Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

National Federation of Blind v. The Container Store, Inc.

United States Court of Appeals, First Circuit

September 14, 2018

NATIONAL FEDERATION OF THE BLIND, on behalf of their members and themselves; MIKA PYYHKALA, on behalf of herself and all others similarly situated; LISA IRVING, on behalf of herself and all others similarly situated; JEANINE KAY LINEBACK, on behalf of herself and all others similarly situated; ARTHUR JACOBS, on behalf of himself and all others similarly situated, Plaintiffs, Appellees,
v.
THE CONTAINER STORE, INC., Defendant, Appellant. MARK CADIGAN, on behalf of himself and all others similarly situated; HEATHER ALBRIGHT, on behalf of herself and all others similarly situated, Plaintiffs,

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Nathaniel M. Gorton, U.S. District Judge]

          Gregory F. Hurley, with whom Michael J. Chilleen and Sheppard, Mulin, Richter & Hampton LLP were on brief, for Appellants.

          Karla Gilbride, with whom Jeremy Y. Weltman, Kerstein, Coren, Lichtenstein LLP, Jana Eisinger, Law Office of Jana Eisinger, Dani Zylberberg, Public Justice, P.C., Scott C. LaBarre, LaBarre Law Offices, P.C., Timonthy Elder, and TRE Legal Practice were on brief, for Appellees.

          Before Thompson, Circuit Judge, Souter, Associate Justice, [*] And Selya, Circuit Judge.

          THOMPSON, Circuit Judge.

Appellees/Plaintiffs, the National Federation of the Blind ("NFB"), Mika Pyyhkala, Lisa Irving, Jeanine Kay Lineback, and Arthur Jacobs ("individual plaintiffs"), [1] filed a complaint in district court against Appellant/Defendant, the Container Store, Inc. ("Container Store"), alleging several violations of federal and state discrimination laws. The allegations stem from the Container Store's failure to utilize at the time tactile keypads on its point-of-sale ("POS") devices in its stores that could be independently used by customers who are blind. Citing an arbitration provision in the terms and conditions of a loyalty program of which the individual plaintiffs were members, the Container Store sought to stay the proceedings in district court and compel arbitration.[2] The district court denied the motion and the Container Store appealed to this court. Finding no error, we affirm.

         BACKGROUND

         A. The Container Store

         The Container Store is devoted to selling storage and organization products. At the time this litigation commenced in 2015, it operated roughly seventy stores in the United States.[3]The Container Store offers a loyalty program to its customers, known as the POP! Program, where customers are given a card to use during their purchases to accumulate redeemable points. Membership offers customers several perks, including discount coupons and special deals. The loyalty program also gives customers additional benefits including the ability to get full refunds for purchased products without a receipt.

         Enrollment in the loyalty program can be done in-store or online; for in-store enrollment, customers need to use the Container Store's POS devices to enter their contact information -- specifically, phone numbers and email addresses. Customers must also register their consent to the terms and conditions of the program by checking a box that appears on the touch screen POS device indicating agreement. Customers wanting to receive a copy of the terms and conditions on the spot may do so only upon request to the store associate facilitating the enrollment process. Pertinent here, the terms and conditions of the loyalty program contain a mandatory arbitration and class action waiver provision, found on the fourth page, which provides the following:

You agree that The Container Store and you will resolve any disputes through binding and final arbitration instead of through court proceedings. YOU HEREBY WAIVE ANY RIGHT TO A JURY TRIAL OF ANY DISPUTE YOU HAVE WITH THE CONTAINER STORE. NEITHER YOU NOR THE CONTAINER STORE MAY BRING A CLAIM AGAINST THE OTHER AS A CLASS ACTION, REPRESENTATIVE ACTION, OR PRIVATE ATTORNEY GENERAL ACTION. NEITHER YOU NOR THE CONTAINER STORE MAY ACT AS A PRIVATE ATTORNEY GENERAL OR CLASS REPRESENTATIVE, NOR PARTICIPATE AS A MEMBER OF A CLASS OF CLAIMANTS WITH RESPECT TO ANY DISPUTE OR CLAIM BETWEEN US. These POP! Program terms evidence a transaction in interstate commerce, and thus the arbitration will be subject to the Federal Arbitration Act . . . .
In the event of any dispute concerning the POP! Program or these terms, the parties unconditionally and irrevocably agree the dispute will be resolved by arbitration . . . exclusively in Dallas, Texas, in accordance with the rules of the American Arbitration Association. The arbitration will be heard and determined by a single arbitrator. The arbitrator's decision will be final and binding upon the parties and may be enforced in any court of competent jurisdiction. The prevailing party will be entitled to recover its attorneys' fees and arbitration costs from the other party. . . .

