A Recent Folly by General Mills Exemplifies the Need to Consider the Business Consequences of All Legal Decisions

Before a legal decision is employed, it must be thoroughly vetted from multiple perspectives (including a determination of whether the decision comports with the company’s business goals).  Otherwise, unintended business consequences could overshadow the intended benefits of a legal decision.  A recent misstep by General Mills exemplifies this concept.  General Mills, like many other American companies, prefers to resolve consumer disputes through cost-effective negotiations and arbitrations – as opposed to engaging in traditional litigation.  Accordingly, General Mills recently rolled out a new policy that required all customers who used its website, subscribed to its email newsletters, downloaded or printed a digital coupon, entered a sweepstakes or contest, and/or redeemed a promotional offer to settle their disputes with General Mills “by informal negotiations or through binding arbitration.”

Although it is uncertain whether such a policy would even be upheld if it were challenged in court, what is clear is that General Mills did not anticipate the negative business consequences brought on by this seemingly innocuous legal policy revision.  Indeed, shortly after the policy change was made public, the New York Times ran an article (entitled “When ‘Liking’ a Brand Online Voids the Right to Sue”, Stephanie Strom, April 16, 2014) questioning the propriety of General Mills’ new policy.  This New York Times article led to a significant consumer backlash against General Mills, which ultimately caused the company to retract its revised policy.  In a blog post entitled “We’ve listened – and we’re changing our legal terms back” General Mills apologized to its customers, stating that: “We’re sorry we even started down this path.  And we do hope you’ll accept our apology.”

Just as General Mills learned, every legal decision must be evaluated from various angles in order to ensure, among other things, that the decision is consistent with your company’s business goals.  It is much better to make this determination at the onset rather than having to backtrack from unexamined decisions that could ultimately cost your company significant money and goodwill down the road.

At Genova Burns, we stand at the intersection of law, government, and business and pride ourselves on always evaluating decisions from numerous perspectives to ensure that our clients receive the highest quality legal advice.  For more information about how Genova Burns can assist your company in achieving its legal, business and political goals, please contact Kathleen Barnett Einhorn, Director of Complex Commercial Litigation.