You’ve Looked At My Site And Now You Have Waived Your Right To Sue Me. Is That Legal?

by Gray Reed & McGraw
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I’ll admit, General Mills did not go that far.  What they did, according to The New York Times was notify customers that if they downloaded a coupon, joined a forum or entered a sweepstakes, the customer would waive their right to sue in court and would have to go through an online “informal negotiation” or arbitration.

Since the story broke, General Mills is trying to backtrack.  For example, General Mills admitted it would not apply if you interacted with the company on Facebook or simply purchased one of its products at a store, but that the company could enforce it if you interacted on the company’s website.

However, there was a pop-up notice on the company’s home page that “require[s] all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration.”  Consumer watchdogs were concerned General Mills was trying to escape all liability for mislabeling claims or damages related to product recalls just because you “liked” a Facebook page or purchased a product at your local grocery.

In two recent cases, the Supreme Court has held related clauses to be enforceable.  In June 2013, in American Express v. Italian College Restaurant, the Court enforced an arbitration clause between AmEx and the merchandisers.  Two years before that in AT&T Mobility vs. Concepcion, the Court upheld a class action waiver.

Yet, there is still, and always will be, the issue of consent.  When I buy Lucky Charms for my kids (I know, Dad of the Year), I am not consenting to a long list of terms of conditions.  I am buying cereal.  A court would be hard-pressed to find I consented to a long list of terms and conditions on the General Mills website.  That would not be magically delicious in the least bit.

On the other hand, if I download a coupon, or enter a sweepstakes, I would not be surprised to have a pop-up that requires me to agree to terms and conditions no one reads. I might waive my rights to file a class action or a jury trial as it relates to that particular transaction.  In fact, I would not be surprised if this practice becomes more prevalent.

There may be some issues as to whether downloading a Cheerios coupon means I agreed to waive claims against Haagen Dazs in an unrelated transaction.

Despite the fact social media and the internet have made things a little more complicated and hard to keep up with, the basics of contract law still apply.  To bind a consumer, you need to show they consented to the terms which is why a click-wrap agreement is preferred over a browse-wrap agreement.  On top of that, especially when it comes to jury and class action waivers, you need to satisfy both procedural and substantive conscionability.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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