The U.S. Supreme Court, in a series of decisions over the last 15 years, has expansively interpreted the 100-year-old Federal Arbitration Act (FAA) to uphold mandatory arbitration provisions in many different types of agreements. It is now well-accepted that if a contract includes a mandatory arbitration clause, the parties have given up their day in court for any disputes arising out of that contract, whether or not they negotiated or even read the clause.

However, did you know that by clicking on terms and conditions that include a mandatory arbitration clause, a party could unknowingly waive the right to litigate claims that are unrelated to that contract, against unknown defendants, in perpetuity? Consider this example:

ABC Corp. and you agree to arbitrate all disputes and claims between us. This agreement to arbitrate is intended to be broadly interpreted. It includes, but is not limited to:

• claims arising out of or relating to any aspect of the relationship between us, whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory;
• claims that arose before this or any prior agreement (including, but not limited to, claims relating to advertising);
• claims that are currently the subject of purported class action litigation in which you are not a member of a certified class; and
• claims that may arise after the termination of this agreement.

References to “ABC Corp.,” “you” and “us” include our respective subsidiaries, affiliates, agents, employees, predecessors in interest, successors and assigns, as well as all authorized or unauthorized users or beneficiaries of services or devices under this or prior agreements between us.

In Mey v. DIRECTV LLC, 971 F.3d 284 (4th Cir. 2020), the court held this provision in the plaintiff’s cell phone agreement with AT&T (“ABC Corp.”) meant she had waived her right to litigate her claim. Notably, her claim arose not out of the cell phone agreement, or even against AT&T itself, but out of an unrelated claim against DIRECTV, a subsidiary that AT&T acquired three years after the plaintiff entered into her cell phone agreement.

Contractual provisions like this one have become known as “infinite arbitration clauses,” thanks to an influential law review article that identified their emergence during the 2010s. They have gained public attention over the last few months due to two cases against high-profile corporate defendants, both involving tragic facts.

The first such lawsuit arose out of a death at the Walt Disney World Resort in Florida. In October 2023, Kanokporn “Amy” Tangsuan, a doctor from Long Island, and her husband, Jeffrey Piccolo, had dinner at a restaurant at Disney Springs, which is a shopping and dining area located within the resort. Tangsuan, who had severe nut and dairy allergies, died after consuming a meal that she allegedly had been told was allergen-free. Piccolo subsequently filed a wrongful death suit against the operators of the restaurant and Walt Disney Parks and Resorts Inc.

Disney filed a motion to compel arbitration, alleging that Piccolo had waived his right to litigate the wrongful death claim when he: (1) created a subscriber account to receive a month-long free trial of Disney+ in 2019, in which he agreed to arbitrate “all disputes … including any related disputes involving The Walt Disney Company or its affiliates … whether based on past, present or future events,” and (2) purchased tickets to the Epcot theme park (which he and his wife never used) through the “My Disney Experience” app, which included similar terms. The strength of Disney’s legal argument was not tested, because public backlash led Disney to withdraw its motion, waive its (purported) right to arbitration, and proceed with the case in court.

Shortly after the wrongful death suit against Disney hit the news, a personal injury case against Uber made similar headlines. John and Georgia McGinty had dinner out in March 2022 in their hometown of Princeton, New Jersey, and called an Uber to take them home. Their Uber driver allegedly ran a red light and T-boned another car. The McGintys both suffered serious injuries, which required multiple surgeries and impacted their ability to work. They sued their Uber driver, the other driver and Uber in state court in New Jersey.

Uber moved to compel arbitration because two months prior to the accident, the McGintys’ minor daughter, using her mother’s cell phone, had ordered a pizza using the Uber Eats delivery service. In so doing, she clicked on a change in terms that Uber had made in December 2021, which included an infinite arbitration provision. The trial court denied Uber’s motion to compel arbitration, but the appellate court reversed and held that the McGintys were bound to arbitrate their dispute. By clicking “agree” to the change of terms in the Uber Eats app, Mrs. McGinty (or her daughter, acting as her agent) had unambiguously waived her right to a jury trial for any and all claims against Uber.

Two federal courts of appeal have weighed in on infinite arbitration clauses, both in class action lawsuits brought against DIRECTV for aggressive telemarketing strategies towards plaintiffs who were on the “Do Not Call” list and also happened to be AT&T cell phone customers. The 4th Circuit, in the case referenced above, held the plaintiff was bound by her agreement to arbitrate all claims against AT&T and its affiliates. In Revitch v. DIRECTV LLC, 977 F.3d 713 (9th Cir. 2020), however, the 9th Circuit held there was no valid agreement to arbitrate between the plaintiff and DIRECTV because the affiliate was acquired after the agreement between the plaintiff and AT&T.

For now, mandatory arbitration clauses are not going anywhere. Until the Supreme Court places reasonable boundaries on them, the ways in which businesses and their attorneys will continue to develop creative ways to stay out of court are, well, infinite.

This article was contributed by Matt Lyon. He is a member of the TBA Business Law Section’s Executive Council and vice president and dean of the Lincoln Memorial University Duncan School of Law in Knoxville. He teaches contracts, business associations, civil procedure and payment systems. Prior to joining the LMU Law faculty in 2011, Lyon served as senior judicial clerk to Justice Gary R. Wade of the Tennessee Supreme Court and was a commercial litigation associate at Sidley Austin LLP in Chicago. Matt can be reached at Matthew.Lyon@lmunet.edu or 865-545-5318.