Lloyd v. The Retail Equation, Inc.

• Decision Date: 29 December 2022
• Docket Number: CIVIL 21-17057
• Parties: LLOYD, et al., Plaintiffs, v. THE RETAIL EQUATION, INC., et al., Defendants.
• Court: U.S. District Court — District of New Jersey

LLOYD, et al., Plaintiffs, v. THE RETAIL EQUATION, INC., et al., Defendants.

CIVIL No. 21-17057

United States District Court, D. New Jersey

December 29, 2022

OPINION

Hon Joseph H. Rodriguez, USDJ

Presently before the Court is the motion by defendant TJX Companies Inc. seeking an order (i) compelling arbitration of all claims asserted by plaintiff Carol Lloyd, individually and on behalf of a putative class, pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., and (ii) dismissing without prejudice Counts One, Three and Five in the Complaint asserted by plaintiff Carol Lloyd or, in the alternative, staying these causes of action and claims [Dkt. 15]. The Court is in receipt of the opposition filed by plaintiff Carol Lloyd [Dkt. 22] as well as the reply of TJX Companies, Inc. [Dkt. 27]. For the reasons set forth herein, the motion will be granted in part and denied in part.

I. Background

This matter is a putative class action concerning the alleged unlawful collection of consumer data and its use in approving or denying consumers returns or exchanges at certain retail stores. Plaintiff Carol Lloyd (“Lloyd”), on behalf of herself and the putative class(es) she seeks to represent, initiated this suit on September 16, 2021 against defendants The Retail Equation, Inc. (“TRE”) and The TJX Companies, Inc. (“TJX”) (among other defendants).

Lloyd is a New Jersey resident who purchased merchandise from TJX through the TJ Maxx^[1]website (the “Website”) on April 6, 2019, May 21, 2019, July 31, 2020, November 11, 2020, May 20, 2021, and October 21, 2021. Mot. at *5. On or about May 9, 2019, Lloyd attempted a return or exchange of certain of the previously purchased merchandise at a TJ Maxx retail store. Compl. ¶ 35, [Dkt. 1] (“Complaint”). At the time of the attempted return or exchange, the sales associate allegedly “communicated to [Lloyd] . . . that the return or exchange was flagged as potentially fraudulent and that future attempts by [Lloyd] . . . to return or exchange merchandise without a receipt would be declined based upon the recommendation of TRE . . .” Id. ¶¶ 43-44.

TRE is a corporate defendant named in this action but not a party to this instant motion whom TJX contracted with in an effort to combat retail fraud. TRE provides a “software-as-a-service” that uses statistical modeling and analytics to detect fraudulent behavior when returns are processed at a retailer's return counter. Compl. ¶¶ 15, 28. Using its patented software, TRE generates “risk scores” for individual customers attempting to return or exchange items and makes recommendations to the Retail Defendants about whether to approve or deny the processing of same. Id. ¶¶ 14, 28. These risk scores are calculated with a mix of data collected by retailers, both Consumer Commercial Activity Data and Consumer ID Data. Id. ¶ 2. Consumer Commercial Activity Data includes purchase and return history as well as the contents, method, and frequency of consumer purchases. Id. ¶ 18 Consumer ID Data contains information available on various forms of identification and includes “name, date of birth, race, sex, photograph, complete street address, and zip code.” Id. ¶ 19.

Lloyd alleges she was harmed by: (a) the sharing of her Consumer Commercial Activity Data and Consumer ID Data by TJX; (b) the receipt of her Consumer Commercial Activity Data and Consumer ID by TRE; and (c) the use of her Consumer Commercial Activity and Consumer ID Data. Id. ¶ 19. Lloyd claims that as a result of these practices, she is prevented from making future returns or exchanges without a receipt. Id. ¶ 45. The Complaint pleads the following causes of action against TJX stemming from the alleged conduct: invasion of privacy (Count One); violation of the New Jersey Consumer Fraud Act N.J. Stat. Ann. § 56:8-1, et seq. (“NJCFA”) (Count Three); and, unjust enrichment (Count Five). See Dkt. 1.

On January 28, 2022, TJX filed the instant motion to compel Lloyd's claims to arbitration on the asserted basis that “she agreed to arbitrate all disputes with TJX - including any dispute related to TJX's collection, use, or transmission of customer information.” Mot. at *1. In support of the motion, TJX introduces a declaration made on the personal knowledge of Caitlin Kobelski, Vice President, Digital Experience and Site Operations (“Kobelski”), containing exhibits purporting to be screenshots showing the “checkout flow” process “as it would have appeared to Lloyd[.]” Kobelski Decl. ¶ 3, Exhibit B. TJX maintains that Lloyd agreed to arbitrate any dispute with TJX each time she made a purchase through TJX's TJ Maxx website by clicking an icon displaying the words “PLACE ORDER” appearing on the final page of the Website's “checkout flow” process. The screenshot shows the “PLACE ORDER” icon displayed directly below a notice appearing in black font against a white background and comparatively smaller in size. The notice provides that “By placing your order, you agree to the T.J. Maxx terms of use[.]” The underlined phrase “terms of use” was a hyperlink that, when selected, caused the Terms Of Use (“TOU”) to appear in a new browser window.

