Mass Momentum: What’s Next for Mass Arbitration?

In recent years, mass arbitration has emerged as a novel and often controversial tool within United States (U.S.) domestic arbitration. These proceedings occur when a large number of similar individual claims are filed against the same respondent, often a large corporation, creating a high-stakes environment where respondents are forced to either pay substantial administrative fees or settle. This rise of mass arbitration has been particularly driven by the increasing use of arbitration clauses that include waivers of class action rights, a trend sanctioned by the U.S. Supreme Court in 2011. While this practice has gained significant traction in the U.S., one pressing question remains: could mass arbitration be applied successfully in international arbitration?

This note explores the evolution and key characteristics of mass arbitrations, examining how they have taken shape within the U.S. legal landscape. It also considers whether this phenomenon could find a place in international arbitration, addressing potential hurdles such as institutional limitations, non-arbitrability of certain claims under foreign legal systems, and the feasibility of applying mass arbitration frameworks in investor-State disputes. By analyzing the current state of mass arbitration in the U.S. and the unique challenges it would face internationally, this note seeks to understand whether mass arbitrations could potentially change global dispute resolution or remain a practice limited to domestic cases.

The Evolution of Mass Arbitration

As indicated above, mass arbitrations are a relatively new phenomenon, emerging only in the 2010s, specifically in response to the American legal system’s acceptance of class action waivers in consumer contracts.

Before this, defendant companies in the U.S. had tried for years to find ways to escape expensive class action lawsuits initiated by consumers and employees. Eventually, companies turned to arbitration clauses containing waivers of class action suits in the hopes that ordinary claimants would be unable to pay for arbitration, effectively forcing them to drop their claims.[1] Arbitration also offered companies additional benefits in the event that claimants managed to bring their claims, like limiting claimants’ opportunities for discovery and appeal while keeping any claims of fraud or bad behaviour confidential.[2]

However, there was still a question as to the legality of such class action waivers until the Supreme Court sanctioned this approach in its 2011 landmark decision, AT&T Mobility LLC v. Concepcion.[3]

In this case, respondents filed a complaint against AT&T Mobility LLC (AT&T), which was later consolidated with a proposed class action, claiming AT&T had engaged in false advertising and fraud by charging sales tax on phones advertised as free.[4] AT&T sought to compel arbitration based on the terms of its contract, but the respondents opposed this, arguing that the arbitration agreement was unconscionable and unlawfully exculpatory under California law due to its prohibition on classwide procedures.[5] The district court sided with the respondents, and the Ninth Circuit upheld the decision.[6] The central issue was whether the Federal Arbitration Act (the “FAA”), which provides the federal legal framework for the enforcement of arbitration agreements in the United States, preempted California’s restriction on class action waivers.[7]

The U.S. Supreme Court ruled in the affirmative and found that the restriction on class action waivers conflicted with the FAA because it obstructed the objective of federal arbitration law, which is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate informal, streamlined proceedings.[8] The Supreme Court reversed the Ninth Circuit’s decision and remanded for further proceedings, thereby affirming the FAA’s preemption of state laws limiting class action waivers in arbitration agreements.[9]

However, as the FAA provides that an arbitration agreement “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract”, it is still possible for contracts containing class action waivers to be found unconscionable under certain circumstances, as unconscionability is a common law defence to the enforceability of contracts.[10] To avoid such challenges, many companies began including “friendly” fee-shifting provisions in their contracts alongside the class action waivers, committing the companies to pay all or part of a claimant’s arbitration filing fees – still on the assumption that even with the initial fees covered, ordinary claimants would be financially unable to pursue their claims through arbitration.[11]

To the dismay of companies, however, this created conditions that were ripe for mass arbitration to emerge as a counterattack to forced arbitration. Highly capitalized attorneys – not the “ordinary” claimants expected by companies – who found that the fee-shifting provisions mitigated risk and economically incentivized mass arbitration, began filing claims on behalf of hundreds or thousands of individual claimants against the same respondent for similar conduct, forcing them to choose between paying exorbitant amounts in filing fees (often several thousand dollars per claimant) or settling the case.[12]

Mass Arbitration: Pros and Cons

Naturally, the advent of mass arbitrations in the United States has led to intense debate over the benefits and drawbacks of its use.

