Dougan v. The Children's Place Inc

Opinion

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

ELAINE DOUGAN, CASE NO. C20-0818JLR Plaintiff, ORDER GRANTING MOTION v. TO COMPEL ARBITRATION AND STAY PROCEEDINGS THE CHILDREN'S PLACE, INC., Defendant.

Before the court is Defendant The Children’s Place, Inc.’s (“TCP”) motion to compel arbitration and stay proceedings. (Mot. (Dkt. # 11).) Plaintiff Elaine Dougan opposes TCP’s motion. (Resp. (Dkt. # 14).) TCP filed a reply. (Reply (Dkt. # 19).) Having considered the motion, the parties’ submissions regarding the motion, the //

//

// relevant portions of the record, and the applicable law,1 the court grants TCP’s motion to compel arbitration.

A. Factual Background This case is a proposed class action arising from Ms. Dougan’s allegations that TCP sent emails with subject lines advertising false or misleading discounts to Ms. Dougan and others in Washington. (See generally Compl. (Dkt. #1).) TCP is a specialty retailer that sells apparel, accessories, footwear, and other items for infants and children

online and in retail stores nationwide, including in Washington. (Alzate Decl. (Dkt. # 12) ¶ 2.) Ms. Dougan alleges that TCP “creates purported list prices for its products which are inflated far above the products’ regular and true selling prices.” (Compl. ¶ 13.) As a result, when TCP offers discounted and sale prices, “the list prices and claimed discounts are false and inflated because [TCP] rarely or never offers the products at their stated list

price.” (Id.; see also id. ¶¶ 14-16.) On November 22, 2018, Ms. Dougan voluntarily enrolled in TCP’s My Place Rewards Program (“MPR Program” or “Program”) at a TCP retail store in Kennewick, Washington. (Alzate Decl. ¶ 3, Dougan Decl. (Dkt. # 15) ¶¶ 4-9.) The MPR Program provides loyalty points, discounts, and reward credit to TCP shoppers. (See, e.g., Alzate

Decl. ¶ 7 & Ex. D at 3 (describing Program benefits).) TCP sends Program

1 TCP requested oral argument. (See Mot. at 1.) The court finds oral argument would not be helpful to the disposition of this motion, and therefore declines to hold oral argument. See Local Rules W.D. Wash. LCR 7(b)(4). communications, offers, and reward certificates to Program members by email. (See id. at 6.)

TCP posts signage throughout its stores—including the store at which Ms. Dougan shops—to advertise the MPR Program. (Alzate Decl. ¶ 4 (describing TCP’s general policies and procedures); Hazard Decl. (Dkt. # 20) ¶ 2 (describing procedures at stores in Washington and explaining where in the store the signs were posted); see Alzate Decl. ¶ 4 & Exs. A-C (signage).) The following language appears in fine print at the bottom of several of these signs:

The My Place Rewards Program is provided by The Children’s Place, Inc. and its terms may change at any time. For full Rewards Terms and Conditions, please visit childrensplace.com/rewards-terms.

(See Alzate Decl. Exs. A & C.) Ms. Dougan states that she did not see any signs or notices “about terms and conditions relating to the [MPR Program]” when she visited the Kennewick store and enrolled in the MPR Program. (Dougan Decl. ¶ 22.) She does not, however, deny that signs advertising the Program were posted in the store. (See generally id.) In 2018, TCP’s standard operating procedure in its Washington stores for enrolling customers in the MPR Program required TCP’s sales associates to ask a customer if she was already a Program member or wanted to become a member before ringing up the customer’s sales transaction. (Alzate Decl. ¶ 5.) According to TCP, a customer who wanted to enroll in the Program would provide her name and contact information, including email address, to the sales associate. (Id.) The sales associate would then hand the customer a printed copy of a brochure containing the MPR Program terms and conditions (“MPR Brochure”) along with an enrollment receipt. (Alzate Decl. ¶ 6; see also Hazard Decl. ¶ 4 (stating that Washington sales associates are trained to inform the

customer that the document contains information on the terms and conditions and benefits of the MPR Program).) Printed copies of the MPR Brochure were also displayed and available in stands at each cash register in the store. (Hazard Decl. ¶¶ 5-8; see id. Exs. F & G.) The MPR Brochure is a 30-page double-sided document that includes information about both the MPR Program and TCP’s MPR Credit Card Program. (Hattis Decl. (Dkt.

