Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-16994/USCOURTS-ca9-14-16994-0/pdf.json

Parties Involved:
Daniel Norcia
Appellee
Samsung Electronics America, Inc.
Appellant
Samsung Telecommunications America, LLC
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DANIEL NORCIA, on his own

behalf and on behalf of all

others similarly situated, 

Plaintiff-Appellee,

v.

SAMSUNG

TELECOMMUNICATIONS

AMERICA, LLC, a New York

Corporation; SAMSUNG

ELECTRONICS AMERICA, INC.,

a New Jersey corporation, 

Defendants-Appellants.

No. 14-16994

D.C. No. 

3:14-cv-00582-JD

OPINION

Appeal from the United States District Court

for the Northern District of California

James Donato, District Judge, Presiding

Argued and Submitted October 17, 2016

San Francisco, California

Filed January 19, 2017

Before: Sidney R. Thomas, Chief Judge, and

Carlos T. Bea and Sandra S. Ikuta, Circuit Judges.

Opinion by Judge Ikuta

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2 NORCIA V. SAMSUNG TELECOMM.

SUMMARY*

Arbitration / California Law

The panel affirmed the district court’s order denying

Samsung’s motion to compel arbitration of a class action

complaint alleging that Samsung made misrepresentations as

to the performance of the Galaxy S4 phone.

Samsung moved to compel arbitration of the dispute on

the ground that an arbitration provision, which was contained

in a warranty brochure included in the Galaxy S4 box, was

binding on plaintiff.

The panel applied California law. The panel rejected

Samsung’s theory that the Product and Safety & Warranty

Information brochure in the Galaxy S4 box created a binding

contract between plaintiffs and Samsung to arbitrate the

claims in plaintiff’s complaint. The panel further held that

Samsung failed to demonstrate the applicability of any

exception to the general California rule that an offeree’s

silence did not constitute consent. The panel further held that

the brochure was not enforceable as an in-the-box contract.

The panel rejected Samsung’s argument that plaintiff

agreed to arbitrate his claims by signing a Customer

Agreement with Verizon Wireless. The panel noted that

Samsung was not a signatory to the agreement. The panel

concluded that Samsung failed to bear its burden of

establishing that it was a third-party beneficiary of the

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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NORCIA V. SAMSUNG TELECOMM. 3

Customer Agreement, and therefore Samsung could not

enforce the arbitration provision in the agreement.

COUNSEL

John R. Hurley (argued), Eduardo G. Roy, Daniel C.

Quintero, and Jill Dessalines, Prometheus Partners L.L.P.,

San Francisco, California, for Plaintiff-Appellee. 

Sean D. Unger (argued), John P. Phillips, and Ryan C. Nier,

Paul Hastings LLP, San Francisco, California, for

Defendants-Appellants.

OPINION

IKUTA, Circuit Judge:

Daniel Norcia filed a class action complaint against

Samsung Telecommunications America, LLC, and Samsung

Electronics America, Inc., (collectively, “Samsung”), alleging

that Samsung made misrepresentations as to the performance

of the Galaxy S4 phone. Samsung moved to compel

arbitration of the dispute on the ground that an arbitration

provision, which was contained in a warranty brochure

included in the Galaxy S4 box, was binding on Norcia. We

affirm the district court’s denial of Samsung’s motion. 

I

On May 23, 2013, Norcia entered a Verizon Wireless

store in San Francisco, California, to purchase a Samsung

Galaxy S4 phone. Norcia paid for the phone at the register,

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4 NORCIA V. SAMSUNG TELECOMM.

and a Verizon Wireless employee provided a receipt entitled

“Customer Agreement” followed by the name and address of

the Verizon Wireless store. The receipt stated the order

location, Norcia’s mobile number, the product identification

number, and the contract end date. Under the heading

“Items,” the receipt stated “WAR6002 1 YR. MFG.

WARRANTY.” Under the heading “Agreement,” the receipt

included three provisions, including a statement (in all capital

letters): 

I agree to the current Verizon Wireless

Customer Agreement, including the calling

plan, (with extended limited warranty/service

contract, if applicable), and other terms and

conditions for services and selected features I

have agreed to purchase as reflected on the

receipt, and which have been presented to me

by the sales representative and which I had the

opportunity to review. 

