Just what is a service establishment under title III of the ADA? A published case from the 10th Circuit that came down on July 12, 2016,  Levorsen v. Octapharma Plasma, Inc., deals with this question. As is usual, the blog entry is divided into categories: facts, 42 U.S.C. § 12181(7)(F); majority reasoning; reasoning of dissent; and takeaways. The reader is free to focus on any or all of the categories.

I

Facts

Plaintiff suffers from various psychiatric disorders, including borderline schizophrenia. For years, he had donated plasma in exchange for money in an effort to supplement his limited income. In May 2013, he attempted to do that at a Salt Lake City branch of Octapharma Plasma, Inc. (hereafter, defendant). The defendant operates in multiple places. At these places, the defendant collects donors’ plasma using a process called plasmapheresis. During that process, it draws and mechanically processes the donor’s blood, separating and reserving the plasma before returning the red blood cells to the donor. It pays it donors for this plasma, then sells it to pharmaceutical companies. When an employee of the defendant learned that the plaintiff suffers from borderline schizophrenia, the employee became concerned that he might have a schizophrenic episode while donating and dislodge the collecting needle, possibly injuring himself or someone else. The employee then advised the plaintiff that he was ineligible to donate plasma. Even though the plaintiff provided the defendant with a signed form from his psychiatrist, who both indicated that he was medically suitable to donate plasma twice a week, the defendant maintained its refusal to allow him to donate. He then brought suit under title III of the ADA. The defendant defended on the grounds that it was not a service establishment under 42 U.S.C. 12181(7)(F), and therefore, it was not subject to coverage under the ADA.

II

42 U.S.C. § 12181(7)(F)

42 U.S.C. § 12181(7)(F) states that one of the places of public accommodations includes:

“a laundromat, dry-cleaner, bank, barber shop, beauty shop, travel service, shoe repair service, funeral parlor, gas station, office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment.” (Emphasis mine).

III

Majority Reasoning (Moritz, Briscoe)

In reversing and remanding the decision of the District Court, which held that the defendant was not operating a service establishment, the majority, in an opinion by Judge Moritz, reasoned as follows:

  1. The court cited to the definition of a service establishment noted in II above;
  2. The examples listed for service establishment are not exclusive but instead are illustrative;
  3. Courts must construe the section liberally to afford individuals with disabilities access to the same establishments available to those without disabilities;
  4. Turning to Webster’s third new international dictionary, the court said that the dictionary defines a service as “conduct or performance that assists or benefits someone or something,” or “useful labor that does not produce a tangible commodity.” Therefore, a service establishment is a place or business of a public or private institution that, by its conduct or performance, is assisting or benefiting someone or something or providing useful labor without producing a tangible good for a customer or client. In other words, a service establishment is an establishment that provides a service;
  5. Giving the term “service establishment,” its ordinary meaning does not result in an ambiguity nor does it result in an irrational one. Rather, it results in a broad definition entirely consistent with the aim of title III to afford individuals with disabilities access to the same establishments available to those without disabilities;
  6. Even if giving the term “service establishment,” its ordinary meaning resulted in the definition that was ambiguous or irrational, employing the canons of statutory interpretation, ejusdem generis and noscitur a sociis (which would lead to the conclusion that only places providing compensation to customers should be considered a service establishment), doesn’t help anything because another rule of statutory interpretation argues against reading a direction of compensation requirement into the statute when it doesn’t appear. To decide otherwise, only serves to manufacture ambiguity when none exists;
  7. Even assuming ambiguity does exist, legislative history supports the decision to refrain from concluding that an entity is a service establishment only if it is similar to the enumerated examples in the section. More specifically, a House Report explained that a person alleging discrimination does not have to prove that the entity being charged with discrimination is similar to the examples listed in the definition, but only has to show that the entity falls within the overall category. Further, Congress changed the language in this section from “other similar service establishment,” to “other service establishment,” presumably to make clear that a particular business need not be similar to the examples in order to constitute a service establishment (a presumption consistent with legislative history);
  8. The defendant is a place of business that assists or benefits those who wish to provide plasma for medical use, whether it be for altruistic reasons or pecuniary gain, by supplying the trained personnel and medical equipment necessary to accomplish that goal. While the defendant may ultimately produce a tangible good for pharmaceutical companies in the form of plasma, it doesn’t produce a tangible good for individuals like the plaintiff seeking the use of plasma procurement services. Rather, the defendant simply assists those individuals in accomplishing their goal of providing plasma;
  9. The argument that finding the defendant is running a service establishment contradicts regulations from the FDA doesn’t wash because this decision is not a decision on the merits, but rather one holding that it is subject to title III of the ADA in the first place.