# 16) ¶ 4 & Ex. B; see also Hattis Decl. ¶ 7 & Ex. E (photographs of the April 2019 version of the printed brochure).) Nine pages of the MPR Brochure are dedicated to the MPR Program and 21 pages are dedicated to the MPR Credit Card Program. (See Hattis Decl. Ex. B.) Each side of the MPR Brochure has a different cover. The MPR Program side has

an orange cover and is entitled “MY PLACE REWARDS.” (Hattis Decl. Ex. B at 2.) The cover does not mention that the brochure contains terms and conditions for the Program.2 (Id.) The first mention of terms and conditions for the MPR Program appears on the inside cover of the brochure’s contents in fine print under a description of the benefits provided with the MPR Program and MPR Credit Card Program. (Id. at 3

(stating “Turn page for terms and conditions.”).) The second and third pages of the

2 The MPR Credit Card Program side has a blue cover and is entitled “MY PLACE REWARDS CREDIT CARD.” (Hattis Decl. Ex. B at 31.) contents also refer to terms and conditions in fine print. (Id. at 4-5.) Like the store signage, these pages state, in relevant part:

The My Place Rewards Program is provided by The Children’s Place, Inc. and its terms may change at any time. For full Rewards Terms and Conditions, please visit childrensplace.com/rewards-terms.

(Id.) The Program terms and conditions begin on the fourth page of the MPR Brochure with a message in large boldface type stating: PLEASE NOTE: THESE TERMS AND CONDITIONS CONTAIN AN ARBITRATION CLAUSE AND CLASS ACTION WAIVER. THE WAIVER AFFECTS HOW DISPUTES WITH THE CHILDREN’S PLACE ARE RESOLVED. BY ACCEPTING THESE TERMS AND CONDITIONS, YOU AGREE TO BE BOUND BY THIS ARBITRATION PROVISION. PLEASE READ IT CAREFULLY. (Id. at 6.) The specific terms setting forth the “Applicable Law and Mandatory Agreement to Arbitrate on an Individual Basis” begin on the fifth page of the terms and conditions and the eighth page of the brochure. (Id. at 10.) Shortly after a customer completed her enrollment in the MPR Program, TCP would send her two emails: an email asking the customer to confirm her email address and, subsequently, a welcome email that included the customer’s MPR Program rewards number. (Alzate Decl. ¶ 8.) Each of these emails included a hyperlink to the full text of the terms and conditions on the MPR Program webpage of TCP’s website. (Id.) The following text appears at the beginning of the MPR Program terms and conditions webpage: PLEASE NOTE: THESE TERMS AND CONDITIONS CONTAIN AN ARBITRATION CLAUSE AND CLASS ACTION WAIVER. THE WAIVER AFFECTS HOW DISPUTES WITH THE CHILDREN’S PLACE AND GYMBOREE ARE RESOLVED. BY ACCEPTING THESE TERMS AND CONDITIONS, YOU AGREE TO BE BOUND BY THIS ARBITRATION PROVISION. PLEASE READ IT CAREFULLY. (Alzate Decl. ¶ 17 & Ex. E at 1 (current website terms and conditions).) On November 22, 2018, the TCP sales associate followed the general process above to enroll Ms. Dougan in the MPR Program. (Dougan Decl. ¶¶ 4-11.) Ms. Dougan states, however, that neither the TCP sales associate nor anyone else at the store handed her a copy of the MPR Brochure, nor did anyone say anything to her about the brochure or about terms and conditions that governed her membership. (Dougan Decl. ¶¶ 13-15, 18, 20-21.) Indeed, Ms. Dougan states that she never saw the MPR Brochure until August 2, 2020. (Id. ¶ 19.) Although Ms. Dougan states that she never saw an email from TCP “about any terms and conditions relating to the [MPR Program]” (Dougan Decl. ¶ 23), TCP’s records show that Ms. Dougan received both the email asking her to confirm her email address and the welcome email on November 23, 2018 (Alzate Decl. ¶ 13). TCP’s records also show that Ms. Dougan used her membership after she enrolled in the Program and was assigned reward coupons on November 24, 2018 and October 8, 2019. (Id. ¶ 14.) B. Procedural Background Ms. Dougan filed her complaint in this action on May 30, 2020. (Compl.) Ms. Dougan alleges on behalf of herself and a proposed class that TCP violated the Washington Commercial Electronic Mail Act (“CEMA”), ch. 19.190 RCW, and the Washington Consumer Protection Act (“CPA”), ch. 19.86 RCW, by transmitting emails with subject lines advertising false or misleading discounts. (Id. ¶¶ 32, 42-74.) Ms. Dougan seeks to enjoin TCP from sending emails that include false or misleading