TJX also introduces copies of the TOU as it would have appeared on various dates corresponding to Lloyd's purchases. Kobelski Decl. ¶¶ 4-7, Exhibits C, D, E, F. Since at least January 2019, the TOU have provided, in relevant part

Arbitration Agreement & Waiver Of Certain Rights You and the TJX Businesses agree that we will resolve any disputes between us through binding and final arbitration instead of through court proceedings. You and the TJX Businesses hereby waive any right to a jury trial of any Claim. All controversies, claims, counterclaims, or other disputes arising between you and the TJX Businesses relating to these Terms or the Website (each a “Claim”) shall be submitted for binding arbitration in accordance with the Rules of the American Arbitration Association (“AAA Rules”). The arbitration will be heard and determined by a single arbitrator. The arbitrator's decision in any such arbitration will be final and binding upon the parties and may be enforced in any court of competent jurisdiction

* * *

Neither you nor the TJX Businesses may act as a class representative or private attorney general, nor participate as a member of a class of claimants, with respect to any Claim. Claims may not be arbitrated on a class or representative basis. The arbitrator can decide only your and/or the TJX Businesses' individual Claims. The arbitrator may not consolidate or join the claims of other persons or parties who may be similarly situated.

* * *

THIS SECTION LIMITS CERTAIN RIGHTS, INCLUDING THE RIGHT TO MAINTAIN A COURT ACTION, THE RIGHT TO A JURY TRIAL, THE RIGHT TO PARTICIPATE IN ANY FORM OF CLASS OR REPRESENTATIVE CLAIM, THE RIGHT TO ENGAGE IN DISCOVERY EXCEPT AS PROVIDED IN AAA RULES, AND THE RIGHT TO CERTAIN REMEDIES AND FORMS OF RELIEF. OTHER RIGHTS THAT YOU OR THE TJX BUSINESSES WOULD HAVE IN COURT ALSO MAY NOT BE AVAILABLE IN ARBITRATION.

Id.

In the same location on the “checkout flow” interface where the hyperlink to the TOU appear, the website presents a separate hyperlink to its Privacy Policy, which the TOU purport to “incorporate[] . . . by reference[.]” Id. The Privacy Policy addresses

1. the information TJX “may collect . . . from [a consumer] in connection with [his or her] activities at T.J. Maxx, such as when [the consumer] shop[s] on [its] websites or in [its] stores;

2. how TJX uses the information it collects from consumers including, inter alia, to (a) “[p]rocess, manage, complete and account for transactions, including purchases and refund, exchange and layaway requests,” (b) “[p]rovide [its] products and services to [consumers] and fulfill [their] orders,” (c) “[v]erify [a consumer's] identity in certain instances (such as when [the consumer] pay[s] by check, return[s] merchandise, or request[s] a refund),” and (d) “[s]ecure [its] operations and protect against, identify and help prevent fraud, unauthorized activity, claims and other liabilities and minimize credit risk”; and

3. how and with whom TJX may share consumer information including “with partners or third parties who perform services for [T]X] or with [T]X] contract[s] for the purposes described in th[e] Privacy Notice.”

Id.

In opposition to the motion, Lloyd argues that when she made her purchases TJX failed to provide adequate notice that she would be contractually bound to the TOU by making those purchases and, therefore, she could not have assented to the TOU. Opp. at *1. Further, Lloyd contends that when she made her purchases, she was not informed that the TOU to which she was purportedly agreeing included a mandatory arbitration provision and her waiver of her right to a jury trial in the event of a dispute, and thus she never entered into an agreement to arbitrate. Id. Finally, Lloyd submits that the Kobelski declaration and the exhibits thereto are inaccurate and contain inconsistencies rendering them unreliable and inadmissible. Id.

II. Legal Standard

The Federal Arbitration Agreement (“FAA”) “creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate.” Moses H. Cone Mem'l Hosp. v Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983)); Harris v. Green Tree Fin. Corp., 183 F.3d 173, 179 (3d Cir. 1999). Section 2 of the FAA provides that “[a] written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract . . . 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 “saving clause” in Section 2 indicates that the...