         Once enrollment is complete, a "welcome" email is sent to the new member also containing an electronic link to the terms and conditions. Thereafter, members are sent monthly promotional emails as part of the loyalty program that likewise contain a link to the terms and conditions. To register individual purchases to their loyalty card, customers must provide their phone number or email address to the store clerk at the time of each purchase.

         B. The Plaintiffs

         Founded in 1940, the NFB is the largest and oldest advocacy organization for individuals who are blind. It initiated this suit against the Container Store on behalf of (and in addition to) the individual plaintiffs who are blind persons who shop at the Container Store (collectively, "Plaintiffs"). Plaintiffs allege they cannot enroll or participate in the loyalty program without having to verbally disclose their email addresses or phone numbers to the sales associate (and presumably, also to those standing nearby who can overhear) because of the Container Store's exclusive use of visual touch screen interfaces, without tactile keypads on its POS devices.[4] Plaintiffs further allege that blind persons are unable to enter their personal identification numbers ("PINs") when making certain debit and credit card purchases due to the machine's inaccessibility to them.

         Pyyhkala, Irving, and Jacobs ("the in-store plaintiffs") each enrolled in the loyalty program while at the Container Store with the assistance of a sales associate. According to the in-store plaintiffs, none were presented with the terms and conditions of the loyalty program, including the mandatory arbitration provision and class action waiver, nor did they agree to those terms.

         Meanwhile, Plaintiff Lineback, who had originally attempted to enroll in the loyalty program at her local store but was unable to do so because she could not use the POS device, [5]enrolled from her computer at her home. As part of her at-home enrollment process, Lineback had to first check a box to the immediate left of "I agree to the POP! terms and conditions" (hyperlinked to the terms and conditions). While it is undisputed that she enrolled, Lineback does not recall being presented with or reviewing any arbitration agreement.

         C. This Litigation

         As a class action in September 2015, Plaintiffs filed a twelve-count first amended complaint[6] alleging a violation of Title II of the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12181, several violations of Massachusetts, New York, Texas, and California discrimination laws, [7] and seeking declaratory relief. The complaint alleges that the Container Store "is knowingly denying blind individuals throughout the United States equal access to the goods and services it provides to its sighted customers who shop at its retail store." Specifically, the complaint highlights that because of the Container Store's use of a visual, touch screen interface on its POS device at many of its locations, blind customers are unable to: (1) independently pay for merchandise at the Container Store with a debit or credit card requiring a PIN; (2) enroll in the loyalty program; or (3) register each purchase they make to their loyalty program membership. Instead, and unlike sighted customers, Plaintiffs have to verbally disclose this private information to the store clerk (and presumably anyone who is nearby and can hear), thus subjecting them to privacy concerns every time they shop at the Container Store.

         In response to the amended complaint, the Container Store, citing the relevant provision in the terms and conditions of the loyalty program, filed a motion to compel arbitration, enforce class action waivers, and to stay action. Attached to and in support of its motion, Defendant submitted an affidavit of Joan Manson, its Vice President of Loss Prevention, Payroll, Benefits and Legal, in which she outlined both the at-home and in-store process of enrolling in the loyalty program. Plaintiffs objected to the motion on the basis that the Container Store had "fail[ed] to demonstrate that any enforceable contract to arbitrate was ever formed." Plaintiffs also claimed that certain terms in the loyalty program (specifically, the change-in-terms provision) were illusory and that the arbitration provision was unconscionable.