discounts. (Id. at 20 ¶¶ 2, 8.) She also seeks actual and statutory damages under the CPA. (Id. at 20 ¶¶ 4-6.) Ms. Dougan alleges that since at least March 2019, TCP “has transmitted hundreds of commercial emails containing false or misleading information” about discounts “to thousands of Washington State consumers.” (Id. ¶¶ 22-23; see, e.g., id. Ex. A (listing 250 emails Ms. Dougan received between March 5, 2019 and December 31, 2019 that she

alleges have false or misleading information about discounts in their subject lines).) She alleges that statements such as “XX% Off” in the subject line of the emails are false or misleading because they are “based on [TCP]’s self-created and inflated fictitious list prices.” (Id. ¶ 24.) TCP filed the instant motion to compel arbitration on July 10, 2020. (Mot.) On

September 10, 2020, the court granted TCP’s motion for relief from the deadlines in the court’s scheduling orders regarding initial disclosures (Dkt. # 21) and class certification (Dkt. # 22) pending its ruling on TCP’s motion to compel arbitration. (Order Granting Relief from Deadlines (Dkt. # 26).)

A. Standard for Motions to Compel Arbitration The Federal Arbitration Act (“FAA”), 9 U.S.C. § 2, governs arbitration agreements in any contract affecting interstate commerce. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001). Under the FAA, arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA “reflect[s] both a liberal

policy favoring arbitration . . . and the fundamental principle that arbitration is a matter of contract.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal quotation marks and citations omitted). “In line with these principles, courts must place arbitration agreements on an equal footing with other contracts . . . and must enforce them according to their terms.” Id. (internal quotation marks and citations omitted). Section 4 of the FAA provides a judicial remedy where a party seeks to compel

another party to arbitrate a dispute. See 9 U.S.C. § 4. Under Section 4, “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction . . . of the subject matter of a suit arising out of the controversy between the parties,” for an order compelling arbitration. Id.

On a motion to compel arbitration, the court’s role under the FAA is generally “limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho Diagnostic Sys., 207 F.3d 1126, 1130 (9th Cir. 2000); see also Meadows v. Dickey’s Barbecue Rests. Inc., 144 F. Supp. 3d 1069, 1075 (N.D. Cal. 2015). “[U]pon being

satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4. The parties do not appear to dispute that Ms. Dougan’s claims are within the scope of TCP’s arbitration provision. (See generally Mot., Resp.) The court, therefore, focuses on whether a valid agreement to arbitrate exists.

As the party seeking to compel arbitration, TCP bears “the burden of proving the existence of an agreement to arbitrate by a preponderance of the evidence.” Norcia v. Samsung Telecomm. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017). “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit.” Id. (quoting AT&T Techs., Inc, 475 U.S. at 648) (alteration in original). In analyzing the parties’ arguments about contract formation, the

court applies “ordinary state-law principles that govern the formation of contracts” to decide whether an agreement to arbitrate exists. See id. (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). B. Ms. Dougan Has Assented to Arbitration The parties agree that Washington law applies to determine whether the parties

formed a contract. (Mot. at 7-8; Resp. at 4.) Under Washington law, in order to form a valid contract, the contracting parties must “objectively manifest their mutual assent.” Keystone Land & Dev. Co. v. Xerox Corp., 94 P.3d 945, 949 (Wash. 2004). “Generally, manifestations of mutual assent will be expressed by an offer and acceptance.” Id. In the context of online agreements, the existence of mutual assent turns on whether the

consumer had reasonable notice of the agreement. Wilson v. Huuuge, Inc., 944 F.3d 1212, 1219 (9th Cir. 2019) (citing Nguyen v. Barnes & Noble, Inc., 763 F.3d 1171, 1175 (9th Cir. 2014). “Washington does not allow parties to shirk contract obligations if they had actual or constructive notice of the provisions.” Id. (citing W. Consultants, Inc. v. Davis, 310 P.3d 824, 827-28 (Wash. Ct. App. 2013)). A consumer “cannot successfully argue that the contract is unenforceable as long as [she] was not deprived of the