The receipt also stated (in all capital letters): “I understand

that I am agreeing to . . . settlement of disputes by arbitration

and other means instead of jury trials, and other important

terms in the Customer Agreement.” The Customer

Agreement did not reference Samsung or any other party. 

Norcia signed the Customer Agreement, and Verizon

Wireless emailed him a copy. 

After signing the Customer Agreement, Norcia and a

Verizon Wireless employee took the Galaxy S4 phone, still

in its sealed Samsung box, to a table. The front of the

product box stated “Samsung Galaxy S4.” The back of the

box stated: “Package Contains . . . Product Safety &

Warranty Brochure.” The Verizon Wireless employee

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NORCIA V. SAMSUNG TELECOMM. 5

opened the box, unpacked the phone and materials, and

helped Norcia transfer his contacts from his old phone to the

new phone. Norcia took the phone, the phone charger, and

the headphones with him as he left the store, but he declined

the offer by the Verizon Wireless employee to take the box

and the rest of its contents. 

The Samsung Galaxy S4 box contained, among other

things, a “Product Safety& Warranty Information” brochure. 

The 101-page brochure consisted of two sections. Section 1

contained a wide range of health and safety information,

while Section 2 contained Samsung’s “Standard Limited

Warranty” and “End User License Agreement for Software.” 

The Standard Limited Warranty section explained the scope

of Samsung’s express warranty. In addition to explaining

Samsung’s obligations, the procedure for obtaining warranty

service, and the limits of Samsung’s liability, the warranty

section included the following (in all capital letters):

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.

Later in the section, a paragraph explained the procedures for

arbitration and stated that purchasers could opt out of the

arbitration agreement by providing notice to Samsung within

30 calendar days of purchase, either through email or by

calling a toll-free telephone number. It also stated that opting

out “will not affect the coverage of the Limited Warranty in

any way, and you will continue to enjoy the benefits of the

Limited Warranty.” Norcia did not take any steps to opt out.

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6 NORCIA V. SAMSUNG TELECOMM.

In February 2014, Norcia filed a class action complaint

against Samsung, alleging that Samsung misrepresented the

Galaxy S4’s storage capacity and rigged the phone to operate

at a higher speed when it was being tested. The complaint

alleged that these deceptive acts constituted common law

fraud and violated California’s Consumers Legal Remedies

Act (Cal. Civ. Code §§ 1750–1784), California’s Unfair

Competition Law (Cal. Bus. & Prof. Code §§ 17200–17210),

and California’s False Advertising Law (Cal. Bus. & Prof.

Code §§ 17500–17509). The complaint sought certification

of the case as a class action for all purchasers of the Galaxy

S4 phone in California. Norcia did not bring any claims for

breach of warranty. 

Instead of filing an answer to the complaint, Samsung

moved to compel arbitration by invoking the arbitration

provision in the Product Safety & Warranty Information

brochure. The district court denied Samsung’s motion. It

held that even though Norcia should be deemed to have

received the Galaxy S4 box, including the Product Safety &

Warranty Information brochure, the receipt of the brochure

did not form an agreement to arbitrate non-warranty claims. 

Samsung timely appealed the district court’s order.

The district court had jurisdiction under 28 U.S.C.

§ 1332(d)(2), because the parties satisfied minimal diversity

and the amount in controversy exceeded $5 million. We have

jurisdiction under the Federal Arbitration Act, 9 U.S.C. § 16. 

“We review the district court’s decision to deny the motion to

compel arbitration de novo.” Davis v. Nordstrom, Inc., 755

F.3d 1089, 1091 (9th Cir. 2014). “Factual findings are

reviewed for clear error, but where no facts are in dispute our

entire review is de novo.” Id. (internal citation omitted).

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NORCIA V. SAMSUNG TELECOMM. 7

II

“[A]rbitration is a matter of contract and a party cannot be

required to submit to arbitration any dispute which he has not

agreed so to submit.” AT&T Techs., Inc. v. Commc’ns

Workers of Am., 475 U.S. 643, 648 (1986) (quoting United

Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363

U.S. 574, 582 (1960)). Therefore, to evaluate the district

court’s denial of Samsung’s motion to compel arbitration, we

must first determine “whether a valid agreement to arbitrate

exists.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207

F.3d 1126, 1130 (9th Cir. 2000); see also Kilgore v. KeyBank,

Nat’l Ass’n, 718 F.3d 1052, 1058 (9th Cir. 2013) (en banc). 

