Peoples v. Discover Financial Servsices, Inc.
387 F. App'x 179 (2010)
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Rule of Law:
In the Third Circuit, Title III of the Americans with Disabilities Act (ADA), which prohibits discrimination in places of public accommodation, applies only to physical places and not to intangible services like a credit card company's fraud investigation process.
Facts:
- From March to November 2007, John F. Peoples, who is blind, used his Discover credit card, serviced by DFS Services LLC (DFS), to purchase prostitution services from Ginger Dayle.
- Following each session, Peoples gave his card to Dayle, who would process the charge and prepare a receipt.
- Because he could not see, Peoples would sign the receipt without being able to verify the amount charged.
- In November 2007, while reviewing his statement with his mother, Peoples discovered eleven transactions from October and November that he believed were fraudulent overcharges.
- Peoples alleges Dayle told him she was charging amounts like '$375 or $750' but actually charged $1,100 for ten transactions and $1,600 for one.
- Peoples reported these specific overcharges to DFS, claiming fraud and requesting a credit to his account.
- Prior to the disputed period, Peoples had paid Dayle similar large sums, including charges of $1,075 and $1,100, which he did not contest.
- DFS provides a 24-hour telephone service allowing cardholders to check recent transaction amounts.
Procedural Posture:
- John F. Peoples filed suit against DFS Services LLC (DFS) in the United States District Court for the Eastern District of Pennsylvania.
- Peoples's complaint alleged violations of Title III of the ADA, the Rehabilitation Act, and breach of contract.
- The parties filed cross-motions for summary judgment in the District Court.
- The District Court granted summary judgment in favor of DFS on all of Peoples's claims.
- Peoples (appellant) appealed the District Court's decision to the United States Court of Appeals for the Third Circuit, where DFS was the appellee.
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Issue:
Does a credit card company's fraud investigation process constitute a 'place of public accommodation' under Title III of the ADA, thereby requiring the company to provide reasonable accommodations for a cardholder's visual impairment?
Opinions:
Majority - Jordan, Circuit Judge
No. A credit card company's fraud investigation process is not a 'place of public accommodation' under Title III of the ADA. The court's reasoning for affirming summary judgment for DFS rested on three main points. First, regarding the ADA claim, the court held that it was bound by its precedent in Ford v. Schering-Plough Corp., which interprets the term 'public accommodation' in Title III as being limited to actual physical structures. Since DFS's fraud investigation services do not occur at a physical place that DFS owns, leases, or operates, the ADA does not apply. Second, the Rehabilitation Act claim failed because Peoples presented no evidence that DFS receives federal financial assistance, a prerequisite for the Act to apply. Finally, the breach of contract claim failed because Peoples did not show that DFS's investigation was unreasonable; DFS followed its procedures, obtained signed receipts from the merchant, and noted the disputed charges were consistent with Peoples's prior, uncontested payment history. The court also noted that Peoples's own use of the card for illegal transactions arguably constituted a prior material breach of the cardmember agreement, which would prevent him from enforcing the contract against DFS.
Analysis:
This decision reaffirms the Third Circuit's restrictive interpretation of 'public accommodation' under the ADA, limiting its application to physical spaces. By doing so, it solidifies the circuit split on whether the ADA applies to non-physical contexts like websites and services provided over the phone or internet. This ruling makes it significantly more difficult for plaintiffs in the Third Circuit to bring ADA Title III claims against companies for discrimination that occurs in a non-physical context. The case signals that any expansion of the ADA's reach to cover such intangible services in this jurisdiction would likely require a Supreme Court ruling or legislative action.
