- Retailers and restaurant chains are defending against mass litigation in the New York federal courts that challenges gift cards under the ADA and state and local laws.
- Judge Woods in the Southern District of New York recently granted multiple retailers' motions to dismiss and issued thoughtful and well-reasoned opinions.
- The court held that the plaintiffs lacked Article III standing and that the ADA does not require businesses to offer gift cards in Braille.
- These rulings should serve as helpful guidance to other judges considering identical claims and deter the plaintiffs' class action bar from further investing in these cases
The first action challenging physical gift cards under Title III of the Americans with Disabilities Act (ADA) for their failure to include Braille was filed on October 24, 2019. Within just a few weeks, a handful of plaintiffs had filed 242 nearly identical cases against retailers and restaurant chains in the Southern and Eastern Districts of New York. The boilerplate complaints reflect a recurring issue in the modern consumer litigation environment: "cut and paste" complaints leveraging the class action device and the threat of costly litigation to prompt early settlements at a premium. These actions led a different plaintiffs' attorney to file copycat lawsuits in California state court. Retailers have been on the receiving end of abusive claims for so long pertaining to text messaging, reference pricing, website accessibility, credit card receipts and the list goes on. Many retailers have elected to vigorously defend these actions with the hope that the courts will recognize their frivolity. In multiple opinions dismissing plaintiffs' claims, Judge Gregory Howard Woods of the Southern District of New York demonstrated that he did.
Retailers and restaurants aim to ensure that all consumers, including individuals with disabilities, enjoy full access to their stores, goods and services. Doing so is aligned with their commitment to being good corporate citizens and their commercial interests. Retailers strive to provide good customer service in connection with their store and e-commerce operations. Nevertheless, over the past few years, these businesses have been exposed to liability under the ADA—often through lawyer-driven actions manufactured through improper tactics—that raise claims far removed from the intent of the statute. Indeed, following a wave of claims challenging the pin pads on point-of-sale devices in physical stores, tens of thousands of demand letters and complaints exploited confusion as to the applicability of Title III of the ADA to websites and mobile apps and a lack of clear regulatory and judicial guidance. And more recently, perhaps anticipating that retailers would seek settlement over litigation as a value proposition, a small group of plaintiffs' lawyers filed the latest iteration of ADA claims against the industry. The core allegation in the 243 cases that flooded the New York court dockets is that businesses violated the ADA by not offering physical gift cards in Braille. In much-awaited rulings, Judge Woods granted motions to dismiss filed by Banana Republic, Kohl's and several other retailers on similar grounds. Dominguez v. Banana Republic, LLC, --- F. Supp. 3d ---, No. 19-10171, 2020 WL 1950496 (S.D.N.Y. Apr. 23, 2020); Murphy v. Kohl's Department Stores, Inc., No. 19-09921, 2020 WL 1974261 (S.D.N.Y. Apr. 24, 2020); Dominguez v. CKE Rests. Holdings, Inc., No. 19-10816, 2020 WL 1974148 (S.D.N.Y. Apr. 24, 2020); Calcano v. Swarovski N. Am. Ltd., No. 19-10536, 2020 WL 1974143 (S.D.N.Y. Apr. 24, 2020); Mendez v. AnnTaylor, Inc., No. 19-10625, 2020 WL 1974211 (S.D.N.Y. Apr. 24, 2020); Calcano v. Art of Shaving-FL, LLC, No. 19-10432 (S.D.N.Y. Apr. 27, 2020) (Dkt. No. 24).1 In holding that the plaintiffs failed to demonstrate Article III standing and that Braille gift cards are not required under the ADA, the court also acknowledged the concerning nature of certain mass litigation tactics targeting consumer-facing businesses. The court's well-reasoned and thoughtful opinions should guide judges presiding over identical cases. While the court granted leave to amend, it appears that the plaintiffs have already pled themselves out of a case.
