Insight from the President: JAMS Policy Regarding Mass Arbitration Filings

The question whether class action arbitration waiver agreements are enforceable was decided by the United States Supreme Court in its 2018 opinion in Epic Systems Corp. v. Lewis, 823 F.3d 1147, where Justice Gorsuch, writing for the majority, stated that the Court has determined that the Federal Arbitration Act “establishes ‘liberal federal policy favoring arbitration agreements,’…[and] arbitration agreements like those before us must be enforced as written.” 

Following that decision, and in the face of an arbitration clause that bars class or collective actions, attorneys representing employees or consumers have responded in some instances by filing dozens, hundreds or even thousands of individual arbitration demands against a single company. These filings have prompted questions from Claimants’ and Respondents’ counsel about how ADR providers will administer the matters, what fees apply and whether providers will impose specialized processes that may run counter to the specific terms of the parties’ contract. Claimants whose contract requires them to pay a portion of the initial filing fee may request a discount or waiver of the filing fees, and Respondent companies that may be required to pay the remainder or all of the filing fees balk at what may be a costly and prohibitive sum. Respondents may also question whether every individual claim is legitimate before it posts filing fees for the matter, but in some jurisdictions face penalties if they don’t pay the arbitration filing fees within a specified time period.

JAMS understands the complexities of the situation. However, we have a fundamental responsibility and commitment to neutrality and high ethical and professional standards. Our role as the administrator of the parties’ arbitration proceedings prohibits us from modifying or changing the arbitration agreement absent express agreement of the parties. If the parties’ agreement prohibits class actions and consolidations, we must treat each case individually. Each matter is commenced and managed separately because that is what the pre-dispute contract requires. Every arbitration receives its own process and its own arbitrator, and the resources needed to manage these individual arbitrations are similar to or greater than any individual arbitration.

JAMS has developed internal protocols to make the commencement process as efficient as possible, including maximizing the use of technology and creating a dedicated team to oversee the commencement of the arbitration and appointment of the arbitrator. We aim to fulfill the goal of arbitration—an efficient, fair and neutral proceeding that leads to a final arbitration award that will be upheld in court. JAMS will not reduce fees for either side to avoid even an appearance of impartiality or bias. Every individual arbitration receives individual treatment and an individual award to ensure the parties receive an impartial, neutral and fair process.

We encourage the parties to collaborate at the outset of a mass filing (which JAMS defines as any group of 25 or more filings from the same law firm or lawyer against the same company at the same time). Strategies that have proven effective include sharing information about the validity of each individual’s status (employee, customer, etc.); filing demands in batches; and agreeing on “test” cases, arbitrator selection, manner of hearing (in-person, virtual or hybrid), timelines for commencement and hearings, etc. JAMS can work with the parties to implement any processes or procedures that have been agreed upon prior to or even after an arbitration has been filed. However, in the absence of an agreement amongst the parties, the arbitration agreement controls.

To reiterate, JAMS’ core value is neutrality. We take each individual arbitration as it is filed, according to the terms of the contract. We take that position to maintain our neutrality and because we do not believe we have the power, as the administering body, to change the parties’ agreement unilaterally.