Banana Republic's Arbitration Clause Waiver: Enlightened consumer measure or lawsuit defense?

So today, I bought a new winter coat from Banana Republic. To save 15 percent, I agreed to sign up for a "Bananacard." Being a good consumer, I read the fine print before signing. Much to my surprise, the application form noted that the agreement includes an arbitration provision, but that I could decline to accept it by simply following the instructions in the agreement.

Looking for those instructions, I again learned that an arbitration provision would limit my right "to litigate in court or have a jury trial, discovery and appeal rights and the right to participate as a representative or member of a class action." The application and initial disclosure form didn't actually explain how to waive the provision, but I later looked online and learned that I have  60 days to send a written request via certified mail to the company to ask for a waiver.

I thought this was all worth noting because I have never seen a credit card agreement offer an opt-out option for the arbitration provision. I'm wondering why the company is being so magnanimous (to the extent that's possible in a credit card agreement that gives them the right to change the terms at any time without my consent). I suspect it's just in there as defense from future lawsuits and that it has little impact on the company because no one actually takes the offer. I guess I'll find out if they cancel my account after I send in my request!

Anyway, attorneys out there: what do you make of this?

Comments

[Pedro Alberto Oliveira]

Stephanie:

Your posting about the opt-out option for the arbitration provisionis is very interesting.

I agree with your conclusion. I believe that the purpose of such opt-out option is an earlier attempt of "Bananacard" to make the arbitral clause enforceable in the future against those non-opting-out clients challenging the clause's validity. Something like... "you did not opted-out, so you accepted it".

Pedro

[Jack]

I agree that it sounds like an attempt to make sure that the arbitration agreement is enforceable in the event of litigation. One possible defense to an arbitration agreement, although not usually successful, is that the consumer did not have a meaningful choice in the matter. They could either sign the arbitration agreement or decline to make the particular transaction. The cases, at least in my state, look at whether or not the consumer/plaintiff could have obtained similar goods or services in the marketplace without signing the arbitration agreement. (So even if BR made you sign one you could have received a credit card from Black Market that did not require an arbitration agreement.)
This situation with Banana Republic is somewhat different but BR will be able to later argue that the plaintiff had a choice in agreeing to arbitration and that the arbitration agreement should be enforced and not be thrown out as a contract of adhesion.
That being said, I have never dealt with Banana Republic (either legally or as a consumer) and can only speculate.

[JMG]

Or they are headquartered in a state that requires an opt-out and they just decided to make it standard for all (knowing, as you say, that most of us can't and won't try to read 6 point type even if our lives depend on it).