opportunity to read it.” Schmidt v. Samsung Electronics Am., Inc., No. C16-1735JCC, 2017 WL 2289035, at *2 (W.D. Wash. May 25, 2017). Ms. Dougan denies that she had actual notice of the MPR Program’s terms and conditions. Therefore, the court considers whether Ms. Dougan had constructive notice of those provisions and concludes that she did. “In the absence of actual knowledge, a reasonably prudent consumer must be on constructive notice of the terms of the contract”

where the contract does not require the user to affirmatively assent to the terms of use. Wilson, 944 F.3d at 1220. “Users are put on constructive notice based on the conspicuousness and placement of the terms and conditions.” Id. Courts will not enforce agreements where the terms and conditions are, for example, “buried at the bottom of the page or tucked away in obscure corners of the website.” Id.

Here, TCP provided notice of the existence of terms and conditions governing the MPR Program in several places: in signs posted throughout TCP’s retail store; in a physical brochure that was displayed at each cash register and that, according to TCP’s policies, is handed to the customer when she signs up for the Program; and in emails that require the customer to confirm her email address and that welcome her to the Program.

The signs, brochure, and emails each inform the consumer that the MPR Program is subject to terms and conditions. The signs and emails direct the customer to TCP’s website for more information about the terms and conditions, while the MPR Brochure contains the actual terms. TCP’s website and the MPR Brochure both clearly state in large bold type that the MPR Program’s terms and conditions include an arbitration agreement and class action waiver. The court concludes that these disclosures were

adequate to provide Ms. Dougan constructive knowledge of the existence of terms and conditions governing her membership in the MPR program. Although Ms. Dougan states that she “never saw an email from TCP about any terms and conditions relating to” the MPR Program, that assertion is not sufficient to defeat TCP’s motion, particularly where the emails she indisputably received included links to the terms and conditions. In addition, although Ms. Dougan states that she never

received a copy of the MPR Brochure, TCP’s evidence of a consistent practice of delivering the terms and conditions is prima facie evidence that she was aware of the offer. Schmidt, 2017 WL 2289035, at *5 (citing Schwartz v. Comcast Corp., 256 Fed. Appx. 515, 518 (3d Cir. 2017)). In any event, the court concludes that the physical signs in the retail store and the emails Ms. Dougan received placed her on constructive notice

that her membership in the MPR Program was governed by terms and conditions. Had she inquired further, she would have discovered that those terms and conditions included an agreement to submit any disputes about the MPR Program to arbitration. Finally, Ms. Dougan makes no argument that the terms and conditions governing TCP’s arbitration provision are unconscionable or otherwise unenforceable. (See

generally Resp.) Therefore, the court concludes that TCP has met its burden to show by a preponderance of the evidence that Ms. Dougan assented to the terms and conditions governing the MPR Program, including the arbitration agreement contained therein. As a result, the court finds that the arbitration agreement is valid and enforceable. C. Stay of Proceedings When a court determines that an arbitration agreement covers a parties’ claims, the

FAA requires all remaining substantive issues to be decided in arbitration. 9 U.S.C. § 4. The final question for this court, therefore, is whether to dismiss or stay this case pending the completion of arbitration. Under Ninth Circuit precedent, the court “may either stay the action or dismiss it outright when, as here, the court determines that all of the claims raised in the action are subject to arbitration.” Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072, 1074 (9th Cir. 2014) (citing 9 U.S.C. § 3). Here, TCP requests a stay.

(See Mot. at 14-15.) Ms. Dougan does not respond to this request. (See generally Resp.) Because Ms. Dougan has not opposed TCP’s request that these proceedings be stayed pending the completion of arbitration, the court grants TCP’s request for a stay. For the foregoing reasons, the court GRANTS TCP’s motion to compel arbitration

and stay proceedings (Dkt. # 11). Ms. Dougan is compelled to proceed to arbitration of her claims in accordance with the terms of the arbitration agreement contained in the MPR Program terms and conditions. Dated this 27th day of October, 2020.

A United States District Judge