Disney+ Terms of Service Cited in Wrongful Death Arbitration Case

Forced arbitration clauses in employment and consumer contracts create unfair power imbalances by forcing individuals to surrender their right to sue in court, effectively blocking access to the justice system for those who need it most; these clauses prevent collective action, limit appeals, introduce inherent bias toward corporate interests, and undermine fundamental constitutional rights including the Seventh Amendment guarantee of jury trial, making the FAIR Act a critical legislative effort to restore citizens' access to the courts.

The Forced Arbitration Injustice Repeal Act is legislation designed to prohibit predispute arbitration agreements that force arbitration of future employment, consumer, antitrust, or civil rights disputes. It also prohibits agreements and practices that interfere with the rights of individuals, workers, and small businesses to participate in joint class or collective action related to such disputes. The video encourages viewers to contact their senators and representatives to support this act.

Public Justice has engaged in significant regulatory advocacy: working with the Consumer Financial Protection Bureau to issue rules banning arbitration clauses that prevent class actions; working with Medicare/Medicaid to require nursing homes to remove such clauses; and working with the Department of Education to prevent for-profit colleges from having arbitration clauses. The issue has gained public awareness, moving from something most people didn't understand to something discussed in dinner conversations. Provisions about forced arbitration now appear in Dodd-Frank and other laws.

There has been increased public awareness of how pervasive arbitration is and its effects on employees and consumers. In 2018, over 20,000 Google workers staged a walkout around Google's forced arbitration for sexual harassment complaints. Several high-profile tech companies ended their forced arbitration requirements. States have responded with legislation: New York prohibits mandatory arbitration for sexual harassment claims; Washington requires state contracts to use companies without forced arbitration; Maryland prohibits agreements waiving rights for sexual harassment claims and requires employers with 50+ employees to disclose settlement data; Vermont prohibits employers from requiring employees to sign agreements waiving court access for sexual harassment claims. The Fair Arbitration Injustice and Repeal (FAIR) Act, introduced in February 2019, is bicameral and bipartisan, applying to employment, consumer, and antitrust disputes. It would prohibit mandatory arbitration and give employees or consumers the choice to arbitrate or go to court. Employment disputes are defined broadly to include those classified as independent contractors. California's SB 51 prohibits employers from requiring employees to waive rights under specified labor and employment laws, including sexual harassment, assault, equal pay, and retaliation. California's SB 707 requires procedural safeguards within arbitration to ensure workers and consumers can vindicate their rights. If an employer fails to pay the initiation fee within 30 days, the party is in breach, and the consumer or employee can either withdraw and go to court or compel arbitration. For fees after initiation, if a company fails to pay, the party can be declared in material breach, and the consumer or employee can either withdraw and proceed in court, continue as long as the arbitration company agrees, or petition the court for an order compelling the company to pay fees. The bill also requires arbitration companies to report demographic information about arbitrators including gender, race, and ethnicity, addressing the lack of diversity in the arbitrator community. The legislative movement against mandatory arbitration came directly from the #MeToo movement, which made the pervasiveness of sexual harassment clearer to many people. Legislators and advocates pushed for legislation to better protect workers against sexual harassment, recognizing that arbitration can chill women and workers from coming forward because it's not a public proceeding, there are often confidentiality requirements, and there are limitations on how claims might be brought. 50 State Attorney Generals wrote to Congress expressing concern that the Fair Act would prevent sexual harassment claims from being confidential. The claimed benefits of arbitration include that people can decide how they want to resolve their own disputes (a consent model) and that it's cheaper and more efficient. However, in the consumer and employee arena, there is not genuine consent because one side drafts and the other side cannot even apply for the job or get the product without both consenting. The average time from filing to disposition in a federal case not tried is often seven to ten months. The Epic Systems case showed that companies can prevent collective redress, meaning if you aren't in a group, you might not know your injury and might not have the resources to pursue it. The bills and legislation do not purport to prohibit arbitration but rather give workers and consumers a choice, consistent with FAA dictates that arbitration is a matter of consent, not coercion. Federal filings are basically flat, and some cases can come to federal court. In some federal district courts, judges have about 200 cases per judge per year. There is capacity in the federal courts and in state courts, which are busier than federal courts. The real issue is that in the arbitration context, most employees and consumers are not bringing claims at all and are not vindicating their rights under the current system. The Center for Medicare and Medicaid Services (CMS) adopted a rule to ban mandatory arbitration in nursing homes in 2015, then almost immediately when sued by the industry, issued a proposed rule to permit it, which is still pending today.

