Dracca's Arbitration Clause and Product Safety Failures

Arbitration Clause Enforceability and Case Law

Despite Dracca's claims that the presence of an arbitration clause on page 5 of its 16-page contract with consumers makes all lawsuits null and void, recent case law suggests there is considerable room for dispute regarding this statement for its Spanish-speaking consumers and all consumers who purchased the offending product. In a recent Florida case, Roberto Basulto, et al. v. Hialeah Automotive, etc., et al., the court found that arbitration clauses "contained in various agreements signed by the Spanish-speaking petitioners relating to their purchase of a Dodge Caravan from a car dealership were unenforceable." The Florida Supreme Court upheld the trial court's ruling that the arbitration clauses could not be enforced because they were conflicting and unconscionable, particularly given the low level of English literacy of the consumers (Oppenheimer 2014).

Arbitration clauses must be consistent, contain all essential terms, and above all be fair, the court ruled. The Supreme Court of New Jersey similarly "refused to enforce a lawyer-client arbitration provision because it failed to include sufficiently detailed warnings to the client" in Atalese v. U.S. Legal Services Group, L.P (Ciolino 2014). The agreement constructed by Dracca met none of the above-cited standards in either of these states, suggesting that case law is trending toward protecting consumer rights against companies that attempt to use complex legal language to shield themselves from legitimate litigation.

The Spanish-speaking consumers will likely prevail if this case goes to court. From Dracca's perspective, offering a financial settlement before the bad publicity a trial would no doubt generate would be wise. From an ethical standpoint, given that real harms were done to consumers, using the arbitration clause to escape this responsibility is morally as well as legally questionable. The harms done to consumers were considerable, and a trial might very well be the most appropriate forum to decide the case.

Ethical Failures and Corporate Responsibility

Dracca's approach overall to the litigation process is morally inexcusable. In another instance, when children were harmed by the product (Pack-n-Play clasps), rather than being forthright about the fact that tampering by an employee was the reason for the issue, Dracca instead attempted to conceal this fact. When such unethical behavior is revealed, particularly by a company responsible for personal care and child products, no one will be willing to buy from the company again if there is a cover-up.

Dracca also has a moral obligation to ensure that consumers remain safe and are not hurt by its products. Although Dracca did not order the employee to tamper with the clasps, it is still responsible for her actions because she was an employee of the company when the tampering occurred and was working on company property. Even though her actions were personally motivated, Dracca is still responsible for instituting safety procedures to screen for such mischief. The fact that the defective clasps passed safety inspection itself highlights Dracca's legal and ethical culpability.

A company that manufactures products for small children must hold itself to a higher—not a lower—ethical standard than that dictated by the law. By attempting to conceal the tampering rather than address it transparently, Dracca has demonstrated a fundamental failure of corporate responsibility. This approach damages consumer trust far more severely than acknowledging the problem and taking corrective action would have done.