ClearCast Episode 7: What Kind of Legal Trouble is Samsung in Over the Note 7 Recall?

https://twitter.com/MartysaurusRex/status/777966415403970560

[Editor’s note]

..Not bad at all.

And Welcome to today’s ClearCast!

As always, we appreciate you coming back and all the comments we’ve received through our social media channels.

Today, we tackle the controversy surrounding Samsung and the defective Note 7 phone.

If you are unfamiliar, more than 92 cases of exploding Samsung phones have been reported in America (with more than another dozen reports worldwide).

Included are a phone causing a car to burst into flames, and a very sad story of a small boy in Brooklyn whose phone blew up in his hands as he was watching a video.

Samsung has issued a recall for the defective phones. Problem solved, yes?

Not exactly..

Thanks for watching

-Brian

[End note]

 

 

Transcript:

Jordan Flake: Hi welcome to ClearCast. I’m attorney Jordan Flake and I’m here with attorney Jared Richards, my esteemed partner and personal injury attorney extraordinaire. The reason we brought Jared on today is because he’s going to give us some insight as to a potential, I don’t know I guess it would be a potential products liability issue that’s going on in the news right now. If you pull out your phone right now there’s a chance that you own a Samsung phone, just because it’s a highly popular phone here in America. Jared happens to own the Edge, which fortunately for Jared is not the Samsung phone that’s been blowing up.

Jared Richards: It’s not likely to blow up on me as far as I know.

Jordan Flake: As far as we know.

Jared Richards: I guess we’ll only find out in time.

Jordan Flake: Samsung has recently released the very popular Note 7 and it’s been blowing up on people. In fact there have been 92 reported cases of these phones blowing up. How do we start to think about this? Jared, if somebody calls you up on their land line because their phone’s exploded. They call you on the land line and they say, “Jared, my Note 7 blew up while I was watching a video. It burned both my happens.”

Jared Richards: Now and handless.

Jordan Flake: Now I’m handless.

Jared Richards: When it blows up do we know how violent the explosions are?

Jordan Flake: Brian. Can you help us out. Brian’s off camera here. He can help us with that.

Brian: It varies from explosion to explosion. Some have been very serious.

Jordan Flake: Some just kind of catch fire.

Brian: Some explode in people hands. One exploded in a guy’s pocket. He had a second degree burn on his hand when he tried to take it out of his pocket.

Jared Richards: What’s interesting is, as you know I was in the air quite a bit last week. We had business up in Canada and we had business in Iowa. I had to fly out to go handle those. When I boarded the airplane, every airplane that I boarded, except for Frontier so I guess I worry about them a bit, but every other airline as I boarded they gave us the express instruction that if we have a Note 7 that we are not to turn it on, not to use it, not to take it out of the bag, make sure that it is off at all times. This is something that the … they were saying that was what the FAA was instructing them to say. It’s something that’s of concern that airlines certainly don’t want to have random fliers and explosions on the airplane. As you try to smuggle the Note 7 and you get tackled as a terrorist. Clearly it’s a concern if the phone is going to explode.

The way that I think this is going to play out, it’s going to depend. Every state handles this a little differently. When a manufacturer produces products that go to every state, you’re going to be dealing with generally in the laws of the state that the person got hurt in. Although that might be an interesting analysis that somebody does at some point if they don’t like the laws of their state. We have two problems here. We have one, exploding phones. The exploding phone itself makes the product not worthwhile. Nobody wants have an exploding phone and nobody wants to have the risk of having an exploding phone.

Jordan Flake: Although Samsung did point out that the risk was about the same as getting struck by lighting.

Jared Richards: Sure but nobody opts into that situation. Nobody stands on a mountaintop during a thunderstorm with a rusty umbrella saying, “God I dare you.” As I was flying trying to turn on my Note 7 and an air Marshall was tackling me I was trying to explain to him …

Jordan Flake: It’s only as likely as getting struck by lightning.

Jared Richards:  We have three potential different types of lawsuits that might go on on something like that. First you have a class action suit. The point of a class action suit is that everybody has the same kind of damages. Whereas some people have been burnt and some people have had other property destroyed, they don’t all have the same type of damage. There is one aspect of damage that everybody does have. That is everybody now has a phone that has either exploded or that they’re worried about having explode. The cost of the phone itself is a similar damage across the board. Presumably some law firm out there probably already has started a class action suit to try to represent everybody in the United states in the market that has purchased this phone to try to get them a refund for the price of their phone. Quite frankly that could be a huge class action. For the individual person it’s not all that valuable, it’ll be a few hundred dollars. For the attorney’s that take a percentage of the total amount it’s going to be a significant amount.

Then we have two other types of injuries. We have injuries to person and injuries to property. There are two different theories of liabilities that are going to be popular here. The first theory is that of strict products liability. Strict product’s liability is only going to deal with the malfunctions that actually hurt a human. Strict product liability, probably if you need to replace your pants that got burnt or on the case that Brian was telling us about where a car was burnt down or if you’re an airline owner and somebody smuggles in the Note 7 and blows up your plane with it that really isn’t a strict products liability because we’re dealing with property damage.

As far as damage to people go, what we look at and different states do different things. The majority of states still follow what we call the consumer expectation test. The consumer expectation test just simply asks the question when you buy a phone and it blows up on you were you expecting it? This area of law actually is really complex and there’s a lot of law and a lot of judgement and case law that we can use on this and different tests that we use. The very basic test is that of consumer expectation. If the phone is more dangerous than a consumer would normally expect then it’s a dangerous product and the company is going to be strictly liable …

Jordan Flake: For the damage to the person.

