When Arbitration Clauses Really Bug You

Insect infestations have led to some first-rate judicial decisions in this country, so it seems appropriate that our first entry in the "clause celebre" contest should be about bugs. This comes courtesy of Terry Carter at the ABA Journal, who wrote a story a few years back about some savvy Alabama residents who fended off an arbitration clause in an exterminator's contract. Here's an excerpt:

Homeowners Robert and Margo Rebar bought their stately suburban home in 2000....Cook's Pest Control certified that the house once had a termite infestation, but it was termite-free at sale. The couple soon learned the home they purchased from a lawyer had extensive termite damage. Cook's, which had been under contract for many years to inspect the home, added a binding arbitration clause to the agreement when it transferred to the Rebars.

The Rebars apparently went to a Birmingham lawyer [Thomas Campbell] known for tangling with termite companies before sending in their renewal. It was after that consultation that they put the addendum, chock-full of legalese, into the envelope with their check. The addendum stated in part: 'Notwithstanding prior amendments, nothing herein shall limit Customer's right to seek court enforcement (including injunctive or class relief in appropriate cases) nor shall anything herein abrogate Customer's right to trial by jury. Arbitration shall not be required for any prior or future dealings between Cook's and Customer.'

The Alabama supreme court ruled that when the bug company cashed the Rebars' check, it accepted the addendum, and the court allowed them to sue over the termite damage...