 2 amend their claims, Plaintiffs must file an amended complaint within 30 days of the termination of 3 the stay pending arbitration. Failure to meet the deadline to file an amended complaint or failure 4 to cure the deficiencies identified in this Order will result in a dismissal of Plaintiffs’ claims with 5 prejudice. 6 7 8 9 Dated: March 30, 2018 ______________________________________ BETH LABSON FREEMAN United States District Judge 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7