Jared Richards: For the damage to the person under that idea that the manufacturer is really the common factor and it doesn’t’ even matter, let’s say that to make the phone explode you have to turn around three times and spit over your left shoulder and that’s the only way you make it explode. You say, ‘Well people shouldn’t be turning around three times and spitting over their left shoulder. That person was negligent.” In strict product liability we don’t even care about the negligence of the user. We look at what the manufacturer did.

Jordan Flake: Right so if you left your phone … let’s say the common denominator is everybody had left their phone in a hot car immediately prior to picking it up and putting it in their pocket.

Jared Richards: You say, ‘Well why did you do that? That was stupid?”

Jordan Flake: Right you shouldn’t leave that in a hot car.

Jared Richards: Under a normal analysis you would look at the total damage. Let’s say the total damage was $100 to the person. It’s going to be more than that but $100 is a nice even number. You’ll say, “Okay well we’re going to put 20% on the user because they shouldn’t have left it in the car. We’ll put 80% on the manufacturer, manufacturer you have to pay 80%.” Under strict product liability we don’t care what the user did. We put it all on the manufacturer and the manufacturer is going to be liable for the damage they’ve done.

Jordan Flake: As a policy consideration of we want the big and powerful product manufacturers in our country, such as Samsung, to make safe product.

Jared Richards: To make safe products. Now other states are going to use other tasks, not so much consumer expectation, that was there a safer design? The answer is, I don’t know my phone hasn’t blown up on me. I’m sure that there’s a safer design out there, one that doesn’t blow up.

Jordan Flake: Should I just stop carrying my phone. I carry my phone in my front pocket. Could I carry it somewhere else?

Jared Richards:  You’re not going to be carrying it … I was thinking maybe you have a special case to make it so it doesn’t … it’s like a firecracker. What happens when you put your hand around a firecracker? Big explosion. You have to be careful. As far a damage to property we use a different theory of law, it’s called a product warranty. It’s just simply saying there was an implied contract that they were going to give you something that wasn’t going to blow up. They breached that contract so now they’re responsible for the property damage they caused.

Jordan Flake: Let me ask you a question. Let’s say the judge looks into this and they find out that Samsung was like, “Oh man these phones blow up but you know what? We have to rush this out there because iPhone 7 is being put on the market too.”

Jared Richards: That’s when things get really interesting.

Jordan Flake: Does that come in under the class action side? Now we’d be talking about punitive damages right? Does that come in under the class action side or the personal side or possibly both?

Jared Richards:  Both. What’s going to happen is if Samsung actually knew that their product was dangerous before they shipped it out.

Jordan Flake: Yeah Samsung. They probably didn’t know which just my guess is.

Jared Richards:  We have no idea. Samsung, please don’t sue us we have no idea.

Jordan Flake:      Don’t send your people out to us because we don’t think you were witting there like, “Oh one in every hundred blows up.”

Jared Richards:  You’re giving that, I’m just saying I have no idea. I’m not implying they did, I’m not implying they didn’t. I have no basis upon which to form an opinion. I’m not forming an opinion. Let’s say there’s a magic document, the damning email, the magic bullet that you have one of the designers sent a memo over to a vice president that said, “Warning, we’re not so sure about this.” The vice president got the memo and it went out anyway. Then we’re talking about punitive damages and punitive damages are going to apply at all the different levels.

Jordan Flake: All the way, everywhere.

Jared Richards: Well every case the judge makes the determination of whether punitive damages are appropriate in this case. In the class action where everybody has lost, I mean what is the Note it’s like $800? Everybody’s lost an expensive $800 device either because it’s blown up or because it’s not worthy, fit, safe to keep in your pocket so they have to get a new phone. I don’t know, did they sell a million of these? I don’t know how many they sold. You look at the judge and say, “Your honor, they’ve caused $800 million of property damage by selling unfit phones and they knew about it and they sent it out for profit anyway.” The punitive damages there may be very large. Every judge is going to make the determination whether punies are going to be appropriate in their case. If you have somebody who lost a hand, again I don’t know how explosive these explosions are, but if somebody lost a hand or lost the use of their hand because it was so burnt, then that person might also very justifiably go after punitive damages against the company.

It’s possible there would come a point where a judge would say, “Okay the purpose of punitive damages is never to award the person who’s been hurt. It’s only meant to send a message.” There’s already been so many millions of dollars in punitive awards against this company, guys message has been sent. We’re not going to find punitive damages appropriate in this case. The plaintiff only has so much room to complain because the punitive damages, although the plaintiff is the one that gets the money. They’re never really his, it was for the purpose of teaching a lesson and to prevent other people from doing the same thing.

Jordan Flake: Sure that makes perfect sense. I think that gives us a good rundown on obviously if you have a products liability situation you can probably easily tell if Jared’s the right guy to call. If you have something like that pop up let us know. In the meantime, as always, we’re very interested to hear your thoughts on this. Let us know if you have a different take on this or if you think the cell phone companies need to be treated differently when they have this type of situation come up. Leave us a message and let us know. Thanks so much for joining Clearcast. We really appreciate it.

Jared Richards:  Thank you.

 

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