Professional Documents
Culture Documents
: 2610/16 CP
ONTARIO
SUPERIOR COURT OF JUSTICE
1
N
and
_______________________
November 4, 2016
Date
Issued by
Local registrar
London Court House
Address of 80 Dundas Street
court office London ON N6A 6K1
TO:
AND TO:
CLAIM
The Plaintiffs, on their own behalf and on behalf of all Class Members, seek:
(a)
an order certifying this action as a class proceeding and appointing the Plaintiffs
as the representative plaintiffs of the proposed national class pursuant to the Class
Proceedings Act, 1992, S.O. 1992, c. 6;
(b)
a declaration that the Defendants actions (as hereinafter described) were false,
misleading, and deceptive contrary to Part III of the Consumer Protection Act,
2002, S.O. 2002, c. 30, Sch. A and the parallel provisions of the consumer
protection legislation in other Canadian provinces as described in Appendix 1
hereto;
(c)
(d)
(e)
a declaration that the Defendants actions (as hereinafter described) were false
and misleading contrary to section 52 of the Competition Act, R.S.C. 1985, c. C
34;
(f)
(g)
(h)
(i)
(j)
a declaration that any funds received by the Defendants through the sale of the
Note? Devices (as hereinafter defined) are held in trust for the benefit of the
Plaintiffs and Class Members;
(k)
a reference to decide any issues not decided at the trial of the common issues;
(1)
costs of administration and notice, plus applicable taxes, pursuant to section 26(9)
of the Class Proceedings Act, 1992, S.O. 1992, c. 6;
(m)
costs of this action pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6,
the Courts ofJustice Act, RS.O. 1990, c. C.43, and the Rules of Civil Procedure,
R.R.O. 1990, Reg. 194;
(n)
(o)
such further and other relief as to this Honourable Court seems just.
THE PARTIES
Plaintiffs
2.
The Plaintiff, Daniel Fuller, is a resident of Leonard, Michigan and is currently in the
process of obtaining Canadian residency and moving to Burlington, Ontario.
3.
4.
The Plaintiffs, Daniel Fuller and Hannah Shaheen, are herein collectively referred to as
the Plaintiffs.
Plaintiffs Experiences
5.
The Plaintiffs each owned a Samsung Galaxy Note 7 smartphone (Note7) which were
purchased through Verizon Wireless at a Best Buy in Michigan. These Note7 devices
were the subject of a global recall in September 2016, described in further detail below,
due to safety risks.
6.
On or about October 20, 2016, while travelling home from their honeymoon in the Turks
and Caicos Islands, the Plaintiffs were both forced to destroy and discard their Note7
devices at the airport after being advised during the check-in process that the Note7 had
been banned from air transportation. During the process of destroying the devices, one
Note7 caught fire.
7.
Due to having to destroy the Note7 devices at the airport, the Plaintiffs lost all personal
information, data, contact lists, photographs, and videos on their devices. Much of this
lost information was personal and cannot be replaced.
8.
9.
To date, the Plaintiffs have not received any compensation and have not received a
replacement device.
Further, the
Plaintiffs have continued to be charged by their carrier, Verizon Wireless, despite being
unable to use the services given the lack of a device.
10.
The Plaintiffs are aware of the current compensation offer being extended by the
Defendants in the range of $25-$ 100. This compensation is wholly inadequate to cover
the damages suffered by the Plaintiffs and Class Members. Further, Samsung has raised
the retail prices of other Samsung smartphone devices in the face of the recall.
The Class
11.
The Plaintiffs seek to represent the following class (the Class) of which the Plaintiffs
are Class Members:
All persons, corporations, and other entities resident in Canada who purchased a
Samsung Galaxy Note 7, a Samsung Galaxy S7, or a Samsung Galaxy S7 Edge
sold, manufactured, or distributed by one or more of the Defendants.
12.
The Samsung Galaxy Note 7 (Note7), the Samsung Galaxy S7 (S7), and the
Samsung Galaxy S7 Edge (S7 Edge) are hereinafter collectively referred to as the
Devices.
Defendants
13.
The Defendant, Samsung Electronics America, Inc., is a New York corporation with its
principal place of business located in Ridgefield Park, New Jersey. Samsung Electronics
America, Inc. is a wholly-owned subsidiary of Samsung Electronics Co., Ltd., which is a
Korean company headquartered in Suwon, South Korea.
