The American Arbitration Association (AAA) and JAMS recently enacted mass arbitration rules as a way to resolve a large number of individual claims. The new AAA Mass Arbitration Supplementary Rules became effective as of January 15, 2024, and JAMS Mass Arbitration Procedures and Guidelines became effective as of May 1, 2024. Both sets of rules are intended to facilitate the fair, expeditious and efficient resolution of mass arbitrations. Below are key similarities and differences between the two sets of new rules.
Applicability
An important difference between the tribunal's two sets of rules is that the AAA "may" apply mass arbitration rules for a group of cases that fit within its mass arbitration definition (MA-1), while JAMS appears to require a pre- or post-dispute written agreement between the parties adopting its mass arbitration procedures and guidelines (Procedure 1).
While we believe the prevailing approach in both tribunals will be to apply mass arbitration rules to claims within the relative parameters, it is worth considering the inclusion of language requiring agreement to these new mass arbitration rules in terms and conditions and arbitral provisions in contracts.
Scope
AAA mass arbitrations are defined as (i) "twenty-five claimants or more Consumer or Employment/Workplace Demands for Arbitration" filed against or on behalf of the same party or related parties, or (ii) "one-hundred or more non-Consumer/non-Employment/Workplace similar Demands filed against or on behalf of the same party or related parties," and (iii) where representation of all parties is consistent or coordinated across the cases. (MA-1(b)). JAMS mass arbitrations are defined "as 75 or more similar Demands for Arbitration, or such other amount as is specified in the Parties' agreement(s), filed against the same Party or related Parties by individual Claimants represented by either the same law firm or law firms acting in coordination." (Procedure 1(c))
Process Administrators
Both the AAA and JAMS mass arbitration rules allow for the appointment of process administrators who hear and determine preliminary and administrative matters in a mass arbitration. Under both sets of rules, process administrators consider, by way of example, (i) whether the parties have met their filing requirements; (ii) disputes over applicable conditions precedent; (iii) disputes regarding payment of administrative fees, arbitrator compensation and expenses; and (iv) which demands for arbitration should be included as part of the mass arbitration filing (MA-6(c) and Procedure 3).
Appointment of Merits Arbitrators
The AAA compiles a roster of arbitrators for the purpose of identifying those who may be appointed to cases in a mass arbitration. The AAA may submit a list of proposed arbitrators to the parties to any mass arbitration. The parties are encouraged to agree to arbitrators from this list and to advise the AAA of their agreement. If the parties are unable to agree upon arbitrators, each party shall have 14 calendar days from the list transmittal date in which to strike names objected to, number the remaining names in order of preference and return the list to the AAA. (MA-7(a)). If for any reason appointments cannot be made from the submitted lists or if the AAA determines the number of cases is too numerous for use of lists, the AAA shall have the authority to administratively appoint merits arbitrator(s).
Under the JAMS rules, the process administrator shall, after consulting the otherwise applicable rule and consulting with the parties, determine the selection process for the arbitrator(s), including any needed modifications to the applicable arbitrator selection rule.
Mediation
Unlike JAMS Mass Arbitration Rules, the AAA provides for mandatory mediation. Under the AAA mass arbitration supplementary rules, within 120 calendar days from the established due date for the answer, the parties shall initiate a global mediation of the mass arbitration pursuant to applicable AAA mediation procedures or as otherwise agreed to by the parties. The mediator shall be administratively appointed by the AAA unless the parties agree on a mediator. The mediation shall take place concurrently with the arbitrations and shall not act as a stay of the arbitration proceedings, unless agreed to by the parties. Any party may unilaterally opt out of mediation upon written notification to the AAA and the other parties to the arbitration. Notwithstanding the foregoing, the AAA may, in its sole discretion, appoint a mediator to facilitate discussions between the parties on processes that may make resolution of the cases more efficient. Unless agreed upon by all parties and the mediator, the mediator shall not be appointed as an arbitrator for any of the cases in the same mass arbitration. (MA-9)
Fees
AAA Fees
Administrative fees are billed according to the applicable Consumer Mass Arbitration and Mediation Fee Schedule. In general, the AAA imposes a flat fee of $3,125 for individuals, and a flat fee of $8,125 for businesses. In cases where a business is the filing party, either as the claimant or filing on behalf of the individual, the business shall be responsible for administrative fees that include all initiation fees, per case fees, arbitrator appointment fees and final fees. The initiation fee will be billed and must be paid upon the filing of a mass arbitration by the individuals. The business will be responsible for their portion of the fee once the individuals have met the AAA's filing requirements. In the event administration continues beyond the items covered by the initiation fee, parties will be responsible for the per case fee noted below. The initiation fee will be credited toward per case fees for cases that advance to that stage. Once the case proceeds past the initiation stage, the following fees shall apply:
|
Type of case fee |
First 500 cases |
Cases 501 to 1,500 |
Cases 1,501 to 3,000 |
Cases 3,001 and beyond |
|
Individual per case fee |
$125 |
$75 |
$75 |
$75 |
|
Business per case fee |
$325 |
$250 |
$175 |
$100 |
JAMS Fees
The JAMS Mass Arbitration Procedure Fee Schedule has a $7,500 filing fee regardless of the number of cases and a $7,500 filing fee for counterclaims. The other fees will depend on the hourly rate of the process administrator and arbitrator. If JAMS determines that either the JAMS Consumer Arbitration Minimum Standards or the Employment Arbitration Minimum Standards apply, the obligation to pay fees under these procedures shall be allocated consistent with those minimum standards, subject to review by the process administrator pursuant to procedure 3(e)(v). According to the minimum standards, the consumer will only be responsible for $250 for initiating the case.
For More Information
If you have any questions about this Alert, please contact James J. Regan, Walter A. Saurack, Y. Katie Wang, any of the attorneys in our Trial Practice Group, any of the attorneys in our Arbitration, Mediation and Alternative Dispute Resolution Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.