Arbitration clauses state that any case brought against the defendant will be heard by an arbitrator rather than by a jury. Arbitration clauses are becoming more and more common. They are often hidden in the fine print of contracts, credit card agreements, tickets, and website and app user agreements. Unfortunately, the Courts have generally upheld arbitration clauses.
Arbitration clauses are seen as benefiting businesses over consumers, because the arbitrators are usually industry insiders that regularly work within the industry being sued. Arbitrators are also believed to be less likely swayed by emotion than a jury of lay people, and less likely to ‘punish’ a business for improper behavior. Finally, there is no appeal process from an arbitration decision, so you can be stuck with a wrongly decided decision, with little to no recourse.
An arbitration clause recently made the headlines when Disney tried to remove a case against them from the courts to arbitration.
In the lawsuit, Plaintiff Jeffrey Piccolo alleged that his late wife suffered a fatal allergic reaction from a meal she ate at a park restaurant in 2023. Disney tried to get the lawsuit tossed by asking the court to move the dispute to arbitration, meaning the case would not go before a jury or otherwise continue in court.
Disney’s argument was that Piccolo had allegedly entered into a subscriber agreement when signing up for a Disney+ trial years ago – which requires users to arbitrate all disputes with the company. Company lawyers also claimed that because Piccolo used the Walt Disney Parks’ website to buy Epcot Center tickets, Disney is shielded from a lawsuit from the estate of Piccolo’s late wife.
Eventually, due to public outcry and ridicule, Disney relented and waived the arbitration clause. Most commentators thought Disney was overreaching when claiming that the arbitration clause in a trial subscription to the streaming service would apply to an incident in their theme park years later.
Still many arbitration clauses are upheld by the courts on a regular basis. The Federal Arbitration Act governs arbitration clauses in interstate commerce and strongly favors arbitration. New York Courts regularly uphold arbitration clauses. Uber, LYFT and other ride share apps state in their user agreements that claims brought against the ride share company must be arbitrated rather than tried in court before a jury. These clauses are regularly upheld by New York Courts.
If you believe you have been wronged due to the negligence of a company which has language restricting the manner, or if, a lawsuit can be commenced, you should consult with an attorney to determine the legality of the restricted language. Some language restricting lawsuits are against public policy and unenforceable. Some restrictions may be unenforceable because they are unclear and ambiguous. Some language may be binding against one person but not another (for example an arbitration clause may be valid against a person who uses their phone app to call for an Uber, but not against someone who was a passenger in an Uber, but was not the person who requested the rideshare). Even if the language is binding, you are almost always better off being represented by an attorney in whatever forum you are in, then going at it alone.
In summary, arbitration clauses very well may be enforceable. It is best to consult with an attorney to know your rights.