Companies with arbitration agreements should carefully consider potential arbitration providers’ mass arbitration procedures and fee structures if they could be at risk of becoming the target of a mass arbitration. FedArb, an ADR provider, recently updated its consumer and employment Mass Arbitration Rules to include a robust affirmation requirement, similar to the “reasonable inquiry” standard embodied in Federal Rule of Civil Procedure 11. Specifically, the new rules require claimants’ counsel to (1) submit a spreadsheet identifying each claimant and (2) submit a sworn declaration averring that the information in both the arbitration demand and the spreadsheet is true and correct to the best of counsel’s knowledge after an inquiry reasonable under the circumstances. It also empowers the arbitrator to impose sanctions for violation of the affirmation requirement, including dismissal of the claim or payment of attorney’s fees.
FedArb’s mass arbitration rules also provide for a “pre-filing fee motion” based on a flat fee; the “pre-filing fee motion” can include a motion to dismiss for failure to state a claim. The update clarifies that the standard for such a motion to dismiss is the same standard as used in a Rule 12(b)(6) motion.
To learn more about providers’ mass arbitration procedures, see our post comparing AAA’s and JAMS’s procedures.