14.
The Defendant, Samsung Electronics Canada Inc., is a Canadian corporation with its
principal place of business located in Mississauga, Ontario. Samsung Electronics Canada
Inc. is a wholly-owned subsidiary of Samsung Electronics Co., Ltd., which is a Korean
company headquartered in Suwon, South Korea.
15.
The Defendants, Samsung Electronics America, Inc. and Samsung Electronics Canada
Inc., are herein collectively referred to as the Defendants or Samsung.
16.
The Defendants are responsible for the design, manufacture, marketing, distribution,
and/or sale of the Devices.
17.
In mid-August 2016, the Defendants released the Note7 to the Canadian market. The
Note7 was aggressively marketed by the Defendants as a high-end, flagship smartphone
and came with a substantial purchase price. Approximately 39,000 Note7 devices were
sold or distributed in Canada.
18.
However, shortly after the release of the Note7, reports began to surface indicating that
the devices were overheating, catching fire, and exploding. The dangers of the Note7
were widely reported in the media and Samsung delayed shipment of the Note7 to
complete quality testing. At that time, Samsung did not reveal what it was testing or
which markets would experience delays. This information was clearly available to the
Defendants and was purposefully not shared with the public.
19.
20.
At that time, the Defendants announced that the Note7 devices could be exchanged for a
replacement device for a new Note7 which contained a battery from a different
manufacturer.
21.
However, despite the replacement of the battery in these new devices, the replacement
Note7 devices continued to overheat, catch fire, and/or explode.
Further, consumers
experienced significant delays (sometime weeks) between returning their Note7 devices
and obtaining a replacement Note7. Despite the delays, mobile carriers continued to
charge fees for usage of mobile plans that could not be accessed by consumers who were
without a device.
22.
Shortly thereafter on
September 15, 2016, a formal recall in was issued by the US Consumer Product Safety
Commission.
23.
On September 12, 2016, Health Canada issued a recall noting that the Note7 has the
potential to overheat and burn which poses a fire hazard and, therefore, a threat to public
safety.
24.
On October 10, 2016, the Defendants halted global sales of the Note7 and the next day
announced that production of the Note7 device was permanently terminated.
25.
On October 14, 2016, Transport Canada and the US Federal Aviation Administration
banned all Note7 devices from air transportation in both carry-on baggage and checked
baggage.
26.
Given the internal and external warnings initiated by the Defendants, Health Canada, the
US Consumer Product Safety Commission, Transport Canada, and the US Federal
Aviation Administration, it is clear that the Note7 poses a safety risk. Further, it is clear
that the Defendants were aware of the safety risks for several weeks prior to issuing any
recall or notifying the public.
27.
Subsequent to determining that both the Note7 and the replacement Note7 continued to
malfunction and continued to pose a threat to safety and production of the Note7 was
permanently terminated, as described above, consumers were urged to return their Note7
devices in exchange for a Samsung Galaxy S7 (S7) or a Samsung Galaxy S7 Edge (S7
Edge).
28.
Although the S7 and S7 Edge do not contain all of the features that were available with
the Note7, given the extreme risks identified to both personal and public safety, many
consumers exchanged their Note7 for a either a S7 or a S7 Edge.
10
29.
However, shortly after consumers began to exchange their Note7s for the S7 and/or S7
Edge, safety issues began to arise with respect to the S7 and S7 Edge.
Specifically,
numerous reports have been made both in Canada and internationally indicating that both
the S7 and S7 Edge overheat, catch fire, and/or explode. These reports are reminiscent of
the reports regarding the Note7.
30.
It is clear that both the S7 and S7 Edge pose a safety risk. Further, it is clear that the
Defendants were aware of the safety risks and to date have made no attempt and/or
inadequate attempts to protect consumers and the public from the risks of the S7 and the
S7 Edge.
CAUSES OF ACTION
(a) Breach ofthe Consumer Protection Act, 2002 and the Competition Act
31.
The Defendants actions are false, misleading or deceptive representations under section
14 of the Consumer Protection Act, 2002 and an unfair practice under section 17 of the
Consumer Protection Act, 2002.
(b)
Representations that the Note7 was Devices were of a particular standard and
quality which the Note7 was Devices were not; and
11
(c)
32.
