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General Mills Backs Off Attempt to Box Up Class Action Suits
April 8, 2014
This is a public-service announcement and warning about how corporations can behave.
Over the weekend of April 19, General Mills removed “Legal Terms” from its web site that appeared to impose an obligation on consumers to agree to a “Binding Arbitration Clause and Class Action Waiver.” The move was viewed in some circles as a reaction to consumer class action lawsuits against General Mills and its subsidiary companies. The terms purported to limit consumers’ rights to sue over product problems simply by accessing the web sites for General Mills’ and its popular product lines such as Betty Crocker, Pillsbury and Wheaties. There was considerable backlash from consumers and consumer advocates.
You might wonder why General Mills would seek to impose such terms on its customers. Well, consider that consumer class action lawsuits can be very costly, especially for a multinational food conglomerate like General Mills, whose products may reach millions of consumers. In a class action lawsuit, all persons injured by the same conduct can be joined together as parties to the suit. So even if each individual suffers injury valued at a small dollar amount, when spread across a large class of injured persons, the combined amount of damages can be astronomical. If they had to file suit on their own, individuals who suffered small amounts of harm have little incentive to spend the time to seek compensation, let alone file an expensive lawsuit. And everyone in the class should be similarly situated, so that would impose a burden on the class to determine who did and who did not use General Mills' web site. It seems that General Mills, therefore, would greatly benefit if it could impose these legal terms on potential claimants.
When General Mills announced that it was removing the terms from its web site, it gave the corporate-speak version of that incredulous protest “what’s all the hullabaloo about?” It and said “At no time was anyone ever precluded from suing us by purchasing one of our products at a store or liking one of our Facebook pages.” It was all just a “mischaracterization.” General Mills was “just very misunderstood.”
General Mills misunderstood? Baloney!
General Mills’ new terms plainly stated that anyone using its web site or joining its on-line community had entered into a binding agreement to arbitrate all claims against General Mills and to waive any right to participate in a class action against General Mills.
The new “Legal Terms” stated in bold, underlined, capital letters that they were creating “A BINDING ARBITRATION CLAUSE AND CLASS ACTION WAIVER.”
They supposedly affected the user’s rights “IN ANY DISPUTE WITH GENERAL MILLS (INCLUDING ITS AFFILIATED COMPANIES AND BRANDS).”
And the clause and waiver affected more that just disputes arising out of the use of the web site or participation in the on-line community. The clause and waiver also affected “DISPUTES ARISING OUT OF YOUR PURCHASE OR USE OF ANY GENERAL MILLS PRODUCT OR SERVICE FOR PERSONAL OR HOUSEHOLD USE, INCLUDING GENERAL MILLS PRODUCTS PURCHASED AT ONLINE OR PHYSICAL STORES.”
Now to be fair to General Mills, they did allow customers to pursue disputes in small claims court. But that’s in the fine print. I could not determine when General Mill’s proposition would have allowed the small-claims court option. Who would have given it much thought anyway? The “Legal Terms” stated in bold, underlined, capital letters that:
ANY DISPUTE OR CLAIM MADE BY YOU AGAINST GENERAL MILLS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR YOUR PURCHASE OR USE OF ANY GENERAL MILLS SERVICE OR PRODUCT … WILL BE RESOLVED BY INFORMAL NEGOTIATIONS OR THROUGH BINDING ARBITRATION, AS DESCRIBED BELOW.
It sure sounds to me like General Mills wanted to stop people from taking them to court.
In any event, because General Mills has announced its abandonment of the binding arbitration clause and class action waiver, there is little point debating its efficacy. Worth pondering is what General Mills hoped to achieve by announcing these now-withdrawn “Legal Terms” in the first place. I am skeptical that this was merely a misunderstood and ill-conceived policy decision but I doubt that this will be last time we hear of such a scheme.
General Mills has since removed the problematic terms, but you might still find them at http://web.archive.org/web/20140417231334/http://generalmills.com/Legal_Terms.aspx, and I have a copy I can email as well.