Mass Arbitration: How Did We Get Here, and Where Are We Now?

The U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion in 2011 laid the groundwork for mass arbitration. The decision was the first in a series upholding class action waivers in favor of individual, binding arbitration. The result was mass arbitration, where firms brought a large, coordinated group of individual cases against a company instead of one class action. It would be several years after Concepcion before the American Arbitration Association – International Centre for Dispute Resolution (AAA-ICDR) began seeing actual filings of this nature. Still, the phenomenon existed before increasing in recent years.

Definition of Mass Arbitration

Mass arbitration is distinct from other forms of group arbitration because each case is decided individually on the merits and is defined by the AAA-ICDR as a group of demands filed on behalf of or against a common party, where all parties’ representation is consistent or coordinated across the cases.

Specifically, the AAA-ICDR defines mass arbitration as follows:

• Consumer/Employment/Workplace Disputes: 25 or more similar Demands for Arbitration filed against or on behalf of the same party or related parties, where representation of all parties is consistent or coordinated across the cases.
• Construction/Commercial/International: 100 or more similar Demands for Arbitration filed against or on behalf of the same party or related parties, where representation of all parties is consistent or coordinated across the cases.

Revised Mass Arbitration Rules (2024)

The AAA-ICDR’s experience informed the original Multi-Case Filing Supplementary Rules in 2021. The name of those rules changed to the Mass Arbitration Supplementary Rules in 2023, and significant revisions were made in 2024 to benefit the parties’ dispute resolution process.

Prior to the 2024 revisions, a per-case fee was due upon filing from each party. But parties often became deadlocked regarding how many cases had actually been filed and should be paid for. When that critical issue went unresolved, administrative fees went unpaid, and parties were forced to go to court.

As a not-for-profit public service organization, the AAA-ICDR’s commitment is to ensure that its fees do not interfere with its mission to resolve disputes fairly and efficiently. As a result, in January 2024, the AAA-ICDR released its revised Mass Arbitration Supplementary Rules and related fee schedules, which established a new, up-front flat fee not tied to the number of cases filed, and reworked the authority of the process arbitrator to be able to determine issues that commonly arise at the outset of a mass arbitration. That way, cases can move more quickly to merits hearings and ultimate resolution.

The revised rules made other changes to any new mass arbitration filing. Below is an overview of the various changes:

1. Representatives must now submit an affirmation with Demands and Answers that the information provided therein is true and correct to the best of the representative’s knowledge.
2. The AAA-ICDR has reworked the initiation fee, which is now a flat amount and not based on the number of filings. Upon receipt of the initiation fee, the parties get immediate access to a process arbitrator and global mediator. Under the Mass Arbitration Supplementary Rules, parties must mediate but can opt out in writing.
3. If mediation is unsuccessful, the AAA-ICDR has now given the process arbitrator the authority to decide administrative, nonmerits issues that cause the parties to deadlock. The process arbitrator can now decide whether the filing requirements have been met, whether any contractual preconditions to filing have been met, the process for selecting merits arbitrators, and the locale of merits hearings, among other issues.
4. Checks against the process arbitrator’s authority have also been added: merits arbitrators are no longer bound by the process arbitrator’s decision if they find that the process arbitrator has abused its discretion.
5. Once the process arbitrator has ruled on any disputed issues, the AAA-ICDR will charge a per-case fee for each case that proceeds. The flat initiation fees are credited to the per-case fees. When arbitrator selection is ready to begin in consumer or employment/workplace cases, a second fee is charged to each party. A final fee is charged when the evidentiary hearing is scheduled or at the time the final submission date is set. This staging of fees should give parties more control over when fees are triggered. Fee schedules are available for consumer, employment/workplace, and other dispute types.

Changes to the process arbitrator and fee schedules are expected to help parties move quickly past procedural issues to resolution on the merits. Once this phase is reached, arbitrators are assigned to individual matters to hear and decide them.

Parties may also agree to efficiencies beyond those contained in the AAA-ICDR’s Mass Arbitration Supplementary Rules, and are encouraged to do so throughout the life of the mass arbitration process.

Mass Arbitration Rules and Fee Schedule for Nonconsumer and Nonemployment/Workplace

On April 1, 2024, the AAA-ICDR again updated its Mass Arbitration Supplementary Rules to include disputes beyond the consumer and employment/workplace contexts. These disputes involve commercial business-to-business (B2B) relationships; construction/real estate contracts; international disputes; and any other nonconsumer, nonemployment/workplace matter. The April 2024 revisions also cover B2B web commerce or homeowner/home builder claims. The Mass Arbitration Supplementary Rules now provide a clearer path toward the resolution of claims in this developing area.

