Samsung exploding phone lawsuits may be derailed by fine print

Samsung has been on a PR offensive ever since it was forced to recall its Galaxy Note 7 phone, in an effort to regain its consumers’ trust. But some people who are now trying to sue Samsung feel like they are getting burned twice, reports CBS News correspondent Jim Axelrod.

Last September, Joni Barwick woke up in the middle of the night to her Galaxy Note 7 phone spewing flames 16 inches from her face.      

“There’s orange and red and smoke and fire, and it took me just a split second to process that my phone was on fire,” she recalled.

Joni’s husband, John, grabbed some oven mitts and carried the phone into the back yard.

“The entire way it was dripping burnt, melted plastic, and whatever else was inside the phone that had combusted was dripping all over our floor,” John said.

The Barwicks are considering joining a class action lawsuit, but they may have a problem.

“Are you aware that you entered into a contract with Samsung that prohibits you from suing?” Axelrod asked them.

“No,” they responded.

Inside the box, under the phone, inside another box, on the last few pages of the warranty guide, is a clause requiring “all disputes with Samsung” be resolved through “final and binding arbitration, and not by a court or jury.”  A consumer has 30 days to “opt out” or else they cannot sue.

Michael Taylor, 19, is testing the clause. He is suing Samsung for damages after his Note 7 caught fire, leaving him with severe burns.

“I have never had a pain that strong in my life. I’ve literally taken a pitchfork through my foot and it doesn’t even compare to that,” Taylor said.

In December, Samsung sent their lawyer went to court to argue the case should be thrown out because Taylor never opted out.

“I don’t know how I was supposed to be able to opt out of something I didn’t know existed,” Taylor said.

“When you began to become aware that you were up against this clause, what were your thoughts?” Axelrod asked him.

“I felt like I was robbed of a right that I have in my country,” Taylor said.

In court filings, Samsung argues the clause is “conspicuous” and “consumer-friendly,” but even Samsung’s own employees seemed unaware of it, when we asked them about it using hidden cameras.

“Hypothetically if something ever happened, if it did catch fire, would I be able to sue?” a CBS News investigative producer asked.

“Hell yeah. Hell yeah. I would,” one salesperson in New York City said.

“You could sue, you could sue anybody, it’s U.S.A.,” another said.

Myriam Gilles, a dean at Cardozo School of Law, has spent a decade studying arbitration.

“I bet they don’t train their employees at all on this issue,” Gilles said. “Because I think they feel really confident that their arbitration provision tucked into that little booklet underneath the phone is going to hold up in any court of law.”

Axelrod asked Joni whether she read the guide.

“Oh, no. No. And I can guarantee most Americans buying Samsung products or any other electronic product that has that book, I know they don’t read that either,” Joni said.

The judge has not yet ruled on whether Taylor will be allowed to sue. Samsung declined an on-camera interview, but said in a statement: “While we cannot comment on pending litigation or arbitrations, we have established a dispute resolution procedure for some of our products to enable consumers to have a faster, easier, and more efficient resolution through the arbitration of any claims or issues they may have.”

Here’s a look at other brands and their fine prints: 

(Research contributed by Alex Tin, Blake Christy and Leigha Wentz)