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‘Like’ A Brand Online And Lose The Right To Sue

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Most major businesses were fairly quick to jump on the social media bandwagon, even when it was clear when they didn’t know precisely why they were there. This has been especially true of major consumer brands, almost all of which have a presence of some kind on Twitter, Facebook, Instagram, Pinterest, and whatever other new social media platform you can think of. Now, The New York Times reports on a rather bizarre outgrowth of that phenomenon, the prospect that you could lose your right to sue a company if you interact with one of its brands online:

Might downloading a 50-cent coupon for Cheerios cost you legal rights?

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.

We’ve updated our privacy policy,” the company wrote in a thin, gray bar across the top of its home page. “Please note we also have new legal terms which require all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration.”

The change in legal terms, which occurred shortly after a judge refused to dismiss a case brought against the company by consumers in California, made General Mills one of the first, if not the first, major food companies to seek to impose what legal experts call “forced arbitration” on consumers.

“Although this is the first case I’ve seen of a food company moving in this direction, others will follow — why wouldn’t you?” said Julia Duncan, director of federal programs and an arbitration expert at the American Association for Justice, a trade group representing plaintiff trial lawyers. “It’s essentially trying to protect the company from all accountability, even when it lies, or say, an employee deliberately adds broken glass to a product.”

The move toward mandatory arbitration in consumer transaction isn’t a new one. Whether you’re aware of it or not, the terms and conditions governing the credit card(s) you use include language requiring any disputes be submitted to binding arbitration, although that generally doesn’t apply in situations whether the credit card company is attempting to collect an unpaid balance from a cardholder. Those provisions began showing up in card agreements about a decade ago, and soon after they started cropping up in other industries as well, such as banking, investments, airlines, and elsewhere. In the early years, of course, there was much litigation as businesses, consumers, and Plaintiff’s attorneys tested the limits of what consisted of a valid contract in the context of agreements that few people ever actually read. While the results varied from state to state, the general judicial preference for encouraging out-of-court resolution of disputes, combined with laws such as the Federal Arbitration Act which encourage the use of private arbitration and make it easy to enforce arbitration rulings in court has generally meant that these agreements have been upheld.  This is the first time I’ve heard of such a provision being used in the context of a consumer food product, though

It’s certainly understandable why businesses would want to encourage arbitration of disputes with consumers. Generally arbitration is faster and less expensive than proceeding through the court system. Arbitration is generally perceived as being more “pro-business” than courts would be, but it strikes me that this is at least in part due to the nature of the claims that are brought in the two different systems. More importantly, though, arbitration proceedings are private, if hearings are held at aren’t held in public court rooms, and the claims made and their outcomes are not matters of public record available to anyone. For companies interested in protecting brand identity, proceeding through arbitration, or settling a case prior to court, is obviously more advantageous than proceeding in Court.

What’s truly unique about it, though, is the extent that General Mills is attempting to impose arbitration provisions on people merely for interacting with the company online in some manner. On the surface, it seems unlikely that a court would enforce an arbitration agreement on someone merely because they visited a website or “liked” a product on social media because that generally doesn’t rise to the level of activity required to create a contractual relationship. It’s a completely untested area of the law, though, so it’s going to take some time for courts to figure out how to deal with things like this. The other option, of course, is that legislatures could step into the breach here and define the terms of acceptable arbitration contracts in these contexts, but that’s not likely to happen unless someone gets sufficiently outraged about the matter to start lobbying for it. Until then, this will be yet another area where the law will have to do the best it cane to catch up to technology.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. Neil Hudelson says:

    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.

    Is there a slippery slop here, when it comes to “interacting in a variety of other ways?”

    For instance, if they proved that I have bought Honey Nut Cheerios on multiple occasions, would that be enough interaction to lose my right to sue?

    Additionally, it strikes me as exceedingly odd that a company could dictate what rights you do and do not have when it comes to legal actions through a court of law.

    Like or Dislike: Thumb up 5 Thumb down 0

  2. Matt Bernius says:

    On the surface, it seems unlikely that a court would enforce an arbitration agreement on someone merely because they visited a website or “liked” a product on social media because that generally doesn’t rise to the level of activity required to create a contractual relationship.

    I don’t see how any of these would stand up in court — unless or until an active acknowledgement of TOS is involved.