On the one hand, mass arbitrations have been praised as a way for individuals who have been deprived of class actions to overcome the prohibitively high costs of arbitration against companies seeking to avoid justice for their abuses. This is particularly true as the number of individuals who benefit from settlements can be even greater than the number filing claims in arbitration. For example, in 2024, after facing arbitration claims from over 100,000 consumers for alleged violations of the Illinois Biometric Information Privacy Act through the Instagram app, Meta agreed to a USD 64.5 million settlement for 4 million consumers.[13] In 2022, Snap, Inc. concluded a USD 35 million settlement for similar violations against 3 million consumers after it faced over 10,000 arbitration claims.[14]

On the other hand, the practice of mass arbitration is the subject of severe criticism. Commentators warn that mass arbitrations can be (and have been) easily abused by plaintiffs’ lawyers.[15] Plaintiffs’ lawyers may initiate mass filings of meritless or frivolous claims to force companies into paying settlements simply to avoid millions of dollars of arbitration fees, thereby coercing said companies into removing arbitration agreements from their contracts altogether.[16] Mass arbitration has thus been called “the latest plaintiff-lawyer strategy to try to eliminate arbitration.” [17]

Interestingly – and somewhat ironically – this seems to be the exact opposite of what the companies themselves had hoped for when forcing their customers and employees to arbitrate – that individuals would be forced to choose between paying for costly arbitration or dropping their claims, regardless of the claims’ legal merit.[18] As one article commented: “The plaintiffs’ bar is taking an old adage to heart: If you can’t beat ‘em, join ‘em.”[19]

Mass arbitration is also criticised for its propensity to impose a hefty administrative burden on institutions and cause significant delays, as both counsel and arbitral institutions are unlikely to be able to expeditiously handle tens of thousands of simultaneous arbitrations.[20]

The Development of Institutional Rules for Mass Proceedings

Certain arbitral institutions have responded to the unique circumstances of mass arbitrations by developing arbitration rules specifically tailored to mass proceedings.

The first example of this was the American Arbitration Association’s (AAA) Supplemental Rules for Multiple Case Filings, which took effect on 1 August 2021. These rules applied, at the sole discretion of the AAA, to consumer and employment disputes where 25 or more similar demands for arbitrations were filed against or on behalf of the same party or related parties and representation of the parties was consistent or coordinated across the cases.[21] If this threshold criterion was met, the rules provided that the AAA would appoint a Process Arbitrator to determine all administrative issues before the merits of the dispute would be submitted to party-appointed Merits Arbitrators.[22]

A particularly interesting feature of these supplemental rules was that they required a per-case fee to be paid by each party upon filing.[23] This led to disputes between parties as to how many cases had been legitimately filed, forcing claimants to seek a motion to compel arbitration from the courts.[24]

In response, the AAA updated its rules in 2024, in the form of the Revised Mass Arbitration Rules, replacing the per-case fee with an upfront flat fee unrelated to the number of cases filed and a per-case fee to be paid only once the cases reach the merits stage of the proceedings.[25] As the AAA stated in a blog, “The AAA-ICDR’s commitment is to ensure that its fees do not interfere with its mission to resolve disputes fairly and efficiently.”[26]

Additionally, to prevent the intentional filing of claims on behalf of non-existent or duplicate claimants, party representatives must now submit an affirmation with each demand or answer that the information provided therein is true and correct to the best of the representative’s knowledge.[27] The Revised Mass Arbitration Rules also allow for disputes outside of the consumer and employment contexts to be settled via mass arbitration, although the threshold number of demands for such cases is 100 instead of 25.[28]

Another example is that of JAMS, another U.S.-based arbitral institution, which released its own Mass Arbitration Procedures and Guidelines, along with a Mass Arbitration Procedures Fee Schedule on 1 May 2024.[29] However, JAMS explained that it was initially hesitant to develop mass arbitration rules, as it wished to prioritise the neutrality of the institution and its respect for the arbitration clauses as they are written in each contract.[30] Thus, unlike the AAA’s mass arbitration rules, which give the AAA sole discretion over their application to a particular case, the JAMS procedures only apply upon the explicit agreement of the parties – either in the arbitration agreement or once the dispute has arisen.[31] Additionally, the threshold number of demands for any JAMS mass arbitration is 75, irrespective of the subject matter of the dispute.[32]

