How Corporations Use Forced Arbitration to Block Consumer Justice

Today, I’m talking with Brendan Ballou, founder of the Public Integrity Project and author of When Companies Run the Courts, a new book examining the rise of forced arbitration in corporate terms of service agreements. Ballou previously appeared on the show to discuss his book Plunder, which explored the impact of private equity on American life. Forced arbitration has become pervasive in modern consumer and employment contracts.

Deep within the terms of service for nearly every product or service purchased or used lies a clause: by agreeing to the terms, consumers waive their right to join class-action lawsuits if issues arise. Instead, disputes must be resolved through private arbitration. This practice has drawn scrutiny in high-profile cases, including one involving a man whose wife died from an allergic reaction after dining at a Disney World restaurant. When the widower sued, Disney attempted to compel arbitration, arguing that his earlier agreement to Disney+’s terms of service waived his right to sue. After significant public backlash, Disney reversed course. However, thousands of lower-profile cases each year leave consumers and employees without legal recourse.

Ballou’s book explores the origins of this system—including the role of former Supreme Court Justice Antonin Scalia—and examines potential solutions. The Public Integrity Project, which Ballou leads, is also pursuing legal action against Paramount, alleging improper quid pro quo with the Trump administration during the Warner Bros. acquisition. We began the conversation there.

Brendan Ballou on Forced Arbitration and Corporate Power

This interview has been lightly edited for length and clarity.

Brendan Ballou: Good to be here. I’m excited to talk to you.

The last time Ballou appeared on the show, he was introduced as a former Department of Justice prosecutor in the Antitrust Division. That conversation centered on his book Plunder, which analyzed the influence of private equity in American markets. His new book, When Companies Run the Courts, shifts focus to the legal system’s growing reliance on arbitration—a topic Ballou describes as deeply concerning for consumer rights.

Ballou explains that forced arbitration clauses are now embedded in the fine print of countless consumer and employment contracts. These clauses require individuals to resolve disputes through private arbitration rather than in court, often stripping them of the ability to join class-action lawsuits. The result, he argues, is a system that overwhelmingly favors corporations over individuals.

How Forced Arbitration Became the Norm

Ballou traces the rise of forced arbitration to a series of legal decisions, including those influenced by former Supreme Court Justice Antonin Scalia. He notes that the Federal Arbitration Act, originally intended to facilitate efficient dispute resolution, has been reinterpreted to expand corporate power. Today, arbitration clauses are nearly unavoidable in consumer contracts, from credit cards to streaming services.

One of the most egregious examples Ballou highlights involves a man whose wife died due to an allergic reaction after dining at a Disney World restaurant. When the widower sued, Disney attempted to compel arbitration, citing a clause from his long-ago Disney+ subscription agreement. While public outcry forced Disney to drop the arbitration demand, Ballou emphasizes that such cases are far from isolated. Thousands of similar disputes occur annually, often without public awareness.

Legal Action Against Paramount Over Warner Bros. Merger

In addition to his work on arbitration, Ballou’s Public Integrity Project has filed a lawsuit against Paramount, alleging that the company engaged in improper quid pro quo with the Trump administration during its acquisition of Warner Bros. The lawsuit claims that the merger, which was approved in 2022, involved undue political influence, potentially violating antitrust laws.

Ballou explains that the case underscores broader concerns about corporate accountability and the erosion of legal protections for consumers and employees. He argues that forced arbitration and regulatory loopholes create an environment where corporations can operate with minimal oversight, often at the expense of individual rights.

What’s Next for Forced Arbitration Reform?

Ballou’s book not only dissects the problem but also proposes solutions. He advocates for legislative and regulatory changes to curb the overuse of arbitration clauses, including stricter enforcement of the Federal Arbitration Act and greater transparency in corporate contracts. He also calls for public awareness campaigns to educate consumers about their rights and the hidden clauses in terms of service agreements.

The Public Integrity Project continues to challenge corporate practices that undermine legal recourse for individuals. Ballou emphasizes that reform is possible but requires collective action from policymakers, advocacy groups, and consumers alike.