Mass Arbitration Developments

Mass arbitrations are where a plaintiff’s firm brings thousands of identical claims against a business. It has increasingly been relied upon by plaintiff lawyers in the past few years.

For several decades, businesses have commonly included arbitration clauses with class action waivers in their consumer and employment agreements. This prevented the business from facing class actions. Supported by a 2011 Supreme Court decision that struck down a California law banning class action waivers in consumer contracts, a business could require disputes to be resolved on an individual basis.

Most arbitral bodies use a similar fee structure for consumer and employment cases. According to the rules of both organizations, a consumer or employee filing a case does not pay the entire initial filing fee; instead, the business must cover most of it, which can be a few thousand dollars per case. This fee is due before any arbitrator makes a decision. Fees are also charged for arbitrator appointments and other case management tasks beyond the initial filing.

Without the advantage of the class action process, plaintiffs’ lawyers started using another tactic to threaten significant liability: filing thousands of arbitration claims against the same company. In these mass arbitrations, the business could face millions of dollars in arbitration filing fees. Additionally, the plaintiffs’ lawyer would highlight the arbitration clause drafted by the business as preventing a class action or other consolidation method that could reduce the number of cases and associated fees.

This mass arbitration technique first emerged in 2018 and 2019 for wage-and-hour claims. After COVID, mass arbitrations have broadened to cover other claims, especially consumer privacy and data breach laws. These federal and state privacy laws are desirable for mass arbitrations because they often (i) include a private right of action, (ii) offer statutory liquidated damages without needing to prove actual damages, and (iii) can be plausibly claimed in everyday consumer-business interactions that are the same for thousands of claimants.

In response to these large-scale arbitrations, JAMS and AAA have begun to establish rules specific to mass arbitrations, defined as arbitrations involving a certain number of demands against one respondent filed by the same law firm or coordinating law firms. (75 JAMS, 25 for AAA.) However, the underlying fee structure still allows plaintiffs to exert significant leverage against businesses by filing a mass arbitration.

In 2025, AAA published statistics on the use of mass arbitration and the extent of mass arbitrations. There were 92 mass arbitrations submitted to the AAA in 2024, involving approximately 280,000 individual claims. Of the mass arbitration cases that closed in 2024, only 1% of consumer cases and 2% of employment cases resulted in awards. The majority of both consumer (59%) and employment (77%) cases ended with settlements, although 30% of consumer cases were dismissed. In cases resulting in an award in favor of consumers, the average award in consumer arbitrations was $10,131.

AAA also released updated data through Q2 of 2025 on closed consumer and employment mass arbitrations. In the first half of 2025, the AAA closed 26 mass arbitrations involving 37,648 claimants. These mass arbitrations were filed against businesses across various sectors. None of the 26 mass arbitrations were decided on the merits; instead, they were settled, withdrawn, or administratively dismissed (possibly due to non-payment of mass arbitration fees). 

This data indicates that plaintiff firms have initiated arbitrations on behalf of hundreds or thousands of claimants without expecting to see them through to completion. However, in 2026, these firms might struggle to persuade businesses to participate in mass arbitration because recent case law developments have not consistently favored plaintiffs.

This September, the United States Court of Appeals for the Second Circuit (New York) ruled that the petitioners could invoke the Federal Arbitration Act (FAA) to compel arbitration because a business failed to pay arbitration fees.

In that case, the district court ordered Twitter to pay over ten million dollars in a mass employment arbitration. Reversing the decision, the Second Circuit stated that the payment of fees is a procedural issue that must be determined and enforced by an arbitration panel, not a failure, neglect, or refusal to arbitrate necessary to grant a petition under the FAA. Procedural issues beyond arbitrability, including which party must pay arbitration fees, are for the arbitrator, not the court, to decide. The Second Circuit joined a growing number of federal circuits with similar rulings.

Even so, companies should carefully review the language in their arbitration agreements to minimize their potential exposure to mass arbitrations—a few decisions in 2025 addressed techniques for case consolidation and bellwether proceedings.

