Jackson Weatherall – Disney World, often revered as the most magical place on Earth—a place of joy, laughter, and excitement- became a legal nightmare for one New York family. Tragically, 42-year-old doctor Konokporn Tangsuan died last year after dining with her husband and mother at the Raglan Road Irish Pub in Disney Springs. Despite Tangsuan repeatedly informing restaurant employees of her severe food allergy, these warnings proved futile, and she died due to complications related to her food allergy.
Following her passing, her husband, Jeffrey Piccolo, sued Walt Disney Park and the restaurant. In response to Piccolo’s suit, the Disney legal team responded with an unexpected legal strategy, invoking an arbitration clause from a seemingly unrelated source. In November of 2019, four years before Tangsuan’s death, the Piccolo family had signed up for a free trial of Disney’s streaming service, Disney+. The trial’s terms and conditions included an arbitration clause that stated that disputes between the user and Walt Disney Company or its affiliates would be litigated exclusively through arbitration. The specific clause explicitly provided, “Any dispute between You and Us, except for Small Claims, is subject to a class action waiver and must be resolved by individual binding arbitration.” Disney’s lawyers argued that because the family had agreed to this clause, the lawsuit should be stayed and submitted to arbitration. They further contended that the Piccolo family’s use of the Disney app to purchase the theme park tickets bolstered their argument, asserting that that action alone bound the family to the arbitration terms.
So why is Disney so intent on avoiding traditional court and instead demanding arbitration? Arbitration often gives large corporations, like the Walt Disney Company, a superior advantage when battling claims. The Federal Arbitration Act (“FAA”) is the foundational law that enforces arbitration agreements within the United States. Section 2 of the FAA declares that any written provision of a contract evidencing a transaction involving commerce that requires a resolution of a dispute is valid, irrevocable, and enforceable unless it would be revocable through contract law. The act aims to encourage the use of arbitration and arbitration agreements. It allows for courts to compel arbitration when an agreement between the parties exists. The enforcement of the Act allows for effective dispute resolution, saving the parties time and reducing the burden on the courts. However, a working paper from the 2018 Stanford Graduate School of Business, Arbitration with Uninformed Consumers, explains that the system of arbitration is designed to protect big businesses. When a company engages in arbitration, it usually has a vast number of resources available to it that aid its ability to find arbitrators who are sympathetic to its case. Arbitrators know that if they side with big business, they are more likely to be selected again for later disputes. Furthermore, arbitration cases are generally confidential, not subject to public scrutiny, and often cannot be appealed, shielding these companies from reputational damage.
So, what does this mean for the Piccolo family and other Disney+ subscribers? The Piccolo’s tragedy should serve as a cautionary tale. For starters, consumers need to be aware that they can unwittingly sign their legal rights away with the click of a button and will be subject to terms buried within the fine print, with little ability to contest. Most people do not understand what arbitration is nor the gravity of their choice to opt into a particular service. Piccolo’s attorneys have criticized Disney’s defense, calling it absurd and “preposterous” to suggest the family’s creation of a Disney+ account should waive their right to seek recourse in court. While the argument resonates emotionally, it may not be legally sound, and the issue of “infinite arbitration clauses” – those clauses that have nothing to do with the transaction and go beyond the original contracting partners, with no expiration – remains a formidable obstacle to claimants and the courts.
Strategies like the one Disney seeks to employ are not new and are often the chosen course of action to protect a company’s interests. Big companies such as Amazon, Uber, and Walmart routinely rewrite their terms and conditions to include one-sided favorable provisions that create bigger hurdles for claimants and ultimately deter would-be litigants. Even so, American courts have routinely upheld the majority of arbitration clauses, highlighting how deeply ingrained arbitration clauses are in our society. The Supreme Court has not addressed the practice of “infinite arbitration clauses,” allowing lower courts to decide as they deem fit. However, recent disagreements among courts have created a circuit split. For example, the Fourth Circuit recently ruled that an arbitration clause in a woman’s wireless phone agreement covered claims against her television provider. The agreement broadly required arbitration for disputes with the cell phone provider, even if the television provider was not an affiliate at the time of the agreement. On the other hand, the Ninth Circuit reached an opposite conclusion in a case with similar facts. That court held that the FAA’s Section 2 does not require enforcement of clauses in disputes that do not “arise out of” the contract that contained the clause.
While Disney’s legal team has since stepped down, choosing not to enforce the arbitration clause following public backlash, the law still supports the company’s right to assert such a defense. Until legislative reform or further court rulings clarify the reach of such clauses, consumers should carefully review terms and conditions in contracts as companies like Disney continue to utilize these provisions in both expected and unexpected ways.