Both complaints—like the others filed in the New York district courts—contain nearly identical allegations. Specifically, the plaintiffs claim that they learned through phone calls to the retailers that they did not sell Braille gift cards. They then elected to initiate the actions. See, e.g., Banana Republic, 2020 WL 1950496, at *1 (reciting factual allegations); Kohl's, 2020 WL 1974261, at *1 (same). In each case, the named plaintiff alleges violations of Title III of the ADA, the New York State Human Rights Law (NYSHRL) and the New York City Human Rights Law (NYCHRL). The plaintiffs seek to represent putative nationwide classes defined as "all legally blind individuals in the United States who would like to purchase accessible store gift cards from the Defendant and as a result have been denied access to the equal enjoyment of goods and services offered in Defendant's physical locations, during the relevant statutory period" (along with similar state and city subclasses). See, e.g., Am. Complaint ¶¶ 60–62, Dominguez v. Banana Republic, LLC, No. 19-10171 (S.D.N.Y. Feb. 21, 2020); Am. Complaint ¶¶ 60–62, Murphy v. Kohl's Department Stores, Inc., No. 19-09921 (S.D.N.Y. Mar. 5, 2020) (same).
Plaintiffs Lack Article III Standing
As an initial matter, the court held that the plaintiffs lacked Article III standing. Both plaintiffs attempted to "check the box" to establish standing by alleging that they placed phone calls to the retailers to inquire as to whether they sold Braille gift cards. They filed suit a short time later, after learning that they did not have them for sale, and alleged that they would have immediately purchased the gift cards had they been offered. This is the case with respect to each of the 243 cases filed against retailers and restaurant chains. The court found plaintiffs' allegations insufficient to confer Article III standing. With respect to the plaintiff in Banana Republic, the court held that "there are not enough facts in Plaintiff's complaint to plausibly suggest that he will be injured by Banana Republic's failure to sell Braille gift cards in [the] future," and that the plaintiff's "generic, conclusory statements are plainly insufficient" to establish standing. Banana Republic, 2020 WL 1950496, at *4. The court further explained that "[p]laintiff does not profess an interest in procuring contemporary, affordable workwear, nor does he assert that he owns several Banana Republic pieces already and wishes to continue compiling a collection with the help of a Banana Republic gift card." Id. And, with respect to Kohl's, the court observed that while the plaintiff alleged that he lived in close proximity to a store location, "there is no Kohl's retail store located at that address" (the address referenced in the complaint is actually a Boston Market location—another defendant to an identical suit2). Kohl's, 2020 WL 1974261, at *1. The court then correctly pointed out that "there are no Kohl's stores anywhere in Manhattan," where plaintiff allegedly resides. Id.
Plaintiffs' ADA Claims Fail as a Matter of Law
The court considered whether the ADA requires retailers to make gift cards accessible goods (i.e., by having a stock of Braille gift cards) and concluded that it does not. The ADA "regulates access to places of public accommodation—not the type of merchandise a place of public accommodation sells." Banana Republic, 2020 WL 1950496, at *5 (emphasis added).3 The court acknowledged that it is well-settled that the ADA does not require businesses to create specialty goods for individuals with disabilities. While the court noted that the plain text of the ADA was clear and it need not rely on its implementing regulations, it found support in both. "In fact, the plain text of the ADA and the Department of Justice's implementing regulations make clear . . . : a retailer need not alter the mix of goods that it sells to include accessible goods for the disabled." Id. at *7
Second, the court determined that "gift cards are neither public accommodations nor are they places." Id. The court observed that gift cards cannot be "shoehorned" into any of the 12 categories of "public accommodations" enumerated in the ADA. See id. But, even if they could be, the court determined that "plastic cards are not places." Id. (emphasis in original). While a place of public accommodation need not be a physical location, it must be "a space—figurative or not—that can provide the services of a public accommodation." Id. Here, the court explained that "[i]t is also implausible that an inaccessible gift card could impede a blind person from enjoying all of the benefits of [the business's] retail locations." Id. at *9 n.5.