III

Reasoning of the Dissent (Holmes)

  1. The District Court correctly ruled that service establishments offer certain services in exchange for monetary compensation i.e. a fee;
  2. Every establishment listed in the section shares certain unifying traits by: 1) offering the public a service in the form of: a) expertise (eg. barbers, beautician, shoe repair craftsman, drycleaner, funeral parlors, lawyer, accountant, insurance offices, pharmacists, healthcare providers, and hospitals); or b) specialized equipment (eg. laundromats and gas station); 2) for use in achieving some desired end in exchange for monetary compensation;
  3. Plasma donation center do not receive a fee from members of the public in exchange for any services they provide;
  4. To the extent that plasma donation centers provide services to the public, they do not do so for the public’s use in achieving the desired end. Rather, they provide them for the plasma centers use in achieving a desired end-collecting plasma for sale to pharmaceutical companies. Therefore, plasma donation centers are fundamentally unlike service establishments listed in the section and should not be deemed to fall within the scope of that section;
  5. Since the statute is clear, legislative intent should not be looked at;
  6. The meaning of statutory language depends upon context and using the applicable canons of statutory construction (see below). Therefore, it doesn’t make sense to break out the terms “service,” and “establishment,” in the way the majority did in order to come up with a definition of the term, “service establishment;”
  7. It was proper to apply to statutory canons of construction, as the lower court did, to reach the proper result. The first, ejusdem generis, means that when a general term follows a specific one, the general should be understood as a reference to subjects akin to the one with specific enumeration. The second, noscitur a sociis, means that a word is known by the company it keeps;
  8. Canons of statutory construction are aids in construing statutory language itself and not a tool to be relied upon only in the face of ambiguity;
  9. Saying that there is no need to resort to legislative history if the literal language of the statute controls, is not the same thing as giving a court the right to ignore canons of statutory construction;
  10. The fact that legislation has a remedial purpose does not give the judiciary license in interpreting a provision to disregard entirely the plain meaning of the word used by Congress;
  11. The Department of Justice has made it clear that the statutorily enumerated examples are representative and illustrative of what constitutes a service establishment i.e. the examples possess qualities common to all service establishments;
  12. From looking at the categories in the section, it is more appropriate and natural to think of service establishments as providing a service rather than a good even though the delivery of the goods may be incidental to the furnishing of the service. Accordingly, service establishments under this section offer services to the public in exchange for a fee, i.e. monetary compensation;
  13. Every establishment listed in the section provides the public a service in the form of expertise or specialized equipment. Further, the list of services are intended for the public’s use in achieving a desired end, such as a haircut, clean clothes, legal advice etc.;
  14. Using the principles of statutory construction, the term “service establishment,” is a statutory term with a distinct meaning from the dictionary definitions of its component words;
  15. Utilizing the statutory canons of constructions leads to the conclusion that for a place of public accommodation to be a service establishment, the entity must offer the public a service in the form of expertise or specialized equipment for use in achieving some desired end of the public in exchange for compensation. The plasma centers do not meet this definition because they do not receive a fee from members of the public in exchange for any services that they furnish. Instead, they give members of the public a fee for tendering to them the commodity in the form of plasma or for performing a service of donating plasma;
  16. Unlike the service establishments found in the section, the defendant did not receive money from the plaintiff in exchange for services, but rather it paid the plaintiff instead;
  17. Plasma centers do not provide services for the public’s use in achieving the desired end, rather they provide them for the plasma centers use in achieving the desired end. Every service establishment listed in the section offers members of the public a service for use in achieving an end desired by them and not an end desired by the service establishment;
  18. The statute contemplates the service establishment provide the service to the public in exchange for a fee that it receives, but it does not contemplate that a member of the public will receive from the service establishment both the service and the fee. That is, under this section, the fee cannot be the desired end the public is seeking to achieve from the plasma donation center because the statute contemplates that the service establishment receive the fee in exchange for providing the desired end;
  19. Plasma donation centers resemble manufacturers much more than they do the kind of entities customarily providing services to the public under this section. That is, they manufacture a product, plasma. That product is derived from a raw commodity, whole blood, given by donors in exchange for a fee. Thus, plasma donation centers are more like paper mills, a manufacturer, than the other typical business providing services to the public under this section. Further, federal statutes clearly regard plasma donation centers as manufacturers as does the Food and Drug Administration. So, plasma centers may be manufacturers, but they are not service establishments.

