Forced ArbitrationAccording to a recent article by the New York Times, food companies hare adding language to their websites that giving consumers an alert that they give up their right to sue the company if they download coupons, join it in online communities such as Facebook, enter company sponsored contests, or interact with the company in other ways.  According to the newspaper, “General Mills, the maker of cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has added language to its website” that strips consumers of their right to sue the company for actions as simple as downloading a coupon or ‘liking’ the company or its products on Facebook.

According to the General Mill’s terms, anyone who has received what might be construed as a “benefit” from the company, who then engages in a dispute with the company over the product, must use informal negotiations through email or seek arbitration for relief.  General Mills has even gone so far as to suggest that buying their products binds consumers to their terms.

Arbitration is a form of alternative dispute resolution which aims to resolve of disputes outside the courts. Arbitration clauses have been common in the financial industry for decades but have increasingly entered into other areas of American life in recent years. Since a 2011 Supreme Court ruling upholding the use of arbitration clauses in cellphone contracts this legal device has spread rabidly through the corporate world.  Large companies prefer that disputes are settled through arbitration because, unlike a trial, it is not open to the public.  Additionally, companies like arbitration because although the process is supposedly fair to both parties in dispute, in reality it tends to favor deep-pocketed businesses.   Often times the consumer is forced to even use an arbitrator has been selected by the company.  Many legal experts believe that these arbitrators tend to favor the deep pocketed businesses so that they continue to be selected and paid as the arbitrator.

General Mills’ new terms show an example of one of the first major food companies to impose “forced arbitration” on consumers of their products.  The big food companies are concerned about potential class-action lawsuits with regard to labeling, ingredients, or other health threats.  A growing number of companies in all industries are adopting similar policies.  Even a Whataburger fast-food hamburger restaurant has hung a sign on its door telling customers that just entering their premises means that they have agreed to settle their disputes through arbitration.  These policies can also bar consumers that are claiming fraud against the companies from joining their disputes together in a single arbitration and forcing consumers to resolve their claims through one-on-one arbitration.

Legal experts are saying that that a food company trying to limit its customers’ ability to litigate against it raises the stakes.  For instance, what happens when a child that is allergic to peanuts eats a product that contains trace amounts of nuts, but the product mistakenly did not include that information on its packaging? Food recalls for mislabeling, including failures to identify nuts in products, are not uncommon.  The parents of the child may be barred from bring the company to trial.  These arbitration clauses go against what is stated by the Seventh Amendment to the US Constitution, which guarantees everyone a trial by jury as one of the most basic rights of our democracy.

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