The Dell workaround

A Dell customer, unhappy with the company’s response to his complaints, sued the company. However, rather than having the papers delivered to the company headquarters, he had them delivered to a Dell Kiosk in a shopping mall. When the court date came, Dell wasn’t represented and the customer won the case.

What’s particularly interesting with this, is a constrast between it and a case in Illinois where Dell was being sued in a class action lawsuit. Purchasers of Dell computers sued the company because it claimed a specific chip was the ‘fastest’, and they disputed this claim after getting their computers.

In the Illinois case, Dell filed a motion to stay the proceedings based on the fact that the Terms and Conditions of the computer sale contained an arbitration clause. Since the buyers completed the purchase, the buyers agreed to the T & C, including the use of arbitration in any and all disputes between them and the company.

The lower courts denied the motion, but Dell won on appeal and the case was remanded to arbitration. (See more details in the Internet Cases weblog.)

On appeal, the court held that the plaintiffs were properly made aware of the terms and conditions. The hyperlinks appearing on the web pages made the pages “the same as a multipage written paper contract. The blue hyperlink simply takes a person to another page of the contract, similar to turning the page of a written paper contract.” The contrasting blue color of the hyperlink served to make it conspicuous. Finally, the court noted that because the plaintiffs were purchasing computers online, they were not novices, and should have known that more information would have been available by clicking on the link.


If the customer in the first story had filed with the agent on record for the company in his state, his lawsuit would have been squashed, and he would have been forced into arbitration.

Why is this not necessarily in the best interest of the customer? Why did the plaintiffs in the Illinois case fight this move to arbitration? Let’s just say that little people seldom win against Big People in arbitration. In a story the Washington Post ran in 2000, it found that for the National Arbitration Forum, one corporate client won over individuals in arbitration, 99.6% of the time. More importantly, there is no transparency in arbitration: most of the actions are secret; whatever rights we have during the arbitration process are given at the discretion of the arbitration company and not mandated by law; and the decisions lack verifiability. It has, however, become a billion dollar industry, and new darling of the corporates.

Personally, I’ve had nothing but good service from Dell, so I’m not picking on the company just to pick on the company. However, before you make your online purchases this year, read the Terms and Conditions and look for an arbitration clause. If you find one, consider if you really want to enter into an agreement to arbitrate if a problem occurs.

Oh, and I’ve checked: so far as I can see, Apple has not inserted a mandatory/binding arbitration clause into it’s Terms and Conditions.

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