Yes, You Should Read the Fine Print: Arbitration and Class-Action Waivers

Calista Kayatta

Edited by Keerthi Chalamalasetty, Aida Alyasin, Mac Kang, and Sahith Mocharla

In 2024, The Walt Disney Company faced national scrutiny following a wrongful death that occurred on one of its properties. While on vacation, Dr. Kanokporn Tangsuan suffered a fatal allergic reaction to the food she was served at a restaurant located in a Disney-owned shopping center. Tangsuan’s husband, Jeffery Piccolo, filed suit, claiming that—despite repeated warnings—the servers and chef failed to accommodate his wife’s documented severe allergies and that Disney, as the property owner and employer/operator, bore responsibility. In response, Disney filed a bold motion to dismiss, alleging that because Piccolo had “created a Disney account and agreed to arbitrate ‘all disputes’ against ‘The Walt Disney Company or its affiliates,’” the case must be resolved through Disney-led arbitration rather than in court [1]. The motion sparked widespread public backlash and a pressing legal question: Does agreeing to online terms and conditions mean forfeiting the right to bring a lawsuit—even in cases involving serious injury or death?

Arbitration is a contractual agreement between parties to resolve disputes outside the judicial system before a private arbitrator, with limited judicial review. Governed by the Federal Arbitration Act (FAA), decisions reached through arbitration are, crucially, just as legally binding and enforceable as those decided in a court, and a claim submitted to arbitration cannot also be raised in the traditional court system [2]. Arbitration is typically pursued because it is often far less expensive than litigation, much more expedient, and less confined by procedural requirements such as formal discovery schedules, judicial precedent, and formal written opinions. As a result, many companies will insert arbitration clauses in consumer terms and conditions and employee contracts. Under the FAA, these clauses are enforceable but also still subject to contract defences [3]. One of the most common defenses is unconscionability, where a contract may be deemed void if it is proven that there was either procedural unconscionability (lack of meaningful choice, hidden terms, adhesion contracts) or substantive unconscionability (overly harsh or one-sided terms) [4]. 

Another mechanism for extrajudicial resolution is waivers, which are voluntary relinquishment(s) of an otherwise recognized right. By signing a waiver, an individual or party agrees not to enforce a particular right or claim they are erstwhile legally entitled to [5]. Traditionally, waivers serve as acknowledgements of inherent risk, particularly in recreational activities (eg, you cannot sue a trampoline park for breaking your ankle if you landed badly, but you retain your right to sue if the trampoline was improperly installed and you fell through). However, like arbitration agreements, many customer and employee waivers have extended beyond acknowledgment of inherent risk to include a release of liability for expressed or gross negligence. Many companies have even begun to employ class action waivers, which, when enforced, remove an individual’s right to participate in or bring forth a class action suit, a legal proceeding where one or more plaintiffs file a lawsuit on behalf of a larger group who have suffered similar injuries or losses. These kinds of waivers limit the ability of customers or employees to effectively hold companies accountable for negligent practices. 

Piccolo’s case is not an isolated incident. Across industries, consumers and employees increasingly find themselves trapped by mandatory arbitration clauses and class action waivers embedded in the fine print of terms and conditions or employment contracts. Their widespread use, particularly in contexts of unequal bargaining power, effectively strips individuals of their enshrined Seventh Amendment right to a jury trial, undermines access to justice, and allows corporate actors to avoid accountability through contractual loopholes.

The Seventh Amendment guarantees that “[i]n Suits at common law… the right of trial by jury shall be preserved” [6]. Since the founding of the U.S., the right to a jury trial has been fundamental, ensuring that ordinary citizens, not private decision makers or government officials, can check corporate misconduct and overreach. Jury trials provide safeguards that arbitration intrinsically lacks: public proceedings, formal rules of evidence, and a verdict from a cross-section of the community rather than from a single arbitrator. Although the courts and companies have historically characterized arbitration as a voluntary waiver of jury rights, in reality, these clauses are embedded within adhesion clauses presented on a take-it-or-leave-it basis, leaving customers and employees with no meaningful chance to negotiate. The result is not ostensibly an alternative form of litigation, but the systematic displacement and aversion of the civil jury system. Ultimately, arbitration subjects a constitutional right to the discretion of the more powerful contracting party. 