As the party seeking to compel arbitration, Samsung bears

“the burden of proving the existence of an agreement to

arbitrate by a preponderance of the evidence.” Knutson v.

Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014)

(citing Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal. 4th

394, 413 (1996)).

Samsung raises two theories of contract formation to

support its argument that Norcia entered into a binding

contract with Samsung to arbitrate his claims. First, Samsung

claims that the inclusion of the arbitration provision in the

Product Safety & Warranty Information brochure created a

valid contract between Samsung and Norcia to arbitrate all

claims related to the Galaxy S4 phone. Second, Samsung

contends that the Customer Agreement signed by Norcia

incorporated the terms of its Product Safety & Warranty

Information brochure by reference and created a binding

contract between Norcia and Samsung. 

In analyzing these arguments, we “apply ordinary

state-law principles that govern the formation of contracts” to

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8 NORCIA V. SAMSUNG TELECOMM.

decide whether an agreement to arbitrate exists. First

Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995). 

Here, the parties agree that California law governs the issue

of contract formation. In discerning California law, we are

bound by the decisions of the California Supreme Court,

“including reasoned dicta.” Muniz v. United Parcel Serv.,

Inc., 738 F.3d 214, 219 (9th Cir. 2013). If the California

Supreme Court has not directly addressed the question before

us, we must predict how it would decide the issue. See

Glendale Assocs., Ltd. v. NLRB, 347 F.3d 1145, 1154 (9th

Cir. 2003) (internal quotation marks omitted). We generally

will “follow a published intermediate state court decision

regarding California law unless we are convinced that the

California Supreme Court would reject it.” Muniz, 738 F.3d

at 219. Applying California law, we address each of

Samsung’s theories in turn. 

A

We first evaluate whether the Product Safety & Warranty

Information brochure in the Galaxy S4 box created a binding

contract between Norcia and Samsung to arbitrate the claims

in Norcia’s complaint. Although the brochure is in the form

of an express consumer warranty from Samsung to Norcia,

the arbitration provision states that arbitration is required not

only for “[a]ll disputes with Samsung arising in any way from

this limited warranty” but also for all disputes arising from

“the sale, condition or performance of the products.” 

Norcia’s complaint involves a non-warranty dispute. Thus,

our analysis is governed by contract law—not warranty law.

We begin with the basic principles of California contract

law. Generally, under California law, “the essential elements

for a contract are (1) ‘[p]arties capable of contracting;’ (2)

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NORCIA V. SAMSUNG TELECOMM. 9

‘[t]heir consent;’ (3) ‘[a] lawful object;’ and (4) ‘[s]ufficient

cause or consideration.’” United States ex rel. Oliver v.

Parsons Co., 195 F.3d 457, 462 (9th Cir. 1999) (alterations in

original) (quoting Cal. Civ. Code § 1550). A party who is

bound by a contract is bound by all its terms, whether or not

the party was aware of them. “A party cannot avoid the terms

of a contract on the ground that he or she failed to read it

before signing.” Marin Storage & Trucking, Inc. v. Benco

Contracting & Eng’g, Inc., 89 Cal. App. 4th 1042, 1049

(2001). 

“A contract for sale of goods may be made in any manner

sufficient to show agreement, including conduct by both

parties which recognizes the existence of such a contract.” 

Cal. Com. Code § 2204(1). “Courts must determine whether

the outward manifestations of consent would lead a

reasonable person to believe the offeree has assented to the

agreement.” Knutson, 771 F.3d at 565 (citing Meyer v.

Benko, 55 Cal. App. 3d 937, 942–43 (1976)). 

As a general rule, “silence or inaction does not constitute

acceptance of an offer.” Golden Eagle Ins. Co. v. Foremost

Ins. Co., 20 Cal. App. 4th 1372, 1385 (1993); see also Sorg

v. Fred Weisz & Assocs., 14 Cal. App. 3d 78, 81 (1970). 

California courts have long held that “[a]n offer made to

another, either orally or in writing, cannot be turned into an

agreement because the person to whom it is made or sent

makes no reply, even though the offer states that silence will

be taken as consent, for the offerer cannot prescribe

conditions of rejection so as to turn silence on the part of the

offeree into acceptance.” Leslie v. Brown Bros. Inc., 208 Cal.