         A magistrate judge filed a report and recommendation on the Container Store's motion, which denied its requested relief and the Container Store objected to the report and recommendation before the district judge. In support of its objection, the Container Store submitted a new piece of evidence: excerpts from a training manual for Container Store employees indicating they were trained to "[a]llow the customer the opportunity to review [the terms and conditions on the POS device/screen] and then ask them to press the I Accept button," and that, "[i]n the event the customer cannot enter their information on the tablet and would like to enroll in [the loyalty program], at the customer's request, you can turn the tablet around and enter the information on the customer's behalf." The Container Store did not, however, present any evidence that the store clerk in the relevant transactions did in fact read the terms and conditions to Plaintiffs, nor that the in-store plaintiffs were made aware that terms and conditions existed.[8]

         In a written decision adopting the magistrate judge's report and recommendation, the district court denied Defendant's motion to compel arbitration, enforce class waivers, and stay action -- concluding that this one piece of new evidence did not change its agreement with the magistrate judge's recommendation. First, it held that pursuant to the requirements of the ADA, the Container Store did not provide Plaintiffs the "minimal level of notice" that by enrolling in the loyalty program they were agreeing to waive their rights to pursue any future ADA claim in court --thus, any arbitration provision was not enforceable as to Plaintiffs' ADA claims. Second, as to Plaintiffs' state-law claims, the district court found (contrary to the Container Store's position[9]) that it was the proper forum to decide whether Plaintiffs had in fact entered into an agreement to arbitrate any future dispute with the Container Store. It concluded that pursuant to Massachusetts law no contract to arbitrate was formed between the Container Store and any of the in-store plaintiffs primarily because there was no evidence that the store clerk informed them of the existence of any terms and conditions applicable to the loyalty program. It rejected the Container Store's argument that the in-store plaintiffs were on constructive notice of the terms. In a footnote, the district court likewise rejected the Container Store's "suggestion" at oral argument that by continuing enrollment in the loyalty program, in-store plaintiffs had ratified the arbitration agreement -- therefore rendering it enforceable. In doing so, it highlighted that the Container Store had wholly failed to present any evidence that the in-store plaintiffs reaped any benefits of the loyalty program.

         Lastly, the district court found that Lineback -- unlike the in-store plaintiffs -- had entered into an agreement when she enrolled in the loyalty program at home and was "bound by the [l]oyalty [p]rogram's terms and conditions." It concluded, however, that she too should not be compelled to arbitrate any of her claims because pursuant to Texas law[10] the agreement to arbitrate was illusory as to all Plaintiffs and therefore unenforceable (because it contained a change-in-term provision that allowed the Container Store to unilaterally change the terms of the agreement and was silent on that term's retroactive application). It also found that the agreement was unconscionable with respect to the in-store plaintiffs (but not Lineback).

         Accordingly, the judge entered an order denying the Container Store's motion to compel arbitration, enforce class action waiver, and stay action. Defendant appealed to this court.[11]

         DISCUSSION

         A. Standard of Review

         We review a district court's denial of a motion to compel arbitration de novo. Kristian v. Comcast Corp., 446 F.3d 25, 31 (1st Cir. 2006). "In conducting our inquiry, '[w]e are not wedded to the lower court's rationale, but, rather, may affirm its order on any independent ground made manifest by the record.'" Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 551 (1st Cir. 2005) (quoting InterGen N.V. v. Grina, 344 F.3d 134, 141 (1st Cir. 2003)).

         B. Arguments

         On appeal, the Container Store characterizes this case as a "classic[] example of judicial hostility towards arbitration" and assigns five errors to the district court's decision. According to the Container Store, the district court overstepped its boundaries and erred as a matter of law when it: (1) ruled in the first instance on whether Plaintiffs had agreed to arbitrate all their claims -- an issue it insists should have been decided not by the court but by an arbitrator; (2) found that the parties had not formed an agreement to arbitrate their ADA or state-law claims; (3) determined that Plaintiffs had not ratified post initial enrollment the loyalty program agreement (including the arbitration provision) when they participated in its loyalty program after signing up; (4) found the contract was illusory; and (5) ruled the contract was unconscionable.

         For their part, Plaintiffs maintain that the district court ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.