Arbitration

Plaintiffs sometimes try to sidestep an arbitration agreement with one company by suing only a second company for interrelated conduct.  Last month, a California federal court applied principles of fairness under the doctrine of “equitable estoppel” to reject this tactic, holding that a software vendor (Twilio) could enforce a plaintiff’s arbitration agreement with a website operator (Keeps) that was not named as a defendant.  Perry-Hudson v. Twilio, Inc., 2024 WL 493333 (N.D. Cal. Dec. 2, 2024).Continue Reading California Federal Court Allows Software Vendor to Enforce Website Operator’s Arbitration Agreement in Privacy Lawsuit

The Court of Appeal for Ontario dismissed Binance’s appeal after a lower court declined to stay a proposed class action and enforce an arbitration agreement contained in Binance’s terms and conditions. The decision carries implications for companies who do retail business or distribute products in multiple jurisdictions, including in Canada.

Background

As a Cayman Islands company, Binance Holdings Limited (“Binance”), together with associated companies, marketed and sold cryptocurrency derivative contracts to Canadian retail investors though the Binance website. In the wake of Binance’s exit from the Ontario market, in June 2022 a proposed class filed an action against Binance in the Superior Court of Justice of Ontario. The proposed class of retail investors argued that Binance distributed securities and investment contracts under Canada’s securities laws, but failed to file or deliver a prospectus required by law.Continue Reading Canadian Appellate Decision Highlights Class Action and Mass Arbitration Risks for Companies in Operating in Multiple Jurisdictions

In a significant decision for businesses who are attempting to revise their consumer arbitration clauses to address the prospect of mass arbitration, the Ninth Circuit affirmed the district court’s denial of Live Nation and Ticketmaster’s motion to compel arbitration, based largely on the content of the mass arbitration provisions of their arbitration agreement.  Heckman v. Live Nation Ent., Inc., – F.4th –, 2024 WL 4586971 (9th Cir. Oct. 28, 2024).  The court concluded that the “dense, convoluted and internally contradictory” arbitration rules cross referenced in Ticketmaster’s arbitration provision, along with other elements of the provision, rendered it unenforceable.  The court also held, on an alternate basis, that the Federal Arbitration Act (FAA) did not even apply to the mass arbitration procedure at issue because it is “not arbitration as envisioned by the FAA.”Continue Reading A Closer Look: Ninth Circuit Holds Arbitration Agreement with Certain Mass Arbitration Protocols Unenforceable

The Third Circuit recently clarified when court-ordered discovery is necessary to determine whether a dispute should be subject to arbitration.  In Young v. Experian Information Solutions Inc., — F.3rd —, 2024 WL 4509767, at *4 (3d Cir. Oct. 17, 2024), plaintiff sued the consumer reporting agency for violations of the Fair Credit Reporting Act after Experian issued an erroneous credit report.  Experian filed a motion to compel arbitration based on a later-signed agreement that plaintiff had with an Experian affiliate.  The district court denied Experian’s motion without prejudice, and granted leave for Experian to re-file a motion to compel arbitration after the parties engaged in limited discovery on the issue of arbitrability.  Experian appealed.Continue Reading A Closer Look:  Third Circuit Clarifies When Court-Ordered Discovery Into Issues of Arbitrability Is Necessary.

A recent Seventh Circuit decision, Wallrich v. Samsung Elecs. Am., Inc., — F.4th —-, 2024 WL 3249646 (7th Cir. July 1, 2024), will be of interest to companies facing mass arbitration demands.Continue Reading Seventh Circuit Reverses Order Compelling Payment of Mass Arbitration Fees

JAMS recently has become the latest arbitral institution to publish rules tailored to the unique issues presented by mass arbitration filings.  Mass arbitration filings have become a popular tactic among plaintiffs’ lawyers and a significant source of potential exposure for companies.

Effective May 1, 2024, parties agreeing to arbitration under the JAMS Rules will be able to opt into the application of the Mass Arbitration Procedures and Guidelines (the “Procedures”) and an accompanying Mass Arbitration Procedures Fee Schedule (“Fee Schedule”) for certain mass filings.  The Procedures and Fee Schedule include features similar to those available under the rules of other arbitral institutions, including the American Arbitration Association (the “AAA”) and National Arbitration and Mediation, including the designation of a Process Administrator to hear and determine preliminary and administrative matters in a more streamlined and cost-efficient manner.  For JAMS to assign a Process Administrator, the parties must pay a flat fee of $7,500, at least $5,000 of which shall be paid by the business in consumer mass arbitrations.

We previously discussed here the AAA’s mass arbitration procedures, which were last updated on April 1.  The Procedures adopted by JAMS differ from the AAA’s current mass arbitration procedures in several notable ways, including those summarized in the table below.Continue Reading JAMS Implements New Procedures for Mass Arbitrations

On Tuesday May 16th, the U.S. Supreme Court ruled that a federal district court does not have discretion to dismiss a case where all claims are subject to arbitration and a party has requested a stay. This resolves a long-standing circuit split. Continue Reading Supreme Court Says Courts Cannot Dismiss Claims Pending Arbitration When Stay is Requested

Last week, a divided Second Circuit panel affirmed a district court ruling denying a motion to compel arbitration of a putative class action seeking classwide equitable remedies under ERISA for alleged mismanagement of an employee stock ownership plan.  The Second Circuit found the defined contribution plan’s mandatory arbitration clause unenforceable because it limited plaintiff’s ability to assert a claim that would result in any relief other than individual relief, and specifically prevented him from pursuing the plan-wide remedy authorized by ERISA Section 502(a)(2).  The Court’s decision extends the “effective vindication exception” and raises questions about the extent to which plans can force individual arbitration of ERISA claims that apply to an entire plan.  

In Cedeno v. Sasson, 2024 WL 1895053 (2d Cir. May 1, 2024), the plaintiff asserted claims under ERISA Sections 502(a)(2) and 409(a), alleging that defendants breached fiduciary duties by purchasing stock shares for purportedly more than fair market value, saddling the Plan with tens of millions of dollars of debt and decreasing its value. Continue Reading Second Circuit Blocks Use of Arbitration Clause to Prevent Class Action ERISA Claims

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:Continue Reading AAA Introduces Rule Changes Tailored for Mass Arbitrations

The ever increasing threats of mass arbitration have led many companies to re-examine the terms of their contracts with consumers and to include provisions intended to guard against such threats.  One of the options some companies may find themselves considering is doing away with the arbitration clause but keeping the class action waiver.Continue Reading NJ Supreme Court to Rule on Whether Class Action Waiver is Enforceable Absent an Arbitration Clause