Finally, the court rejected plaintiffs' alternate theory of liability: that the retailers denied plaintiffs access to a service by failing to provide them with Braille gift cards. According to plaintiffs, they were not offered Braille gift cards as auxiliary aids and were, therefore, denied the service of using gift cards in stores. The court explained that "the ADA empowers retailers, not customers, to choose what auxiliary aid to offer," and, furthermore, it contemplates communication between the customer and business in determining an appropriate auxiliary aid. Id. at *10. And a business is not required to offer an auxiliary aid unless one is specifically requested. Here, the plaintiffs never requested an auxiliary aid. Indeed, plaintiff made clear in the complaint against Banana Republic that "[Plaintiff] knows nothing about the range of auxiliary aids and services Banana Republic offers the visually impaired." Id. at *11. The court found "[i]t is unclear what part of the ADA requires that [a retail] employee magically divine, from the single question Plaintiff asked about Braille gift cards, that he was disabled and in need of an auxiliary aid or service," and "it would be absurd to read the ADA as requiring that a public accommodation offer every single customer the help of all available auxiliary aids and services before the customer asks for one." Id. at *11 n.6. In a footnote, the court, citing the arguments of amici (the Retail Litigation Center, Restaurant Law Center, National Retail Federation, Retail Gift Card Association and National Association of Theater Owners), surmised that Braille might not even be an effective auxiliary aid for a gift card. That is because a gift card is roughly three inches wide and two inches tall and having the information embossed with Braille would encounter "a very elemental problem: 'Braille is big. It takes 10 volumes of Braille, for example, to publish Harry Potter and the Goblet of Fire.'" Id. at *11 n.7.
The Trouble With Mass Litigation
After carefully considering and rejecting each of the plaintiffs' legal arguments, the court revisited a theme that pervaded both opinions—the problems with "copy-and-paste litigation":
The pitfalls of such an approach is evident here where, among other things, Plaintiff's opposition responds to arguments never made by its opponent in its motion and failed to even correctly identify what Defendant sells. See, e.g., Opp'n at 3, 15, 16, 20 (referring to Banana Republic as a "food establishment"). Although it features the fruit in its name, Banana Republic does not sell bananas.
Id. at *12 (emphasis added). Plaintiffs' counsel adopted a scorched earth practice of blanketing two federal courts with these contrived actions. The court here aptly observed that by filing a "generic" complaint that can easily "be repurposed for use against different defendants," plaintiffs encountered one of the "greatest weakness[es]" of "copy-and-paste litigation." Id. at *4. That is, "those who live by the photocopier shall die by the photocopier." Id. (quoting Mendez v. Apple Inc., No. 18-7550, 2019 WL 2611168, at *4 (S.D.N.Y. Mar. 28, 2019) (emphasis added)).
Retailers and restaurants are keenly focused on serving the needs of their customers with disabilities, including by providing aids and auxiliary services. When businesses are forced to divert resources from those they aim to serve, the only "winners" are the plaintiffs' bar who are unduly rewarded with quick settlements and, as Judge Woods observed, "of course, attorneys' fees." Id. at *1. The Banana Republic and Kohl's opinions, along with those issued in cases against three other retailers, and the support of leading industry groups like the Retail Litigation Center and National Retail Federation as amici, offer hope that other judges will follow with similar rulings, and this wave of baseless litigation will soon come to an end.
1 For purposes of this alert, we have focused on the Banana Republic and Kohl's opinions.
2 Thorne v. Boston Market Corp., No. 19-09932 (S.D.N,Y. Oct. 27, 2019).
3 Judge Woods found that plaintiff's ADA claims in Kohl's would fail under Rule 12(b)(6) for the same reasons as in Banana Republic. The court noted that "there are no substantive differences between either the complaint or the briefing in this case and Banana Republic that would compel a different conclusion." Kohl's, 2020 WL 1974261, at *2.
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