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.