When to Back Down: Balancing Public Relations with Arbitration

By Eli Mizrahi

In 2023, Kanokporn Tansgsuan died of an allergic reaction while dining at the Raglan Road Irish Pub.[1]  According to a lawsuit filed by Jeffrey Piccolo, Kanokporn’s husband, after informing a waiter of Tangsuan’s severe allergies, they received assurances that the food would be allergy free.[2]  Forty-five minutes later, Tangsuan had a severe allergic reaction and died in the hospital.[3]  While the restaurant is located in the Disney Springs shopping, dining, and entertainment complex, it is “neither owned nor operated by Disney” according to a statement released by Disney.[4]

Subsequently, Mr. Piccolo filed suit against Disney and the restaurant for wrongful death of his wife.[5]  However, before the court could actually consider the plaintiff’s claims, Disney moved to dismiss the lawsuit in its entirety and to require the claims to be brought in arbitration.[6]  Disney’s reasoning was that the plaintiff agreed to resolve all disputes against Disney through arbitration when he signed up for Disney+, the company’s streaming service, in 2019.[7]

Following intense public backlash, Disney decided to drop its arbitration bid and litigate the claim in court.[8]  According to Disney’s Josh D’Amaro, the reason for this change in strategy was because the “situation warrants a sensitive approach to expedite a resolution for the family who have experienced such a painful loss,”[9] essentially confirming that their bid to arbitrate was dropped to avoid further embarrassment.

“Arbitration saves time, trouble and money not only to the disputants but to the state as well, freeing congested court calendars . . . and permitting the courts to devote their energy to matters for which they are specially organized, and which they are better fitted to handle.”[10]  It is also more private than traditional litigation.[11]  That being said, arbitration does have some disadvantages, namely, it has limited appeal options and often has less oversight.[12]  Here, it appears that Disney would have preferred arbitration for its privacy and its finality.  However, when the case attracted media attention, the privacy factor was diminished.  Jamie Cartwright, a partner at Charles Russell Speechlys, told the BBC that "In attempting to push the claim into a confidential setting on what were very tenuous grounds, [Disney] succeeded only in creating the very publicity and attention it likely wanted to avoid.”[13]  Additionally, Disney’s theory for applying an arbitration clause from a Disney+ subscription to a wrongful death suit was still quite novel and not a sure thing.[14]

Being that Disney is a publicly traded company with a market cap above 170 billion dollars,[15] it likely made no sense for them to risk negative publicity for some perceived advantages in a suit worth around $50,000.[16]  “When negative news occurs, especially if a company is experiencing a given controversy, there is the potential for the company to experience a dip in this value.”[17]  Even a slight dip in value would cause Disney far greater harm than losing to Mr. Piccolo.  Ultimately, while arbitration can have many advantages, in this case, its disadvantages outweighed them.[18]

_____________________

[1] Jessica Guynn, Disney wrongful death lawsuit over allergy highlights danger of fine print, USA Today, (Aug. 15, 2024), https://www.usatoday.com/story/money/2024/08/15/disney-wrongful-death-lawsuit-arbitration/74805949007/ [https://perma.cc/267S-8GEX].

[2] Id.

[3] Id.

[4] Id.

[5] Rachel Reed, Does signing up for Disney+ mean you can never sue The Walt Disney Company?, Harvard L. Today, (Aug. 19, 2024), https://hls.harvard.edu/today/does-signing-up-for-disney-mean-you-can-never-sue-the-walt-disney-company/ [https://perma.cc/L7TN-CKJB].

[6] Id.

[7] Id.

[8] Tom Gerken, Disney drops bid to stop allergy death lawsuit over Disney+ terms, BBC, (Aug. 20, 2024), https://www.bbc.com/news/articles/cr7r9djxj0do [https://perma.cc/C433-LU8H].

[9] Id.

[10] Charles L. Bernheimer, The Advantages of Arbitration Procedure. The ANNALS of the American Academy of Political and Social Science, 98, 98 (1926), https://www-jstor-org.ezproxy.yu.edu/stable/1016251 [https://perma.cc/P3AM-FRZJ].

[11] Arbitration vs. Litigation: Choosing the Right Path, Pepperdine L. Blog, (Apr. 4, 2024), https://law.pepperdine.edu/blog/posts/arbitration-vs-litigation-choosing-the-right-path.htm [https://perma.cc/48CE-99M9].

[12] Id.

[13] Gerken, supra note 8.

[14] Reed, supra note 5.

[15] Nasdaq, https://www.nasdaq.com/market-activity/stocks/dis [https://perma.cc/Q5QS-78XN] (last visited Sept. 26, 2024).

[16] Gerken, supra note 8.

[17] Russell Spears, The Impact of Public Opinion on Large Global Companies’ Market Valuations: A Markov Switching Model Approach, 9 J. Fin. & Econ. 115, 115 (2021), https://pubs.sciepub.com/jfe/9/3/3 [https://perma.cc/4P77-P6TR].

[18] Bernheimer, supra note 10.