[A version of this discussion about legal strategy, public relations, and trust between attorneys and their clients is also posted at https://www.linkedin.com/pulse/high-profile-lawyering-business-ecosystem-lexpatglobal-p894e/ with additional links and hashtags.]

By: Adam Pearlman, Managing Director

Last month saw a lot of controversy over Disney’s litigation strategy in a wrongful death case in Florida.  As with all wrongful death lawsuits, this one is rooted in tragedy: a guest at a Disney resort suffered a severe allergic reaction – allegedly due to food served to her at one of the resort’s restaurants – and did not survive.  Her husband sued both Disney and the restaurant (which is not owned by Disney).  Disney then made headlines for invoking arbitration clauses – including citing the clause used for its Disney+ streaming service – to avoid litigating the case in court (which would be before a jury, if it goes to trial), before doing an embarrassing about-face just days later in light of the bad press.

The case raises interesting questions about so-called infinite arbitration and also deserves a discussion combining both the legal and public relations angles of the case.

Litigation for large companies like Disney and other high-profile institutions often includes a PR component that many lawyers might not think as much about when conducting their legal research, considering potential arguments, seizing upon what looks like a winning one, and writing it up.  Indeed, sometimes shortcomings in lawyer-client communications, or otherwise failing to account for the “how will the press run with this” factor, can lead to PR disasters that cause reputational harm and may lead the company to over-correct for its original miscalculation.

Great lawyer-client relationships are rooted in solid, candid, two-way communication.  Lawyers provide our expert assessments of the legal issues at stake for our clients (based on the facts as we understand them), and clients often are appropriately deferential to our opinions of what needs to be done to protect their legal interests.

But that’s not the end of the story.  The best clients are also candid with their lawyers, educate their lawyers on the facts – the good and, especially, the bad – and ultimately make a business decision about whether to proceed as the lawyers advise or not, perhaps even sending the legal team back to the drawing board if the proposed legal theory of the case is at odds with their brand or business model.  All of this requires a lot of trust and often includes investing a little extra time with some back-and-forth between lawyers and clients.

The Disney case is a tough and uncomfortable one for several reasons.  First and foremost, as noted above it’s rooted in a tragic death.  Second, the legal question is one that implicates a basic facet of life today – the click-through Terms of Service.  And third is the presence of “infinite arbitration” (and class action waiver) clauses in nearly all of those TOS agreements.

There’s an inherent awkwardness and lopsidedness with ad infinitum type clauses like the ones Disney relied upon in this case to try to move it to arbitration. An example of a different sort is when people sign-over copyright, image, or likeness rights to a publisher, distributor, or event venue to use “in any form,” including those not yet invented, forever.  Those types of clauses are nevertheless very common.  The Disney case got so much press because a) it’s Disney – a brand that tries to maintain a wholesome image and whose parent company people want and expect to play fair, and b) the tack Disney took in its brief to move the case to arbitration allowed the press to cast the company as having taken that ad infinitum clause to the usually hypothetical ad absurdum.

As a matter of law, the merits of the case likely will be decided in terms of landlord/tenant vicarious liability.  Disney neither owns nor operates the restaurant where this tragic incident happened and, but for including tenant-provided information on the Disney Springs website, Disney appears to be just the deep-pocketed landlord.  So if the case goes to trial, perhaps the most important questions for Disney would likely concern whether it breached any duties it has to guests at its resort, and what due diligence a landlord must perform regarding any tenant-provided representations published as advertising material through the landlord’s platforms (presumably to their mutual benefit).

But those legal questions are obviously not the headline news.  Rather, what begot all the bad press last month implicates the long well-trodden but unsettled issue of whether it’s at all reasonable to expect consumers to be able to read and digest in full the endless barrage of TOSs, EULAs, and the like that we all face as part of daily life.  It’s been 14 years since Chief Justice Roberts said publicly that he himself doesn’t read them, and they’ve only gotten longer, more complex, and more ubiquitous since then.

