Norcia v. Samsung Telecommunications America, LLC

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

DANIEL NORCIA, on his own No. 14-16994
behalf and on behalf of all
others similarly situated, D.C. No.
Plaintiff-Appellee, 3:14-cv-00582-JD

v.
OPINION
SAMSUNG
TELECOMMUNICATIONS
AMERICA, LLC, a New York
Corporation; SAMSUNG
ELECTRONICS AMERICA, INC.,
a New Jersey corporation,
Defendants-Appellants.

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
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.
 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,
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
 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.
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).
 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
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)
 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).
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.
 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
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
 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.
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
 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.
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
warranty agreements, 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
 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.
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
 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
20 NORCIA V. SAMSUNG TELECOMM.

“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,” 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-the-
box 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.
 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
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.