Despite these differences, the JAMS procedures and AAA rules nonetheless have numerous comparable features. For example, the JAMS procedures provide for a JAMS-appointed Process Administrator (like the AAA’s Process Arbitrator) to handle preliminary administrative matters. However, the Process Administrator is viewed as an “adjunct of the [National Arbitration Committee] and not an Arbitrator”,[33] although this seems to make little practical difference as the powers of both the AAA Process Arbitrator and the JAMS Process Administrator are strikingly similar:

Like the revised AAA rules, the JAMS procedures also limit the initial filing fee to a standard amount, regardless of the number of cases filed.[34] JAMS explained this by saying: “While the threat of large fees can serve as a bargaining chip, from an administrative cost perspective, the functions carried out by the process administrator and the subsequent appointment of arbitrators makes it unnecessary to charge a filing fee for each individual demand filed.”[35] Thus, arbitral institutions, particularly as of 2024, have taken much of the sting out of mass arbitration for companies, dispensing with the upfront per-case fee requirement that made it such a powerful force for claimants.

Corporate Responses to Mass Arbitration

As mass arbitration has become more common and its repercussions clearer, respondent companies have also reacted in several ways.

Some companies have started to add provisions to their arbitration agreements, requiring the use of bellwether or batch procedures during contractually mandated arbitrations. In a bellwether arbitration, a small sample of representative cases is used to set a precedent or gauge how a larger group of similar cases might be decided. Similarly, batching allows the arbitration of a small number of cases before returning to settlement discussions.

The cell phone service provider, Verizon, attempted to include arbitration clauses in its contracts that required multiple rounds of bellwether arbitration if a large number of customers were to bring claims against it:

If 25 or more customers initiate notices of dispute with Verizon Wireless raising similar claims, and counsel for the Verizon Wireless customers bringing the claims are the same or coordinated for these customers, the claims shall proceed in arbitration in a coordinated proceeding. Counsel for the Verizon Wireless customers and counsel for Verizon Wireless shall each select five cases to proceed first in arbitration in a bellwether proceeding.  The remaining cases shall not be filed in arbitration until the first ten have been resolved.  If the parties are unable to resolve the remaining cases after the conclusion of the bellwether proceeding, each side may select another five cases to proceed to arbitration for a second bellwether proceeding.  This process may continue until the parties are able to resolve all of the claims, either through settlement or arbitration.  A court will have authority to enforce this clause and, if necessary, to enjoin the mass filing of arbitration demands against Verizon.[36]

However, when 2,685 consumers challenged the clause in a class action before the United States District Court for the Northern District of California (MacClelland v. Cellco Partnership), the district court found that the clause, whose bellwether and batch procedure could force claimants to wait up to 156 years to vindicate their legal claims, conflicted with the basic legal principle that justice delayed is justice denied and was therefore unconscionable.[37]

Commentators have suggested that bellwether provisions may nonetheless be legally tenable if an “elastic” model is adopted – that is, where the next batch of cases grows or shrinks depending on the outcome of the previous batch.[38] However, this remains to be seen.

Some companies have gone a step further and attempted to effectively create their own arbitration rules in order to benefit from the most favourable mass arbitration conditions. For example, in a 2024 case, Heckman v. Live Nation Entertainment, the Ninth Circuit noted that the attorneys of the global ticket sales and distribution company, Ticketmaster, and its parent company, Live Nation, had collaborated with the newly founded arbitral institution, New Era ADR, to develop mass arbitration procedures that were “internally inconsistent, poorly drafted, and riddled with typos”[39] and contained “multiple interrelated substantive provisions that overtly favor defendants”.[40]

The Ninth Circuit concluded that these procedures, combined with the unfair terms of the defendants’ terms and conditions, were “‘so overly harsh or one-sided,’ […] as to unequivocally represent a ‘systematic effort to impose arbitrations … as an inferior forum’ designed to work to Live Nation’s advantage”, affirming the district court’s denial of the defendants’ motion to compel arbitration.[41]