606, 621 (1929); see also 1 Witkin, Summary of California

Law, Contracts § 193 (10th ed. 2005) (collecting California

cases). 

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10 NORCIA V. SAMSUNG TELECOMM.

There are exceptions to this rule, however. An offeree’s

silence may be deemed to be consent to a contract when the

offeree has a duty to respond to an offer and fails to act in the

face of this duty. Golden Eagle, 20 Cal. App. 4th at 1386;

see also Beatty Safway Scaffold, Inc. v. Skrable, 180 Cal.

App. 2d 650, 655 (1960). For example, in Gentry v. Superior

Court, an employee signed an “easily readable, one-page

form” acknowledging that he would be required to arbitrate

all employment-related legal disputes unless he opted out. 42

Cal. 4th 443, 468 (2007), abrogated on other grounds by

AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). By

signing this agreement, the employee “manifested his intent

to use his silence, or failure to opt out, as a means of

accepting the arbitration agreement.” Id. Therefore, the

California Supreme Court held that the employee’s failure to

act constituted acceptance of the agreement. Id.

An offeree’s silence may also be treated as consent to a

contract when the party retains the benefit offered. See

Golden Eagle, 20 Cal. App. 4th at 1386; see also Cal. Civ.

Code § 1589 (“A voluntary acceptance of the benefit of a

transaction is equivalent to a consent to all the obligations

arising from it, so far as the facts are known, or ought to be

known, to the person accepting.”). In Golden Eagle, a couple

received a renewal certificate from their insurance company,

and retained the benefit of the renewed insurance policy

without paying the premium. 20 Cal. App. 4th at 1386. The

court held that in light of the existing relationship between

the couple and the insurance company, the couple’s retention

of the renewal certification was “sufficient evidence of

acceptance of the renewal policy” under California law. Id.

at 1386–87. 

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NORCIA V. SAMSUNG TELECOMM. 11

Even if there is an applicable exception to the general rule

that silence does not constitute acceptance, courts have

rejected the argument that an offeree’s silence constitutes

consent to a contract when the offeree reasonably did not

know that an offer had been made. See Windsor Mills, Inc.

v. Collins & Aikman Corp., 25 Cal. App. 3d 987, 993 (1972). 

In Windsor Mills, a buyer ordered yarn from a supplier, and

the supplier acknowledged the order on a printed form which

stated “in small print” on the reverse side of the form, “15.

Arbitration: Any controversy arising out of or relating to this

contract shall be settled by arbitration in the City of New

York . . . .” Id. at 989–90. The court concluded that the

buyer was not bound by this provision because “an offeree,

regardless of apparent manifestation of his consent, is not

bound by inconspicuous contractual provisions of which he

was unaware, contained in a document whose contractual

nature is not obvious.” Id. at 993; see also Marin Storage, 89

Cal. App. 4th at 1049–50 (noting that a party is not bound by

a document that “does not appear to be a contract and the

terms are not called to the attention of the recipient”). 

We now apply these principles of California law to

determine whether Norcia engaged in any conduct sufficient

to show that he agreed to be bound by the arbitration

agreement in the Product Safety & Warranty Information

brochure. There is no dispute that Norcia did not expressly

assent to any agreement in the brochure. Nor did Norcia sign

the brochure or otherwise act in a manner that would show

“his intent to use his silence, or failure to opt out, as a means

of accepting the arbitration agreement.” Gentry, 42 Cal. 4th

at 468. Under California law, an offeree’s inaction after

receipt of an offer is generally insufficient to form a contract. 

Leslie, 208 Cal. at 621. Therefore, Samsung’s offer to

arbitrate all disputes with Norcia “cannot be turned into an

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12 NORCIA V. SAMSUNG TELECOMM.

agreement because the person to whom it is made or sent

makes no reply, even though the offer states that silence will

be taken as consent,” id., unless an exception to this general

rule applies. 

Samsung fails to demonstrate the applicability of any

exception to the general California rule that an offeree’s

silence does not constitute consent. Samsung has not pointed

to any principle of California law that imposed a duty on

Norcia to act in response to receiving the Product Safety &

Warranty Information brochure. Gentry, 42 Cal. 4th at 468. 

Nor was there any previous course of dealing between the

parties that might impose a duty on Norcia to act. See Beatty

Safway Scaffold, 180 Cal. App. 2d at 655. Moreover,

Samsung has not alleged that Norcia retained any benefit by

failing to act. See Cal. Civ. Code § 1589. Indeed, the

brochure states that Norcia was entitled to “the benefits of the

Limited Warranty” regardless whether Norcia opted out of

the arbitration agreement. 

