General Mills reverses course on right to sue after backlash by consumers.
General Mills, maker of Cheerios and Wheaties, thinks it deserves credit for reversing itself after quietly trying to strip customers of their constitutional right to a day in court.
But that's like a homeowner saying he deserves credit for putting out a house fire after deliberately setting his living room ablaze.
The reality is that General Mills Inc., one of the nation's largest food companies, tried to pull a fast one on consumers and was caught off-guard by the volume and the scope of the backlash.
The Minneapolis firm had sought to deny customers their right to sue or join class-action lawsuits — requiring arbitration instead — once they downloaded its online coupons or took part in "any other General Mills offering."
Yes, it did the right thing by backing down. But it never should have tried to get away with such a customer-unfriendly trick in the first place.
"You don't think of having a contract with a company just for downloading its coupons or getting its newsletter," said Christine Hines, consumer and civil justice counsel at the advocacy group Public Citizen. "But that's what they were saying."
Astonishment quickly grew to outrage after it was reported last week that General Mills had changed its online legal terms to include mandatory arbitration.
By Saturday, the company threw in the towel — and patted itself on the back for being a good corporate citizen.
"We've listened," Kirstie Foster, a General Mills spokeswoman, said on the company's website. The legal terms, she said, will return "to what they were before."
In other words, you won't be required to arbitrate any disputes. You still can sue the company and join class-action lawsuits if you so choose.
"We'll just add that we never imagined this reaction," Foster said. "Similar terms are common in all sorts of consumer contracts, and arbitration clauses don't cause anyone to waive a valid legal claim. They only specify a cost-effective means of resolving such matters."
She apologized "on behalf of our company and our brands."
General Mills' dozens of brands include Chex, Bisquick, Betty Crocker, Haagen-Dazs, Yoplait and Pillsbury.
OK, points for quickly doing the stand-up thing. But Foster was being disingenuous when she noted that arbitration provisions are common in "all sorts of consumer contracts."
It's true that such clauses are routinely found in credit card, cellphone and cable contracts, to name just a few examples. But it's rare if not unprecedented for a manufacturer of retail goods — particularly food products — to assert a perpetual ban on litigation just for interacting with it online.
General Mills had said arbitration would be required "in exchange for the benefits, discounts, content, features, services or other offerings that you receive or have access to by using our websites, joining our sites as a member, joining our online community, subscribing to our email newsletters, downloading or printing a digital coupon, entering a sweepstakes or contest, redeeming a promotional offer or otherwise participating in any other General Mills offering."
In other words, you'd be kissing away your legal rights for almost any cyber-handshake you might have with the company.
Some interpreted these conditions to include "liking" General Mills on Facebook or following it on Twitter or even simply purchasing its products in a store. But Public Citizen's Hines said that was too broad an interpretation.
"You had to do something on the company's website to trigger the arbitration provision," she said. "Downloading a coupon would be a trigger. Liking them on Facebook wouldn't."
Consumers could have opted out of the revised terms by emailing the company, but that would have barred them from any other online transactions. Downloading coupons again or interacting with General Mills in almost any other way online would have once again triggered the requirement for arbitration.
The U.S. Supreme Court ruled in a 5-4 decision in 2011 that businesses can include arbitration clauses in their service contracts. The ruling specifically involved telecom carrier AT&T but applied to all companies in all industries.
Many businesses prefer arbitration because settlements are limited and because professional arbitrators, whose fees are typically paid by the company in a dispute, tend to favor their corporate employers.
A 2007 report by Public Citizen found that over a four-year period, arbitrators sided with credit card companies 94% of the time in disputes with California consumers.
"We rarely have disputes with consumers — and arbitration would have simply streamlined how complaints are handled," General Mills' Foster said. "Many companies do the same, and we felt it would be helpful."
Helpful for General Mills' legal team, perhaps, but not necessarily for consumers.
Many people might not have understood that they were abandoning their right to sue if they downloaded an attractive coupon — half off a can of Progresso soup, say.
They might not have realized until it was too late that they were unable to sue or join a class-action lawsuit should they or a family member consume a tainted General Mills product.
In September, General Mills announced a recall of its Pillsbury Cinnamon Rolls with Icing "because the dough may contain fragments from a broken piece of plastic on the production line." In June, the company recalled single-serve containers of its Cinnamon Toast Crunch cereal because of "the possible presence of salmonella."
Jamie Court, president of the Santa Monica advocacy group Consumer Watchdog, said class-action lawsuits are often the only recourse customers have to hold companies accountable for relatively minor incidents.
"Arbitration is a stacked deck against consumers who only collectively have a chance to take on a large corporation," he said.
Hines at Public Citizen said it wasn't surprising that a company like General Mills would try to explore new legal territory.
"We'll keep seeing things like this until someone makes them stop," she said.
David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to [email protected].