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New ADA Lawsuits Challenging Gift Card Issuers Inundate New York Federal Dockets

Client Alert

Authors: Angelo A. Stio III, Jeffrey M. Goldman and Jason J. Moreira

11/15/2019
New ADA Lawsuits Challenging Gift Card Issuers Inundate New York Federal Dockets

Over the last several weeks, a variety of major retailers, restaurant groups, pharmacies and other merchants have been hit with a deluge of putative class action lawsuits alleging violations of the Americans with Disabilities Act (ADA) and the New York State and City Human Rights Laws (NYSHRL and NYCHRL, respectively) for failing to make Braille-embossed gift cards available to their blind and vision-impaired customers. The lawsuits, which have exploded to more than 100 (and counting) over a few short weeks, seek preliminary and permanent injunctions modifying the business practices of the named defendants; compensatory damages, including all applicable civil penalties and fines; and declarations that the defendants’ failure to furnish Braille-embossed gift cards constitutes discrimination against blind and sight-impaired individuals. The lawsuits, mostly filed in the U.S. District Courts for the Southern and Eastern Districts of New York, seek to certify nationwide classes of “all legally blind individuals in the United States who would like independent access to [the defendants’] store gift cards,” as well as New York State and New York City subclasses based on separately alleged violations of the NYSHRL and the NYCHRL. To date, dozens of household-name companies in a variety of industries, from Disney and Whole Foods to Home Depot and Victoria’s Secret, have been named as defendants.

Overview of Gift Card Lawsuits

The plaintiffs in these gift card lawsuits contend that the defendant companies are “places of public accommodation” under the ADA and are prohibited from discriminating against blind and sight-impaired customers by denying them the opportunity to equally participate in, or benefit from, the defendants’ goods and services if the provision of “auxiliary aids and services” (such as Braille-embossed gift cards) would render those goods and services accessible to such customers. The plaintiffs specifically seek injunctive relief requiring the defendant businesses to design, manufacture and sell Braille-embossed gift cards that (1) identify the name of the merchant and the denomination of the gift card and its packaging (assuming it has a predetermined denomination); (2) convey “other pertinent information” such as terms of use, privacy policies and instructions for making balance inquiries; and (3) provide this pertinent information either on the card, affixed to the card or inserted in the card’s packaging. The plaintiffs advance substantially the same claims under the applicable provisions of the NYSHRL and the NYCHRL, which contain language similar to the language in Title III of the ADA.

The new wave of ADA gift card litigation is closely related to another string of ADA accessibility lawsuits — advanced by the same handful of law firms and many of the same litigants — contending that the websites of various retailers are not accessible to blind and sight-impaired individuals and therefore violate the ADA. Given the speed with which these website accessibility lawsuits proliferated — more than 3,000 filed from 2017 (when they began) to the present — the new wave of gift card lawsuits should be taken seriously. Indeed, earlier this year, the Ninth Circuit Court of Appeals reversed the trial court and permitted a blind customer to move forward with an ADA lawsuit against Domino’s Pizza, contending that Domino’s failed to make its website and mobile app accessible to blind and sight-impaired customers. Robles v. Domino’s Pizza, LLC, No. 17-55504 (9th Cir. Jan. 15, 2019), cert. denied, Domino’s Pizza, LLC v. Robles, No. 18-1539 (U.S. Oct. 7, 2019). The Ninth Circuit rejected Domino’s argument that the ADA, which was passed in 1990 and therefore predated the modern internet, did not apply to websites and apps. The Supreme Court recently denied certiorari, and the California Court of Appeals recently determined that websites that are connected to a “brick and mortar” location must be accessible to the visually impaired.

Potential Defenses

The legal theories being advanced in the gift card lawsuits are novel and remain largely untested. As of this writing, no case law exists specifically analyzing the application of Article III of the ADA (or the NYSHRL or the NYCHRL) to the issuance and availability of gift cards. Nevertheless, potentially affected businesses may have a number of potential defenses at their disposal.

First, a business faced with a gift card lawsuit may be able to obtain dismissal by taking prompt remedial action that moots the plaintiff’s claims. Although still untested in the gift card context, this strategy was successfully employed in a recent decision in the Southern District of New York involving website accessibility. See Diaz v. Kroger Co., 2019 U.S. Dist. LEXIS 93177 (S.D.N.Y. June 4, 2019).

Second, the ADA, the NYSHRL and the NYCHRL each permit defendant businesses to show that the provision of one or more auxiliary aids or services, such as providing Braille-embossed gift cards, would fundamentally alter the nature of the good or service being offered or would result in an “undue burden.” The plaintiffs in the ADA gift card lawsuits contend that the sums the defendants spend in marketing and selling their gift cards, as well as the revenue generated therefrom, are “far greater than the associated cost of making [their] store gift cards equally accessible to visually impaired customers.” This allegation is speculative and remains an open factual question, however.

Finally, there are significant legal and factual questions regarding (among other things) whether the lack of Braille actually impedes access to the store’s services, in that once a gift card is used, the Braille reflecting the original value is no longer accurate; relatedly, whether and under what circumstances the provision of Braille-embossed gift cards would constitute an “undue burden”; and whether all goods and services offered by places of public accommodation — including gift cards — must be independently accessible to blind or sight-impaired customers, or whether utilizing alternative methods (such as providing employee assistance) would be sufficient. On this latter point, at least one case in the Southern District of New York dismissed an ADA claim on the ground that it was sufficient for a restaurant to make “qualified readers” available to assist blind or sight-impaired customers with navigating and operating a touchscreen fountain drink machine. West v. Moe's Franchisor, LLC, No. 15cv2846, 2015 U.S. Dist. LEXIS 165070 (S.D.N.Y. Dec. 9, 2015).

Given that this wave of ADA litigation was initiated only recently, courts are unlikely to make any definitive determinations regarding the viability of these gift card claims in the near term, and uncertainty regarding compliance and litigation risk is likely to persist. Potentially affected businesses should review their internal policies and practices relating to the design and sale of gift cards and consult experienced counsel to investigate and address any concerns, mitigate litigation risk, and respond to any pending claims.

The authors are members of Pepper Hamilton’s Trial and Dispute Resolution Practice Group, a seasoned and trial-ready team of advocates who help clients analyze and solve their most emergent and complex problems through negotiation, arbitration and litigation.

The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.

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