Might downloading a 50-cent coupon for Cheerios cost you legal rights?
General Mills, the maker of cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways.
Instead, anyone who has received anything that could be construed as a benefit and who then has a dispute with the company over its products will have to use informal negotiation via email or go through arbitration to seek relief, according to the new terms posted on its site.
In language added on Tuesday after The New York Times contacted it about the changes, General Mills seemed to go even further, suggesting that buying its products would bind consumers to those terms.
“We’ve updated our Privacy Policy,” the company wrote in a thin, gray bar across the top of its home page. “Please note we also have new Legal Terms which require all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration.”
The change in legal terms, which occurred shortly after a judge refused to dismiss a case brought against the company by consumers in California, made General Mills one of the first, if not the first, major food companies to seek to impose what legal experts call “forced arbitration” on consumers.
“Although this is the first case I’ve seen of a food company moving in this direction, others will follow — why wouldn’t you?” said Julia Duncan, director of federal programs and an arbitration expert at the American Association for Justice, a trade group representing plaintiff trial lawyers. “It’s essentially trying to protect the company from all accountability, even when it lies, or say, an employee deliberately adds broken glass to a product.”
General Mills declined to make anyone available for an interview about the changes. “While it rarely happens, arbitration is an efficient way to resolve disputes — and many companies take a similar approach,” the company said in a statement. “We even cover the cost of arbitration in most cases. So this is just a policy update, and we’ve tried to communicate it in a clear and visible way.”
A growing number of companies have adopted similar policies over the years, especially after a 2011 Supreme Court decision, AT&T Mobility v. Concepcion, that paved the way for businesses to bar consumers claiming fraud from joining together in a single arbitration. The decision allowed companies to forbid class-action lawsuits with the use of a standard-form contract requiring that disputes be resolved through the informal mechanism of one-on-one arbitration.
Credit card and mobile phone companies have included such limitations on consumers in their contracts, and in 2008, the magazine Mother Jones published an article about a Whataburger fast-food restaurant that hung a sign on its door warning customers that simply by entering the premises, they agreed to settle disputes through arbitration.
Companies have continued to push for expanded protection against litigation, but legal experts said that a food company trying to limit its customers’ ability to litigate against it raised the stakes in a new way.
Continue reading the main storyContinue reading the main story Advertisement
What if a child allergic to peanuts ate a product that contained trace amounts of nuts but mistakenly did not include that information on its packaging? Food recalls for mislabeling, including failures to identify nuts in products, are not uncommon.
“When you’re talking about food, you’re also talking about things that can kill people,” said Scott L. Nelson, a lawyer at Public Citizen, a nonprofit advocacy group. “There is a huge difference in the stakes, between the benefit you’re getting from this supposed contract you’re entering into by, say, using the company’s website to download a coupon, and the rights they’re saying you’re giving up. That makes this agreement a lot broader than others out there.”
Big food companies are concerned about the growing number of consumers filing class-action lawsuits against them over labeling, ingredients and claims of health threats. Almost every major gathering of industry executives has at least one session on fighting litigation.
Last year, General Mills paid $8.5 million to settle lawsuits over positive health claims made on the packaging of its Yoplait Yoplus yogurt, saying it did not agree with the plaintiff’s accusations but wanted to end the litigation. In December 2012, it agreed to settle another suit by taking the word “strawberry” off the packaging label for Strawberry Fruit Roll-Ups, which did not contain strawberries.
General Mills amended its legal terms after a judge in California on March 26 ruled against its motion to dismiss a case brought by two mothers who contended that the company deceptively marketed its Nature Valley products as “natural” when they contained processed and genetically engineered ingredients.
“The front of the Nature Valley products’ packaging prominently displays the term ‘100% Natural’ that could lead a reasonable consumer to believe the products contain only natural ingredients,” wrote the district judge, William H. Orrick.
He wrote that the packaging claim “appears to be false” because the products contain processed ingredients like high-fructose corn syrup and maltodextrin.
Arbitration experts said courts would probably require General Mills to prove that a customer was aware of its new policy before issuing decisions denying legal action against the company.
The policy is so broadly written, lawyers say, that it is likely to raise interesting legal questions.
For instance, on Tuesday an order was placed through the company’s online store for a Cheerios bowl, before General Mills posted the notice about the change to its legal terms on its home page.
At no point did the order system suggest changes had been made to the legal terms governing the buyer. It offered a link to the company’s privacy policy, and two opt-out boxes for receiving promotional materials through email.
Whether a court would rule that, under the new policy, the buyer of the bowl could not sue General Mills was unclear, since the General Mills home page now included a message about the changes it had made to its legal terms.
“A transaction has taken place that, according to General Mills, includes an agreement to submit to informal negotiation or arbitration in the event of a dispute,” Mr. Nelson said.
He said he did not think a court would agree to enforce the policy if a consumer merely visited a General Mills website, “but we really don’t know.”
“You can bet,” he said, “there will be some subpoenas for computer hard drives in the future.”
