April 21, 2014
The initial change marked one of the first cases of a major food company imposing “forced arbitration” on consumers. General Mills, owner of popular brands such as Cheerios, Wheaties, Pillsbury and Betty Crocker, said in an earlier statement: “While it rarely happens, arbitration is an efficient way to resolve disputes — and many companies take a similar approach.”
The company also claimed that it covers the cost of arbitration in most cases. The policy update came shortly after a judge refused to dismiss a case brought against the company in California over the labeling of its Nature Valley products.
Many companies in telecommunications, banking, consumer electronics, and entertainment also have similar policies because of the AT&T Mobility v. Concepcion Supreme Court decision in 2011. By using a standard-form contract to require arbitration to resolve disputes, companies can now forbid class action lawsuits. Amazon, Netflix, eBay, Sony, Dell, Electronic Arts, and many major phone companies are just some examples of the companies that use this type of language in their terms of service.
Class-action lawsuits are a major concern for big food companies, that now have to defend themselves in cases dealing with labeling, ingredients, and claims of health threats. “Almost every major gathering of industry executives has at least one session on fighting litigation,” reports The New York Times.
A backlash gained momentum in the wake of the NYT report. In response to public outrage over the new terms, General Mills announced it was voiding them. However, the company “stood by the decision and defended arbitration as cost-effective and common in the corporate world,” reports CNNMoney.
“The controversy over the General Mills terms arose from a conception that it applied very broadly — including interactions on social media where, for example, the company may provide coupons. If the customer accepted the coupon, he may agree to the terms without knowing it,” explains the article. The company described that as a “mischaracterization.”
“No one is precluded from suing us by purchasing our products at a store, and no one is precluded from suing us when they ‘like’ one of our Facebook pages,” wrote spokeswoman Kirstie Foster. “Those terms — and our intentions — were widely misread, causing concern among consumers. So we’ve reverted back to our prior terms. There’s no mention of arbitration, and the arbitration provisions we had posted were never enforced.”