from the likewrap dept
Three years ago when the Supreme Court ruled in AT&T Mobility v. Concepcion, basically allowing binding arbitration clauses in contracts to exclude class action suits, we noted that it was an unfortunate pitting of a broken class action system against a broken arbitration system. Both arbitration and class action lawsuits may have some good features — and the concepts behind each sound good, but both have been abused to extreme levels. On the class action side, often these lawsuits have little to do with righting wrongs, and very much to do with big paydays for lawyers (and some companies even turn class action lawsuits into marketing opportunities).
On the arbitration side, while the theory of having a neutral third party settle the dispute without having to go through an expensive litigation process certainly sounds good, the reality is quite different. Since arbitrators are hired, and large companies are frequent employers, arbitrators have very strong incentives to side with those companies, in order to make sure they’ll be hired in the future. When you have one party who is likely to be a frequent employer, and another who will only engage in the transaction once, guess where the bias is going to fall. And, indeed, multiple studies have shown that’s exactly what happens. In one case 94% of rulings went against consumers. Another study showed that companies that regularly use arbitration get higher awards.
So neither side in that fight necessarily could be said to “represent the good guys.” However, as we noted when the Supreme Court ruling came out, it seemed likely that this would lead to companies putting arbitration clauses absolutely everywhere. At the time, we suggested a simple fix: have Congress make it clear that you can’t give up your right to go to court based on a non-negotiated contract. And that still seems to make sense, but of course, nothing has actually been done.
It should come as little surprise, then, that the prediction of seeing companies put arbitration clauses absolutely everywhere is happening — and to ridiculous levels. The NY Times has an article about how General Mills, makers of Cheerios, Chex and lots of other cereals, has updated some legalese on their own website to basically say if you do absolutely anything related to its cereals — including liking them on Facebook, or buying them — you give up your right to go to court and are agreeing to arbitration:
General Mills, the maker of cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways.
Instead, anyone who has received anything that could be construed as a benefit and who then has a dispute with the company over its products will have to use informal negotiation via email or go through arbitration to seek relief, according to the new terms posted on its site.
In language added on Tuesday after The New York Times contacted it about the changes, General Mills seemed to go even further, suggesting that buying its products would bind consumers to those terms.
While one might argue that you get what you deserve when you “like” a cereal on Facebook, this still seems ridiculous and excessive. I can almost see the sense of saying if it’s in a binding contract you sign as a subscriber (e.g., mobile phone service) such a clause can be considered legit, but something like this, which isn’t even “clickwrap” but more “likewrap” can’t possibly be legally binding. Not only has the person probably not read the details, from what’s being said, this “binding arbitration” clause may appear on a website they’ve never visited at all. I can’t see how that can or should be considered a true contract in any sense of the word.