General Mills backed down from its controversial lawsuit policy. But the problem isn't over.
Class action lawsuits are an efficient way for wronged individuals — who may lack funds and legal expertise — to fight back against the powerful legal muscle of big business. One very famous example is the case of Erin Brockovich, who built a class action lawsuit that successfully sued Pacific Gas and Electric over contamination of drinking water.
A lone consumer wronged by a large corporation might struggle to foot the bill to hire the legal firepower necessary to win their case in court. But hundreds or thousands of consumers claiming similar injuries or damages from the same company or organization can, by banding together in a class action lawsuit.
It isn't surprising, then, that some firms are taking measures to limit their customers' abilities to join class action lawsuits.
General Mills, the manufacturer of Cheerios, Betty Crocker, Green Giant, and various other grocery products has reversed a recent change to its online legal policy that would have barred customers who "liked" General Mills' social media pages, downloaded money-saving coupons from its website, or entered any company-sponsored contests from joining class action lawsuits against the firm.
Under the revised terms of service, any consumer dispute with the company would have to be decided through arbitration, a change first noticed and reported by The New York Times last week.
The firm had earlier defended arbitration as "a straightforward and efficient way to resolve such disputes — and many companies take the same approach."
However the widespread outcry — and negative publicity — forced the company to change course. That's good news for General Mills' customers — after all, in theory, the possibility of a class action lawsuit is an incentive for firms to not be negligent — but it's hardly the end of the story.
"Class action waivers are everywhere," Florencia Marotta-Wurgler, a professor at New York University School of Law told Slate. Her research suggests that fewer than one in 1,000 consumers will click on website links to view the full terms of a contract before hitting "I agree."
That means lots of firms — including AT&T, Sprint, eBay, Amazon, American Express, and Dropbox — have introduced class-action waivers into their terms of service. General Mills, it seems, is just the tip of the iceberg.
Is this legit? The Supreme Court has decided that it is. Its 2011 judgment on the AT&T case ruled in favor of AT&T's waiver and against a state law that prohibited it. The court then upheld this decision last year even in cases where the costs of proving an individual claim in arbitration exceeds the potential recovery, which is precisely the problem that class action lawsuits are meant to solve.
The implications of this are worrying for consumers. Imagine if the tobacco industry had been able to avoid class action lawsuits filed by smokers made ill by smoking by simply printing on their packaging something like: "By buying this product, you waive your right to join a class action lawsuit against the manufacturer."
Yes, injured individuals can still sue, but only if they can foot the legal bill, or find someone else who will foot the bill for their individual costs. If there are corporations today or in the future whose products turn out to be anywhere near as damaging as those of the tobacco industry — which killed 100 million people last century — legal redress may be much harder to attain for consumers, especially those who cannot individually afford top-notch legal counsel.
Of course, individuals who don't want to take the risk of not being able to join a class action lawsuit could — in theory — only choose to do business with firms whose terms of service don't restrict class action lawsuits. In reality, though, not everyone has hours of free time necessary to read the small print and reach an informed decision.
But there is something more fundamental here. People shouldn't be able to just sign away their legal rights because of an obscure paragraph of conditions buried away in a terms of service agreement.
If the Supreme Court can't find a federal law that explicitly grants consumers the right to join class action lawsuits, then the legislative branch needs to step in and create one. After all, screwing up should carry a big risk for firms. If firms know that injured consumers will find it difficult to sue, then they have less incentive to be vigilant in preventing mistakes and injuries.