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

United States District Court

District of Massachusetts

)

National Federation of the )

Blind, et al., )

)

Plaintiffs, )

)

v. ) Civil Action No.

) 15-12984-NMG

The Container Store, Inc., )

)

Defendant. )

)

MEMORANDUM & ORDER

GORTON, J.

This dispute arises out of a decision of the First Circuit

Court of Appeals (“the First Circuit”) to affirm this Court’s

denial of the Container Store’s motion to compel arbitration

pursuant to the terms of its Loyalty Program. Following that

decision in 2018, plaintiffs moved for entry of final judgment

and injunctive relief with respect to the subject arbitration

provision.

I. Background

In 2015, the National Federation of the Blind (“the NFB”)

and Mika Pyyhkala, Lisa Irving, Jeanine Lineback, Arthur Jacobs,

Mark Cadigan and Heather Albright (“the individual plaintiffs”)

filed a complaint against the Container Store, Inc. (“the

Container Store” or “defendant”) alleging a violation of Title

III of the Americans with Disabilities Act (“the ADA”), 42

U.S.C. § 12181 and other state discrimination statutes.

In response, defendant filed a motion to compel arbitration

and enforce class action waivers, pursuant to the terms of its

Perfectly Organized Perks (“POP!”) Loyalty Program (“the Loyalty

Program”) against all individual plaintiffs except Cadigan and

Albright. This Court denied that motion. The Container Store

sought interlocutory review under the Federal Arbitration Act

(“the FAA”), which provides a statutory exception for

interlocutory appeal where final judgment has not been certified

by the district court.

In late 2018, the First Circuit affirmed this Court’s order

denying defendant’s motion to compel arbitration. It held that

for the plaintiffs who enrolled in the Loyalty Program at the

store (Pyyhkala, Irving and Jacobs), there was no contract

formation with respect to the arbitration clause because those

in-store plaintiffs lacked actual or constructive notice of the

arbitration clause at the time of their acceptance.

As to the plaintiff who enrolled in the Loyalty Program

online (Lineback), the First Circuit held that, because the

Container Store unilaterally retained the right to alter the

terms and conditions of the Loyalty Program retroactively, the

contract was illusory and thus no agreement to arbitrate was

consummated between the parties. It declined to rule on the

unconscionability of a non-existent contract.

Following the First Circuit’s decision, plaintiffs moved

for entry of final judgment with respect to the arbitration

provision of the Loyalty Program under Fed. R. Civ. P. 54(b) and

national injunctive relief under the All Writs Act, 28 U.S.C. §

1651. They allege that final judgment is warranted because both

this Court and the First Circuit have held that the terms of the

Loyalty Program are illusory. They further submit that national

injunctive relief is appropriate because 1) defendant continues

to use the illusory terms in its Loyalty Program agreement and

2) it will ensure the protection of the rights of current

customers in the Loyalty Program, including plaintiffs.

Defendant rejoins that the denial of its motion to compel

does not implicate Fed. R. Civ. P. 54(b) because 1) the motion

to compel arbitration is an embedded proceeding, not a final

decision and 2) interlocutory review of a denial of a motion to

compel under the FAA does not completely dispose of any claims.

Defendant further contends that plaintiffs are not entitled to

injunctive relief under the All Writs Act because 1) no

justiciable controversy exists, 2) plaintiffs lack standing to

seek injunctive relief on behalf of unnamed plaintiffs, 3)

plaintiffs have failed to meet the requirements for injunctive

relief under the All Writs Act and 4) the issue is moot because

defendant is in the process of amending the terms of its Loyalty

Program.

II. Legal Analysis

Generally, when a federal suit on an underlying claim is

pending, a district court’s denial of an order compelling

arbitration is not appealable under 28 U.S.C. § 1291 (the final

decision statute). Langley v. Colonial Leasing Co. of New

England, 707 F.2d 1, 5 (1st Cir. 1983). The FAA, however,

creates statutory exceptions to the final judgment rule with

respect to orders refusing stays and orders denying petitions to

compel arbitration. Campbell v. Gen. Dynamics Gov’t Sys. Corp.,

407 F.3d 546, 550 (1st Cir. 2005).

In this case, the Container Store sought interlocutory

review of this Court’s denial of defendant’s motion to compel

arbitration and enforce class action waivers under the FAA

exception to final judgment. Pursuant to the decisions of this

Court and the First Circuit, the defendant may not enforce the

arbitration provision of the Loyalty Program against all named

plaintiffs on the grounds that the terms and conditions of the

Loyalty Program agreement are illusory.

