Galaxy S4 Phone Claims Survive Trimming

SAN FRANCISCO (CN) - Samsung is still on the hook in an amended class action over the speed, performance and memory of its Galaxy S4 smartphone, a federal judge ruled.

Daniel Norcia sued Samsung in 2014, claiming it "intentionally programmed the Galaxy S4 to fool benchmark apps and create false perceptions regarding the speed and performance of those devices."

Benchmarking apps assess how well devices work and compare the score to similar devices.

Norcia claimed Samsung also misled consumers about the phone's storage capacity.

He said Samsung "advertised and marketed" the phone as having 16 gigabytes of storage, though approximately half the memory was used by pre-installed software and was "inaccessible and unusable to the end user."

Samsung sought to compel arbitration, citing a provision in the warranty.

The warranty booklet stated: "All disputes with Samsung arising in any way from this limited warranty or the sale, condition or performance of the products shall be resolved exclusively through final and binding arbitration, and not by a court or jury."

But U.S. District Judge James Donato refused to send the dispute to an arbitrator in September 2014, finding that when Norcia bought the phone he took only the hardware and left a box and booklet in the store.

Though Norcia voluntarily declined the box, he was to be treated as though he'd received it, Donato ruled, which did not constitute a contract for arbitration.

"The inconspicuous placement of the arbitration provisions in the warranty booklet, and Samsung's failure to inform customers in any way about the proposal to require arbitration, bar a finding that a valid and enforceable contract was formed," Donato wrote.

Donato added that Samsung's product Web page, which contained a link to the warranty, was "not sufficient by itself to constitute inquiry notice."

In his Aug. 20 ruling on the amended lawsuit, Donato granted in part and denied in part Samsung's motion to dismiss.

Donato dismissed Norcia's benchmarking manipulation affirmative misrepresentation claims without prejudice.

"Samsung's alleged programming conduct does not constitute a 'statement' or 'representation' for which Samsung, even assuming falsity, could be held liable under any of the four consumer protection and fraud claims plaintiff has asserted," Donato wrote.

Norcia's claim that Samsung "rigged" the benchmarking apps "knowing that the benchmarking manipulations would result in false information being communicated to consumers," was "striking in its failure to allege that Samsung itself made any false communications to end users," Donato added.

"At most, it alleges that third-party product reviewers running the apps, such as Engadget or SlashGear, made the statements that allegedly misrepresented the S4's performance."

Donato denied Samsung's motion to dismiss benchmarking manipulation omission claims, finding that Norcia sufficiently alleged that the manipulations were within Samsung's exclusive knowledge and subject to a duty to disclose.

"Plaintiff has adequately alleged that consumers would have had an expectation or an assumption that the kind of benchmarking manipulation alleged here would not be hidden in the source code of their phone and it would have been difficult for the ordinary consumer to have discovered this issue on their own," the 15-page ruling states. "That is enough."

Donato dismissed Norcia's storage capacity claims, with one last opportunity to amend.

"Plaintiff alleges generically that he 'viewed the product specifications on websites reviewing the Galaxy S4 and/or announcing the release of the Galaxy S4 that the Galaxy S4 has 16 GB of memory capacity,' without giving any detail about what, exactly, he read; when these statements were published or read by him; or who authored those third party statements," Donato wrote.

Samsung and its counsel did not respond to requests for comment Monday.

Samsung released the Galaxy S4 in 2013. It is the company's fastest-selling smartphone, with 40 million sold in the first six months.

A case management conference is set for Sept. 30, and a joint case management statement due Sept. 23.

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