Explained: Disney’s wrongful death lawsuit and why did the company take a u-turn on its initial move

American media giant Disney landed itself in a soup when it tried to sidestep a wrongful death lawsuit filed against the company’s parks and resorts business using arbitration clauses agreed to by the plaintiff in its streaming division Disney+.

However, the company on Monday withdrew its push for arbitration and agreed to let a court handle the lawsuit following widespread criticism and debate over its action.

Invezz breaks down the sequence of events:

What is the Disney wrongful death lawsuit about?

Earlier, this year, Jeffrey Piccolo filed a wrongful death lawsuit against Disney after his wife, Dr. Kanokporn Tangsuan, died in 2023 from an allergic reaction after dining at Raglan Road. Raglan Road is a restaurant in Disney Springs-a complex within the Walt Disney World Resort in Florida.

Dr. Tangsuan had severe allergies to dairy and nuts and Piccolo’s has argued that they chose the pub because an online Disney map indicated the restaurant accommodated people with allergies. 

The widower has submitted that despite assurances from the waiter, his wife collapsed later that day and died from anaphylaxis due to dairy and nuts.

Piccolo has argued that the wait staff was negligent and has sued Disney for damages exceeding more than $50,000 to cover medical expenses, funeral costs and medical suffering. 

How did Disney react?

In an unexpected move that earned the company much backlash online, Disney pulled out clauses mentioned in subsription for Disney+ which Piccolo had signed up for way back in 2019, and tickets to EPCOT, to push for an out of court settlement. 

In a legal filing, lawyers for Walt Disney Parks and Resorts said the matter should be referred to an outside arbitrator because when Piccolo signed up for a Disney+ account in 2019 and when he bought tickets to EPCOT on the Disney website in 2023, he agreed to arbitrate all disputes against the company.

Disney also noted that the restaurant, Raglan Road, an Irish pub in the Disney Springs section of its Orlando resort, was independently owned and operated.

The company defended itself so:

“We are deeply saddened by the family’s loss and understand their grief. Given that this restaurant is neither owned nor operated by Disney, we are merely defending ourselves against the plaintiff’s attorney’s attempt to include us in their lawsuit against the restaurant.”

Piccolo’s lawyers criticized Disney’s attempt to dismiss the case, calling it “surreal.” They argued that Disney is essentially trying to prevent its 150 million Disney+ subscribers from ever pursuing wrongful death claims in court, even when the case is unrelated to Disney+.

How did social media react?

Social media erupted with criticism after Disney attempted to dismiss the lawsuit using the Disney+ arbitration clause.

Many users found the argument that subscribing to Disney+ could waive rights to sue over unrelated incidents “absurd” and “callous.”

The backlash painted Disney as prioritizing legal loopholes over compassion for the grieving family, leading to widespread negative sentiment online.

Examples of corporates using arbitration clauses to tackle lawsuits

Legal experts, on the other hand, said it was not unusual for companies to use a tactic similar to Disney’s—arguing that arbitration clauses can extend to any affiliate within the company’s corporate structure and cover any claims, even those unrelated to the original transaction that led to the arbitration agreement.

In a wrongful death lawsuit brought against Airbnb by the estate of a man who was killed at one of its rentals, the company pointed to the arbitration clause in the agreement the man had entered when signing up for an Airbnb account, even though the deceased man had not rented the property where his death had occurred.

The Nevada Supreme Court ruling in favor of Airbnb cited a unanimous 2018 ruling by the US Supreme Court that said courts cannot decide whether an arbitration clause covers a dispute if the contract language says an arbiter must also resolve any such question.

Another corporate giant- Walmart is also known to have successfully used an arbitration clause to push back on a civil rights lawsuit it faced.

A Black family had sued Walmart after one of its employees falsely and without evidence accused the family of shoplifting, creating an embarrassing scene in front of the family’s neighbors and classmates.

But because, months prior, one member of the family had signed a contract containing an arbitration clause in order to drive for Walmart’s grocery delivery service, a federal judge ruled that civil rights lawsuit could not move forward in her court, and most go to arbitration instead.

Her ruling cited the precedent from the 2019 Supreme Court class-action case, known as Lamps Plus, Inc. v. Varela.

Disney finally withdraws push for arbitration

On Monday, Disney said it had decided to let a court handle the lawsuit.

Josh D’Amaro, chairman of Disney Experiences, stated in an emailed response to Reuters, “We believe this situation deserves a compassionate approach to quickly resolve the matter for the grieving family.

Therefore, we have chosen to forgo our arbitration rights and allow the case to proceed in court.”

Brian R. Denney, a lawyer for Mr. Piccolo, however, said in a statement that Disney’s attempt to prevent the case from going to trial should be “looked at with skepticism.”

“Although Disney has withdrawn its motion, the arbitration clauses they relied upon in their motion still exist on their various platforms,” Denney said. “This potentially puts other people injured by Disney’s negligence at risk of facing a similar legal challenge.”

Matt Adler, a partner at Troutman Pepper who regularly represents clients in arbitration, said in a New York Times report that it was very uncommon for a party to withdraw its request for arbitration instead of letting a judge decide. Arbitration agreements are usually upheld, he said, though this one was “a bit of a stretch.”

“My guess is that they decided that the harm they were suffering in the public eye was greater than the risk of losing money on this case,” said Adler, who does not represent Disney.

Significance of the lawsuit and Disney’s handling of it

While the fate of the lawsuit now will be decided in a court of law, the Disney wrongful death lawsuit is significant for several reasons, not least because it highlights how corporates use arbitration clauses to slip away from legal action unrelated to the original agreement.

The developments have also brought to fore consumer awareness regarding the fine print in agreements that they generally ignore as evidently it has the potential to change the course of a future action against the company.

It also highlights issues around corporate responsibility and accountability, particularly in how companies handle disputes and the rights of individuals to seek justice through the courts.