Disney’s attempted use of an arbitration clause in connection with a wrongful death case has been attracting much media attention lately, and I was interviewed by Reuters for a story about this case. I want to share a few observations and problems with Disney’s arbitration clause.
Sadly, a customer had a severe allergic reaction and died after eating at a restaurant in Disney Springs in Florida. The customer’s widower is suing Disney, and in attempt to get the lawsuit dismissed, Disney is relying on an arbitration clause referenced in the terms and conditions for Disney +, the streaming video service.
Can watching Star Wars on Disney’s streaming video service forever bar a customer from suing Disney if the customer, years later, becomes injured while visiting Disney World, an incident which has little or nothing to do with watching Star Wars?
The answer should be no. However, Disney is making this strained argument, and there are some courts that have found an arbitration clause to be enforceable in similar circumstances because literally, the arbitration clause covers all disputes between the parties. For example, there is a reported case where a customer becomes injured when sitting down in a bank’s lobby because the chair breaks and collapses. A court dismissed the customer’s personal injury claim against the bank because of the broad arbitration clause found in the customer’s agreement governing the use of his bank account. See Mobil Oil Federal Credit Union v. Smith, No. 09-22-00393-CV, 2024 WL 630000 (Tex. App. Feb. 15, 2024).
However, other courts interpret broad arbitration clauses in a more limited manner, while considering the context of the claim and the parties’ agreement, reasoning that there must be some “nexus” between the claim and the agreement. See, e.g., Van Dijen v. Citibank, et al., 2024 WL 2133952 (W.D. Wash. May 13, 2024). For example, under this “nexus” approach, if the plaintiff’s claim can be asserted without reference to the underlying contract, a court may conclude that a broad arbitration clause within the contract is not enforceable for such a claim. Here, it is possible to assert the wrongful death claim without having to rely on the terms and conditions of Disney’s streaming service.
Hopefully, the court in this Disney case will find that the wrongful death suit has nothing to do with the use of Disney’s streaming service, and as a result, the arbitration clause is not enforceable. But with a well-drafted, properly-implemented clause covering all disputes between a customer and Disney, some courts may be willing to enforce a broad clause in connection with a personal injury claim, as illustrated by the bank case mentioned above.
Disney will face some other hurdles with its attempt to compel arbitration in this case. In addition to the Disney streaming service contract, Disney is relying on another agreement involving the My Disney Experience, which appears to be an app or platform that helps customers navigate the use of Disney’s theme parks and manage dining reservations, among other things. Under current interpretations and broad applications of the Federal Arbitration Act, a properly-drafted, properly-implemented arbitration clause in connection with the My Disney Experience app would bind a customer who uses the app for a dinner reservation and who has a personal injury claim arising from the dining experience.
However, Disney’s arbitration clause purporting to govern the use of the My Disney Experience app is not properly drafted or implemented for at least two reasons. First, the contract governing the My Disney Experience does not contain an arbitration clause, and instead, incorporates by reference a separate agreement titled “Walt Disney Internet Group Terms of Use.” This separate “Internet Group” agreement is not entirely clear with its scope. The introduction to this “Internet Group” agreement appears to cover the use of Disney-related “websites, software, applications, content, products, and services in any media format or channel.” In other words, the agreement appears to cover online content. However, the arbitration clause found in the “Internet Group” agreement can be interpreted broadly to cover all disputes between a customer and Disney. Some courts may focus just on the broad arbitration clause in the “Internet Group” agreement and conclude it covers all disputes with Disney, while other courts may read the broad arbitration clause in light of the narrower scope in the introduction of the “Internet Group” agreement. If Disney really wants to cover activities that occur in its theme parks, such as a slip and fall at Disney World or an injury from a ride, Disney could better and more directly implement an arbitration clause specifically for all tickets or passes to its theme parks, instead of incorporating by reference a clause covering its Internet Group. (Furthermore, and to get more extreme, every restaurant or store in Disney areas could contain an arbitration clause posted on its front door, as some restaurants have done in the past.) In sum, one problem with Disney’s attempt to rely on arbitration is that the My Disney Experience app incorporates by reference an arbitration clause found in another contract, and this other contract is arguably of a more limited scope.
A second problem with Disney’s reliance on the My Disney Experience app is that the terms governing this app contain a judicial forum selection clause, requiring all disputes to be filed in state court in Florida:
You agree that any claim, action or lawsuit (collectively, “Action”) arising out of these Terms, reservations and bookings, and/or all packages, products and services provided in connection with the reservations and bookings (including without limitation, components such as park admissions, RF Devices, entitlements to access Lightning Lane entrances, photos and other media, and room accommodations) (collectively, “Terms, Reservations and Products”) must be filed and maintained exclusively in any court in Orange County, Florida having subject matter jurisdiction.
See https://disneyworld.disney.go.com/park-experience-terms-conditions/.
This forum selection clause is inconsistent with Disney’s argument that an arbitration clause governs. When a company drafts a contract containing both an arbitration clause and a forum selection clause, I’ve seen conflicting court cases interpreting the contract. Some courts conclude there is no obligation to arbitrate in light of the conflicting provisions, while other courts try to harmonize and reconcile the two conflicting provisions by concluding there is a broad obligation to arbitrate and any litigation regarding the arbitration must comply with the forum selection clause. In other words, there are conflicting judicial decisions involving a contract that contains both a forum selection clause and an arbitration clause. Here, in Disney’s case, the My Disney Experience terms contains a provision to govern what happens if the My Disney Experience terms conflict with the “Internet Group” agreement terms: the My Disney Experience terms prevail, which should mean that the forum selection clause controls.
Ultimately, a court will likely find there is no obligation to arbitrate in this Disney wrongful death lawsuit. However, if Disney had implemented a broad arbitration clause more carefully, an arbitration agreement could be enforceable with this case under current interpretations of the FAA. The broad use of arbitration in the United States prompted me to study and write about the FAA’s history, and in light of the history, I’m convinced the Disney claim should not be subject to arbitration. I’ve filed amicus briefs with the United States Supreme Court explaining how the FAA was never designed for tort claims, such as the wrongful death claim at issue in the Disney case. If the FAA was properly interpreted and applied as originally intended when it was enacted almost 100 years ago, the Disney claim would not be subject to arbitration.