Gone With the Click of a (Disney) Mouse
How Corporations Use Forced Arbitration to Strip Away Your Rights.
By Christine Chen Zinner
The viral news story of a doctor who died of an allergic reaction after eating at a Disney World restaurant has become the unlikely vehicle for a renewed debate about the pervasive harms of forced arbitration. Who knew that a free Disney+ subscription could shield Disney from being held responsible for a wrongful death at its theme park?
Dr. Kanokporn Tangsuan took every precaution to avoid dairy and nuts. Her family repeatedly raised food allergy concerns with the waitstaff, confirming with her server that the food items she ordered were allergen-free when ordering and when it was delivered. Shortly after finishing her meal, Dr. Tangsuan experienced difficulty breathing and collapsed. She self-administered an epi-pen, but died at the hospital from anaphylaxis “due to elevated levels of dairy and nuts in her system.” Her husband Jeffrey Piccolo filed a wrongful death case against Disney.
Did Disney take responsibility or immediately work to make things safer for all visitors? Nope, Disney tried to push the wrongful death case into forced arbitration, citing a clause in a completely unrelated free trial Disney+ subscription Mr. Piccolo had signed up for five years ago. After a week of terrible publicity and public shaming, Disney finally agreed to abandon forced arbitration in this case.
While Disney’s legal ploy seems utterly crazy, most attempts to invalidate forced arbitration clauses are unsuccessful. As a result, forced arbitration clauses pop up in nearly every consumer and employee contract because companies know that people cannot fight back. When you click yes on terms and conditions for subscriptions or services or sign your credit card or employment agreement, you are signing away your legal rights.
While Disney begrudgingly backed down in this one high-profile case, corporations use forced arbitration to shield themselves from culpability for wrongdoing with almost no legal accountability. For the public, clicking or signing seems inconsequential until someone is hurt, only to find out they waived their constitutional rights.
Congratulations, you’ve waived your constitutional rights in return for streaming movies.
Nearly everyone is subject to some sort of forced arbitration clause. Whether you access a bank account, subscribe to a streaming service, use a food delivery or rideshare app, or use a payment processor for your child’s school lunch payments, nearly everything comes with a forced arbitration clause that means you cannot have your day in court, you are required to go through a byzantine private arbitration system instead.
Unlike public court, forced arbitration cases are typically kept hidden from the public, decisions cannot be appealed, and arbitrators who preside over the cases are often paid for by the very corporations that have inflicted the alleged wrongdoing. The entire system is so biased against people bringing claims that more people are struck by lightning than win monetary awards from a company in arbitration. These prospects dwindle even further for monetary awards against financial services companies (1.8 percent win rate), and further still for women and BIPOC people.
The arbitrator is typically not obligated to produce written decisions or disclose why or how a decision was reached. Regardless of how unfair a decision might be, there is no appeal, and no public review. In short, zero public accountability and zero transparency. Despite the enormous surrender of rights, a recent University of Michigan study found that 99 percent of people subject to forced arbitration have no understanding or awareness of these clauses.
Forced arbitration enables egregious corporate misconduct
Companies claim that forced arbitration is necessary to resolve disputes quickly and cheaply. By cheaply, they mean without facing judges and juries that would hold them financially responsible for their misdeeds. The Disney case revealed that these forced arbitration clauses make it harder or even impossible for people to seek any accountability or resolution.
Some companies are unilaterally re-writing terms and conditions, imposing higher arbitration hurdles, and even switching to more industry-friendly arbitrators mid-dispute. For example, in 2018, Wells Fargo imposed a new list of procedural requirements that made it harder to pursue cases after 3,000 customers brought arbitration cases after being illegally charged surprise overdraft fees. This company has paid billions of dollars in penalties and restitution for a long series of scandals that AFR has documented.
In 2022, while a judge considered whether to force ticket holders into arbitration, Ticketmaster unilaterally changed to a new virtual arbitration start-up that received a large percentage of its revenues from Ticketmaster. Its newly imposed forced arbitration agreement bars consumers from grouping cases together and curtails how much evidence consumers can submit to prove their case, further stacking the deck.
The Gemini cryptocurrency exchange repeatedly and unilaterally updated its terms and conditions to switch arbitration firms and impose administrative barriers to make it harder to pursue arbitration cases after Gemini realized it was about to lose $900 million in customer funds.
The public is ready to get rid of forced arbitration. Will lawmakers listen?
People are fed up with forced arbitration and the abuses that result when companies are allowed to keep their misconduct hidden with no meaningful accountability. Last Congress, lawmakers successfully enacted a law to end forced arbitration for cases involving sexual harassment and sexual assault. Bipartisan efforts to end forced arbitration are also underway for age discrimination and human trafficking. Additional legislative proposals to end all forced arbitration as well as forced arbitration for workers, nursing home residents, and health insurance contracts, have been consistently re-introduced over the years.
In 2023, a group of advocacy organizations, including Americans for Financial Reform, submitted a petition with the CFPB, asking for a rulemaking on forced arbitration. More than 100 consumer advocacy, racial justice, faith-based, workers’ rights, and LGBTQIA+ groups, and more than a dozen military servicemember and veterans groups supported a rulemaking and the need to protect consumers from forced arbitration.
One place to start would be to make sure your member of Congress supports the FAIR Act, a bill currently sponsored by 101 members of Congress that would end this unfair and abusive practice.
The Disney case helped remind us how we can surrender our rights with the click of a mouse. Disney finally backed down, but one example of corporate damage control is not a true victory until we’ve ended forced arbitration not just in one instance, but everywhere.
###