Infinite Arbitration: Can Courts Enforce What's in the Fine Print?

By: Kevin Tavolaro, Class of 2027

Background – Disney Story

In August of 2024, Disney faced waves of public backlash after details became public of their actions in a wrongful death lawsuit against the company. Jeffrey Piccolo sued Disney on behalf of the wrongful death of his wife, Kanokporn Tangsuan, who suffered an allergic reaction while dining at the “Raglan Road Irish Pub and Restaurant,” owned by Disney.[1] Piccolo’s complaint alleges that his late wife had severe food allergies, and that they chose Raglan Road specifically “for its safety promises about food allergies,” and their dining party repeatedly reminded the wait staff that Tangsuan was unable to consume dairy or nuts.[2] Nevertheless, Tangsuan passed away “as a result of anaphylaxis due to elevated levels of dairy and nut in her system.”[3]

The backlash resulted from a Motion to Compel Arbitration and Stay Case, filed by Disney in May of 2024.[4] Piccolo had created a Disney+ account in 2019 and later used the account to purchase park tickets in 2023.[5] When signing up for the Disney Account, Piccolo had to accept Disney’s “Subscriber Agreement,” which stated, “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.”[6] Therefore, Disney was asking the court to remove the case to arbitration. Eventually, Disney dismissed their motion following the public outcry, but the topic still presents interesting legal questions.

What is Infinite Arbitration?

The fine print in Disney’s Subscriber Agreement is what has been termed an Infinite Arbitration Clause. David Horton, one of the leading writers on infinite arbitration, has defined the clauses as “mandating arbitration for every dispute between any associated parties for eternity.”[7] Essentially, major companies have been adding language into contracts that allows them to avoid courts altogether when sued and seek more favorable outcomes with an arbitrator.

The Disney case is a prime example of infinite arbitration because the instance in which the plaintiff accepted the terms and conditions of the arbitration were wholly unrelated to the incident for which Disney was being sued.

Case Law

The question as to whether Disney would have been able to enforce the infinite arbitration clause is up for debate. The prevailing court case on arbitration came from the Supreme Court in 2019, which held that “[w]hen the parties’ contract delegates the arbitrability to an arbitrator, the courts must respect the parties’ decision as embodied in the contract.”[8]

When it comes to infinite arbitration, there currently exists a circuit split on their enforceability.[9] In 2020, the Fourth and Ninth Circuits came to different verdicts on the same set of facts.[10] Each plaintiff sued DirectTV under the Telephone Consumer Protection Act for calling the plaintiffs’ cellphones with advertisements, even though they were on the National Do Not Call List.[11] However, the plaintiffs had previously signed up for AT&T, whose service plans included an infinite arbitration agreement that forced arbitration between the signer and AT&T’s “subsidiaries, affiliates, agents, employees, predecessors in interest, successors, and assigns.”[12] Additionally, DirectTV was not affiliated with AT&T until after the service agreement contracts were signed.[13]

The Fourth Circuit, in enforcing the infinite arbitration clause, held that “having interpreted the arbitration agreement to which [the plaintiff] agreed in accordance with traditional contract principles, and applying the presumption in favor of arbitrability, we must enforce the contract ‘according to [its] terms.’”[14] Conversely, the Ninth Circuit in refusing to enforce the clause held that “arbitration is a matter of consent, and . . . DIRECTV has failed to establish that [the plaintiff] consented to arbitrate this pending dispute.”[15]

What’s Next?

When a circuit split exists, it may become an issue that the Supreme Court will look to take up. Given the public scrutiny over Disney’s proposed infinite arbitration motion, it becomes more likely to expect to see a Supreme Court case regarding infinite arbitration clauses in the near future.

[1] Rachel Treisman, Disney backtracks on request to toss wrongful death suit over Disney+ agreement, NPR (Aug. 20, 2024), https://www.npr.org/2024/08/14/nx-s1-5074830/disney-wrongful-death-lawsuit-disney#:~:text=Those%20terms%20of%20use%20%E2%80%94%20which,resolved%20by%20individual%20binding%20arbitration.%E2%80%9D.

[2] Id.

[3] Id.

[4] Piccolo v. Great Irish Pubs Fla., Inc., No. 2024-CA-001616-O, 2024 WL 3889994, at *1 (Fla. Cir. Ct. Aug. 20, 2024) (Defs. Mot. to Compel and Stay Case).

[5] Id. at *2.

[6] Id. at *3-4.

[7] David Horton, Infinite Arbitration Clauses, 168 U. Pa. L. Rev. 633, 657 (2020).

[8] Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63, 65 (2019).

[9] Gaela R. Normile, To Infinity and Beyond Immediate Parties: The Fourth and Ninth Circuit Split on the Enforceability of “Infinite Arbitration Clauses”, WoodsRogers (Oct. 6, 2020), https://www.woodsrogers.com/insights/publications/to-infinity-and-beyond-immediate-parties-the-fourth-and-ninth-circuit-split-on-the-enforceability-of-infinite-arbitration-clauses.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Mey v. DIRECTV, LLC, 971 F.3d 284, 295 (4th Cir. 2020) (citing Lamps Plus, Inc. v. Varela, 587 U.S. 176, 178 (2019)).

[15] Revitch v. DIRECTV, LLC, 977 F.3d 713, 721 (9th Cir. 2020).