Fine print is important. While lawyers often get paid to read the fine print, it is important that clients — individuals and businesses — read it, too. Just as important are the documents referred to or incorporated by reference into the fine print — or what I call the “finer print.”

Consumers and businesses almost always fail to read the finer print, and they often learn about it only after hiring an attorney to help with a claim. The case of Bernal v. Kohl’s Corp., 749 F. Supp. 3d 971 (E.D. Wis. 2024), aff’d, 174 F.4th 573 (7th Cir. 2026), provides a textbook example of the perils facing a consumer who fails to search for and read the finer print. 

In Bernal, the plaintiffs, or more specifically, the petitioners, are four individuals who live in California and have purchased products from the kohls.com website. They allege that Kohl’s engaged in false and deceptive marketing practices to induce them to purchase products. 

When customers purchase on kohls.com, they agree to certain “Terms & Conditions,” which are typically contained in the fine print. These terms include a class-action waiver, as well as binding arbitration of “all disputes.” 

Under the applicable Terms & Conditions, the parties — the petitioners and Kohl’s — agreed to arbitrate their disputes before the American Arbitration Association (AAA), under its applicable Consumer Arbitration Rules. Bernal, 749 F. Supp. 3d at 973. Most consumers do not know about the Consumer Arbitration Rules — their existence or their contents. These rules are part of the finer print.

The applicable Consumer Rules

The petitioners complied with the Terms & Conditions, serving Kohl’s with a Notice of Dispute and subsequently demanding arbitration under the AAA’s Consumer Rules. The petitioners also paid the appropriate AAA filing fees. In response, the AAA sent the parties a letter stating that, to proceed, Kohl’s must register the arbitration agreement naming the AAA as the arbitral forum on its Consumer Clause Registry and pay the associated registration fees. The AAA’s letter further stated that:

“Upon completion of the registration process and confirmation from the AAA that Kohl’s is now active on the Consumer Clause Registry, along with the parties’ completion of the AAA filing requirements, the AAA will begin to proceed with the administration of these cases. ... If the business does not comply, absent a court order, the AAA will be unable to provide arbitration administration to the parties to assist them in resolving their disputes.”

Id. Kohl’s subsequently informed the AAA that it would not register its consumer arbitration agreement on the Consumer Clause Registry. As a result, the AAA informed the parties that due to Kohl’s refusal to register the arbitration agreement and pay the fees associated with registration, the AAA “decline[d] to administer the cases.” Id. The AAA closed its file and refunded all fees the petitioners paid. 

 Stymied by Kohl’s refusal to register its consumer arbitration agreement, the petitioners went to federal district court in the Eastern District of Wisconsin seeking an order compelling Kohl’s to submit to arbitration before the AAA and pay the associated fees.

The district court denied the petitioners’ motion. See Bernal, 749 F. Supp. 3d at 973. The court found that the parties had a valid agreement to arbitrate, the issue of arbitrability was delegated to the arbitrator, and procedural issues were presumptively for an arbitrator, not a judge. Id. at 975. Finding that the parties and AAA acted in accordance with the applicable AAA rules, the court would not get involved and compel Kohl’s to arbitrate. 

The district court noted that the AAA rules also provide, “If the AAA declines to administer a case due to the business’s non-compliance with this registration requirement, the parties may choose to submit their dispute to the appropriate court.” Id. at 976. Thus, the consumer is not left without recourse. As the district court stated, “petitioners are free to pursue their substantive claims in court.” Id. 

This holding was consistent with a prior ruling by the United States Court of Appeals for the Seventh Circuit, Wallrich v. Samsung Elecs. Am., Inc., 106 F.4th 609 (7th Cir. 2024).

Undeterred, the petitioners appealed as of right to the Seventh Circuit. In a 2-1 decision, the appeals court affirmed the district court. See Bernal, 174 F.4th at 575. The majority decision summed up the court’s holding as follows:

“At bottom, unless the parties’ agreement provides otherwise, a motion to compel arbitration is not a mechanism by which a party may seek court intervention to resolve intra-arbitration procedural disputes properly delegated to arbitrators to handle under [the Federal Arbitration Act]. Instead, ‘parties to an arbitration contract’ should ‘expect a forum-based decisionmaker to decide forum-specific procedural gateway matters.’ 

“Accordingly, we conclude Kohl’s failure to register its agreement with the AAA was properly before the AAA to consider in line with its rules. Its exercise of discretion in closing the Petitioner’s cases flowed directly from the parties’ agreement granting AAA that power, leaving nothing for the district court to compel under the Federal Arbitration Act.”

Id. at 581-82 (citations omitted).

Could a party change its mind?

The court of appeals was not unanimous in Bernal. Circuit Judge Joshua Kolar wrote a cogent dissent that, quite frankly, other circuit courts around the country may follow. See Id. at 582-87 (Kolar, J., dissenting). 

While Judge Kolar agreed with the majority that the parties had a valid agreement to arbitrate, he disagreed that arbitration ever took place (since no arbitrator was appointed). Judge Kolar argued that by allowing Kohl’s to decide, unilaterally, not to register its arbitration agreement with the AAA, the court was letting Kohl’s “change its mind” about arbitrating (even though that is what the parties agreed to do). 

The majority held that because the AAA rules were followed, the arbitration process properly ran its course. Judge Kolar felt Kohl’s could strategically prevent the dispute from ever being arbitrated on the merits. “By giving Kohl’s a ticket out of arbitration before the AAA, the majority opinion’s application of [Wallrich] turns the parties’ agreement for ‘bilateral arbitration’ into something akin to a unilateral option for Kohl’s.” Id. at 586. 

Judge Kolar would compel Kohl’s to register its contract so the AAA can administer the disputes and exercise the discretion the parties bargained for. Id. at 587.

Even after facing defeat at the Seventh Circuit, the petitioners made one last effort to get the entire appellate court — all active, sitting judges, as opposed to only a three-judge panel — to hear the case en banc. Petitioners also sought to have the original three-judge panel rehear the case. Since no judge in active service requested a vote on the petition for rehearing and rehearing en banc, and all judges on the original panel voted to deny rehearing, the petition was denied. Bernal v. Kohl’s Corp., No. 24-2806, 2026 WL 2053876 (7th Cir. July 15, 2026).

Lessons learned

What does all this mean for the plumbing engineer or contractor? Whenever you agree to arbitration in any of your contracts, make sure you know and understand the applicable rules. The AAA, for example, has many sets of robust, applicable rules that govern a wide variety of disputes, from construction to commercial to employment to consumer (just to name a few). 

When the parties’ agreement references a set of rules — whether from the AAA or another dispute resolution provider — it is up to the parties themselves to know the rules and what they provide. 

What happens if a commercial party does not register their agreement? What happens if a party does not pay the arbitration fees? What happens if a party ignores the directive of an arbitrator? Answers to these questions and more may be found in the applicable arbitration rules. 

These rules may be incorporated by reference into your agreement, and it is up to you — as a signatory to the agreement — to know the finer print so that you know and appreciate what you are getting yourself into when it comes to arbitrating and waiving your right to a jury trial. 

In the Bernal case, Kohl’s knew exactly what it was doing. It knew the rules and knew that if it did not register its agreement, it could change course and avoid arbitration. This was a business decision by Kohl’s because it understood the relevant arbitration rules and their effect on choosing a forum to resolve disputes.