Beyond these broad constitutional concerns, the increased use of mandatory arbitration clauses and class action waivers also disproportionately affects marginalized groups, reinforcing unequal access to justice. A study by the Economic Policy Institute found that the number of mandatory arbitration clauses has more than doubled since the early 2000s [7]. Now, 56.2 percent of individuals in the private sector are subject to mandatory arbitration, and among employers who require mandatory arbitration, 30.1 percent also include class action waivers. Additionally, the study found that mandatory arbitration is more common in low-wage workplaces and industries with disproportionately high numbers of women and African American employees. Because low-income employees, African Americans, and women are disproportionately represented in these industries, they are also disproportionately subject to systems that limit access to public courts. The employees most vulnerable to broad wage theft, discrimination, and other workplace violations are the very individuals most likely to be barred from pursuing these claims collectively.

Moreover, arbitrators, as individuals, pose concerns about neutrality and implicit bias when setting claims. Arbitrators, like all decision makers, are not immune to bias. A study by The Public Citizen found that among 61,000 participants, all of whom explicitly endorsed racial equality, white participants routinely associated “humanness” more strongly with white individuals than with Black, Asian, or Hispanic individuals [8]. Although organizations such as the American Arbitration Association (A.A.A.) require arbitrators to demonstrate neutrality, there is no policy to ensure diversity amongst arbitrators. Without a diversity of decision-makers, consumers and employees are subsequently frequently funneled before overwhelmingly white and male arbitrators [9]. The absence of demographic diversity and collective deliberation increases the risk that implicit biases will go unchecked, further disadvantaging those already burdened by unequal bargaining power and reinforcing existing structural inequalities within the labor market. 

In 2012, the National Labor Relations Board addressed these predatory practices and issued a landmark decision challenging the use of class action waivers and mandatory arbitration clauses. The Board held that class action waivers prevent employees from engaging in “collective efforts to redress workplace wrongs or improve workplace conditions,” protections guaranteed under Section 7 of the National Labor Relations Act (NLRA) [9]. The NLRB’s decision reflected a longstanding principle that the NLRA safeguards employees’ ability to band together to seek workplace justice, including through collective litigation. 

That reasoning, however, was rejected by the Supreme Court in Epic Systems Corp. v. Lewis (2018). Epic, a healthcare data management software company, faced a lawsuit in February 2015 from former employee Jacob Lewis, who claimed that he and other employees had been denied overtime wages in violation of the Fair Labor Standards Act of 1938. Epic moved to dismiss the case because of the arbitration agreement that the employees had signed. The District Court denied Epic’s motion and held that the waiver was unconscionable because it violated section seven of the NLRA. The US Court of Appeals for the Seventh Circuit affirmed and added that the waiver was unenforceable under the FAA’s savings clause, which outlines that arbitration agreements are to be enforced unless there are legal or equitable grounds that would render a contract unenforceable. Because it was illegal under the NLRA, it was likewise in violation of the FAA. The case was ultimately taken to the Supreme Court, where it was consolidated with Ernst & Young v. Morris and NLRB v. Murphy Oil USA, Inc. Each presented the same fundamental question: when the FAA and the NLRA appear to conflict, which statute governs [10]? 

In a 5–4 decision, the Supreme Court ruled in favor of Epic and ruled that the FAA requires courts to enforce arbitration agreements. Writing for the majority, Justice Gorsuch stated that the NLRA “does not mention class or collective action procedures” and therefore could not displace the FAA. In the Court’s view, Congress had clearly instructed federal courts to enforce arbitration agreements as written, and nothing in the NLRA technically demonstrated anything to the contrary [11]. 

