The New York Times reported yesterday on a new trend among companies selling food products — the use of arbitration clauses. General Mills reportedly created an arbitration clause that would bind consumers who engaged in certain kinds of activity on their website, including downloading coupons or liking their products on Facebook. While such clauses may not be enforceable (apparently the clause is not easily located on the General Mills website), it may well discourage consumers with claims against the company from bringing those claims (even though the company supposedly pays for the arbitration) and certainly suppresses class processes. Touting arbitration as a useful dispute resolution process is one thing; using it as a means to avoid class processes and discourage individual claims is another. See : http://www.nytimes.com/2014/04/17/business/when-liking-a-brand-online-voids-the-right-to-sue.html?hp&_r=0
“Touting arbitration as a useful dispute resolution process is one thing; using it as a means to avoid class processes and discourage individual claims is another.”
As a practicing attorney, I’d venture that about 95%+ of the use of arbitration clauses is the avoid class processes, discourage individual claims and preclude exemplary damages, while less than 5% is as a “useful dispute resolution process.” The percentage of cases where arbitration clauses are included for a legitimate reason are few and far between.
After I read the NYT article, I looked up the new terms on the General Mills website. (It took several clicks through obscure buttons.) I then bought a package of Cheerios to use in the ADR class I was teaching today. Am I bound by the arbitration agreement? I actually read it before I bought the product. Are my students bound the next time they buy a General Mills product, since I’ve told them about it and some of them looked it up on their computers? (This is apart from the question of whether and when someone is bound by terms if they had the opportunity to read but failed to do so.)
Talk about a new low.