Melanie Hoeg v. Samsung Electronics America, Inc.

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted July 17, 2024
Decided July 31, 2024*
Before
DIANE S. SYKES, Chief Judge
FRANK H. EASTERBROOK, Circuit Judge
THOMAS L. KIRSCH II, Circuit Judge
No. 24-1274
MELANIE HOEG, et al.,
Plaintiffs-Appellees,
v.
SAMSUNG ELECTRONICS AMERICA,
INC.,
Defendant-Appellant.
Appeal from the United States District
Court for the Northern District of
Illinois, Eastern Division.
No. 1:23-cv-1951
Harry D. Leinenweber,
Judge.
O R D E R
This appeal is successive to Wallrich v. Samsung Electronics America, Inc., 106 F.4th
609 (7th Cir. 2024). Following Wallrich, we summarily reverse the district court.
* This successive appeal has been submitted to the original panel under
Operating Procedure 6(b). We have unanimously agreed to decide the case without
argument because the briefs and record adequately present the facts and legal
arguments, and argument would not significantly aid the court. F ED. R. A PP . P.
34(a)(2)(C).
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with F ED. R. APP . P. 32.1

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No. 24-1274 Page 2
In Wallrich, a group of consumers brought arbitration demands before the
American Arbitration Association (AAA), alleging that Samsung Electronics Co. and
Samsung Electronics America, Inc., through their devices, unlawfully collected and
stored the consumers’ biometric data in violation of Illinois law. However, Samsung
refused to pay its share of the AAA’s administrative fees. The AAA, in its discretion
and in line with its rules, offered the consumers the opportunity to advance Samsung’s
fees to continue the arbitration, but they declined. Instead, the consumers asked the
AAA to stay the case until they could obtain an order compelling arbitration. The AAA
denied that request, terminated the proceedings, and indicated that the consumers
could file their claims in the appropriate court for resolution. Rather than take that
route, the consumers filed a petition to compel arbitration. The district court granted the
petition and compelled Samsung to pay the administrative fees. We reversed. In doing
so, we concluded that the parties had fully arbitrated in accordance with their
arbitration agreement, which delegated the arbitration and underlying fee disputes to
the rules and discretion of the AAA. Thus, because the AAA terminated the arbitration
in line with the process the parties had agreed to, the district court did not have the
authority to usurp the AAA’s discretion and compel Samsung to arbitrate or pay fees.
The consumers in this appeal come before us on nearly the same footing as those
in Wallrich. The consumers brought the same substantive claims against Samsung
before the AAA. Samsung did not pay its fees by the AAA’s initial deadline, so the
AAA extended the deadline. On the day of the extended deadline, Samsung and the
consumers jointly requested the AAA to stay the arbitration to allow them to mediate
their claims. The AAA declined the request and terminated the proceedings due to
Samsung’s refusal to pay fees. This time, however, and unlike the proceedings in
Wallrich, the AAA indicated that the consumers could refile their arbitration demands if
mediation failed. Sure enough, mediation was unsuccessful, but instead of refiling their
arbitration demands, the consumers filed a petition to compel arbitration in district
court based on the same theory used in Wallrich. And like in Wallrich, the district court
granted the petition and compelled Samsung to pay the AAA’s administrative fees.
We view the consumers’ case in this appeal as presenting one of two possible
scenarios. The first scenario is on all fours with Wallrich. The consumers filed arbitration
demands before the AAA; Samsung refused to pay its share of administrative fees; the
AAA terminated the arbitration in its discretion; and the consumers sought to compel
arbitration in district court due to Samsung’s refusal to pay fees. The second scenario is
a bit more nuanced. Specifically, because the AAA indicated that it would allow the
consumers to refile their claims if mediation failed, one could argue that arbitration has

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No. 24-1274 Page 3
not yet been completed, which would slightly distinguish the posture of this case from
that of Wallrich.
We need not decide which scenario applies here, however, because both
mandate the same result: reversal of the district court’s order compelling arbitration. If
the first scenario applies, Wallrich controls, arbitration has been completed in line with
the parties’ agreement, and the consumers can only file their substantive claims in an
appropriate court. If the second scenario applies, then the district court’s order
compelling arbitration was premature and cannot stand. This is so because, if in fact the
AAA was willing to allow the consumers to refile their arbitration demands, then the
consumers needed to do so before filing a petition to compel arbitration. Without
refiling their arbitration demands, the consumers cannot show that Samsung refused to
arbitrate—after all, there would be nothing yet to refuse. See A.D. v. Credit One Bank,
N.A., 885 F.3d 1054, 1060 (7th Cir. 2018) (noting that a refusal to arbitrate is a required
element for compelling arbitration). And we certainly cannot speculate about how
Samsung would have responded to the consumers’ refiled claims, nor can we speculate
about how the AAA would have ultimately handled Samsung’s refusal to pay fees (if
indeed Samsung stuck to this strategy). In this scenario too, then, the district court’s
order compelling arbitration was improper.
As in Wallrich, the consumers here are not without recourse. They can still bring
their substantive claims in an appropriate court. Moreover, as noted above, they may
still be able to refile their arbitration demands before the AAA. At this stage, however,
the district court cannot compel Samsung to arbitrate and pay the AAA’s administrative
fees.
REVERSED

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