Can signing up for a service waive all future rights to sue a company or its subsidiaries

Question

I saw a recent article that was talking about signing up for a Disney+ account waives your right to sue Disney and it subsidiaries as as there is a binding arbitration clause in the user agreement. Is this something that the courts will take seriously?

It seems that the case involves a food allergy death at an allergy safe restaurant Disney Springs which is an outdoor shopping area in the Disney resort area.

Does signing up for Disney+ waive your right to sue the entertainment company — ever?

That is what Disney argues in a wrongful death lawsuit involving a 42-year-old New York doctor whose family claims had a fatal allergic reaction after eating at an Irish pub in Disney Springs in October.

Disney is asking a Florida court to dismiss a lawsuit brought against it by Jeffrey Piccolo, the husband of Kanokporn Tangsuan, a family medicine specialist with NYU Langone's office in Carle Place, on Long Island.

The company argues Piccolo had agreed to settle any lawsuits against Disney out of court through the arbitration process when he signed up for a one-month trial of Disney+ in 2019 and acknowledged that he had reviewed the fine print.

"The Terms of Use, which were provided with the Subscriber Agreement, include a binding arbitration clause," the company wrote in its motion. "The first page of the Subscriber Agreement states, in all capital letters, that '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 also notes in its response that Piccolo agreed to a similar arbitration provision when he created an account on Disney's website and app ahead of the ill-fated theme park visit.

But Piccolo's lawyer, in a response filed earlier this month, argued that it was "absurd" to believe that the more than 150 million subscribers to Disney+ have waived all rights to sue the company and its affiliates in perpetuity — even if their case has nothing to do with the popular streaming service.

"The notion that terms agreed to by a consumer when creating a Disney+ free trial account would forever bar that consumer's right to a jury trial in any dispute with any Disney affiliate or subsidiary, is so outrageously unreasonable and unfair as to shock the judicial conscience, and this court should not enforce such an agreement," Brian Denney, Piccolo's attorney, wrote in the Aug. 2 filing.

Answer 1

Maybe

It will depend on the wording of the arbitration clause and if Florida law has any consumer protection laws that would make such an agreement unlawful.

The law is very clear: if someone has a dispute which falls under an arbitration agreement that they have agreed to, they must arbitrate.

What falls within the scope of an arbitration agreement depends on the exact wording of the agreement.

Assuming this is the clause (my emphasis):

You and Disney agree to resolve, by binding individual arbitration as provided below, all Disputes (including any related disputes involving The Walt Disney Company, its subsidiaries, or its affiliates) except for: (i) any claim within the jurisdiction of a small claims court consistent with the jurisdictional and dollar limits that may apply, as long as it is an individual dispute and not a class action; and (ii) any dispute relating to the ownership or enforcement of intellectual property rights. “Dispute” includes any claim, dispute, action, or other controversy, whether based on past, present, or future events, whether based in contract, tort, statute, or common law, between you and Disney concerning the Disney Products or this Agreement, or this exclusive authority to resolve any dispute relating to the interpretation, applicability, or enforceability of these terms or the formation of this contract, including, without limitation, the arbitrability of any dispute, and any claim that all or any part of this Agreement is void or voidable.

It also goes on to say that this clause survives termination of the main agreement. It also includes an opt-out clause which almost certainly means that court will not find it to be unfair or unconscionable, since its not actually offered on a "take it or leave it" basis; if you choose not to read the agreement and exercise your opt-out rights - that's on you.

This is what we arbitrators call a broad arbitration agreement. On its face it would appear to capture any dispute that has or will ever occur between Disney and whoever agrees to it - not just disputes arising from the particular contract that contains the agreement.

It is worth noting that arbitration agreements are separate contracts from any other contract they might be written within. So, when you sign up to Disney+ you are entering into two contracts: the Disney+ contract and the arbitration contract.

Unless there is a law in Florida that would limit the scope of this arbitration agreement to only disputes associated with the particular contract (unlikely), or an unfair contracts regime that would make this unlawful (even more unlikely), Disney appears to have a pretty good prima facie case.

Note that it is unlikely that this will actually be tested in this particular case as its far more likely that Disney will be able to have the case against them dismissed because they're just the landlord - they didn't actually do anything negligent.

Answer 2

This is a close call.

The question isn't quite "I think the question will be is if the binding arbitration can be applied to other unrelated parts of a large corporation or not."

It is more of a contract formation/interpretation/unconscionability analysis of whether the Disney+ agreement was intended and reasonably understood to apply to this kind of situation.

The express terms of the arbitration clause seem to apply it, but the immediate contract at the restaurant didn't include the term, the wife who died didn't sign anything, the arbitration clause was not easily located in the agreements to which it purported to apply directly, and a consumer wouldn't necessarily known that Epcot Center and Disney+ were within the group of parties to be bound without knowledge beyond what was expressly stated in the arbitration clauses.

The case law on that is mixed. The case law is also mixed on when the court v. the arbitrator gets to decide if the arbitration clause applies, and whether arbitration is favored only once it is clear that an arbitration agreement was entered into, or to contract formation of an arbitration agreement, and which issue is really at stake here - a scope of an arbitration agreement that was entered into issue or a contract formation issue.

The inquiry isn't blind to the implications of a ruling either - that could remove big companies from the courts entirely (and there are whole industries like securities brokers that are). If the courts ultimately rule in favor of Disney, this could push legislators to amend the Federal Arbitration Act to legislatively overrule the court's ruling in new cases, and that might hurt supporters of arbitration agreements more than a loss in this somewhat quirky outlier case.

Applying an arbitration clause in a context like this could also pose anti-trust implications. There are circumstances where a doctrine similar to constitutional avoidance is used in anti-trust situations, where contracts are interpreted in a manner calculated to avoid interpretations that would pose anti-trust issues. In other words, perhaps the Disney+ arbitration clause should not be interpreted as applying to the restaurant, because if it did, then Disney might have entered into an illegal tie-in agreement.