Epson’s Unusual Lawsuit Defense: Sue Your Own Ink Cartridge Customers! ☹

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Date: Friday January 26, 2024 05:06:55 pm
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    Epson’s Unusual Lawsuit Defense: Sue Your Own Ink Cartridge Customers! ☹
    Epson, a printer company, is facing a mass arbitration claim from thousands of its customers who accuse it of disabling their printers if they used third-party ink cartridges. But Epson has refused to arbitrate, and instead has sued its own customers in court, claiming that they are not real customers, but agents of a rival ink company. Epson’s defense strategy is unusual and risky, as it may draw more attention to the arbitration claim and the allegations of anti-competitive behavior.

    The saga started in the summer of 2022, when Epson received a notification that the plaintiffs’ firm Labaton Sucharow planned to file arbitration demands for 6,570 Epson customers who claimed that they were prevented from using non-Epson ink cartridges with their Epson printers. Epson asked Labaton to provide a serial number or proof of purchase for each customer, but Labaton said it had another 6,800 customers who also wanted to arbitrate.

    After failing to reach an agreement in mediation, Labaton filed about 4,000 arbitration claims at JAMS in March 2023. Epson responded by suing nearly 4,000 of Labaton’s clients in Orange County Superior Court, alleging that they did not comply with Epson’s pre-arbitration dispute resolution procedures and filed their claims in the wrong forum. Epson also sued Labaton clients who did not appear to have bought any Epson products, saying it would not pay arbitration fees for non-customers.

    Epson said it was suing its own customers only as a last resort, because they seemed to have “been roped into a frivolous mass arbitration scheme by their counsel that seeks to extort a large settlement based not on the merits of any consumer grievance against Epson but rather on the threat of having to pay tens of millions of dollars in individual arbitration filing fees.”

    Epson is not the first mass arbitration defendant to criticize plaintiffs’ lawyers for filing unwarranted claims, but it is one of the only ones that has attacked thousands of individual claimants. Intuit tried a similar tactic a few years ago but failed to stop the arbitration cases in court.

    The Epson claimants-turned-defendants are represented by Labaton and Scott + Scott, who have accused Epson of stalling the arbitration process and disregarding its own contractual obligation to arbitrate. They have also asked for a class of defendants to be certified.

    The judge in charge of Epson’s suits, Lon Hurwitz, ruled that the first issue to be decided is whether Labaton’s clients followed Epson’s mandatory “informal” dispute resolution process before filing their arbitration claims. The issue was supposed to be resolved in a limited trial next week, but the two sides agreed this week that it could be based on their filings. Epson claims that Labaton and its clients never made a good-faith effort to comply with the process, while Labaton claims that Epson acted in bad faith and changed its own rules.

    Courts have generally not sided with companies that complain that mass arbitration is an abuse of the process they have imposed on consumers. We’ll have to see if Epson’s tactic of suing thousands of individual claimants works better than just criticizing plaintiffs’ lawyers. If it does, mass arbitration could become more costly for plaintiffs’ firms.
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