First, none of this used to be legal. None of it. And the reason it became legal was not because Congress passed a law, but because in 2011, the five conservative justices on the Supreme Court, in one swoop, reversed 80+ years of judicial interpretation of the 1925 Federal Arbitration Act, and found this shit acceptable. Nevermind that for two centuries, the Supreme Court has applied a higher level of scrutiny to overturning rulings involving questions of statutory interpretation than rulings involving constitutional questions. Nevermind that every single court to consider these questions before them came out the other way. Nevermind that the decision involved a major abrogation of federalism and states rights. The decision was, plain and simple, one of the most egregious forms of judicial activism the Court has ever engaged in.
Second, the decision in 2011 (and a subsequent even more insane one in 2013) basically immunized companies who have contracts with their customers, since those contracts would include arbitration provisions. Because cable companies, wireless providers, financial services providers, etc all have contracts with their customers, those companies are effectively immunized from wide scale liability for false advertising, fraud, violations of things like the Electronic Funds Transfer Act, antitrust violations, and a variety of other causes of action. In other words, these companies can use their monopoly power to force you to sign an agreement waiving your right to sue them for abusing their monopoly power. ALL LEGAL!!
As a result if the 2011 decision, lawyers in this field needed a new way to make money, so they were forced to start going after consumer package goods and other types of consumer transactions that don't involve contracts.
What this article is about is the fact that General Mills is pissed off that its getting sued now instead of AT&T. So while some of these things are certainly not enforceable now (ie the fact that it's on their website can't bind someone who never viewed the website), what it sounds like to me is that they are dipping their toes in the water, trying a few different strategies out, and hoping that the right combination of facts and law will come about so they can get this issue to the Supreme Court and get themselves off the hook too.
What's particularly frustrating about the 2011 decision is that it has given ammunition to politicians to argue that class actions are frivolous. The nice thing about contract-based class actions is that refunds to the customers are easy -- you can identify everyone and give them a few dollar credit on their bills. So while people still might have complained they were stupid, people can visually see the overcharge and the savings that result. The companies like General Mills, who advertise something as "natural" when it's not - that price hike is harder to see and understand, even though they almost certainly focus grouped the shit out of that term, and concluded they could get 5 or 10 cents more a package by using valuable front of the package real estate to advertise the product that way. It's harder to give people money back when that's the violation, and efforts are targeted more towards changed practices, which people forget are important. The result is that because more and more class actions are this type, more and more people begin to believe they are frivolous.
This is why I get so completely wild about the term frivolous lawsuit. I certainly think that some of these food cases are ridiculous. But that's exactly what the US Chamber of Commerce planned to happen. They wanted public opinion to shift so far to the right on this issue that the created an environment where the only cases left were ones that people would think were stupid so that people would think all class actions were stupid. This is not a coincidence. Rather, every single twist and turn has been carefully orchestrated by the US Chamber of Commerce to convince Americans to vote against their self-interest. Now, when people try to undo the mess that the Supreme Court made in Congress, the US Chamber of Commerce, and the politicians to whom they can give unlimited sums of money to now, have so many good examples of stupid lawsuits and such great public support, that they can assure themselves success.
I could probably write 90 more walls of text on this topic. Sigh.
ESF do you ever see the court going the other way in the face the decision in 2011 and 2013? just not in our lifetimes?
I think it will be decades before the 5-conservative, 4-liberal split on the Supreme Court is undone. Bush fucked America with his Supreme Court picks, because Alito is way more hard right than O'Connor, and Roberts is not only more conservative than Rehnquist, but he's a more effective leader and can get Kennedy on his side on things that Kennedy never would have agreed to before. The 2013 decision was so completely ludicrous and showed just how far in support of corporations the Court is willing to go.
Because campaign finance reform is dead, thanks to the 5/4 crazy court, corporations are now able to pump unlimited sums of money into candidates and campaigns to ensure they do not lose again, and they can do so through the Chamber of Commerce, which keeps its membership secret.
Al Franken has been fighting the good fight in the Senate. I read recently that his approval rating is low and he could be in trouble in November, no doubt because of a smear campaign being run by the Chamber of Commerce. I suspect the reason why he's got so few vocal allies is because standing up on this issue makes you a lightening rod for their wrath.
ESF do you ever see the court going the other way in the face the decision in 2011 and 2013? just not in our lifetimes?
I think it will be decades before the 5-conservative, 4-liberal split on the Supreme Court is undone. Bush fucked America with his Supreme Court picks, because Alito is way more hard right than O'Connor, and Roberts is not only more conservative than Rehnquist, but he's a more effective leader and can get Kennedy on his side on things that Kennedy never would have agreed to before. The 2013 decision was so completely ludicrous and showed just how far in support of corporations the Court is willing to go.
Because campaign finance reform is dead, thanks to the 5/4 crazy court, corporations are now able to pump unlimited sums of money into candidates and campaigns to ensure they do not lose again, and they can do so through the Chamber of Commerce, which keeps its membership secret.
Al Franken has been fighting the good fight in the Senate. I read recently that his approval rating is low and he could be in trouble in November, no doubt because of a smear campaign being run by the Chamber of Commerce. I suspect the reason why he's got so few vocal allies is because standing up on this issue makes you a lightening rod for their wrath.