Nat'l Fed'n of the Blind v. Container Store, Inc.
904 F.3d 70
| 1st Cir. | 2018Background
- Plaintiffs (National Federation of the Blind and four blind individual shoppers) sued The Container Store alleging its touchscreen-only point-of-sale (POS) devices prevented blind customers from independently enrolling in and using a store loyalty program and from entering PINs, forcing them to disclose private info verbally.
- The Container Store's POP! loyalty program included terms emailed after enrollment and linked on the POS screen; those terms contained a mandatory arbitration clause, class-action waiver, and a change-in-terms provision allowing unilateral modification.
- In-store enrollment required customers to enter contact info on a touchscreen and check an onscreen box agreeing to terms; blind customers alleged they could not access those onscreen terms and were not informed of them by clerks.
- The Container Store moved to compel arbitration under the loyalty-program terms; the district court denied the motion, finding (1) no evidence the in-store plaintiffs knew of or agreed to the terms so no arbitration agreement was formed and (2) the agreement signed online was illusory under Texas law because of the unilateral change clause.
- The Container Store appealed; the First Circuit affirmed, holding that formation challenges belong to the court, the record lacked proof of assent by in-store plaintiffs, and the change-in-terms clause rendered the agreement illusory as to the online enrollee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides whether an arbitration agreement was formed | Plaintiffs: formation (offer/acceptance) is challenged, so court must decide | Container Store: challenge attacks the whole contract, so arbitrator should decide | Court: plaintiffs challenged formation of the arbitration clause; court decides |
| Formation as to in-store plaintiffs | In-store plaintiffs: never saw or were informed of terms on touchscreen, so they never assented | Container Store: training materials and emails put plaintiffs on constructive notice | Held: no evidence of actual or constructive notice; no contract to arbitrate formed |
| Illusoriness (online enrollee Lineback) | Lineback: agreement illusory due to unilateral change clause and therefore not formed | Container Store: good-faith duty, ability to cancel, or severance cures illusoriness | Held: change-in-terms permits retroactive alteration; under Texas law agreement is illusory and no arbitration formed |
| Ratification by continued program use | Plaintiffs: Container Store failed to show plaintiffs received emails or benefited from program, so no ratification | Container Store: welcome/promotional emails containing terms and continued use ratified agreement | Held: insufficient proof of received emails or post-enrollment benefits; no ratification established |
Key Cases Cited
- Hall St. Assocs., L.L.C. v. Mattel, 552 U.S. 576 (U.S. 2008) (discusses FAA and arbitration policy)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (distinguishes challenges to formation from challenges to validity)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (severability doctrine: validity-of-entire-contract issues presumptively for arbitrator)
- Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287 (U.S. 2010) (courts must determine whether parties agreed to arbitrate)
- Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (allocation of gatekeeping questions between court and arbitrator)
- Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546 (1st Cir. 2005) (supplemental appropriateness inquiry for ADA claims under the FAA)