General Mills Reverses Changes to its Legal Terms, Removing Arbitration Provision

The New York Times reports:

General Mills, one of the country’s largest food companies, on Saturday night announced in a stunning about-face that it was withdrawing its controversial plans to make consumers give up their right to sue it. 

In an email sent after 10 p.m. on Saturday, the company said that due to concerns that its plans to require consumers to agree to informal negotiation or arbitration had raised among the public, it was taking down the new terms it had posted on its website. 

“Because our terms and intentions were widely misunderstood, causing concerns among our consumers, we’ve decided to change them back to what they were,” Mike Siemienas, a company spokesman, wrote in the email. “As a result, the recently updated legal terms are being removed from our websites, and we are announcing today that we have reverted back to our prior legal terms, which contain no mention of arbitration.”

How did General Mills think their terms had been mischaracterized? In its blog, the company elaborates on its legal terms revisions. General Mills' post includes this remark:

We’ll just add that we never imagined this reaction. 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. At no time was anyone ever precluded from suing us by purchasing one of our products at a store or liking one of our Facebook pages. That was either a mischaracterization – or just very misunderstood.

I mentioned in this previous post that I thought there was some misinterpretation about what the legal terms said -- some people had been reporting that purchasing General Mills products would result in a forfeiture of the right to sue, but the legal terms only appeared to apply to those customers who received coupons or "joined" the company's "online community" -- not all customers.

But the terms of the legal agreement said that the agreement applied to customers who "joined" General Mills' websites "as a member" and those customers who "joined" the company's "online community." This was the provision that led many to report that the legal terms applied to users who "liked" the company on Facebook, or followed the company on Twitter. And I think this interpretation of the terms follows from the former language in the agreement. So while General Mills is correct to say that the agreement did not preclude customers from suing as a result of a simple purchase, I don't think they are right to say that the agreement did not preclude lawsuits by consumers who liked the company on Facebook.

While I thought that General Mills' legal agreement contained some questionable provisions, and while General Mills' reversal of these changes is probably a good business move, this reversal means that the interesting legal questions I discussed in my previous post will not be explored by the courts.

UPDATE

Dave Hoffman at Concurring Opinions discusses the General Mills legal agreement and its revision here.