Efficiencies in Mass Arbitration

When it comes to mass arbitration, efficient and fair resolution is key. Although 25 cases is the minimum threshold for a mass arbitration under the AAA-ICDR Mass Arbitration Supplementary Rules, mass arbitrations can range from hundreds to thousands (and potentially tens of thousands) of cases, especially in the consumer context. In mass arbitration, arbitrators hear the merits of each case individually and issue individual awards. Accordingly, most parties will want some efficiencies once they enter the merits arbitration phase. The suggestions below relate solely to post-dispute agreements between counsel, who should consider the following options:

• Mediation: Resolution of even one global issue could save significant time trying remaining issues. Mediation is the most efficient and fair method of resolving cases because both parties agree to the outcome. Mediation can help parties resolve substantive and procedural issues, including what efficiencies to employ going forward. The AAA-ICDR believes in mediation so strongly that parties are required under the AAA-ICDR’s Mass Arbitration Supplementary Rules to mediate their disputes.
• Process Arbitrator: Process arbitrators resolve many issues under the rules, and parties can agree to submit additional issues common to the cases to the process arbitrator for a resolution, effectively expanding their jurisdiction. Parties are also free to agree to appoint a separate neutral to govern aspects of the cases, such as discovery. Having one neutral decide those issues can significantly streamline the merits arbitrator phase; otherwise, the parties must raise those disputes directly to each merits arbitrator for resolution.
• Merits Arbitrator Selection: Parties can agree to have multiple cases assigned to one merits arbitrator for resolution. Although arbitrators may have numerous cases from the same mass arbitration (depending on several factors), the more cases the parties agree to submit before a single arbitrator, the more efficient hearings will be. Common issues can be argued and briefed once rather than once per case, saving significant time for parties. Although each case would have an individual award, to the extent common issues can be decided together, the process will be faster.
• Joint Scheduling Order: Where the parties can agree on a joint scheduling order, they can eliminate the need for a preliminary hearing on each case. This saves counsel and arbitrators time not attending the hearing, determining deadlines, and writing the order.
• Documents-Only/Virtual Hearings: Many parties now prefer virtual hearings, and parties can resolve some mass arbitrations on the documents without a hearing. If the parties can agree on what format of hearing is appropriate for the cases at hand, they can save time over individual arbitrators needing to decide the issue. Virtual hearings save travel time for all participants, which is especially important with mass arbitrations where claimants may be located across the country or globe.
• Form of Award: The AAA-ICDR’s Mass Arbitration Supplementary Rules allow parties to agree to a form of award different from those in the rules. Parties can even create their own agreed-upon award template to save the arbitrator time in writing it.
• Limitation of Briefs, Etc.: Agreements to limit briefs, motions, and discovery requests can effectively streamline the merits arbitration phase.
• Alternative Forms of Testimony: Agreements to allow alternative forms of testimony, such as via affidavit or recorded deposition instead of live testimony, save parties’ and witnesses’ time.
• Bellwether/Batching: If counsel can agree to hear a certain number of cases in an up-front “batch,” it can give them a good sense of how future arbitrators will rule on the issues. This informs settlement discussions and can lead to resolution of the entire caseload while only having to argue a subset.

Parties have many options for streamlining and customizing their process under the AAA-ICDR Mass Arbitration Supplementary Rules.

Leveraging Technology to Increase Efficiency in Mass Arbitrations

Recognizing the large volume of individual case documents that are exchanged in a mass arbitration, the AAA-ICDR has developed an application programming interface (API) allowing for two-way document transmission between parties and the AAA-ICDR. This means that as soon as a document goes into the AAA-ICDR’s file, it goes into the user’s file, and vice versa, with controls set by the AAA-ICDR and user. This API can help avoid the need to transmit case documents via email. The value of this tool scales with larger volumes of filings.These technologies are free for all parties to use on AAA-ICDR cases and can significantly increase efficiency in mass arbitration.

The AAA-ICDR also offers a case-filing API, allowing firms to file their cases without the requirement to submit them individually to the AAA-ICDR. Based on parameters set by the user and the AAA-ICDR, information from the user’s system is directly mapped to the AAA-ICDR’s system, creating an instant filing. In the future, the AAA-ICDR will also be able to offer parties a case-status API and a neutral-appointment API so that parties always know the status of individual matters and the information regarding neutrals appointed to each case.

The Future of Mass Arbitrations

Mass arbitrations continue to be filed with the AAA-ICDR. Recently, Reuters Legal published a statistic that 71.3 percent of the federal civil caseload as of the end of the 2023 fiscal year is comprised of multidistrict litigations (MDLs). If this is an indication, it could mean more mass actions of all types. The AAA-ICDR’s Mass Arbitration Supplementary Rules may assist parties in an efficient and fair path to resolution.

To learn more about AAA-ICDR administration of mass arbitrations, visit www.adr.org/mass-arbitration.