Some people eat, sleep and chew gum, I do genealogy and write...

Tuesday, April 22, 2014

Liking a company could lead to giving up legal rights

A local law firm in Mesa, Arizona sent me their Newsletter, (Gunderson, Denton & Peterson, P.C.) with an article entitled, "You Might Be Giving Up Legal Rights by “Liking” a Company on Facebook." This was an interesting thought. The article points out the following:
General Mills, the big company that makes cereals like Cheerios and Chex and also makes many other food products, has added language to its website about arbitration. GM is now telling consumers that they give up their right to sue the company if they join the company in online communities like Facebook or do a number of other things, such as download coupons or enter company sweepstakes. Instead, consumers who do those things will have to resolve their disputes by arbitration, which might be less favorable to them.
The idea with arbitration is the following:
You many have heard that many companies, especially larger companies, have tried to alter the terms of their agreements with clients to avoid jury trials and resolve disputes exclusively through arbitration. Arbitration is usually interpreted as being more favorable toward defendants, especially defendants in big, expensive litigation such as class-action lawsuits.
There are a lot of different levels of "arbitration." In Arizona, the local courts have mandatory arbitration for cases involving claims of a certain minimal amount. What is usually going on in these online agreements is that the arbitration is not the limited, local action contemplated by the local courts. Instead, it is usually set out that the arbitration will be held pursuant to the rules of the American Arbitration Association.  For example, here is the pertinent clause from
If a dispute arises between you and Ancestry, our goal is to provide you a neutral and cost effective means of resolving the dispute quickly. To that end, you agree to first contact Ancestry Customer Support at 1-800-262-3787 to describe the problem and seek a resolution. If that does not resolve the issue, then you and Ancestry agree to the following methods to resolve any dispute or claim between us. First, you agree that this Agreement is governed by the law of the State of Utah, without regard to its principles on conflicts of laws, and the federal law of the United States of America. Second, you agree that you will seek arbitration consistent with the rules before initiating any litigation. If arbitration cannot resolve the issue, you agree to submit to the personal jurisdiction of the courts located within Utah County, Utah for the purpose of litigating all such claims or disputes.

Any arbitration will be governed by the Commercial Dispute Resolution Procedures and the Supplementary Procedures for Consumer Related Disputes of the American Arbitration Association (collectively, "AAA Rules"). The AAA Rules and costs are available online at or by calling the AAA at 1-800-778-7879. . YOU AND ANCESTRY AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Further, unless both you and Ancestry agree otherwise, the arbitrator may not consolidate more than one person’s claims, and may not otherwise preside over any form of a representative or class proceeding. Notwithstanding the foregoing, this arbitration agreement does not preclude you from bringing issues to the attention of federal, state, or local agencies. Such agencies can, if the law allows, seek relief against us on your behalf. This arbitration provision shall survive termination of this Agreement.
If you have any idea what you are reading in the above statement, you will realize that your options in any dispute resolution with are seriously limited. Now, you may not view this as being a bad thing. Companies such as do business all over the world. They can't be expected to have to defend lawsuits in every small jurisdiction around the world, This type of agreement has been upheld by many courts around the country. 

Now, is this one of those "calculated to scare you, come to our law firm first" type observations? I can assure you that the law firm in question had no idea about the existence of the provision. 

On a very local level, when I was practicing law, I thought arbitration was almost always a viable and useful alternative to going to trial in a court. However, the expense and time involved in conducting an arbitration through the American Arbitration Association is another level of dispute resolution and not nearly so convenient or inexpensive. You might want to read the fine print. I am not saying that liking on Facebook invokes the arbitration clause but do you know whether it does or does not? Here are some links you might want to read:

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