At Guerra & Casillas LLP, while our focus is on workers’ compensation and employment law, we closely monitor legal developments that affect everyday people’s rights including alarming trends in arbitration clauses that corporations use to limit access to courts.
Recently, Disney+ made headlines when it tried to force a wrongful death lawsuit into private arbitration based on the fine print in its subscriber agreement. This meant a grieving family’s right to a public trial was at risk of being denied. After significant public backlash, Disney withdrew its motion to arbitrate.
This case shines a light on a growing concern: arbitration clauses buried in consumer contracts that often extend far beyond the original scope of the agreement. Many consumers unknowingly give up their right to take disputes to court simply by clicking “I agree” to lengthy terms of service.
Senate Bill No. 82: A Step Toward Protecting Consumer Rights
To address this issue, California lawmakers introduced Senate Bill No. 82 (SB 82). This bill limits arbitration clauses in consumer contracts to only those claims directly related to the contract itself. SB 82 makes any broader arbitration provisions void and unenforceable, targeting clauses that try to bind consumers to arbitration for unrelated future disputes.
Legal experts refer to these broad clauses as “arbitration servitudes.” These clauses often cover successors, affiliates, and even unauthorized users, sometimes without any time limit. This creates significant legal confusion about what claims are actually subject to arbitration.
The Complex Legal Landscape: Federal vs. State Law
The situation is complicated by the tension between California state law and the Federal Arbitration Act (FAA). Federal law generally favors arbitration and often preempts state laws that try to restrict it. This has led to conflicting rulings in federal courts, making the future of bills like SB 82 uncertain.
The U.S. Supreme Court has consistently upheld arbitration agreements as equal to other contracts, invalidating state laws that disproportionately burden them. Despite these challenges, SB 82 represents an important effort to clarify the boundaries of arbitration in consumer agreements and protect consumers from unfair, overreaching terms.
What This Means for Consumers and Businesses
For consumers, SB 82 is a hopeful sign that lawmakers are trying to stop corporations from stripping away your access to the courts through overly broad arbitration clauses.
For businesses and contract drafters, it’s a warning to carefully consider how arbitration clauses are written and applied, especially in the age of complex and far-reaching online user agreements.
How Guerra & Casillas LLP Supports Your Rights
Although Guerra & Casillas LLP does not handle arbitration cases, our commitment remains steadfast in protecting workers’ rights in areas such as workers’ compensation and employment law. We believe in transparency and fairness and we support efforts to ensure all consumers and workers retain access to justice.
If you have questions about your workplace rights or have faced retaliation, discrimination, or unfair treatment, we’re here to help. Contact Guerra & Casillas LLP for a confidential consultation and learn how we can support your case.
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