United States District Court, D. Massachusetts
MEMORANDUM & ORDER
NATHANIEL M. GORTON UNITED STATES DISTRICT JUDGE.
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.
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
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.
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
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.
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.
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.
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).
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.
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.
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