The Defendants expressly warranted to the Plaintiffs and the Class Members that the
Note7 was Devices were of high quality and safe. The Defendants misrepresented these
qualities by providing a product that was subject to a known and dangerous defect and
known to fail prematurely. The Defendants knowingly sold a defective product without
informing consumers about the defect.
33.
Further, the Defendants made material misrepresentations and omissions concerning the
availability of replacement Note7 Devices and the quality of the replacement Note7
Devices. These misrepresentations led the Plaintiffs and Class Members to continue to
pay monthly carrier services for devices that they either could not use or could not
replace.
34.
The Plaintiffs plead and rely on the provisions of the Consumer Protection Act, 2002 and
the parallel provisions of the consumer protection legislation in other Canadian provinces
as described in Appendix 1 hereto.
35.
The Plaintiffs plead and rely on the provisions of the Competition Act.
The Defendants marketing and sale of the Note7 Devices included an implied condition
as to the quality and fitness of the device. Given the known defect of the Note7 Devices
and the ongoing complications regarding the recalls and replacement of the devices, as
12
described in detail above, it is clear that the Note7 was Devices were not of merchantable
quality or fit for use.
37.
The Plaintiffs repeat and rely upon the allegations made in the preceding paragraphs.
38.
The Plaintiffs plead and rely on the provisions of the Sale of Goods Act, R.S.O. 1990, c.
S. 1 and the parallel provisions of the Sale of Goods Act in other Canadian provinces as
described in Appendix 2 hereto.
(c) Negligence
39.
The Defendants were negligent as they know or ought to have known that their unlawful
acts committed by way of production, marketing, and sale of the Note7 Devices would
result in harm to the Plaintiffs and Class Members.
40.
At all material times, the Defendants owed a duty of care to the Plaintiffs and Class
Members to:
(a)
ensure that the Note7 was Devices were fit for intended and/or reasonably
foreseeable use;
(b)
conduct appropriate testing to determine whether and to what extent use of the
Note7 Devices posed serious safety risks;
(c)
properly, adequately, and fairly warn of the magnitude of serious safety risks;
(d)
ensure that consumers and the public were kept fully and completed informed of
all safety risks associated with the Note7 Devices in a timely manner;
(e)
13
(0
properly inform Health Canada and other regulatory agencies of all risks
associated with the Note7 Devices.
41.
42.
The Plaintiffs state that their damages were caused by the negligence of the Defendants.
Such negligence includes, but is not limited to, the following:
(a)
the Defendants failed to ensure that the Note7 was Devices were safe;
(b)
the Defendants failed to ensure that the Note7 was Devices were fit for intended
purpose and of merchantable quality;
(c)
the Defendants failed to adequately test the Note7 Devices in a manner that would
fully disclose the magnitude of the risks associated with the use of the Note7
Devices;
(d)
the Defendants failed to provide the Plaintiffs and Class Members with proper,
adequate, and/or fair and timely warning of the risks associated with use of the
Note7 Devices;
(e)
the Defendants failed to design and establish a safe, effective, and timely
procedure for the disposal of the Note7 Devices;
(1)
the Defendants failed to adequately monitor, evaluate, and act upon reports of
overheating, fire, and/or explosion of the Note7 Devices;
(g)
the Defendants failed to provide any or any adequate updates and/or current
information to the Plaintiffs and Class Members in a timely fashion respecting the
risks of the Note7 Devices as such information became available;
14
(h)
(i)
after noticing problems with the Note7 Devices, the Defendants failed to issue
adequate warnings, failed to issue a timely recall, failed to publicize the problems,
and failed to otherwise act properly in a timely manner to alert the public of the
inherent dangers of the Note7 Devices;
j)
the Defendants represented that the Note7 was Devices were safe and fit for
intended purpose and of merchantable quality when the Defendants knew or
ought to have known that these representations were false;
(k)
the misrepresentations were unreasonable given that the risks that were known or
ought to have been known by the Defendants;
(1)
(m)
in all of the circumstances of this case, the Defendants applied callous and
reckless disregard for the health and safety of the Plaintiffs and Class Members.
43.
As a result of the Defendants breaching their duty of care owed to the Plaintiffs and Class
Members, the Plaintiffs and the Class Members suffered damages.
44.
The Plaintiffs plead and rely on the provisions of the Negligence Act, R.S.O. 1990, c. N-I
and the parallel provisions of other provincial legislation as described in Appendix 3
hereto.
15
Unjust Enrichment
45.