Some companies have also refused to pay arbitration fees to avoid mass arbitrations altogether. This strategy was adopted in 2022 by Samsung after 50,000 identical arbitration demands were brought against it by consumers alleging that Samsung had unlawfully collected and stored their biometric data.[42] When it came time for Samsung to pay around USD 4 million in filing fees to the AAA, it refused, after which the claimants declined to cover the costs, and the AAA closed the cases.[43]

After a district court ruled in favour of compelling Samsung to pay the fees, the Seventh Circuit reversed in Wallrich v. Samsung, finding that the arbitration clause in Samsung’s contracts, which simply stated that fee disputes would “be determined according to AAA rules”, gave the AAA discretion whether to proceed with the arbitration when Samsung declined to advance the fees and that Samsung had complied with the arbitration clause, as it would have arbitrated the merits of the claims had the consumers paid the fees.[44]

While this strategy allowed Samsung to avoid arbitration, given the facts of this case, it is unlikely that refusing to pay arbitration fees would be an appropriate strategy for companies contractually bound to cover such fees by fee-shifting provisions in their contracts.

Finally, after coming face-to-face with the hefty cost of mass arbitrations, other companies, such as Amazon, have removed arbitration clauses from their contracts altogether, prompting a quick return to class action lawsuits.[45]

Mass International Arbitration Proceedings?

While it is thus clear from the above that mass arbitration has burgeoned in the U.S., this raises the question: Is mass arbitration on the horizon for international arbitration, or is this a purely domestic American issue?

Theoretically, mass arbitration could be applied to international disputes under existing mass arbitration frameworks. The AAA’s Mass Arbitration Supplementary Rules, for example, do not explicitly limit their scope to domestic disputes, and commentators have suggested that they could be used to settle disputes concerning “commercial business-to-business relationships, construction and real estate contracts, international disputes, and any other non-consumer, non-employment/workplace matter[s].”[46] Thus, there is nothing in the text of these rules that would prevent international claimants from bringing mass arbitration cases before the AAA’s international arm, the International Centre for Dispute Resolution (ICDR).

However, while the rules of most popular international arbitral institutions, such as the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), etc., are not inherently incompatible with mass arbitrations, a major obstacle is their lack of clear, established procedures for handling multiple simultaneous arbitrations. Such procedural issues would need to be addressed by institutions for mass arbitration to gain traction in the international arena.

Another significant hurdle for international mass arbitration is the types of disputes that are typically settled through mass arbitrations. As evidenced above, consumer and employment disputes make up the majority of mass arbitrations in the United States; however, these issues are considered non-arbitrable under many foreign legal systems. For example, the European Union (EU) considers that arbitration clauses included in international consumer contracts are against public policy, rendering consumer disputes non-arbitrable.[47] This has the potential to pose significant problems, particularly in the enforcement of awards in such jurisdictions and may thus take mass arbitration off the table for such disputes.

Interestingly, “mass arbitrations” have already emerged in the context of investor-State arbitration, but this usage differs significantly from the mass arbitration framework seen in U.S. domestic law. In investor-State arbitration, the term refers to procedures similar to class action lawsuits rather than the simultaneous resolution of many individual claims.[48] But would mass arbitration, as described by this note, work in the investment arbitration sphere? The answer is likely no.

While investment disputes typically involve measures that may affect large numbers of investors, and the fee for filing an investment case with the International Centre for Settlement of Investment Disputes (ICSID) is USD 25,000, it is extremely unlikely that would be compatible with investment arbitration for one main reason: in order for the fees to have the desired persuasive effect, States would need to have agreed to bear these costs upfront, for example, in the text of their bilateral investment treaties, which does not happen. Rather, the claimants must bear the USD 25,000 filing fee. Therefore, it remains improbable that the mass arbitration model would be feasible within the investment arbitration sphere.