In the absence of an applicable exception, California’s

general rule for contract formation applies. Because Norcia

did not give any “outward manifestations of consent [that]

would lead a reasonable person to believe the offeree has

assented to the agreement,” Knutson, 771 F.3d at 565, no

contract was formed between Norcia and Samsung, and

Norcia is not bound by the arbitration provision contained in

the brochure. 

To counter this conclusion, Samsung argues that Norcia

was bound by the terms set forth in the brochure because the

brochure is analogous to a shrink-wrap license, which we

held was enforceable in California, see Wall Data Inc. v. L.A.

Cty. Sheriff’s Dep’t, 447 F.3d 769, 782 (9th Cir. 2006), or is

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NORCIA V. SAMSUNG TELECOMM. 13

analogous to terms included in a box sent to the consumer

(referred to here as an “in-the-box” contract), which the

Seventh Circuit has held to be enforceable, see Hill v.

Gateway 2000, Inc., 105 F.3d 1147, 1148 (7th Cir. 1997). 

We consider each of these arguments in turn.

In Wall Data, we considered a software manufacturer’s

claim that a sheriff’s department had violated the terms of its

shrink-wrap license, click-through license, and volume

license booklets, and infringed the manufacturer’s copyright,

by installing software on 6,007 computers when the

department was licensed to install the software on only 3,663

computers. 447 F.3d at 773–75. We defined a “shrink-wrap

license” as “a form on the packing or on the outside of the

CD-ROM containing the software which states that by

opening the packaging or CD-ROM wrapper, the user agrees

to the terms of the license.” Id. at 775 n.4. In connection

with upholding an evidentiary ruling by the district court, we

stated that such licenses are enforceable in California, id. at

782, citing Lozano v. AT&T Wireless, 216 F. Supp. 2d 1071,

1073 (C.D. Cal. 2002).1 We did not address the question

whether the license created a contract; rather, we held that the

sole issue to be resolved at trial was whether the sheriff’s

department violated the terms of the software licenses, and

therefore the district court did not err in declining to provide

an instruction on contract formation. Wall Data, 447 F.3d at

786. 

1

 Our unreasoned conclusion that California courts would enforce a

shrink-wrap license is not free from doubt. Lozano did not cite any

California cases and has since been vacated. See Lozano v. AT&T

Wireless, No. CV02-00090WJRAJWX, 2003 WL 25548566, at *1 (C.D.

Cal. Aug. 18, 2003). We have found no California case addressing this

issue, and Samsung has cited none.

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14 NORCIA V. SAMSUNG TELECOMM.

In light of this limited analysis, Wall Data at most stands

for the proposition that a shrink-wrap license of intellectual

property is enforceable in California. This prediction of how

California courts would rule is not untenable: Where a notice

on a package states that the user agrees to certain terms by

opening the package, a court could reasonably conclude,

consistent with California contract law, that the user has a

duty to act in order to negate the conclusion that the

consumer had accepted the terms in the notice. This principle

does not help Samsung, however. Even if a license to copy

software could be analogized to a brochure that contains

contractual terms, the outside of the Galaxy S4 box did not

notify the consumer that opening the box would be

considered agreement to the terms set forth in the brochure. 

Cf. id. at 775 n.4. Under these circumstances, California’s

general rule that silence or inaction does not constitute

acceptance is binding. Accordingly, Wall Data does not

support Samsung’s argument that Norcia was bound by the

brochure contained in the Galaxy S4 box. 

We next consider Samsung’s argument that the Product

Safety & Warranty Information brochure is enforceable as an

in-the-box contract, as the Seventh Circuit held in Hill, 105

F.3d at 1147. In Hill, consumers ordered a computer over the

phone. Id. at 1148. When the box arrived, it contained the

computer and “a list of terms, said to govern unless the

customer return[ed] the computer within 30 days.” Id. The

terms included an arbitration provision. Id. The Seventh

Circuit stated that “[p]ractical considerations support

allowing vendors to enclose the full legal terms with their

products,” id. at 1149, and concluded that “[b]y keeping the

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NORCIA V. SAMSUNG TELECOMM. 15

