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.