IV

Takeaways:

  1. This case is the first of its kind at the Circuit Court level. Both opinions have their strengths and weaknesses, and as a result, I would certainly expect the Circuits to eventually split on this question. Will the Supreme Court take the case before a split in the Circuits presents itself? They don’t usually do that, but it does happen on occasion. Which way would the Supreme Court go? If Justice Scalia was on the Court, there is little doubt in my mind that the dissenting view would prevail. However, he is no longer on the Court, and we have an election coming up. So, it is impossible to predict which way this case will ultimately go. Considering the dissent and how it is written, one wonders whether four Justices would even agree to hear the case as I could see this case being an even split. That is, a reasoning based on canons of statutory construction will, in my opinion, have a great deal of appeal to many Justices on the Supreme Court. That said, perhaps four would agree to hear the case and gamble on what the next Justice would do. Such a gamble would be a huge one because a case turning on interpretation of a statute with statutory canons of construction/legislative history being the critical factors does not fit neatly into a liberal-conservative dynamic.
  2. Since canons of statutory construction have a great deal of appeal to jurists, one wonders if the 10th circuit will not grant a rehearing en banc, assuming one is sought.
  3. How this case ultimately resolves itself depends upon whether legislative history combined with the statutory construction that you don’t read words into a statute that are not there prevails or whether the two canons of statutory construction that are the underpinning of the dissent prevails. It could go either way.
  4. If the case goes forward, direct threat will be a factor. However, the Department of Justice regulations for title II and title III (28 C.F.R. § § 35.139, 208 respectively), unlike the EEOC regulations, do not include threat to self as one of the possibilities.
  5. The manufacturing part of the dissenting opinion leads one to wonder if the dissent isn’t essentially claiming that the plasma centers are a commercial facility per 42 U.S.C. § 12181(2) . Commercial facilities are subject to new construction and alteration requirements but they are not subject to the auxiliary aids and nondiscrimination provisions (see here at discussion of 28 C.F.R. § 36.104).
  6.  Interestingly enough, under either the majority or dissenting opinion, software as a service, which I discuss here, would be a service establishment.

2 Responses to Just What Is a Service Establishment Anyway?

Excellent discussion as usual. The majority opinion could open a real can of worms for businesses that that interact with consumers by buying or accepting goods or services rather than selling goods or services. Special dumpsters used to accept goods for recycling, for example, would often not be accessible to those in wheelchairs. Is an unattended dumpster a service establishment? Similar problems might exist with automated coin counting machines that are not accessible to the blind. This definition could also impact organizations that accept volunteer services. We already know that the Red Cross, for example, must make its shelters and other services accessible; does this mean that any area in which volunteers work must also be accessible? It is, after all, a service establishment.

In any case, I think the majority was blinded by the general “make the world accessible” policy of the ADA and failed to take into account the statutory limits on how that policy is implemented. It seems reasonably clear that Title III was aimed at the disabled as consumers of goods and services, not as vendors of goods or services. Under the 10th Circuit’s reasoning every commercial enterprise could be called a service establishment because if it buys anything in order to carry out its work or produce goods for sale then it provides the service of facilitating the sale of the goods or services it buys. Under this reading “service establishment” swallows up all the other definitions of public accommodation as well as commercial enterprises since every kind of business and charity buys or accepts goods or services of some kind. One could even ask whether every individual consumer is a “service establishment” dedicated to facilitating the sale of the goods the consumer buys.

I’m looking forward to your next post on this subject.

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