When ‘Liking’ a Brand Online Voids the Right to Sue

Grand Potentate

Supporter of Possible Sexual Deviants
I thought this might be an interesting discussion since 20% of our user base are lawyers/aspiring lawyers. Thoughts Harveybirdman Zé Ferreira Zé Ferreira ?


When ‘Liking’ a Brand Online Voids the Right to Sue
  • by Stephanie Strom
  • April 16, 2014
  • 4 min read
  • original
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.

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“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.”

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General Mills declined to make anyone available for an interview about the changes. “While it rarely happens, arbitration is an efficient way to resolve disputes — and many companies take a similar approach,” the company said in a statement. “We even cover the cost of arbitration in most cases. So this is just a policy update, and we’ve tried to communicate it in a clear and visible way.”

A growing number of companies have adopted similar policies over the years, especially after a 2011 Supreme Court decision, AT&T Mobility v. Concepcion, that paved the way for businesses to bar consumers claiming fraud from joining together in a single arbitration. The decision allowed companies to forbid class-action lawsuits with the use of a standard-form contract requiring that disputes be resolved through the informal mechanism of one-on-one arbitration.

Credit card and mobile phone companies have included such limitations on consumers in their contracts, and in 2008, the magazine Mother Jones published an article about a Whataburger fast-food restaurant that hung a sign on its door warning customers that simply by entering the premises, they agreed to settle disputes through arbitration.

Companies have continued to push for expanded protection against litigation, but legal experts said that a food company trying to limit its customers’ ability to litigate against it raised the stakes in a new way.

What if a child allergic to peanuts ate a product that contained trace amounts of nuts but mistakenly did not include that information on its packaging? Food recalls for mislabeling, including failures to identify nuts in products, are not uncommon.

“When you’re talking about food, you’re also talking about things that can kill people,” said Scott L. Nelson, a lawyer at Public Citizen, a nonprofit advocacy group. “There is a huge difference in the stakes, between the benefit you’re getting from this supposed contract you’re entering into by, say, using the company’s website to download a coupon, and the rights they’re saying you’re giving up. That makes this agreement a lot broader than others out there.”

Big food companies are concerned about the growing number of consumers filing class-action lawsuits against them over labeling, ingredients and claims of health threats. Almost every major gathering of industry executives has at least one session on fighting litigation.

Last year, General Mills paid $8.5 million to settle lawsuits over positive health claims made on the packaging of its Yoplait Yoplus yogurt, saying it did not agree with the plaintiff’s accusations but wanted to end the litigation. In December 2012, it agreed to settle another suit by taking the word “strawberry” off the packaging label for Strawberry Fruit Roll-Ups, which did not contain strawberries.

General Mills amended its legal terms after a judge in California on March 26 ruled against its motion to dismiss a case brought by two mothers who contended that the company deceptively marketed its Nature Valley products as “natural” when they contained processed and genetically engineered ingredients.

“The front of the Nature Valley products’ packaging prominently displays the term ‘100% Natural’ that could lead a reasonable consumer to believe the products contain only natural ingredients,” wrote the district judge, William H. Orrick.

He wrote that the packaging claim “appears to be false” because the products contain processed ingredients like high-fructose corn syrup and maltodextrin.

Arbitration experts said courts would probably require General Mills to prove that a customer was aware of its new policy before issuing decisions denying legal action against the company.

The policy is so broadly written, lawyers say, that it is likely to raise interesting legal questions.

For instance, on Tuesday an order was placed through the company’s online store for a Cheerios bowl, before General Mills posted the notice about the change to its legal terms on its home page.

At no point did the order system suggest changes had been made to the legal terms governing the buyer. It offered a link to the company’s privacy policy, and two opt-out boxes for receiving promotional materials through email.

Whether a court would rule that, under the new policy, the buyer of the bowl could not sue General Mills was unclear, since the General Mills home page now included a message about the changes it had made to its legal terms.

“A transaction has taken place that, according to General Mills, includes an agreement to submit to informal negotiation or arbitration in the event of a dispute,” Mr. Nelson said.

He said he did not think a court would agree to enforce the policy if a consumer merely visited a General Mills website, “but we really don’t know.”

“You can bet,” he said, “there will be some subpoenas for computer hard drives in the future.”
We get a lot of "moving things towards arbitration is good" spiel - clears up courts (as if it wasn't courts' job to resolve disputes in the first place?), and you don't have those pesky rules to deal with in arbitration; just an "impartial" arbiter, who can be making a boatload of money on the side and doesn't even require a legal degree to practice as such.

Heck, my school has one of the highest ranked "arbitration" programs in the country.

I think it's a crock - justice system is in place for a reason, and if it's clogged then we need to put more people on the job, or get better people on the job, not keep judges on until they're senile and then continue to pay them full salary after retirement (although, I've admittedly considered moving towards the judiciary for such reasons).

And yes, companies will keep trying to move towards an Arbitration system in hopes of beating the system. They'll try to sneak shrinkwrap or clickwrap terms into anything you buy and claim and any sort of service rendered somehow binds you to the company offering it. Always trying to increase the profit margin and limit loss.

But in all honesty, I don't know a ton about the particulars of the issue here.
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El Argo's right, arbitration is bullshit. Also anybody doing anything online under his/her real name is a chump.
Arbitration almost always favors the business. Which is why many companies are requiring forced arbitration in their TOS now.
I'm just shocked at the way businesses are trying to hide it w/ microprint, suddenly changing terms and conditions, etc. If it's such a good thing for the consumer (which it isn't) then you shouldn't have any problem shouting it from the rooftops (which you don't).

