Samsung’s release of the faulty and dangerous Galaxy Note7, followed by a recall that fed more faulty devices into the market, is now at the centre of a court dispute.
That creaking sound you hear is the opening of a potentially costly door for Samsung, as the first class action suit against the company’s Galaxy Note7 debacle was filed yesterday.
A relatively small suit, three people in the US brought the case against the company to reclaim the money they spent on data and phone plans during the weeks they were advised not to use the Note7, which stretched from the month of September into the early days of October.
“These phones people were being advised not to use – and were not using – all of them are part of data and voice plans,” Richard McCune, the plaintiffs’ lawyer, told Bloomberg. “This is to recover the cost of the voice and data plan during the time that you couldn’t use your phone.”
Though relatively small, it represents just one of the reasons Samsung is estimated to lose over $5bn on the whole affair.
Yesterday, Samsung announced plans to reimburse its various suppliers on the back of the Note7 disaster. Official partner manufacturers of camera modules, casings and various elements that went into the Note7 were estimated to be out of pocket to the tune of $1.7bn.
“We will offer full compensation for remaining inventories of Note7 components among our suppliers,” the company said in a statement.
“We feel sorry for causing concern among our suppliers due to discontinuation of the Galaxy Note7…we will complete the compensation quickly to minimise difficulty faced by them,” it said.
The lawsuits that emerge from customers whose Note7s actually exploded could follow in the coming weeks and it’s those cases that could prove the most troubling for the company.
Samsung was forced to recall 2.5m of the original Note7 phablet devices a month ago, when lithium-ion batteries in some of the devices caught fire. Samsung described the problem as a battery cell issue.
In the time that the crisis unfolded over a month ago, the company has lost nearly $22bn in its stock value.