Corporate Arbitration Clauses Prevent Victims From Trial

It’s never been more important to read the fine print. When we use apps (almost any app, actually), we usually have to check a tiny box to accept its “terms and conditions,” or the app won’t let us proceed with whatever it is we want to do. It seems inconsequential... why on Earth would you not waive a right to a jury trial when you sign up for Disney+ streaming service, for example?

Or, why would you not check that little box when you order from Uber Eats? You likely wouldn’t think in a million years that could come back to haunt you, but it can—and it did—for families who suffered tragedies in which those little check boxes cost their rights to file a lawsuit.

New Jersey family hurt in Uber crash can’t file lawsuit

John and Georgia McGinty were traveling by Uber in 2022 when their driver failed to stop at a red light and caused a collision. The couple suffered serious injuries and sought to sue Uber for damages.

But there was a problem.

Several months prior to the accident, their daughter—a minor—placed an order through Uber Eats, with her parents’ permission. The parents were getting ready to go on a trip, and Georgia gave her daughter permission to order a pizza using Georgia’s Uber Eats account. The young girl had ordered food online in the past, and her mother was comfortable with her capability to do so.

But while using her mother’s phone to order the pizza, Georgia and John’s daughter inadvertently checked a box that waived their rights to a trial and all future potential legal claims.

That’s right—a child clicked a box while ordering a pizza that prevented her parents from filing a lawsuit against Uber for their serious injuries resulting from the Uber driver’s negligence.

If that sounds kind of jaw-dropping, that’s because it is. The 7th Amendment of the Constitution protects an American’s right to a jury trial in civil cases where the value exceeds $20. This is part of the U.S. Bill of Rights and was ratified in 1791.

Georgia McGinty’s injuries included cervical and lumbar spine fractures, rib fractures, a protruding hernia and other traumatic injuries to her abdominal wall and pelvic floor. Her husband suffered a fractured sternum and severe fractures to his arm and wrist, necessitating a bone graft. He has diminished use and sensation in his left wrist. Georgia was unable to return to work as an attorney for about a year after the accident.

Is this unusual?

Not as much as you might think.

Jeffrey Piccolo filed a wrongful death lawsuit against Disney Parks and Recreation in early 2024 after his wife died after consuming food with allergens at a Disney property, even after the couple was told by the server several times that the allergies would be accommodated.

However, Disney’s lawyers responded that the $50,000 lawsuit should be dismissed and resolved through arbitration because Piccolo had accepted this as the terms when he signed up for a free trial of the Disney+ streaming service.

That’s right—he signed up to watch Disney+ on streaming in his home, and then was unable to get a jury trial for the death of his wife because of one checkbox agreeing to the terms and conditions of the streaming service, which apparently apply to all of Disney.

He would not have been able to use the streaming service if he had not checked the box. He had signed up for the free trial while using his PlayStation but then canceled it and did not ultimately subscribe.

Ultimately, Disney reversed its stance on the issue. It said, “[w]e’ve decided to waive our right to arbitration and have the matter proceed in court,” citing the sensitivity of the case.

What is an infinite arbitration clause?

An infinite arbitration clause refers to a contract clause that compels parties to submit to arbitration to resolve a dispute without any time limitation, meaning that it applies to all disputes arising from the contract indefinitely. This type of clause can bind parties to arbitration even after the contractual relationship has ended or if the contract itself is terminated. In practice, this could mean that even years after a contract expires, any related disputes might still have to be arbitrated.

These are a problem because an arbitration clause in a consumer agreement is not usually negotiated by the parties. They’re also not limited to disputes related to the original contract, as we saw in both the Uber Eats case and the Disney lawsuit.

Another example could be that you check a box on an agreement by your mobile service provider that requires arbitration instead of a lawsuit if you claim that the phone service provider overcharged you. But an infinite arbitration clause could reach so far that it actually could prohibit a lawsuit against a driver who caused a car accident years after your phone contract ended if the driver worked for an affiliate of the phone service provider.

Why do companies prefer arbitration to a jury trial?

Arbitration tends to be faster and quieter. There is no jury, they can be made confidential, and there are limitations on appeal, discovery and evidentiary rules. The company sets the rules and the consumer is bound by them, usually because no one reads the fine print before they check the box or sign an agreement. And, even if you do read every word of the company’s terms and conditions, they’re not negotiable. If you don’t want to agree to your mobile provider’s contract, then you would need to find a new mobile provider. Simple as that.

Are infinite arbitration clauses enforceable?

Some states do not enforce infinite arbitration clauses. Because the states are split on this issue, it will depend on the state where the case is filed and the specific facts of the claim.

What can you do as a consumer to avoid this?

You might be able to mitigate the effects of an arbitration clause, but it won’t be pain-free.

Read before you sign. Always read the fine print in contracts before agreeing to anything, especially for products, services, or employment agreements. Arbitration clauses are often hidden in these sections.
Negotiate, if possible. If it’s an in-person contract signing (for instance, you’re at a retailer for your mobile phone plan), you might be able to request changes to the contract’s scope or duration. You might be able to request that certain types of disputes are exempt from arbitration.
Check for an opt-out provision. Some companies provide consumers with a window (usually 30 to 60 days after signing) to opt out of arbitration. If the contract has such a provision, make sure to submit your opt-out notice within the specified period.
Strike out certain clauses. If you’re dealing with a negotiable contract (e.g., certain service agreements or smaller, personalized agreements), you can try physically striking out the arbitration clause before signing the contract. Make sure the other party agrees to this modification. Again, if it’s an online “terms and conditions” checkbox or similar, this is likely not possible.
Investigate other options. If the company or service provider insists on including an infinite arbitration clause, consider switching to a competitor that either doesn’t have arbitration clauses or has more consumer-friendly terms.

Certainly, some of these are often easier said than done. Not everyone can simply opt out of a clause or choose another provider, depending on the service. Could you choose GrubHub instead of UberEats for your pizza delivery? Probably. But you would likely be faced with very similar terms and unless you check that little box agreeing to them, you can’t get that pie you want in a hurry. In a lot of ways, large corporations have consumers over a barrel.

But does that mean we have no choice but to accept a binding arbitration clause that could cause us legal trouble later?

Not always.

First, there are states that have stronger rules governing arbitration clauses, especially in consumer contracts, that might void unreasonable terms, such as an infinite clause. If you believe you’ve signed an arbitration agreement, check your state laws to find out if it’s enforceable.

Second, support legislation that restricts the use of forced arbitration clauses in consumer contracts. Consumer rights groups and legislators often push for reforms that aim to protect consumers from being unfairly bound by arbitration agreements, especially those with no clear end date. It might seem like your voice doesn’t matter, but it can. Lobbyists and legislators care about consumers and need to know your priorities.

Finally, if you were injured and believe you’re bound by an arbitration clause, consult a lawyer who is knowledgeable on personal injury and contract law. They can help you understand your rights and protections if you need to file a lawsuit.