Conclusion

Mass arbitrations have proven to be a dynamic and contentious development in U.S. domestic arbitration, offering a powerful tool for claimants while posing significant challenges for companies. The ability to bring multiple individual claims simultaneously against a single respondent can force companies to either settle disputes on a large scale or face exorbitant administrative costs. As seen in the U.S., mass arbitrations have evolved in response to the limitations of class action waivers, allowing claimants to bypass what could otherwise be prohibitively expensive arbitration. Nevertheless, companies and institutions have pushed back, finding ways to dull the sting of mass procedures.

While mass arbitration has gained traction in the United States, its potential for international arbitration remains uncertain. Although frameworks like the AAA’s Mass Arbitration Supplementary Rules may provide the structural foundation for international mass arbitration, the lack of established procedures and the absence of clear guidelines in many international arbitration institutions pose significant barriers. Furthermore, the types of disputes most often addressed through mass arbitrations — particularly consumer and employment claims — are often deemed non-arbitrable in foreign jurisdictions, complicating enforcement and jurisdictional issues.

In the investor-State arbitration context, the concept of mass arbitration as we know it in domestic law is unlikely to succeed due to the high costs associated with filing fees, which the claimants must pay.

Ultimately, while mass arbitrations may provide a means for addressing mass claims in the United States, their future in international arbitration remains constrained by legal, procedural, and financial obstacles. As international arbitration institutions develop clearer guidelines and address the complexities surrounding mass proceedings, the landscape of arbitration may evolve — but for now, mass arbitration remains predominantly a domestic issue.

[1] V. Forson, Litigation Minute: What Is Mass Arbitration, 6 September 2022, https://www.klgates.com/Litigation-Minute-What-Is-Mass-Arbitration-9-6-2022 (last accessed 10 February 2025).

[2] Mass Arbitration 101, 13 January 2025, https://www.tzlegal.com/news/mass-arbitration-101/ (last accessed 10 February 2025).

[3] AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] 9 U.S. Code § 2 (emphasis added). For example, a contract is procedurally unconscionable if it is a contract of adhesion, though this alone is not enough to deny a motion to compel arbitration. See Lane v. Francis Capital Mgmt. LLC, 224 Cal. App. 4th 676, 689, 168 Cal.Rptr.3d 800 (2014).

[11] J. Glover, Recent Developments in Mandatory Arbitration Warfare: Winners and Losers (So Far) in Mass Arbitration, 100(6) Washington University Law Review, p. 1623.

[12] Id.

[13] Mass Arbitration, https://milberg.com/practice-areas/mass-arbitration/ (last accessed 12 February 2025); Law Firms Advising Social Media Users Harmed by Instagram in Anticipation of Mass Arbitration, https://www.businesswire.com/news/home/20241121581845/en/Law-Firms-Advising-Social-Media-Users-Harmed-by-Instagram-in-Anticipation-of-Mass-Arbitration (last accessed 12 February 2025).

[14] Mass Arbitration, https://milberg.com/practice-areas/mass-arbitration/ (last accessed 12 February 2025).

[15] U.S. Chamber of Commerce Institute for Legal Reform, Mass Arbitration Shakedown: Coercing Unjustified Settlements, February 2023, https://instituteforlegalreform.com/research/mass-arbitration-shakedown-coercing-unjustified-settlements/ (last accessed 10 February 2025), p. 2.

[16] U.S. Chamber of Commerce Institute for Legal Reform, Mass Arbitration Shakedown: Coercing Unjustified Settlements, February 2023, https://instituteforlegalreform.com/research/mass-arbitration-shakedown-coercing-unjustified-settlements/ (last accessed 10 February 2025), p. 3.

[17] U.S. Chamber of Commerce Institute for Legal Reform, Mass Arbitration Shakedown: Coercing Unjustified Settlements, February 2023, https://instituteforlegalreform.com/research/mass-arbitration-shakedown-coercing-unjustified-settlements/ (last accessed 10 February 2025), p. 3.

[18] J. Glover, Mass Arbitration, 74 Stan. L. Rev., p. 1308.

[19] The Threat of Mass Arbitration: How Companies Can Avoid Becoming the Next Target, 6 March 2024, https://www.omm.com/insights/alerts-publications/insights-2024-the-threat-of-mass-arbitration-how-companies-can-avoid-becoming-the-next-target/ (last accessed 10 February 2025).

