When âLikingâ a Brand Online Voids the Right to Sue
FILE - This June 16, 2011 file photo shows boxes of Cheerios in a store in Akron, N.Y. Large food companies are trying to head off state-by-state efforts to enact mandatory labeling of genetically modified ingredients by proposing new voluntary labels nationwide. The food industry and farm groups are pushing Congress to pass legislation that would require the Food and Drug Administration to create guidelines for the new labels, which food manufacturers could use. (AP Photo/David Duprey, File)
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, âjoinâ 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.
âWeâve updated our Privacy Policy,â the company wrote in a thin, gray bar across the top of its home page. âPlease 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.â
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 âforced arbitrationâ on consumers.
âAlthough this is the first case Iâve seen of a food company moving in this direction, others will follow â why wouldnât you?â said Julia Duncan, director of federal programs and an arbitration expert at the American Association for Justice, a trade group representing plaintiff trial lawyers. âItâs essentially trying to protect the company from all accountability, even when it lies, or say, an employee deliberately adds broken glass to a product.â
General Mills declined to make anyone available for an interview about the changes. âWhile it rarely happens, arbitration is an efficient way to resolve disputes â and many companies take a similar approach,â the company said in a statement. âWe even cover the cost of arbitration in most cases. So this is just a policy update, and weâve tried to communicate it in a clear and visible way.â
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 customersâ ability to litigate against it raised the stakes in a new way.
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.
âWhen youâre talking about food, youâre also talking about things that can kill people,â said Scott L. Nelson, a lawyer at Public Citizen, a nonprofit advocacy group. âThere is a huge difference in the stakes, between the benefit youâre getting from this supposed contract youâre entering into by, say, using the companyâs website to download a coupon, and the rights theyâre saying youâre giving up. That makes this agreement a lot broader than others out there.â
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 plaintiffâs accusations but wanted to end the litigation. In December 2012, it agreed to settle another suit by taking the word âstrawberryâ 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 ânaturalâ when they contained processed and genetically engineered ingredients.
âThe front of the Nature Valley productsâ packaging prominently displays the term â100% Naturalâ that could lead a reasonable consumer to believe the products contain only natural ingredients,â wrote the district judge, William H. Orrick.
He wrote that the packaging claim âappears to be falseâ 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 companyâs 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 companyâs 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.
âA 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,â 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, âbut we really donât know.â
âYou can bet,â he said, âthere will be some subpoenas for computer hard drives in the future.â
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