The American Arbitration Association (“AAA”) recently published a set of modified Mass Arbitration Supplementary Rules and a new Consumer Mass Arbitration and Mediation Fee Schedule, both effective January 15, 2024.  The modified rules and fee schedule aim to address the increasingly prevalent tactic of plaintiffs’ firms launching mass arbitration campaigns against defendants with arbitration agreements in their consumer contracts.

The AAA defines a mass arbitration as 25 or more similar demands for arbitrations filed against or on behalf of the same party or related parties where representation of all parties is consistent or coordinated across arbitrations.  The modified rules implement the following key changes:

  • Flat initiation fee.  Whereas the previous AAA mass arbitration rules and fee schedule required defendants to pay hundreds of dollars per case, plus thousands in case management and hearing fees, before even appointing an arbitrator, the modified rules and fee schedule require only a flat initiation fee of $8,125 to appoint a Process Arbitrator who can determine procedural issues – including, for example, disputes over conditions precedent to arbitration, the scope of the demand(s), the selection process for Merits Arbitrator(s), and case administration issues.  Arbitrations that proceed to the merits remain subject to the same fee schedule as before. 
  • Affirmation requirement.  The modified rules require plaintiffs’ lawyers to affirm in each filing that the information provided for each individual arbitration is true and correct to the best of the lawyer’s knowledge.  While it remains uncertain how and to what extent the AAA will give teeth to this requirement, this may have some deterrence effect on the filing of boilerplate (and often inaccurate) claims asserted in mass arbitrations.
  • AAA’s discretion to appoint a mediator.  Under the modified rules, even when one or both parties opt out of mediation, the AAA may, in its sole discretion, appoint a mediator to facilitate discussions between them on processes to improve efficiency.  This change may help to facilitate voluntary use of streamlining procedures like bellwether proceedings in mass arbitrations.

These modified rules and fees have been in place for only a few months, so it remains to be seen whether and what effect they will have on mass arbitration efforts, but companies should keep these provisions in mind when selecting arbitration providers and evaluating potential strategies to mitigate the risk of mass arbitrations.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Kaixin Fan Kaixin Fan

Kaixin Fan is a member of the Litigation and Investigation and the Food, Drug, and Device Practice Groups. She has advised clients in various high-stakes disputes, including clients in the food, beverage, and consumer packaged goods industries in matters implicating consumer protection statutes.

Kaixin Fan is a member of the Litigation and Investigation and the Food, Drug, and Device Practice Groups. She has advised clients in various high-stakes disputes, including clients in the food, beverage, and consumer packaged goods industries in matters implicating consumer protection statutes. Kaixin also has experience in advising clients in complex investigations and counseling life sciences clients on FDA regulatory matters.

Kaixin maintains an active pro bono practice, with experience in the areas of housing, reproductive rights, and gender-based violence.

Photo of Kathryn Cahoy Kathryn Cahoy

Kate Cahoy uses her substantial class action experience to help clients develop strategic and innovative solutions to their most challenging litigation matters. She specializes in defending clients in complex, high-stakes class action disputes involving privacy, antitrust, and consumer protection claims and has achieved…

Kate Cahoy uses her substantial class action experience to help clients develop strategic and innovative solutions to their most challenging litigation matters. She specializes in defending clients in complex, high-stakes class action disputes involving privacy, antitrust, and consumer protection claims and has achieved significant victories for clients in the technology, entertainment, consumer product, and financial services industries. In addition, Kate has substantial experience litigating cases brought under California’s Section 17200 and other consumer protection, competition, and privacy laws, including the Sherman Act, California Consumer Privacy Act (CCPA), California Invasion of Privacy Act (CIPA), Wiretap Act, Stored Communications Act, Children’s Online Privacy Protection Act (COPPA), Video Privacy Protection Act (VPPA), and common law and constitutional rights of privacy, among others.

Photo of Kanu Song Kanu Song

Kanu Song is a litigator specializing in complex commercial disputes, including intellectual property litigation, class actions, and claims brought under consumer protection and competition laws, such as California’s Unfair Competition Law (B. & P.C. § 17200).

She works with clients in the technology…

Kanu Song is a litigator specializing in complex commercial disputes, including intellectual property litigation, class actions, and claims brought under consumer protection and competition laws, such as California’s Unfair Competition Law (B. & P.C. § 17200).

She works with clients in the technology, entertainment, consumer brands, food, drug, and cosmetic industries through all stages of litigation, with a strong track record of success on early resolution and dispositive motions.