Arbitration Agreements are Getting Out of Hand
There are many services we sign up for today that include multiple pages of user agreements that we breeze through. The catch is that while many of these companies offer a wide range of services, such as Uber and Disney+, when you sign a user agreement for just one of their services, you may be bound to unfair terms when using any of their services. The danger in the fine print can leave you unprotected. Read more for the latest news stories and examples.
You may have seen this recent headline: a doctor went to eat at a Disney restaurant, informed the restaurant in advance that there was a certain food she was deathly allergic to, was still served this food, and she died as a result of the restaurant’s negligence. But when her husband tried to hold Disney accountable in court, the company moved to dismiss the lawsuit—on the basis that the victim’s husband had signed up for a Disney+ account and had agreed to bring any claims against the company via arbitration, rather than in court. [1]
Or maybe you’ve heard about the couple who were severely injured when an Uber driver crashed the car. Uber argued—successfully—that since the couple’s 12-year-old daughter agreed to Uber’s service agreement when ordering pizza on her parent’s account the parents had waived their right to a trial by jury and consented to the arbitration. [2] The New Jersey Court of Appeals recently affirmed that the arbitration agreement was “valid and enforceable” and denied the couple their day in court.
Our office flagged the emerging trend of forcing people into arbitration in 2016 [3], but since then, the movement towards forced arbitration has only accelerated, driven in part by the expansion of electronic service agreements that come with making purchases through mobile applications like Uber and Disney+. For example, if a person walks into a fast-food restaurant to order food and slips on water left on the floor, they would have a right to bring their case in court. But, if the same person had ordered through a mobile application and had agreed to terms of service that include an arbitration agreement, they may be forced into arbitration.
Uber’s standard terms include the following when you sign up to use their services:
“By agreeing to these Terms, you agree that you are required to resolve any claim that you may have against Uber on an individual basis in binding arbitration as set forth in this Arbitration Agreement, and not as a class, collective, coordinated, consolidated, mass and/or representative action. Binding arbitration is a procedure in which a dispute is submitted to one or more arbitrators who make a binding decision on the dispute. In choosing binding arbitration, you and Uber are opting for a private dispute resolution procedure where you agree to accept the arbitrator’s decision as final instead of going to court. You and Uber are each waiving your right to a jury trial.”
Despite the significant rights people give up with this clause, there is no way to opt out and still use their services.
Why do companies prefer arbitration? One of the big advantages is privacy. Arbitration proceedings aren’t public, and there is no public record of the company’s wrong-doing. Additionally, injured parties are forced to present their claim in front of a single arbitrator, who is paid by the company that they are bringing suit against. The company will often also select the laws that will be applied (which may be different than the laws of the state where the person was injured) and the location of the arbitration (which may also be different than the state where the person was injured). Essentially, arbitration can significantly stack the odds in favor of a company that has negligently hurt someone. Companies will argue that arbitration is fairer, faster, and cheaper than going to court. While it may be faster and cheaper, its fairness is another matter altogether.
If a claim is wrongly denied, options for review are often limited or non-existent, and this is the case even where the arbitrator incorrectly applied the law or refused to acknowledge the facts. The injured party is typically even required to assist with the cost of the arbitration with the company or the insurer. The arbitration agreements also typically limit the options to be part of a class-action lawsuit, meaning that people with smaller, similar claims cannot consolidate their actions as a part of a broader lawsuit. This makes it prohibitively expensive for many small claims to see justice.
Faced with public outcry, Disney changed its position. But big corporations are unlikely to be deterred from this unless more significant action is taken to limit the scope of the arbitration clauses being snuck into everyday purchases. We encourage you to re-read your user agreements, including Uber and Disney+.
What can you do? First, you can look up whether a company forces consumers to go to arbitration. This can be found by looking at the language on some of the products companies sell, or under the “terms and conditions” portions of their websites or apps. You can decide not to do business with companies that force arbitration. Second, some companies allow customers to opt out of arbitration within a certain period of time. Third, you can publicly use your voice through options such as the company’s social media outlets and force corporations to respond to your concerns.
If you have been injured, the presence of these arbitration agreements are yet another reason it is crucial to consult with an attorney. The attorneys at Adler Giersch are happy to help-just call 206.682.0300 to schedule a free, confidential, consultation.
[2] https://www.nytimes.com/2024/10/04/nyregion/uber-eats-car-crash-injury-nj.html
[3] Forced Arbitration and the Vanishing Right to Jury Trial