computer beyond 30 days, the [buyers] accepted [the seller’s]

offer, including the arbitration clause,” id. at 1150.2

Samsung claims that California courts have adopted the

reasoning expressed in Hill, citing Weinstat v. Dentsply

International Inc., 180 Cal. App. 4th 1213 (2010). In

Weinstat, dentists brought an action for breach of express

warranty (among other claims) against the manufacturer of a

tooth-cleaning device. 180 Cal. App. 4th at 1217–18. The

warranties at issue were contained in an instruction booklet

sealed in the box containing the device. Id. at 1228. The

manufacturer argued that such statements were not express

warranties because the dentists were not aware of them before

they bought the product. Id. The court rejected that

argument, holding that absent proof to the contrary, any

affirmation made by the manufacturer before the delivery of

the product to a consumer, including statements contained in

the product box, constituted an express warranty. Id. at 1229. 

Although section 2313 of the California Commercial Code

provides that express warranties are comprised of

affirmations by the manufacturer that become “part of the

basis of the bargain,” the court stated that the parties’ bargain

“is distinguishable from the ‘contract’” so a manufacturer’s

affirmations could become “part of the basis of the bargain”

for purposes of warranty law even after a contract was

formed. Id. at 1230. Therefore, the dentists could state a

cause of action for breach of the express warranties contained

in the instruction booklet. Id.

2 Hill did not determine which state’s law applied to contract

formation; nor did it cite the law of any state. 105 F.3d at 1149. Rather,

the Seventh Circuit appeared to provide its own view of the Uniform

Commercial Code. Id.

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16 NORCIA V. SAMSUNG TELECOMM.

Samsung argues that Weinstat, read in light of Hill, stands

for the proposition that terms and conditions included in a

brochure in a product box constitute a binding contract

between the manufacturer and the consumer. Therefore,

Samsung claims, Norcia accepted Samsung’s offer contained

in the Product Safety & Warranty Information brochure,

including the arbitration clause, which became a binding

agreement between Norcia and Samsung. 

We disagree. Samsung’s reliance on Weinstat is

misplaced, because it is based on a misunderstanding of the

difference between California warranty law and contract law,

which are governed by different sets of rules. Compare Cal.

Com. Code §§ 2201–2210 (governing contract formation),

with Cal. Com. Code §§ 2313–2317 and Cal. Civ. Code

§§ 1790–1795.8 (governing the formation of express and

implied warranties). A seller is bound by any express

warranties given to the buyer, including statements in written

warrantyagreements, advertisements, oral representations, or

presentations of samples or models. See Keith v. Buchanan,

173 Cal. App. 3d 13, 20 (1985); see also 4 Witkin, Summary

of California Law, Sales §§ 56–62 (10th ed. 2005). Language

in a written warranty agreement is “contractual” in the sense

that it creates binding, legal obligations on the seller, see

Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824,

830 (2006), but a warranty does not impose binding

obligations on the buyer. Rather, warranty law “focuses on

the seller’s behavior and obligation—his or her affirmations,

promises, and descriptions of the goods—all of which help

define what the seller in essence agreed to sell.” Weinstat,

180 Cal. App. 4th at 1228 (internal quotation marks omitted);

see also Cal. Com. Code § 2313. A buyer may have to fulfill

certain statutory conditions to obtain the benefit of a

warranty. See, e.g., Cal. Civ. Code § 1793.02(c) (stating that

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NORCIA V. SAMSUNG TELECOMM. 17

“[i]f the buyer returns the [assistive device for an individual

with a disability] within the period specified in the written

warranty,” the seller must adjust or replace the device

(emphasis added)). But a warranty generally does not impose

any independent obligation on the buyer outside of the

context of enforcing the seller’s promises. Weinstat, 180 Cal.

App. 4th at 1228 (“[T]he whole purpose of warranty law is to

determine what it is that the seller has in essence agreed to

sell . . . .” (internal quotation marks omitted)); Cal. Com.

Code § 2313(1)(a) (stating that an express warranty is a

“promise made by the seller to the buyer which relates to the

goods”). A condition that must be satisfied before a

consumer can enforce a warranty is not equivalent to a

freestanding obligation that limits a buyer’s rights outside of

the scope of warranty itself. 