General Mills Retreats an Inch on Its Mandatory Arbitration Overreach
Today, April 18th 2:17am
· Yves Smith

Law Professor Adam Levitin argued that we peons should make counterclaims against General Mills. Recall that the New York Times reported yesterday that the food producer asserted that anyone receiving a “benefit” from the company, such as downloading coupons, and even buying its products or liking it on Facebook had agreed to give up their right to sue and had to submit to arbitration in the event of a dispute.

Levitin’s language, from the Credit Slips website:

In light of General Mills policy of claiming that its binding mandatory arbitration requirement (with class action waiver) applies to anyone who purchases its products, including via third-party vendors, I have decided, to post the following legal notice, applicable to all persons, everywhere:

By permitting, allowing, or suffering me to purchase any of your products or services, whether directly from you or indirectly through dealers, vendors, agents, or other third-parties, you agree to irrevocably surrender all rights to compel me to arbitration or to waive my rights to proceed against you as a member of a class action. In order to make this provision effective and allow effective vindication of my rights, you also agree to irrevocably surrender all rights to compel arbitration and to prevent class actions against all other purchasers of your products and services. You also agree to cover all of my costs associated with bringing an action, including attorneys’ fees and any damages awarded against me, irrespective of the outcome of the action.

Is General Mills notice any more effective than mine? I don’t see why it would be. Let’s get this long-range battle of the forms on!

As much as Levitin’s riposte might get some traction, it appears that the New York Times article on General Mill’s overreaching policy hit a nerve in the public at large. The Grey Lady reported today that General Mills had amended, as in climbed down an itty bit on its policies:

General Mills, the multibillion-dollar food company behind brands like Cheerios and Pillsbury, said on Thursday that an update to its new legal policies, which stated that consumers “joining our online communities” could not sue the company, did not apply to people who visit its Facebook pages and Twitter accounts….

In an email received Thursday, Mike Siemienas, a General Mills spokesman, said the “online communities” mentioned in the policy referred only to those online communities hosted by the company on its own websites. He later elaborated in a second email: “No one is precluded from suing us merely by purchasing our products at the store or liking one of our brand Facebook pages. For example, should an individual subscribe to one of our publications or download coupons, these terms would apply. But even then, the policy would not and does not preclude a consumer from pursuing a claim. It merely determines a forum for pursuing a claim. And arbitration is a straightforward and efficient way to resolve such disputes.”

But lawyers remained skeptical. More from the Times’ account:

Lawyers had pointed out that the new terms were vaguely written, leaving them open to a wide range of interpretation. A pop-up notice on the company’s home page, for example, says that the new terms “require all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration.”

“It is very clear that if you do any number of things, you are covered by these changes,” said Julia Duncan, director of federal programs at the American Association for Justice, a trade group for trial lawyers. “If you use a coupon, go on their website, participate in a promotional campaign of any sort, sign up for email alerts or ‘participate in any offering by General Mills.’ That is so exceptionally broad that it may be possible anything you purchase from them would be held to this clause.”

“Purchase or use”? That means if you were visiting a friend’s house and everyone got sick from consuming a General Mills product, you couldn’t sue even though you hadn’t made the purchase, as in you had no commercial relationship with General Mills whatsoever.

Adam Levitin, via e-mail, says the General Mills position is bunk:

There has to be an agreement to arbitrate. I don’t think that I am agreeing to anything with General Mills when I purchase Cheerios from the supermarket. My agreement is with the supermarket, and it is limited to the price listed for merchantable goods. Similarly, I don’t think that liking something on Facebook constitutes an agreement—there’s no exchange of value. Downloading the coupon is perhaps an exchange of value, but it’s so lopsided that it doesn’t even approach the situation in AT&T v. Concepcion, so I could imagine a court ruling it unconscionable.

But the overreach of binding mandatory arbitration (which is really about class action waivers, not arbitration) and the Supreme Court’s recent approval of this in Concepcion and American Express v. Italian Colors Restaurants is one of the greatest threats to democracy today because it has effectively closed the courts to the small against the powerful. They are a license for business fraud and theft done in small amounts on a large scale. Overcharge everyone by $5 and there’s no remedy available because no one will arbitrate this individually and there’s no class action remedy. Do this to 10 million people and that’s real money. Concepcion and Italian Colors are going to be remembered in history as travesties of justice akin to Lochner.

While I am loath to disagree with the good professor, let me point out another layer to the General Mills chicanery: how many people will know that the General Mills assertion that consumers have consented to arbitration is rubbish? How many will write complaints or threaten litigation and have General Mills write back and tell them falsely that their only option is arbitration? I imagine most NC readers are at least somewhat legally sophisticated and have some lawyers in their personal networks that they can sound out for sanity checks. But General Mills sells products to a mass market. Many of its consumers aren’t as savvy and no doubt can be successfully bullied into going the arbitration route when they likely would have done better in court (among other things, it would be difficult for General Mills to get a case sealed, so litigation has PR downside missing in private arbitration hearings).

This continuing, successful campaign by large corporations to inflict one-sided contracts on consumers demonstrates how the notion of “free markets” is a fantasy. Recall that libertarians argue that all commercial interactions can be handled by contract; there’s no need for government oversight save for a court system. But they ignore that most industries have scale factors (barriers to entry, increasing returns to scale, network effects, etc) which means that over time, they will evolve into having a comparatively small number of incumbents who have pricing power (as in oligopoly status either across the industry or in certain product/geographic niches). Being an oligopolist is a good business model; all the standard textbooks show it is more profitable than competing in a more level playing field. And one of the things these large concerns have done is to subvert the judicial process to favor corporate interests over those of ordinary citizens, assuming they even have access to courts at all.
That depends. If it was all sudafed and dinosaurs, there may not be intent there to form a legally binding relationship.

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