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General Mills Attempts to Force Arbitration upon Consumers

Probably most Texans remain unaware of the systematic attack on their right to a jury trial. General Mills, the giant food maker, is simply the latest to try to eliminate it.

The Texas Legislature passed an arbitration statute years ago, and the Texas Supreme Court has aggressively enforced arbitration, even when a party was unaware of an arbitration provision. Arbitration is binding, and the parties are required to pay huge sums to a private lawyer who acts as “judge and jury” of the case. It is also secret, so the public does not have the benefit of the adjudication of legal issues. This is especially important in consumer cases, where thousands of people might be adversely affected and have comparatively small claims that, individually, cannot be litigated economically.

One danger of arbitration agreements is that they can be buried among verbose legal terms of consumer agreements, as well as in policy manuals depriving employees of their right to a jury if they are injured at work. Thus, completely unaware that valuable rights have been taken from them, and with no specific consideration paid to them for giving up that right, those bringing claims have been forced into private arbitrations. Not surprisingly, some research has confirmed that decisions from arbitrators tend to favor the defendants who supply them with repeat business, rather than injured workers or consumers who may only have one case.

Congress has passed a federal arbitration act. A few years ago, in the 2011 decision of AT&T Mobility v. Concepcion, the United States Supreme Court ruled that a telephone company could include provisions in its “legal terms” that defeats the effort to bring a “class action” suit on behalf of all similarly-affected consumers. This means that, in the event AT&T breaches its contract terms, each consumer must bring a separate claim, rather than join in the efficiency and power of a class action. Accordingly, companies like AT&T can now force each consumer into a separate arbitration.

Now, General Mills has gotten into the act, with an even more devious approach. According to Wednesday’s New York Times, downloading a coupon, joining a Facebook community (or “liking” a product on Facebook), or even participating in a contest could take away a consumer’s right to a jury. Further, the company could assert that simply purchasing a product from General Mills constitutes a jury waiver and an “agreement” to binding arbitration. Given that food safety directly affects the health of consumers, and that few would appreciate the legal significance of a term hidden in the “privacy” terms of a website, this is a dangerous precedent.

Because of adverse publicity from the article in the New York Times, General Mills reversed itself at 10:00 p.m. on Saturday night before Easter. Its press release claimed its actions were misunderstood. That is exactly what was not the problem for General Mills: the problem was that people were, for once, being given an opportunity to understand its scheme to deprive consumers of their right to a jury. For now, General Mills has retreated. But we can expect other companies, and perhaps General Mills itself, to use the arbitration tactic to insulate themselves from responsibility when their actions and products hurt people. Imposed arbitration must be defeated.


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