Mass Arbitration Rules Developments & Trends

Businesses have to face the fact that mass arbitrations of consumer claims are quickly becoming the norm. This trend is largely the outgrowth of efforts to avoid the costs of class action litigation. However, this new form of dispute resolution brings its own problems, which are being addressed.

JAMS and AAA issued rule changes and updated their fee schedules in 2024 to address mass arbitration and mitigate some of the cost and administrative burdens mass filings impose on businesses.

Rule Changes

AAA’s revisions to its Consumer Arbitration Rules illustrate that point. They have significant implications for mass proceedings and give the AAA greater flexibility to manage large volumes of cases. A new consolidation provision allows the AAA to treat multiple claims by the same party under the same contract as a single administered case. The rules also make hearings virtual by default.

Other rule changes could increase a company’s expense of defending against mass filings. Now, an arbitrator must consider the time and cost of briefing a dispositive motion when deciding whether to allow any such motion. Dispositive motions are a critical tool for early dismissal of claims that fail threshold tests. This additional constraint may make arbitrators more hesitant to permit such motions, potentially limiting a company’s ability to efficiently cull claims without merit from a large docket of related arbitrations.

Judicial Uncertainty

Around the same time, courts have begun to scrutinize mass arbitration procedures and how provider protocols function in practice. The Ninth Circuit has ruled that a provider’s mass-arbitration protocol was unconscionable. More recent decisions have rejected unconscionability challenges to JAMS and AAA rules affecting the coordination of mass filings within those frameworks.

Mass arbitration is now a key consideration of litigation strategies for companies. When drafting consumer arbitration agreements and choosing ADR providers, companies should evaluate how rule changes interact with existing contracts and influence responses to mass arbitrations