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What do A-Rod, the NLRB, and General Mills have in Common?

 The title of this post is not a riddle.  On Jeopardy! it would be the correct response to “They evidently read George Friedman’s blog at Arbitration Resolution Services.” Three times in recent months, I have blogged about the above cast of characters, and urged or predicted that they take corrective action.  First A-Rod, then the National Labor Relations Board, and now General Mills have acted more or less as I stated they should or would in my blog.  I don’t really know whether I had anything to do with it, but I like to think I played a small part.

General Mills

 On Friday last week I blogged about a new policy adopted by General Mills by which consumers, by engaging in activities such as downloading a recipe, or participating in a contest, or “liking” the firm on Facebook, would unwittingly be agreeing to arbitrate. I pointed out that the strong federal policy in favor of arbitration rests on the assumption of an agreement.  I likened the tactic of hiding the arbitration agreement from the consumer as arbitration’s version of the “Hidden Ball Trick,” dubbing it the “Hidden Arbitration Clause Trick.”  As the unwitting consumer engages in what’s normally a benign act – for example “liking” a company on Facebook, clicking on terms of service, or entering an online contest – the company slaps a tag on them with a hidden predispute arbitration agreement (“PDAA”).  I closed by urging that something be done: “When we reach adulthood, we attain the legal right to make decisions.  But allowing consumers to unwittingly agree to arbitrate is not fair and should not be allowed.  Whether relief for consumers comes from the courts or Congress, in my opinion something needs to be done.  Assuring a knowing agreement to arbitrate is a good step.…  It’s time to eliminate the “Hidden Arbitration Clause Trick.”

Stepping up to the Plate

On Saturday, General Mills stepped up to the plate, posting a notice in its blog that it was rescinding the policy immediately:

We rarely have disputes with consumers – and arbitration would have simply streamlined how complaints are handled. Many companies do the same, and we felt it would be helpful.

But consumers didn’t like it.

So we’ve reverted back to our prior terms. There’s no mention of arbitration, and the arbitration provisions we had posted were never enforced. Nor will they be. We stipulate for all purposes that our recent Legal Terms have been terminated, that the arbitration provisions are void, and that they are not, and never have been, of any legal effect.

Although it attributed the problem to a misunderstanding, the company apologizes without reservation, stating “On behalf of our company and our brands, we would also like to apologize. We’re sorry we even started down this path. And we do hope you’ll accept our apology. – See more at: http://www.blog.generalmills.com/2014/04/weve-listened-and-were-changing-our-legal-terms-back-to-what-they-were/#sthash.afHQEqbS.dpuf.”  Good for them!

Let’s Remember Arbitration is a Good Thing

As General Mills points out, arbitration is a good thing.  I said the same thing in my blog post last week: “I believe in arbitration.  It performs precisely as its proponents say: it is fast, fair, and economical.”  My beef was with the secret foisting of arbitration on unwitting consumers.  As I said, “To be clear, I am not troubled if the consumer, after getting clear notice of the arbitration agreement, choses to accept it.”  I continue to believe arbitration is a much better place than court for consumers, and that given a choice they should opt for arbitration.  Moreover, class action litigation is not the consumer’s best friend, with the typical payout being cents on the dollar or a discount coupon.[1]  In arbitration, parties have the opportunity to recover their entire loss.

Conclusion

Having been involved in litigation, given a choice, I would opt without fail for agreeing to arbitrate.  The benefits of arbitration are many and real, but we must always keep in mind that it rests on a mutual agreement to arbitrate that is clear and unequivocal.


[1] See, e.g., Class Action Suits Benefit Few but Attorneys, available at http://news.investors.com/ibd-editorials-perspective/022013-645120-high-court-to-decide-whether-arbitration-hurts-consumers-rights.htm?p=full <visited Apr. 20, 2014>.