Weinstat focused on warranty formation under section

2313 of the California Commercial Code, not on contract

formation. Accordingly, Weinstat did not adopt the rule

stated in Hill, that statements in a brochure enclosed in a

product box create a contract between the seller and

consumer that can limit the consumer’s rights to bring legal

actions against the manufacturer for claims not involving an

express warranty.

3

Samsung also relies on a Second Circuit case, Schnabel

v. Trilegiant Corp., 697 F.3d 110 (2d Cir. 2012), to support

its argument that California courts have adopted the reasoning

3 Under Weinstat, Samsung may be able to require Norcia to arbitrate

claims arising out of the Standard Limited Warranty contained in the

Product Safety & Warranty Information brochure, but we need not

consider the enforceability of any such limitation because Norcia has not

brought any warranty claims against Samsung. 

 Case: 14-16994, 01/19/2017, ID: 10271124, DktEntry: 33-1, Page 17 of 22
18 NORCIA V. SAMSUNG TELECOMM.

in Hill for enforcing in-the-box contracts. In Schnabel, the

Second Circuit considered a complaint involving defendants

who encouraged website visitors to enroll for a free trial

period of an entertainment service, and then continued to bill

those customers each month if they failed to cancel the

service. 697 F.3d at 114–17. The defendants moved to

compel arbitration of the complaint. Id. at 117. They argued

that they had presented an arbitration provision to the

customers through a hyperlink on their website, as well as by

sending the customers a follow-up email. Id. at 113. By

failing to cancel the service, the defendants argued, the

customers had agreed to be bound by the arbitration

provision. Id. at 121. In responding to this argument,

Schnabel noted that some recent cases had held that licenses

included in a product box may “become enforceable contracts

upon the customer’s purchase and receipt of the package and

the failure to return the product after reading, or at least

having a realistic opportunity to read, the terms and

conditions of the contract included with the product.” Id. at

122 (citing Hill, 105 F.3d at 1150). But even cases applying

these principles, Schnabel noted, “do not nullify the

requirement that a consumer be on notice of the existence of

a term before he or she can be legally held to have assented

to it.” Id. at 124. Because the information provided to the

customers did not give them inquiry notice of the arbitration

provision included in the email, Schnabel rejected the

defendants’ arguments as a matter of both California and

Connecticut contract law (without resolving the dispute as to

which state’s law was applicable). Id. at 128. 

We used similar reasoning in Knutson. See 771 F.3d at

566–67. This case raised the question whether a plaintiff who

bought a Toyota vehicle that included a 90-day trial

subscription to a satellite radio service was bound by a

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NORCIA V. SAMSUNG TELECOMM. 19

customer agreement in a “Welcome Kit” that he received a

month later from the radio service. Id. at 561–62. Applying

California law, we held that the plaintiff was not bound

because a reasonable person in the plaintiff’s position would

not understand that receiving the Welcome Kit and failing to

cancel the trial subscription to the radio service constituted

assent to the arbitration provision. Id. at 565. We rejected

the defendant’s argument that its customer agreement was a

valid shrink-wrap agreement, holding that while “a party

cannot avoid the terms of a contract by failing to read them

before signing,” id. at 567, no contract is formed “when the

writing does not appear to be a contract and the terms are not

called to the attention of the recipient,” id. (quoting Marin

Storage, 89 Cal. App. 4th at 1049–50).

Neither Schnabel nor Knutson held that California courts

enforce in-the-box contracts. Rather, they concluded that

even if a customer may be bound by an in-the-box contract

under certain circumstances, such a contract is ineffective

where the customer does not receive adequate notice of its

existence. Even under this analytic approach, Samsung’s

arguments would fail. In this case, Samsung gave a brochure

entitled “Product Safety & Warranty Information.” Such a

brochure indicates that it contains safety information and the

seller’s warranty, which constitutes the seller’s “affirmation

of fact[s] or promise” relating to the Galaxy S4 phone. Cal.

Com. Code § 2313(1)(a). A reasonable person in Norcia’s

position would not be on notice that the brochure contained

a freestanding obligation outside the scope of the warranty. 

Nor would a reasonable person understand that receiving the

seller’s warranty and failing to opt out of an arbitration

provision contained within the warranty constituted assent to

a provision requiring arbitration of all claims against the

seller, including claims not involving the warranty. Because

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20 NORCIA V. SAMSUNG TELECOMM.

