Miracle-Pond v. Shutterfly, Inc.

VERNITA MIRACLE-POND & SAMANTHA PARAF,individually and on behalf of all others similarly situated, Plaintiffs, v. SHUTTERFLY, INC., Defendant.

Case No. 19 cv 04722

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

May 15, 2020

Judge Mary M. Rowland

MEMORANDUM OPINION & ORDER

Plaintiffs Vernita Miracle-Pond and Samantha Paraf have sued Defendant Shutterfly, Inc. under the Illinois Biometric Information Privacy Act ("BIPA"), 740 ILCS 14/1, et seq. Before the Court is Shutterfly's motion to compel arbitration for Ms. Miracle-Pond¹ and to stay the litigation pending the outcome of arbitration, and Plaintiffs' motion for curative measures. (Dkt. 19; Dkt. 38). For the reasons stated below, Shutterfly's motion is granted [19], and Plaintiffs' motion is denied [38]. Shutterfly's motion to dismiss [16] is stayed pending the outcome of arbitration.

BACKGROUND

Ms. Miracle-Pond is a Shutterfly user with a Shutterfly account. (Dkt. 1, Ex. 1 ¶ 7). She registered for her Shutterfly account using the Shutterfly Android mobileapp in August 2014. (Dkt. 23 ¶ 3). During the registration process, the app displayed a page on Ms. Miracle-Pond's Android device. (Dkt. 23, Ex. 1, 2). In order to proceed past that page, Ms. Miracle-Pond was required to click a button that said "Accept" below the following statement: "By tapping 'Accept', you agree to use the Shutterfly for Android software and the associated Shutterfly services in accordance with Shutterfly's Terms of Use." (Id.). The page directed users to the Terms of Use: "To view a copy of the Terms of Use from your phone, tap the 'View Terms of Use' button below. You may also view the Terms of Use and Privacy Policy at shutterfly.com." (Id.). An image of the page's layout is replicated below:

Image materials not available for display.

(Id.).

Shutterfly has had various Terms of Use between 2014 and the filing of this suit. In the version of the Terms of Use from August 2014, the time Ms. Miracle-Pondopened an account with Shutterfly, the first section reiterated that the user was accepting the Terms. The Terms of Use stated, in relevant part:

Please read these Terms of Use ("Terms") carefully. They contain the legal terms and conditions that govern your use of and access to our websites, mobile sites, and mobile applications (collectively, our "Sites and Apps"), as well as our provision of products and services...

By visiting any of our Sites and Apps, you are signifying your assent to these Terms and our Privacy Policy, which is incorporated herein by reference. Any products ordered or services used through any of our Sites and Apps are also governed by these Terms. We may revise these Terms from time to time by posting a revised version. YOUR CONTUNED USE OF ANY OF THESE SITES AND APPS AFTER WE POST SUCH CHANGES WILL CONSTITUTE YOUR ACCEPTANCE OF SUCH CHANGES. IN ADDTION, BY ORDERING PRODUCTS OR USING SERVICES, YOU ACKNOWLEDGE THAT YOU HAVE READ AND REVIEWED THESE TERMS IN THEIR ENTIRIETY, YOU AGREE TO THESE TERMS AND THE PRIVACY POLICY AND THESE TERMS CONSTITUTE BINDING AND ENFORCEABLE OBLIGATIONS ON YOU.

(Dkt. 23, Ex. 2, 2) (capitalization in original). Notably, the revision clause did not require notice of revisions to Shutterfly users, other than posting the new terms. (Dkt. 37, 3).

The 2014 Terms of Use included a class action waiver that stated:

ANY DISPUTE RESOLUTION PROCEEDINGS, WHETHER IN ARBITRATION OR COURT, WILL BE CONDUCTED ONLY ON AN INDIVIDAUL BASIS AND NOT IN A CLASS OR REPRESENTATIVE ACTION OR AS A NAMED OR UNNAMED MEMBER IN A CLASS, CONSOLIDATED, REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL LEGAL ACTION. YOUR ACCESS AND CONTINUED USE OF ANY OF OUR SITES AND APPS SIGNIFIES YOUR EXPLICIT CONSENT TO THIS WAIVER.

(Dkt. 23, Ex. 2, 14) (capitalization in original).

In May 2015, Shutterfly added an arbitration provision to its Terms of Use. (Dkt. 23, Ex. 3). Every version of Shutterfly's Terms of Use since May 2015, including the most recent version from September 2019, has included an arbitration provision. (Dkt. 23, Ex. 4). In each version, the preamble to the Terms stated: "NOTE: THIS TERMS OF USE CONTAINS AN ARBITRATION AND CLASS ACTION WAIVER PROVISION IN THE 'ARBITRATION' SECTION BELOW THAT AFFECTS YOUR RIGHTS UNDER THE TERMS OF USE AND WITH RESPECT TO ANY DISPUTE BETWEEN YOU AND US AND OUR AFFILIATES." (Dkt. 23, Ex. 3, 1; Dkt. 23, Ex. 4, 1) (capitalization in original). In both versions of the Terms, the arbitration clause states that "you and Shutterfly agree that any dispute, claim or controversy arising out of or relating in any way to the Shutterfly service, these Terms of Use and this Arbitration Agreement, shall be determined by binding arbitration." (Id.). The arbitration clause further explains that "[a]ll issues are for the arbitrator to decide, including issues relating to the scope and enforceability of this arbitration agreement." (Id.).