[20] JAMS Mass Arbitration Procedures and Guidelines, Introduction; C. Bloomfield, Mass Arbitrations: The New Landscape of Dispute Resolution and Its Challenges, 2 May 2024, https://www.jamsadr.com/blog/2024/mass-arbitrations-the-new-landscape-of-dispute-resolution-and-its-challenges (last accessed 10 February 2025).

[21] AAA Mass Arbitration Supplementary Rules, MC-1(a)-(b).

[22] AAA Mass Arbitration Supplementary Rules, MC-6, 7.

[23]  A. Shoneck, Mass Arbitration – How Did We Get Here & Where Are We Now?, 6 June 2024, https://www.adr.org/blog/mass-arbitration-how-did-we-get-here-and-where-are-we-now (last accessed 11 February 2025).

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] AAA Mass Arbitration Supplementary Rules, MA-1(b)(ii).

[29] M. McTigue et al., JAMS Adopts Mass Arbitration Procedures and Guidelines, 9 May 2024, https://www.skadden.com/insights/publications/2024/05/jams-adopts-mass-arbitration-procedures-and-guidelines (last accessed 10 February 2025).

[30] C. Bloomfield, Mass Arbitrations: The New Landscape of Dispute Resolution and Its Challenges, 2 May 2024, https://www.jamsadr.com/blog/2024/mass-arbitrations-the-new-landscape-of-dispute-resolution-and-its-challenges (last accessed 10 February 2025).

[31] Id.

[32] JAMS Mass Arbitration Procedures and Guidelines, Procedure 1(c).

[33] Id., Procedure 3(b).

[34] See JAMS Mass Arbitration Fee Schedule.

[35] C. Bloomfield, Mass Arbitrations: The New Landscape of Dispute Resolution and Its Challenges, 2 May 2024, https://www.jamsadr.com/blog/2024/mass-arbitrations-the-new-landscape-of-dispute-resolution-and-its-challenges (last accessed 10 February 2025).

[36] MacClelland v. Cellco P’ship, 609 F. Supp. 3d 1024, 1040 (N.D. Cal. 2022).

[37] Id. at 1042.

[38] B. Rogers, Can Batches and Bellwethers Work in Mass Arbitration?, 3 October 2024, https://arbitrationblog.kluwerarbitration.com/2024/10/03/can-batches-and-bellwethers-work-in-mass-arbitration/ (last accessed 11 February 2025).

[39] Heckman v. Live Nation Ent., Inc., No. 23-55770, WL 4586971, at *8 (9th Cir. 2024).

[40] Id. at *29.

[41] Id.

[42] S. Boxer, Seventh Circuit Decision: Samsung Prevails in Mass Arbitration Dispute, 10 July 2024, https://www.cpradr.org/news/seventh-circuit-decision-samsung-prevails-in-mass-arbitration-dispute (last accessed 10 February 2025).

[43] Wallrich v. Samsung Electronics America, Inc., No. 23-2842 (7th Cir. 2024).

[44] Id.

[45] L. Lonas Cochran, Amazon bucks arbitration, allowing customers to sue, 1 June 2021, https://thehill.com/policy/technology/556264-amazon-bucks-arbitration-allowing-customers-to-sue/ (last accessed 10 February 2025).

[46] A. Shoneck, Mass Arbitration – How Did We Get Here & Where Are We Now?, 6 June 2024, https://www.adr.org/blog/mass-arbitration-how-did-we-get-here-and-where-are-we-now (last accessed 11 February 2025).

[47] See Directive 93/13/EEC of 05/03/1993; J. Jarusevicius, Consumer Arbitration – Will the Two Different Worlds Across the Ocean Converge?, 25 February 2016, https://arbitrationblog.kluwerarbitration.com/2016/02/25/consumer-arbitration-will-the-two-different-worlds-across-the-ocean-converge/ (last accessed 10 February 2025).

[48] E. Obadia, Mass Arbitrations in International Investment Cases Introductory Remarks, Class and Group Actions in Arbitration, ICC Institute Dossier XIV.