“an offeree, regardless of apparent manifestation of his

consent, is not bound byinconspicuous contractual provisions

of which he was unaware, contained in a document whose

contractual nature is not obvious,” Windsor Mills, Inc., 25

Cal. App. 3d at 993, Norcia was not bound by the arbitration

provision even if the in-the-box contract were otherwise

enforceable under California law.4

In the absence of support from California courts,

Samsung urges us to conclude, as the Seventh Circuit did in

Hill, that the practicalities of consumer transactions require

the enforcement of in-the-box contracts and that consumers

expect that products will come with additional terms. We

decline this request. Even if we were persuaded by

Samsung’s argument, “the Legislature, and not the courts, is

vested with the responsibility to declare the public policy of

the state.” Green v. Ralee Eng’g Co., 19 Cal. 4th 66, 71

(1998). If the California Legislature believes that its current

commercial code fails to strike an appropriate balance

between consumer expectations and the burden on commerce,

it can amend the law.

Because California courts have not adopted the principle

set forth in Hill, but have made clear that silence alone does

4 Samsung also cites Murphy v. DirecTV, Inc., 724 F.3d 1218 (9th

Cir. 2013), to support its argument that California courts recognize in-thebox contracts. But Murphy is inapposite. Murphy held that plaintiffs

waived their argument that they had not assented to an arbitration

provision contained in a customer agreement; therefore we provided no

analysis of the elements required for a contract to be enforceable under

California law. Id. at 1225 n.4. Absent such explanation, Murphy’s dicta

that the district court correctly concluded that plaintiffs had received the

customer agreement, accepted defendant’s services, and were bound by

the terms of the contract, does not provide guidance in this case.

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NORCIA V. SAMSUNG TELECOMM. 21

not constitute assent, see Golden Eagle, 20 Cal. App. 4th at

1385, we reject Samsung’s argument that Norcia reasonably

assented to the arbitration provision because he failed to opt

out of the arbitration provision contained in the product box. 

Under the circumstances in this case, we conclude that

Samsung’s inclusion of a brochure in the Galaxy S4 box, and

Norcia’s failure to opt out, does not make the arbitration

provision enforceable against Norcia.

B

We next turn to Samsung’s second argument, that Norcia

agreed to arbitrate his claims by signing the Customer

Agreement with Verizon Wireless. This argument is

meritless. 

The Customer Agreement is an agreement between

Verizon Wireless and its customer. Samsung is not a

signatory. While the agreement itself includes a number of

terms governing the relationship between Norcia and Verizon

Wireless, including an arbitration provision, nothing in the

agreement references Samsung or any other party. 

Samsung argues that it may enforce the arbitration

agreement because it is a third-party beneficiary of the

agreement between Verizon Wireless and Norcia. Under

California law, “[t]he mere fact that a contract results in

benefits to a third party does not render that party a ‘third

party beneficiary’”; rather, the parties to the contract must

have intended the third party to benefit. Matthau v. Superior

Court, 151 Cal. App. 4th 593, 602 (2007); see also Hess v.

Ford Motor Co., 27 Cal. 4th 516, 524 (2002); 1 Witkin,

Summary of California Law, Contracts § 689 (10th ed. 2005). 

In this case, Samsung does not point to any evidence in the

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22 NORCIA V. SAMSUNG TELECOMM.

record indicating that Norcia and Verizon Wireless intended

the Customer Agreement to benefit Samsung. Therefore, we

conclude that Samsung fails to bear its burden of establishing

that it was a third-party beneficiary.

III

The Federal Arbitration Act “embodies the national

policy favoring arbitration.” Buckeye Check Cashing, Inc. v.

Cardegna, 546 U.S. 440, 443 (2006). But the “liberal federal

policy regarding the scope of arbitrable issues is inapposite”

when the question is “whether a particular party is bound by

the arbitration agreement.” Comer v. Micor, Inc., 436 F.3d

1098, 1104 n.11 (9th Cir. 2006) (emphasis omitted); see also

Volt Info. Scis., Inc. v. Bd. of Trs. of the Leland Stanford Jr.

Univ., 489 U.S. 468, 478 (1989) (“[T]he FAA does not

require parties to arbitrate when they have not agreed to do so

. . . .”). Because Samsung failed to carry its burden of

proving the existence of a contract with Norcia to arbitrate as

a matter of California law, the district court did not err in

denying Samsung’s motion to compel arbitration.

AFFIRMED.

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