Forced arbitration is a practice where corporations require consumers and workers to resolve disputes through private tribunals instead of public courts, effectively denying them their constitutional right to a trial by jury; the FAIR Act (Forced Arbitration Injustice Repeal Act) aims to restore this fundamental right by banning the enforcement of forced arbitration clauses in consumer, employment, and civil rights disputes, thereby allowing individuals to seek justice through the court system and join class actions against corporate wrongdoers.

Large corporations follow predictable patterns when responding to serious incidents, and these patterns can sometimes backfire. Disney's response to the 2023 death of Kanockporn Tanguan (who died from an allergic reaction at a Disney restaurant) followed four stages: issuing condolences, affirming safety priorities, arguing legal non-responsibility, and attempting to use terms and conditions to avoid court. Disney moved to the fourth stage faster than any company of its size in recent history. When the company attempted to force private arbitration based on a Disney Plus subscription term, public backlash forced Disney to withdraw the motion. This case illustrates how corporate crisis communication strategies can be undermined by public scrutiny, and how contractual terms may be challenged in cases involving employee negligence.

Walt Disney's early career lesson about intellectual property ownership shaped Disney's corporate legal strategy. When Disney left Universal with Oswald the Rabbit, he discovered he had no legal claim to the character because he had not properly secured ownership rights. This experience taught him the critical importance of protecting intellectual property through proper legal agreements. Disney subsequently built one of the most formidable legal defense teams in corporate history, developing aggressive strategies including extensive delay tactics and procedural maneuvers designed to exhaust plaintiffs. This reputation stems from Walt Disney's early lesson about the importance of legal protection, leading the corporation to create a legal department that has become known for its aggressive defense strategies.

Disney initially attempted to dismiss a wrongful death lawsuit by claiming their Disney+ subscription terms required arbitration, but faced significant public backlash and ultimately decided to allow the case to proceed in court, demonstrating how public opinion can influence corporate legal strategies.

When corporations pursue aggressive legal defenses in high-profile cases, they must carefully weigh the potential legal merits against the reputational and public relations damage that could result from losing, as even legally questionable strategies can cause significant brand harm that may outweigh the benefits of fighting a meritless claim.

Major corporations may need to reverse their public positions when faced with legal defeats. Disney, which had previously stated that Johnny Depp would no longer be part of the Pirates of the Caribbean franchise due to the accusations, was forced to acknowledge its error after the court ruling. This illustrates how corporate decisions can be influenced by legal outcomes and how companies may need to publicly admit mistakes when their initial positions are proven incorrect in court.

Class action bans (or waivers) prevent consumers and workers from banding together in class actions when they have similar claims against a company. This is particularly problematic because individual lawsuits against companies charging small fees (like $30) are often not feasible, while class actions provide the only practical way to hold companies accountable when they harm many people in similar ways.

Mandatory arbitration agreements buried in terms of service force users to resolve disputes through private arbitration rather than court. The company picks the judge and pays them, creating incentives to rule for the company. Class action waivers prevent groups from suing collectively, meaning one million people ripped off $10 each cannot band together. The Supreme Court ruled this legal, making it ubiquitous. These clauses prevent consumers from pursuing meaningful legal action against corporations, effectively immunizing companies from accountability.

Class action waivers in arbitration agreements prevent multiple consumers from joining together to file a single lawsuit against a company. Each case must be filed and resolved individually, even when many consumers have suffered similar harms. This fragmentation makes it more difficult and expensive for any individual consumer to seek justice, as each case requires separate legal proceedings. The result is that companies can avoid systemic accountability while consumers face prohibitive costs to pursue their individual claims.

Binding arbitration restricts consumers' options by preventing them from participating in class action lawsuits. If a company screws over many customers and they want to collectively sue the company, consumers who agreed to arbitration clauses cannot do this. Instead, each individual would have to sue the company separately in arbitration, which costs much more money and is less likely to happen.

Arbitration clauses in consumer contracts (cell phones, credit cards) primarily function as anti-class action devices rather than anti-litigation devices. Companies fear aggregate litigation over small ripoffs affecting many customers, so they use arbitration to prevent class actions rather than individual suits, which would be too costly to pursue individually.