Samsung Could Face Second Recall as U.S. Probes Burnt Phone

Agencies are looking into incident aboard passenger jet
Investigators checking whether phone replaced after recall

Samsung Electronics Co. could face an unusual second recall of its Note 7 smartphones if one that caught fire aboard an airliner this week is a replacement device as its owner says, two former U.S. safety officials said.
The Federal Aviation Administration and the Consumer Product Safety Commission are investigating Wednesday’s incident, when a passenger’s phone emitted smoke on a Southwest Airlines Co. plane readying for departure from Louisville, Kentucky. A flight attendant doused it with a fire extinguisher, and the plane was evacuated without injury.

“If it’s the fixed phone and it started to smoke in his pocket, I’m going to guess there’ll be another recall,” said Pamela Gilbert, a former executive director of the consumer agency. “That just doesn’t sound right.”

Samsung has been engulfed in crisis since the Note 7 smartphones began to burst into flames just days after hitting the market in August. The Suwon, South Korea-based company announced last month that it would replace all 2.5 million phones sold globally at that point. Samsung said it had uncovered the cause of the battery fires and that it was certain new phones wouldn’t have the same flaws.

The first indications of the existing recall’s financial impact could be seen Friday with the company’s release of earnings that rose at the slowest pace in five quarters. Operating income increased just 5.5 percent to 7.8 trillion won ($7 billion) in the three months ended Sept. 30.

China Incident
The U.S. safety commission could decide as early as next week on what steps to take, said Gilbert, a partner in Cuneo Gilbert & LaDuca, LLP in Washington. “This is not something you want to leave hanging out there,” she said.

Nancy Nord, a former acting chairwoman of the safety commission, said a second recall doesn’t happen very often.

“Certainly they could do another recall, if it appears this is something beyond an aberration," she said.

“They need to determine if this was a remediated phone, and if so why did this happen?" said Nord, who is of counsel at Olsson Frank Weeda Terman Matz PC in Washington.

CPSC spokesman Scott Wolfson declined to comment on what action may be taken.

Bloomberg News last week interviewed a customer in China who said his new Note 7 had exploded less than 24 hours after it was delivered. The company said it was investigating the incident.

The owner of the phone involved in Wednesday’s incident told investigators it was a replacement Note 7, said Captain Kevin Fletcher of the Louisville Metro Arson Squad.

Arson Squad
“Due to the damage to the phone itself, we have not been able to physically confirm that yet,” Fletcher said during an interview. “We’re in the process of trying to attempt that.”

Samsung and U.S. officials announced the recall after 92 reports of batteries overheating in the U.S., with 26 cases involving burns.

Samsung, FAA and Consumer Product Safety Commission representatives were in Louisville and working with arson investigators, Fletcher said. The phone remains in the possession of the arson squad, which is trying to schedule laboratory tests on the phone. It hasn’t been determined where or when those tests will occur, Fletcher said.

There was “extensive heat damage” to the phone and the plane’s carpet, he said.

Brian Green, the phone’s owner, told WAVE television news in Louisville that he got a replacement phone at a retail store after receiving an e-mail about the recall. “It was a good phone, by all indications, from all the information Samsung provided,” Green said. “But it just had its issues."

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