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Thursday, August 25, 2005

The Commonality of Computers, French Fries and Arbitration

In 2001, McDonald's promoted the sale of its food by sponsoring a "Who Wants to be a Millionaire" game. Plaintiff Linda James purchased an order of french fries; she believed that her fries contained a million dollar prize ticket. When she attempted to redeem the million dollars, McDonald's refused, claiming that it was a "Low-Level Prize Game Card."  Ms. James sued McDonald's and its marketing company.

McDonald's moved to compel Ms. James to arbitrate her claims. The District Court granted the motion. James appealed, and the Seventh Circuit affirmed. The court held that James was bound by the arbitration clause contained in the "Official Rules" of the contest.

James argued that she did not agree to arbitrate because she had not seen the "Official Rules." McDonald's argued that the arbitration clause was made public because the "Official Rules" were posted openly in participating restaurants, and the french fry cartons referred participants to the rules.

Relying on ProCD, 86 F.3d 1447 (7th Cir. 1996) and Hill v. Gateway, 105 F.3d 1147 (7th Cir. 1997), the court held that Ms. James was bound by the arbitration provision even though she had not read it.  Gateway, for example, enforced arbitration clauses against purchasers who had not seen them in the supporting documentation that came with their computers. Following these cases, the Seventh Circuit held:

The situation faced by McDonald's presents an apt comparison [to ProCD and Gateway]. To require McDonald's cashiers to recite to each and every customer the fourteen pages of the Official Rules, and then have each customer sign an agreement to be bound by the rules, would be unreasonable and unworkable. The Official Rules were identified to Ms. James as part of the contest, and that identification is sufficient in this case to apprise her of the contents of the rules.

[Meredith R. Miller]

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Tracked on Sep 2, 2005 7:15:29 AM