Case On Point
Frazier v. X Corp.
(U.S. Ct. of App. for the 2d Cir. 2025)
Plaintiffs filed with JAMS for arbitration of their employment related claims against X Corp. The arbitration agreement both provided for pro rata allocation of arbitral fees and incorporated the JAMS rules which required employers to pay those fees. The agreement also delegated responsibility to the arbitrator to resolve any disputes regarding the allocation or payment of fees.
When defendant refused to pay alll of the fees, JAMS refused to appoint an arbitrator, and suspended the proceedings. Plaintiffs filed suit seeking a court order compelling X Corp. to pay the fees. Plaintiffs contended the failure to pay fees was a "refusal to arbitrate" under the Federal Arbitration Act. The district court agreed and issued the requested order compelling payment of the fees.
The Court of Appeals reversed. It held that the refusal to pay fees was not equivalent to a refusal to arbitrate and that the district court lacked jurisdiction to issue its order. In so ruling, the Court observed:
- The parties' agreement allocated resolution of fees related issues to the arbitrator;
- The Plaintiffs could have advanced the fees and requested that any award require X Corp. to repay them; and
- Plaintiffs also could have requested JAMS to terminate the arbitration and pursued their remedies in court.
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