The Ninth Circuit also approved an arbitral body’s use of a technique that significantly reduced the fees associated with a mass arbitration filing.

In that case, over 100,000 identical arbitration claims were filed by a single law firm in a mass arbitration under the Video Privacy Protection Act and a similar California law. The filing fees alone potentially exceeded $12 million. The defendant’s terms of service stated that JAMS arbitration rules would govern all claims and that class action claims were not permitted.

JAMS decided to consolidate the claims into a single arbitration. The claimants delayed the proceedings by rejecting numerous potential arbitrators. Eventually, a claimant filed a motion to compel individual arbitration. The Ninth Circuit affirmed a lower court’s decision denying this motion.

The court found that the defendant had not refused or failed to arbitrate in a manner that would justify a motion to compel under the FAA. The court reasoned that JAMS consolidated the claims and that the defendant was willing to participate in arbitration throughout the process. Further, the court determined that the terms of service, which barred class action claims, did not necessarily prevent consolidation. Class arbitration differs from consolidated arbitration, and the terms did not explicitly state that only individual arbitration was permitted. The court also concluded that repeatedly disqualifying potential arbitrators indicated that the plaintiff’s true motive was to leverage the potentially high procedural fees to pressure the defendant into settling.

The court rejected the argument that the consolidation was a gateway question of arbitrability that needed to be decided by a court. The FAA only requires courts to address gateway issues when the scope or validity of an arbitration agreement is at stake. Since both parties agreed that the agreement covered their dispute, the court was not required to second-guess JAMS on the consolidation question.

The decision demonstrates that businesses can participate in mass arbitration without facing significant upfront fees. It also indicates that courts may recognize that plaintiffs are using mass arbitration to pressure for settlements rather than genuinely seeking to have their claims resolved on their merits.

One way to reduce arbitration fees in a mass arbitration is through a bellwether process. In this process, once a set number of claims is reached, all claimants are prevented from filing further claims and from paying arbitration fees. Instead, a select group of claimants moves forward to the merits, and the outcomes of these bellwether trials help guide negotiations for all claimants.

Plaintiff lawyers argue that bellwether provisions are unenforceable because any individual claimant might have to wait until the selected bellwethers are resolved. Several courts have explicitly rejected that argument. 

A couple of other courts have held that certain features of specific bellwether provisions may be unconscionable.

In 2024, both the AAA and JAMS issued new mass arbitration rules. Rule revisions continued this year. In the spring, AAA released significant updates to its Employment/Workplace Arbitration Rules and its Consumer Arbitration Rules. These rules became effective on May 1, 2025, and businesses should be aware of them before choosing AAA as an arbitration provider. 

AAA has decided that virtual hearings are now the default. Both the consumer and employment rules now require hearings to be conducted virtually. The only exceptions are when both parties agree or the arbitrator orders otherwise upon an application by one of the parties.

Under both sets of rules, AAA arbitrators may now sanction parties for failing to comply with the rules or with an order.

Arbitrators under the consumer rules now also have the authority to order depositions, interrogatories, and document production. Although similar language was included in the previous employment rules, those rules did not specifically mention discovery; they referred only to the potential exchange of information among the parties.

The previous employment and consumer rules permitted filing a dispositive motion if the arbitrator found that the moving party had established substantial cause, showing that the motion was likely to succeed and to dispose of or narrow the issues in the case. The new rules, however, also require the arbitrator to consider the time and cost of briefing a dispositive motion when deciding whether to allow it. 

The new consumer rules allow for an AAA-administered appeal of a decision if the process complies with the Consumer Due Process Protocol, and the filing fees and arbitrator compensation for the appellate arbitration are paid and allocated in accordance with the Consumer Arbitration Fee Schedule.

The new rules specify that consumer claims under $25,000 must be resolved through documents-only arbitration unless a party requests a hearing and the arbitrator determines that a hearing is necessary.

The new rules give AAA discretion to treat multiple claims filed by the same party arising from the same contract as a single case and to require that claims from separate contracts be filed and managed as individual cases. The AAA makes the initial decision on these matters, which is then subject to the arbitrator’s final ruling.