    That’s not going to happen for “like” (i.e. I can’t see Facebook inserting a step where each time you “like” a company, you have to positively agree to said company’s TOS with a button click).

    Likewise, if all downloading a coupon takes is clicking on a link, that won’t work either.

    However, if the company was to ask you to actively agree to their TOS before you received the link to the coupon, then they would have a case.

    Cynically, beyond trying to force arbitration, one has to wonder how much of this is about simply making it more arduous for a person to bring a civil suit against the company. In other words, the more legal barriers they can throw up, the more likely that the plaintiff’s resources run out before their deep reserves do.

    Like or Dislike: Thumb up 3 Thumb down 0

  3. grumpy realist says:

    Well, they can ARGUE that……I think most judges would cast a very hairy eyeball on their argument.

    Like or Dislike: Thumb up 1 Thumb down 0

  4. @Matt Bernius:

    If it does hold up in court, I’m going to put a TOS on my Livejournal indicating that sending me a piece of junkmail constitutes agreeing to pay me $1,000.

    Like or Dislike: Thumb up 4 Thumb down 0

  5. Tyrell says:

    This may be in the same subject: several months ago someone wrote a bad review for a product or service. They were sued and had their credit messed up as well. There was something in the fine print they missed. So if we purchase something we need to be careful about sending up any bad reviews or comments.

    Like or Dislike: Thumb up 0 Thumb down 0

  6. rudderpedals says:

    Milton Friedman, famous or infamous, touted the Courts and private attorneys general as the regulator to be preferred over government regulation, is spinning in his grave. Where are his libertarian defenders?

    Like or Dislike: Thumb up 1 Thumb down 0

  7. Franklin says:

    If this BS stands up in any court anywhere at any time, then legislators have a pretty clear job to do. (But given our current partisan environment, don’t count on them doing their job.)

    Like or Dislike: Thumb up 1 Thumb down 0

  8. Moosebreath says:

    @rudderpedals:

    “Where are his libertarian defenders?”

    Are you kidding? This is a libertarian wet dream. Business interests are imposing restrictions on consumers without their knowledge or true informed consent (but none dare call it coercion).

    Like or Dislike: Thumb up 3 Thumb down 0

  9. TastyBits says:

    @rudderpedals:

    The problem with regulations is the regulators. Too often, the regulators are working for the interests of the industry they are regulating. There are ways to create well written regulations, but too often, this is not the case.

    The problem with the courts is that the system is rigged. What libertarians fail to understand is that businesses are free-riders on the civil court system. Each of these “contracts” is enforceable within the US civil court system, and this enforceability is a value.

    Libertarians believe in a free market system, but few of them can actually articulate the concept. It is a system of voluntary value for value transactions. If one party does not return a value, they either received a gift, or they stole that value. Libertarians will argue that the contract is of vital importance.

    If this contract were of such importance, General Mills and others would be willing to pay for each of these contracts, but I seriously doubt they will. If companies were charged for each of these “contracts”, this would be a true libertarian solution.

    This is how you earn the label crazy.

    Like or Dislike: Thumb up 2 Thumb down 0

  10. The real problem is that shrinkwrap EULAs – what we in the games industry refer to when we see terms that say you waive standard rights the moment you open, download or use a game – have been seen as legal for some time. It’s a ridiculous notion, and our legal system has perverted the relationship between the consumer and the parent company.

    Like or Dislike: Thumb up 1 Thumb down 0

  11. sam says:

    “Generally arbitration is faster and less expensive than proceeding through the court system. ”

    Also much quieter than the result of a class-action suit being published in the press showing that the Acme Widget Company did willfully withhold from the public the facts that its Galaxy Octobazillion Widget causes impotence, alopecia, and turns the skin a bright shade of green.

    Like or Dislike: Thumb up 4 Thumb down 0

  12. rudderpedals says:

    @Moosebreath:
    @TastyBits:

    Would you believe the original sin was yet another relatively recent misguided Supreme Court decision, this one abusing the Federal Arbitration Act, the line of cases starting with Concepcion? You both will appreciate Yves Smith’s piece today with at http://www.nakedcapitalism.com/2014/04/general-mills-retreats-inch-mandatory-arbitration-overreach.html

    Like or Dislike: Thumb up 1 Thumb down 0