In her dissent, Ruth Bader Ginsburg argued that the majority’s reasoning fundamentally misunderstood both statutes and the historical context in which they were enacted. She claimed that the NLRA was enacted to “place employers and employees on a more equal footing” and that the “Federal Arbitration Act, sensibly read, does not shrink the NLRA’s protective sphere” [12]. She rejected the majority’s narrow textual approach, citing the fact that for over 75 years, the Board has held that the NLRA safeguards employees from employer interference when they pursue joint, collective, or class suits related to the terms and conditions of their employment. Rather than viewing the case as a technical dispute about statutory interpretation, Ginsburg framed it as a broader struggle over access to justice via a trial by jury and the future of labor protections. Ginsburg’s opinion attempted to uphold the established principles of collective bargaining demonstrated by the NLRA.

By privileging the FAA over the NLRA, the majority held contractual formalism over the NLRA’s foundational purpose to equalize bargaining power between employees and employers. The decision thus marked a significant shift in labor law, allowing employers to require individualized arbitration even when doing so prevents employees from pooling small-value claims that would otherwise be economically infeasible to pursue. When forced to negotiate claims individually in arbitration, small claims that otherwise could have been amalgamated into a class action suit are now easily dismissed or minimized in value. One of the crucial powers that the NLRA preserves is the right for employees to unionize and demand equal and just treatment. When that collective bargaining power is stripped, companies can easily silence otherwise potentially million-dollar suits through onerous procedural hurdles and obfuscation. 

In 2020, the Supreme Court of Canada confronted a similar issue in Uber Technologies Inc. v. Heller. Like the employers in Epic Systems, Uber sought to dismiss the case, citing the arbitration clause embedded in its digital standard-form contract. The agreement required disputes to be resolved through arbitration in the Netherlands under International Chamber of Commerce rules, an arrangement that would have required Heller to pay upfront administrative fees of approximately $15,000 despite the fact that he earned only $400–600 per week. Heller argued that the clause was both procedurally and substantively unconscionable because he had no meaningful opportunity to negotiate the terms of the contract before being required to accept it electronically as a condition of his employment. Moreover, the financial burden of initiating arbitration effectively barred him from pursuing his claim at all. In a sharply reasoned decision, the Supreme Court of Canada agreed with Heller and held that the arbitration provision was unconscionable because of the disparate bargaining power between the parties [13].

The contrast between the decision Uber Technologies v. Heller and the U.S. Supreme Court’s reasoning in Epic Systems is striking. Whereas the U.S. majority emphasized strict enforcement of arbitration agreements under the FAA, even in the face of unequal bargaining power, the Canadian Court ruled based on access to justice and contractual fairness. The Canadian Court took into account the realities of the employment relationship and the economic unfeasibility of arbitration. In doing so, it found that consent in a standard-form, “click-through” agreement does not always reflect genuine agreement nor negotiating opportunity [14].

Notably, Canada’s constitutional framework makes this comparison particularly apt. Similar to the U.S., the Canadian government ensures a trial by jury in Section 11(f) of the Canadian Charter for Rights and Freedoms [15]. Both the United States and Canada recognize freedom of contract and the legitimacy of arbitration as an alternative mechanism for legal claims. However, the Canadian decision reflects a constitutional culture more willing to consider subtle structural inequality in enforcing arbitration agreements. This discrepancy proves that the expansion of mandatory arbitration is not an inevitable feature of modern legal systems; it's a product of judicial interpretation and constitutional values–the letter of the law versus the spirit of the law.