Plaintiffs now attempt to enter final judgment with respect

to the Court’s order to deny arbitration for all plaintiffs,

including putative classes that have yet to be certified

(specifically, the Nationwide Class 2 and California Subclass

2). Rule 54(b) provides for entry of judgment on a subset of

the claims asserted in a multi-plaintiff, multi-claim action.

Gonzalez Figueroa v. J.C. Penney Puerto Rico, Inc., 568 F.3d

313, 317 (1st Cir. 2009). Courts have, however, recognized a

long-settled and prudential policy against the “scattershot

disposition of litigation”, finding that a district court should

certify a judgment under Rule 54(b) only after it has determined

that 1) the ruling in question is final and 2) there is no

persuasive reason for delay. Id. Finality requires that a

judgment “dispose of all the rights and liabilities of at least

one party as to at least one claim”. Lee-Barnes v. Puerto Ven

Quarry Corp., 513 F.3d 20, 24 (1st Cir. 2008).

Although the First Circuit’s decision resolves the issue of

whether defendant can compel arbitration, plaintiffs have not

demonstrated that they have satisfied the finality requirement

with respect to the additional relief they are seeking. Here,

plaintiffs seek declaratory judgment as to 1) defendant’s

failure to ensure that the Loyalty Program is accessible to

blind or visually impaired individuals in violation of the ADA

and state laws and 2) whether the arbitration provision of the

Loyalty Program is illusory, unconscionable and unenforceable.

See Second Amended Complaint at 57, National Federation of the

Blind, et al. v. The Container Store Group, Inc., No. 15-12984

(D. Mass. Nov. 04, 2016), ECF No. 109. Those two requests for

declaratory relief are inherently intertwined and entering final

judgment as to the arbitration provision would be premature

absent a finding as to the former claim that the Loyalty Program

violates the ADA and relevant state laws against discrimination.

Thus, there is no finality.

Nor have plaintiffs persuasively demonstrated why final

judgment should be entered. See Sears, Roebuck & Co. v. Mackey,

351 U.S. 427, 435 (1956) (holding that the district court may

determine the appropriate time when each “final decision” upon

“one or more but less than all” of the claims in a multiple

claims action is ready for appeal). The answer as to whether

defendant can compel arbitration as to the named plaintiffs is

clear: they cannot. Moreover, there is no evidence that

defendant has attempted to enforce arbitration on plaintiffs’

claims underlying this lawsuit, thus mitigating any claim that

final judgment must be entered immediately.

Accordingly, plaintiffs’ motion for entry of final judgment

under Rule 54(b) will be denied.

With respect to the prospective injunctive relief that

plaintiffs seek, the Court finds that the All Writs Act does not

apply. That Act is used sparingly and only in the most

“critical and exigent circumstances”. Brown v. Gilmore, 533 U.S.

1301 (2001). Only where the legal rights at issue are

“indisputably clear” and relief is necessary or appropriate in

aiding the Court’s jurisdiction will courts consider providing

injunctive relief. Ohio Citizens for Responsible Energy, Inc. v.

Nuclear Regulatory Comm’n, 479 U.S. 1312, 1312 (1986). Because

defendant is not attempting to enforce the arbitration provision

and is in the process of revising the contract terms, plaintiffs

can only suggest the hypothetical harm of future arbitration.

Such a hypothetical harm does not rise to the level of

“critical” or “exigent circumstances” and should such harm

become likely, plaintiffs may then seek injunctive relief again.

Accordingly, plaintiffs’ motion for writ of enforcement

under the All Writs Act will be denied.

ORDER

For the foregoing reasons, plaintiffs’ motion for entry of

judgment and writ of enforcement (Docket No. 119) is DENIED.

So ordered.

_/s/ Nathaniel M. Gorton____

Nathaniel M. Gorton

United States District Judge

Dated February 13, 2019