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Practice Tip: Use TACT
In April 2014, the media ignited a firestorm of controversy over General Mills' decision to modify its online Privacy Policy and Legal Terms to include a mandatory arbitration provision. The proviso required consumers who downloaded or printed coupons, “joined an online community,” subscribed to an e-mail newsletter, redeemed a promotion, or participated in any “offering” to forego their right to sue the company in court and instead submit to private, binding arbitration to resolve any disputes with the company. In the face of the outcry over this policy change, the company reversed course and restored its prior legal terms, which contained no mention of arbitration.
The media's vilification of the policy change once again brings to the forefront the tension and competing interests between class action litigation and the freedom to contract to arbitrate. This tension has existed since the Federal Arbitration Act was enacted in 1925 and, much to the chagrin of class action litigation proponents, the expansive reach of mandatory arbitration has gained a strong foothold in recent years, due to the overwhelmingly pro-arbitration precedent established by the Supreme Court in its Concepcion and Italian Colors decisions, which express a clear federal policy in favor of enforcing class action waivers contained in arbitration agreements.
Public perception of mandatory arbitration provisions is unquestionably negative. Detractors of this method of dispute resolution largely deride it as an “anti-consumer” practice that allows big corporations to escape all liability by unconscionably and covertly tricking unsuspecting, unsophisticated consumers into clicking away their federally protected legal rights. The mandatory arbitration system is also criticized for establishing a climate where large groups of consumers cannot seek redress for small claims because the individualized nature of the proceedings makes it prohibitively expensive to seek relief.
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