According to Shutterfly's records, Ms. Miracle-Pond uploaded nearly 300 photographs to her account between August 2014 and December 2018, ordered Shutterfly products on December 6, 2015, December 11, 2017, October 24, 2018, and December 8, 2018, and accessed her account as recently as April 22, 2019. (Dkt. 1, Ex.1, ¶ 3).

Ms. Miracle Pond and Ms. Palaf filed this lawsuit, on behalf of themselves and similarly situated Shutterfly users, in the Circuit Court of Cook County in June 2019.(Dkt. 1 ¶ 1). They allege that Shutterfly violated BIPA by using facial-recognition technology to extract biometric identifiers for "tagging" individuals and by "selling, leasing, trading, or otherwise profiting from Plaintiffs' and Class Members' biometric identifiers and/or biometric information." (Dkt. 1, Ex. 1 ¶¶ 48-49). On July 12, 2019, Shutterfly removed to this Court. (Dkt. 1).

In September 2019, about three months after Ms. Miracle-Pond and Ms. Palaf filed this lawsuit, Shutterfly sent an email to all of its users nationwide. The email notified Shutterfly users that the Terms of Use had been updated. The email stated: "We're updating our Privacy Policy and Terms of Use, reflecting our ongoing commitment to be transparent about how we use your data and keep it safe. We invite you to read our policies in full, but here's a snapshot...." (Dkt. 22, Ex. 1). The email then listed four bullet points unrelated to arbitration before stating: "We also updated our Terms of Use to clarify your legal rights in the event of a dispute and how disputes will be resolved in arbitration." (Id.). Finally, the email advised users: "If you do not contact us to close your account by October 1, 2019, or otherwise continue to use our websites and/or mobile applications, you accept these updated terms." (Id.).

Shutterfly's records indicate that Ms. Miracle-Pond opened that email on September 8, 2019. (Dkt. 21, 4). As of October 2, 2019, Ms. Miracle-Pond's account remained open. (Id.). Plaintiffs believe the September 2019 email "was an improper ex parte communication with Plaintiff and putative class members because it failed to advise them of the pending litigation while seeking to deprive them of their rights as plaintiffs or class members." (Dkt. 37, 4). Before the Court are two motions:Shutterfly's motion to compel arbitration, and Plaintiffs' motion for curative measures regarding the September 2019 email. (Dkt. 19; Dkt. 38).

DISCUSSION

1. Motion to Compel Arbitration

Under the Federal Arbitration Act ("FAA"), "[a] written provision in ... a contract... to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable." 9 U.S.C. § 2. The FAA "reflects a liberal federal policy favoring arbitration agreements," AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346, 131 S. Ct. 1740, 179 L.Ed.2d 742 (2011) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 74 L.Ed.2d 765 (1983)), and places "arbitration agreements on an equal footing with other contracts." Gore v. Alltel Comm'cns, LLC, 666 F.3d 1027, 1032 (7th Cir. 2012) (internal quotations omitted). It thereby follows that parties are not required to arbitrate unless they have agreed to do so. Scherk v. Alberto-Culver Co., 417 U.S. 506, 511, 94 S. Ct. 2449, 41 L.Ed.2d 270 (1974). "When deciding whether parties agreed to arbitrate a certain matter, courts generally should apply ordinary state-law principles that govern the formation of contracts." Druco Rest., Inc. v. Steak N Shake Enterp., Inc., 765 F.3d 776, 781 (7th Cir. 2014).

Courts deciding motions to compel arbitration apply a summary judgment standard in accordance with Federal Rule of Civil Procedure 56(c). Tickanen v. Harris & Harris, Ltd., 461 F.Supp.2d 863, 866 (E.D. Wis. 2006); Meyer v. Uber Technologies, Inc., 868 F.3d 66, 74 (S.D.N.Y. 2017). Movants are required to "provide sufficientevidence in support of their claims such that a reasonable jury could return a verdict for them under applicable law." Friends for Health: Supporting North Shore Health Center v. PayPal, Inc., No. 17 C 1542, 2018 WL 2933608, at *3 (N.D. Ill. June 12, 2018) (citing WFC Commodities Corp. v. Linnco Futures Group, Inc., No. 98 C 1354, 1998 WL 834374, at *2 (N.D. Ill. Nov. 25, 1998)). "The party opposing arbitration must identify a triable issue of fact concerning the existence of agreement" and "cannot avoid compelled arbitration by generally denying the facts upon which the right to arbitration rests." Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002). The Court may consider exhibits and affidavits regarding the arbitration agreement. Friends for Health, 2018 WL 2933608, at *3.

a. Whether Ms. Miracle-Pond Agreed to the Terms of Use

A party seeking to compel arbitration must first establish that an arbitration agreement exists.² Gen. Ass'n of Regular Baptist Churches v. Scott, 549 F. App'x. 531, 533 (7th Cir. 2013). Whether an agreement to arbitrate has been formed is governed by state law.³ Sgouos v. TransUnion Corp., 817 F.3d...