Through the Defendants production, marketing, and sale of the Note7 Devices, the
Defendants were unjustly enriched by profits received and retained from the Plaintiffs
and Class Members. The Plaintiffs and Class Members were correspondingly deprived
by paying for a product that was defective, unfit for use, not of merchantable quality, and
dangerous. There is no established juristic reason for the enrichment of the Defendants.
46.
Revenue generated from the production, marketing, and sale of the Note7 Devices was
revenue received and retained by the Defendants at the expense of the Plaintiffs and Class
Members. The Defendants must be required to disgorge all of the revenues received
thereby.
DAMAGES
47.
The Plaintiffs and Class Members damages were caused by the actions of the
Defendants. As a result of the misrepresentations, deceit, unfair business practices, and
negligence of the Defendants, the Plaintiffs and Class Members have suffered and will
continue to suffer damages.
48.
Rescission of the agreement between the Plaintiffs/Class Members and the Defendants
pursuant to section 18(1) of the Consumer Protection Act, 2002 and the parallel
provisions of other provincial legislation as described in Appendix 1 hereto is not
possible in the circumstances. The Plaintiffs and Class Members are therefore entitled to
recover damages pursuant to section 18(2) of the Consumer Protection Act, 2002 and the
parallel provisions of other provincial legislation as described in Appendix I hereto.
16
49.
The Plaintiffs claim pecuniary and special damages for costs, time, and expenses incurred
in the process of replacement of the Note7 Devices and the ongoing wireless carrier
charges that the Plaintiffs and Class Members have continued to pay despite having a
safe, reliable, and usable wireless device. As a result of the Defendants conduct, the
Plaintiffs and Class Members have suffered and continue to suffer expenses and special
damages of a nature and amount to be particularized prior to trial.
50.
The Plaintiffs claim non-pecuniary and general damages for non-monetary losses
incurred as a result of the Defendants conduct.
damages include, but are not limited to, loss of personal data including photographs, pain
and suffering, and loss of enjoyment.
51.
The Plaintiffs claim punitive, aggravated, and exemplary damages for the reckless and
unlawful conduct of the Defendants. The Defendants acts, wrongdoings, and breaches
of duties constitute unlawful business practices, the effects of which were and are borne
by the Plaintiff and Class Members.
WAIVER OF TORT
52.
53.
As a direct, proximate, and foreseeable result of the Defendants acts and otherwise
wrongful conduct, the Plaintiffs and Class Members were economically harmed by the
Defendants actions.
17
production, marketing, and sale of the Note7 Devices and the Plaintiffs and Class
Members suffered corresponding harm.
The Defendants voluntarily retained these revenues and benefits with full knowledge and
awareness that, as a result of their wrongdoing, the Plaintiffs and Class Members were
harmed.
55.
It would be unreasonable for the Defendants to retain the profits or money received from
the production, marketing, and sale of the Note7 Devices because the Plaintiffs and Class
Members were deceived.
56.
The Plaintiffs plead waiver of tort and request that an accounting be made of all revenues
generated by the Defendants and that all revenues thereof be disgorged and distributed to
the Class Members on an aggregate basis regardless of reliance or harm suffered.
57.
The Plaintiffs plead and rely on section 17.02(g), (h), and (p) of the Rules of Civil
Procedure, allowing for service ex juris of the foreign Defendant.
Specifically, this
originating process may be served without Court Order outside Ontario in that the claim
is:
(a)
(b)
(c)
18
PLACE OF TRIAL
58.
The Plaintiffs propose that this action be tried in the City of London.
November 4, 2016
MCKENZIE LAKE LAWYERS LLP
140 Fullarton Street, Suite 1800
London ON N6A 5P2
19
APPENDIX 1
British Columbia Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2
-
Manitoba The Business Practices Act, C.C.S.M. c. B 120, c. 2 and The Consumer Protection
Act, C.C.S.M. c. C200
New Brunswick
Newfoundland and Labrador Consumer Protection and Business Practices Act, S.N.L. 2009, c.
-
Northwest Territories
Nova Scotia
Nunavut
Quebec
Saskatchewan
Yukon
The Consumer Protection and Business Practices Act, S.S. 2014, c. C-30.2
20
APPENDIX 2
Alberta
British Columbia
Saskatchewan
Yukon
21
APPENDIX 3
British Columbia
Plaintiffs
I)efendants
ONTI RIO
SUPERIOR COURT OF JUSTICE