Subscribe To Our Newsletter
Subscribe To Our Newsletter
Mass arbitration is a type of legal action in which a group of claims, or “demands,” is filed against a common party and in which all parties’ representation is coordinated across cases. While similar to a class action lawsuit, a mass arbitration proceeding takes place out of court, and each claim is settled individually based on its merits. In recent years, mass arbitrations have emerged as a response to mandatory arbitration clauses with class-action waivers, becoming more common as corporations seek new ways to resolve disputes with consumers and employees.
In 2011, the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion laid the groundwork for mass arbitration by allowing corporations to include class action bans in their arbitration clauses. This granted companies significant protection against class litigation from large groups of consumers or employees.
As a result, mass arbitration actions in which firms bring a large, coordinated group of individual cases against a company rather than a single class action have become more common. These actions often expose companies to millions of dollars in filing fees and large settlements, but courts have thus far allowed the practice to continue.
Mass arbitrations can include hundreds to even thousands of cases, especially in the consumer context. Under the American Arbitration Association’s new rules, instated in 2024, a “process arbitrator” must be appointed to resolve administrative issues in mass arbitrations, and there must be a global mediation process.
The process arbitrator hears and determines preliminary and administrative matters in a mass arbitration. This allows businesses to challenge some demands at the start, while also reducing up-front fees. Initiating a mass arbitration campaign involves recruiting and intaking clients, be it employees or consumers of a company, and drafting individual demand letters for each client.
Process arbitrators can resolve many issues in the mass arbitration process, but parties can also appoint a separate neutral to govern specific aspects of the case, such as the discovery process. This can streamline the merits arbitrator phase.
At the outset of a mass arbitration filing, fees are limited to an initial filing fee, process administrator fees, and case management fees. In most cases, businesses pay the costs of arbitration. These costs can be high, especially as more claimants join the mass arbitration, which is one factor that drives pressure on the company to settle.
In a mass arbitration, the parties may agree to have multiple cases assigned to one merits arbitrator for resolution. The more cases the parties submit before a single arbitrator, the more efficient the hearings will be, since common issues can be resolved together rather than individually for each case. Merits arbitration hearings occur when the business has not yet reached a global settlement.
Mass arbitration is often used as a tactic to force a company to accept a settlement and save the money it would otherwise spend on arbitration fees. Mediation is often encouraged before and during the arbitration process and may result in a settlement that provides each person who filed an arbitration demand with a specific amount of money based on their injury.
New cases and investigations, settlement deadlines, and news straight to your inbox.
Claimants have significant leverage in mass arbitration proceedings, since in most consumer and employment cases, the company is obligated to fund the arbitration. The threat or filing of thousands of claims also creates a potentially large financial burden on the company, which may motivate it to settle early. Arbitration also provides access to justice for many small claims that would otherwise not merit legal action, such as a lawsuit or a class-action filing, and gives claimants greater individual control over the dispute process.
Since the Supreme Court’s decision allowing arbitration agreements in the consumer and employment spaces to exclude class and collective actions, companies often also add language to their arbitration clauses precluding the consolidation of claims. This prevents them from becoming the subject of a class-action lawsuit or multi-district litigation, which can be costly, time-consuming, and damaging to the company’s reputation.
If a company refuses to settle despite a mass arbitration action, it will inevitably take a long time to address the hundreds or thousands of individual arbitration demands on a case-by-case basis. This means claimants may not get settlement awards for months or even years.
Mass claim filings can result in significant administrative burdens and fees, as well as delays that compromise the integrity of the arbitration process. With a massive volume of claims being filed at once, there is a possibility of adverse binding decisions, as well as reputation risk if filings don’t settle quickly and become publicized.
In a recent empirical study of the arbitration clauses of 106 large consumer-facing companies, it was found that most companies require claimants to exhaust pre-arbitration procedures before initiating arbitration. Many also require cases to be arbitrated in sequential batches rather than all at once, delaying proceedings and forcing claimants to wait longer to seek relief for their injuries.
Pre-arbitration requirements also make it easier for companies to dismiss claims if the requirements aren’t satisfied, further suppressing consumer and employee claims. Additionally, some experts argue that the corporate response to mass arbitration has transformed the process to such a degree that it is no longer covered by the Federal Arbitration Act, and that state governments should have the authority to intervene.
There are two types of mass arbitration groupings according to the American Arbitration Association, divided by case type. A mass arbitration involving consumer, employment, or workplace disputes must involve at least 25 similar demands for arbitration against the same entity. A mass arbitration involving construction, commercial, or international disputes must involve at least 100 similar demands for arbitration against the same entity.
Claimants in mass arbitration proceedings can start the process themselves by filing an arbitration demand and encouraging others to join, or join an existing mass arbitration with legal help. You will need documentation to prove your claim–this may include receipts, medical records, employment records, or any other relevant documents, depending on the nature of your claim. In most cases, businesses pay for arbitration, so you will likely not need to prepare for legal fees.
Mass arbitration is a dispute-resolution process that offers companies and claimants an alternative to legal proceedings such as class-action lawsuits and multidistrict litigation. At Class Action U, our goal is to simplify the process for individuals to join ongoing lawsuits and mass arbitrations, connecting them with our law firm partners who are ready to handle their cases. View our list of current mass arbitrations to see if you are eligible to seek compensation.
New cases and investigations, settlement deadlines, and news straight to your inbox.