Taken together, these cases demonstrate that the rise of mandatory arbitration and class action waivers represents a reordering of how constitutional rights are enforced in the modern workplace. From Epic Systems in the United States to Heller in Canada, courts have been forced to confront the tension between freedom of contract and meaningful access to justice. The U.S. Supreme Court’s jurisprudence has largely privileged the enforcement of arbitration agreements as written, even when embedded in take-it-or-leave-it contracts that foreclose collective action and theoretically bypass requisite negotiating thresholds. By contrast, the Supreme Court of Canada has demonstrated a greater willingness to face the realities of bargaining power and the practical barriers arbitration may impose. As mandatory arbitration clauses and class action waivers become increasingly prevalent—particularly in those aforementioned low-wage sectors disproportionately composed of marginalized employees—the stakes extend beyond statutory interpretation. At issue is whether legal systems will continue to prioritize the minutiae of contract, or whether they will (re)empower structural protections like the NLRA designed to ensure that individuals, especially the most vulnerable, retain a meaningful opportunity to exercise their Seventh Amendment rights.

When Disney sought to compel arbitration in a wrongful death lawsuit, it relied on an unassuming box checked in the registration for a Disney+ account. Their absurd claim that this protected them from a completely unrelated platform inspired wide public backlash. Yet despite the unfortunate death of Dr. Tangsuan garnering broad national skepticism, the underlying legal argument was the same one deployed across industries: that by checking ‘I agree,’ an individual has relinquished the right to bring claims before a jury in a public court of law–– a right otherwise guaranteed since 1789. When arbitration clauses are embedded in ubiquitous digital agreements and employment contracts, consent becomes merely nominal, and constitutional guarantees become contingent on an unassertive box. If courts continue to enforce these clauses without meaningful scrutiny of disparate bargaining power, transparency, and equity, the civil jury system risks erosion through expanding private adjudication. 

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[1] Piccolo v. Great Irish Pubs Fla., Inc., No. 2024-CA-001616-O (Fla. 9th Cir. Ct. 2024).

[2] Arbitration, LII / Cornell Legal Information Institute https://www.law.cornell.edu/wex/arbitration (last visited Feb. 17, 2026).

[3] The Federal Arbitration Act and Class Action Waivers (2026), https://www.congress.gov/crs-product/IF12764. 

[4] Unconscionability, LII / Cornell Legal Information Institute, https://www.law.cornell.edu/wex/unconscionability (last visited Feb. 17, 2026).

[5] Waiver, LII / Cornell Legal Information Institute, https://www.law.cornell.edu/wex/waiver (last visited Feb. 17, 2026).

[6] Seventh Amendment, LII/ Cornell Legal Information Institute, https://www.law.cornell.edu/constitution/seventh_amendment (last visited Feb. 24, 2026).

[7] Alexander J.S. Colvin, The Growing Use of Mandatory Arbitration: Access to the Courts Is Now Barred for More than 60 Million American Workers, Economic Policy Institute (Apr. 6, 2018), https://www.epi.org/publication/the-growing-use-of-mandatory-arbitration-access-to-the-courts-is-now-barred-for-more-than-60-million-american-workers/. 

[8] Candace Milner & Martha Perez-Pedemonti, Consumers’ Fraught Journey Into Forced Arbitration, Public Citizen (Feb. 6, 2024), https://www.citizen.org/article/consumers-fraught-journey-into-forced-arbitration/#_edn1.

[9] American Association for Justice, Where White Men Rule: How the Secretive System of Forced Arbitration Hurts Women and Minorities, The American Association for Justice (2021), https://www.justice.org/resources/research/forced-arbitration-hurts-women-and-minorities. 

[10] D.R. Horton, Inc., 256 N.L.R.B. 2277 (2012).

[11] Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018).

[12] See [10]

[13] See [11]

[14] Uber Technologies Inc. v. Heller, 2020 SCC 16, [2020] 2 S.C.R. 118.

[15] See [14]

[16] Canadian Charter of Rights and Freedoms, s11(f), Part I of the Constitution Act, 1982, being  Schedule B to the Canada Act, 1982, c11 (UK).