The American Arbitration Association Adopts Rules for Multiple Case Filings
A significant advantage of arbitration is that it allows the parties to negotiate and agree on the procedures for resolving any disputes that may arise between them. However, in many instances, consumer and employment agreements are essentially contracts of adhesion, meaning that there is no meaningful opportunity for consumers or employees to negotiate their terms. In response, the American Arbitration Association adopted fairness protocols to ensure that the arbitrations it administers are essentially fair to consumers and employees.
Those protocols, however, do not address class action waivers. In the court system, the class action mechanism permits a named plaintiff to bring claims on behalf of all similarly situated persons who do not opt out of the class action. This permits economies of scale in resolving legal and factual issues that are identical to all claims of class members. The Supreme Court has ruled that class action waivers in arbitration agreements are enforceable, meaning that claims that might otherwise be filed as class actions, must be filed as individual claims.
As a result, lawyers for consumers and employees began filing hundreds of nearly identical arbitration claims on behalf of similarly situated claimants. This increased administrative costs and burdens and resulted in multiple duplicative proceedings before different arbitrators, yielding potentially inconsistent results in virtually identical cases. To address this situation, the American Arbitration Associated adopted Supplementary Rules for Multiple Case Filings. These rules promote the consolidation of cases for procedural purposes and envision the assignment of multiple cases to arbitrators or groups of arbitrators.