Wallrich v. Samsung

Samsung imposes a contractual arbitration provision on people who own or use their devices that requires them to resolve disputes with the company through arbitration.  In 2022, thousands of people filed arbitration demands alleging that their Samsung devices unlawfully extracted their biometric data. The American Arbitration Association (AAA) determined that the claimants met their filing requirements, including paying their share of the filing fees, and that—pursuant to the arbitration provision in Samsung’s contract—Samsung owed the AAA $4 million for its share of the filing fees. Samsung refused to pay, and the AAA therefore closed the arbitrations.

The claimants turned to the court, seeking an order compelling Samsung to arbitrate. The district court issued an order compelling arbitration and ordering Samsung to pay its filing fees. Samsung then appealed to the Seventh Circuit.

On appeal, Public Citizen filed an amicus brief supporting the claimants. The brief explained that when large numbers of consumers and workers subjected to alleged wrongdoing seek access to an arbitral forum that a defendant corporation itself imposed on them, the corporation cannot free itself from its contractual obligation to arbitrate by breaching its obligation to pay its share of the arbitration fees. Samsung’s contrary position, we explained, is at odds with a basic premise of the Federal Arbitration Act: that otherwise valid contracts to arbitrate are enforceable and do not vanish when a party refuses to comply with them.

The Seventh Circuit, however, ruling in favor of Samsung, held that the claimants, by not submitting receipts or declarations, had failed to show that they had entered into arbitration agreements and that, even if they had, they could not force Samsung to pay the arbitration fees for the arbitration that the company itself had required.