No one has been able to divine a solution to the problem.  From the business perspective, these terms and conditions provide necessary protection for a company to be able to provide its products and services, as with any other contract (or licensing of intellectual property).  For the general public, however, they’re adhesion contracts that take the form of a rote click-through en route to what often seems like a very simple, low-risk interaction from the comfort of one’s couch or dining table.

But contract terms are severable – and sometimes can even void the entire agreement – when they’re unreasonable or otherwise against public policy.  And where Disney went sideways in its briefing is in how it appeared to lead off with saying an arbitration clause in its Disney Plus streaming service terms prevents its liability in this in-real-life death case from being litigated.

In fact, that’s not really what they did – the Disney Plus issue appears where it does in the brief because Disney’s lawyers recited the facts of their case in chronological order, and they evidently thought their earliest (not necessarily most important) relevant fact to be that the plaintiff agreed to arbitration when he signed up for a trial of Disney Plus.  Even so, it was a fact that only a Court of Appeals could love (if even), and is what got them raked over the coals by the press and public in the meantime.

If the brief had simply said, “Plaintiff bought a ticket to the park/made a hotel reservations, and terms of ticketing to the park/staying at the hotel include an arbitration clause for any alleged injuries on park properties, regardless of whether purchased online or at the gate,” that would have been routine and far less controversial.  Even relegating the Disney Plus agreement to a footnote (i.e., “This wasn’t the first time Plaintiff agreed to arbitrate . . . .”) would have been unlikely to draw such negative attention.  Instead, by referring back to the TOS of their wholly unrelated streaming service as a stand-alone fact early in their brief, Disney opened themselves up to public ridicule and, had they not stood-down shortly thereafter, may have created a test case as to how far large conglomerates can stretch the terms of their agreements.

Importantly, the bad press and public ridicule ultimately compelled Disney to backpedal further than it otherwise would have had to.  Rather than merely dropping the facially absurd Disney Plus-based argument and continuing to rely on its resort’s arbitration clause, the company abandoned its arbitration position altogether.

Had the parties actually litigated the applicability of the arbitration clause, one potentially relevant question the Plaintiffs could have asked concerns at what level in the Disney organization the Disney Plus TOS was approved.  As a division of a subsidiary of Disney, what does it take for Disney Plus’ TOS to apply universally across the Disney family of companies?  It likely needs to be more than the words on the page, and implicates the process of developing, adopting, and publishing the document.  If it happened through counsel working at the division, or even subsidiary level, can those terms then really be applied to other divisions of the company that have no relation to the streaming service?  And does it matter that Disney Plus was operated by a unit that was not a wholly-owned Disney subsidiary at the time the plaintiff clicked “I agree”?  Even if the Disney Plus TOS was approved at the corporate HQ level, was it approved only for use with Disney Plus, while other, different TOS’s are used for other Disney services?  If so, the Plaintiffs may have had an argument that the TOS doesn’t apply Disney-wide because even Disney didn’t really mean it to (which would require an analysis of whether certain TOS terms can apply company-wide while others are targeted to the specific service being signed up for).

I’ll end on this hypo, using a wholly different large company as an example: Plaintiff buys a Chevrolet.  The purchase contract includes an arbitration clause that says it applies to any potential action against Chevy, its parent company GM, or any of GM’s subsidiaries.  Years later, while walking across the street, Plaintiff is hit by a motorist driving a Cadillac.  The investigation shows that a manufacturing defect in the Caddy caused that driver to lose control and caused the crash.  Is the state of the law really going to be that the Plaintiff can’t sue?  (Fast-forward to a futurist sub-hypo – what if the Caddy was self-driving?)  And, even if that’s where the law lands, would it be a good business decision for the parent company (in this hypo, GM) to fall back on that argument to avoid litigating its liability, or would the prospect of bad press and reputational harm cause them to rein-in some potentially heavy-handed lawyering?

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