Samsung, one of the world’s largest makers of smartphones and other electronics, has accused Labaton Sucharow, one of America’s most influential plaintiffs’ law firms, of trying to cram potentially thousands of wrongful claims against Samsung under Illinois’ biometrics privacy law into mass arbitration, allegedly solely in a bid to pressure Samsung into a huge settlement.
As proof, in a new filing, Samsung asserts the names of at least hundreds of people, whom the Labaton firm has claimed to represent for at least five months, have also now cropped up on the list of plaintiffs allegedly represented by another firm, leveling nearly identical claims against the electronics maker.
With this in mind, Samsung has asked a judge to block Labaton’s bid to send the cases to arbitration, instead asserting the firm should be forced to establish the validity of its clients’ claims in court.
Labaton has not yet replied to Samsung’s most recent filing. However, in a brief filed in January in response to Samsung’s opening salvo in its fight to block the mass arbitration, Labaton asserted Samsung is simply attempting to “pound the table,” using bombastic claims and legal maneuvers to thwart attempts by potentially tens of thousands of Illinois Samsung customers to collect payments they are allegedly owed for Samsung’s alleged violations of the Illinois Biometric Information Privacy Act.
For months, Samsung has publicly protested the attempt by trial lawyers to use so-called “mass arbitration” to force them into settlements worth tens of millions of dollars or more.
Samsung has already numbered among the ranks of thousands of businesses operating in Illinois targeted by class action lawsuits under the Illinois BIPA law.
The law, enacted in 2008, establishes a series of rules businesses are obligated to follow when scanning, storing and handling Illinoisans’ so-called biometric identifiers. These include various unique physically identifying features, including fingerprints, retinas and facial geometry, among others.
The law also includes technical provisions, which require businesses to obtain consent from customers or employees before scanning their biometric IDs, and which require businesses to provide certain notices explaining why they scans are taken place and how the business intends to use, handle and ultimately destroy the biometric information scans.
The law allows plaintiffs to demand damages of $1,000 to $5,000 per violation. Recent Illinois Supreme Court decisions have affirmed those damages can be assessed per scan, not per plaintiff, dating back over the preceding five years.
When multiplied over thousands of potential plaintiffs, damages can quickly climb far into hundreds of millions or even billions of dollars. Faced with such risks, many businesses hit with such lawsuits since the first class actions were filed in 2015 have opted to settle, rather than take their chances in court.
Facebook and Google, notably, agreed to pay $650 million and $100 million each to end claims against them stemming from facial geometry scans they conducted on photos uploaded to their respective photo sharing platforms.
Like Facebook and Google, the claims against Samsung accuse the company of improperly scanning people’s faces in photos stored in its smartphones’ Gallery photo sorting software.
In defending against BIPA claims, some companies have sought to use user agreements to remove claims against them to arbitration, seeking to avoid the risks associated with class action lawsuits.
In response, however, plaintiffs’ law firms, which also have pressed BIPA-related class actions in court, have mobilized what court documents call “mass arbitration” operations. Firms, like Labaton and others, have launched marketing campaigns, primarily online, to enlist hundreds of thousands of individual claimants, each allegedly prepared to press claims against companies like Samsung in arbitration, rather than through class actions in court.
Samsung claims it was particularly targeted by Labaton and other firms using such a tactic.
However, in a motion filed in December, Samsung said the Labaton lawyers did not seek to press those arbitration claims individually. Rather, they asserted Labaton approached Samsung with a threat:
Agree to settle the claims collectively, for more than $50 million, or face the threat of having to pay more than $400 million to pay the collective arbitration fees. Those fees would also prospectively include substantial payments to the trial lawyers who pressed the claims.
Samsung said it refused those demands, prompting the Labaton lawyers to make good on their threat, filing about 50,000 claims in arbitration.
In Samsung’s telling, the company then further called Labaton’s bluff, demanding plaintiffs abide by arbitration rules and agree to advance the fees needed to move their claims forward. Under rules established by the American Arbitration Association, successful claimants can then recoup those fees when they are successful.
If Labaton had agreed to arbitrate their claims under those terms, Samsung said it was willing to take the claims through arbitration.
However, when Labaton refused, Samsung said it pulled the plug on the arbitration process, forcing the process into court. There, Labaton has asked a Chicago federal judge to compel Samsung to arbitrate the claims, asserting the company must abide by the arbitration provisions in its user agreements.
Samsung has asked the judge to deny Labaton’s request. Samsung accuses Labaton of using a slapdash plaintiff enlistment process to amass a gigantic registry of unvetted and potentially frivolous claims in a bid to “weaponize” the arbitration process to extract an allegedly unwarranted massive payout from Samsung.
On March 30, Samsung brought to the table some evidence, which it claimed supports its assertions. In that filing, styled as a motion to reassign the case to a different judge, Samsung accused Labaton of representing at least 241 people also claimed as clients in similar actions by other law firms, also seeking to use “mass arbitration” tactics against the electronics maker over nearly identical BIPA claims.
However, Samsung said the actual number of questionable claims could be more, as the hundreds of allegedly duplicate claims came from only about 1,028 people known to be seeking similar arbitration claims, represented by the firm of Milberg Coleman Bryson Phillips Grossman and Robbins Geller Rudman & Dowd. Samsung said it believes the Milberg and Robbins Geller firms intend to ultimately file at least 60,000 additional claims.
They said this means courts should get the chance to force the plaintiffs' firms to prove all of their claims are valid, at least before requiring Samsung to contest them all at arbitration.
In their January filing pushing back against Samsung’s “weaponization” claims, Labaton doesn’t directly dispute Samsung’s recounting of events, or deny their use of mass arbitration threats to press for a big and quick settlement.
Rather, Labaton said Samsung’s incendiary claims are merely a “tantrum” intended to serve as seemingly desperate attempt to escape arbitration in which they should be allegedly legally obligated to participate.
Labaton notes that the AAA deemed their claims “to have met all filing requirements,” and ready to proceed.
Rather, Labaton asserts it is Samsung that is seeking to “weaponize” the arbitration process. They assert the arbitration rules Samsung is attempting to use to buttress their position is not meant to apply to a defendant with such deep pockets, like Samsung.
“Courts … have an interest in forbidding companies from playing fast and loose with the law like Samsung is doing here,” Labaton wrote. “…Samsung does not get to choose the forum it prefers.”
Samsung is represented in the case by attorney Randall W. Edwards, of the firm of O'Melveny & Myers, of San Francisco, and others with that firm and the firms of Donohue Brown Mathewson & Smyth and Kopecky Schumacher Rosenburg, both of Chicago, and Skadden Arps Slate Meager & Flom, of New York.