JAMS recently has become the latest arbitral institution to publish rules tailored to the unique issues presented by mass arbitration filings. Mass arbitration filings have become a popular tactic among plaintiffs’ lawyers and a significant source of potential exposure for companies.
Effective May 1, 2024, parties agreeing to arbitration under the JAMS Rules will be able to opt into the application of the Mass Arbitration Procedures and Guidelines (the “Procedures”) and an accompanying Mass Arbitration Procedures Fee Schedule (“Fee Schedule”) for certain mass filings. The Procedures and Fee Schedule include features similar to those available under the rules of other arbitral institutions, including the American Arbitration Association (the “AAA”) and National Arbitration and Mediation, including the designation of a Process Administrator to hear and determine preliminary and administrative matters in a more streamlined and cost-efficient manner. For JAMS to assign a Process Administrator, the parties must pay a flat fee of $7,500, at least $5,000 of which shall be paid by the business in consumer mass arbitrations.
We previously discussed here the AAA’s mass arbitration procedures, which were last updated on April 1. The Procedures adopted by JAMS differ from the AAA’s current mass arbitration procedures in several notable ways, including those summarized in the table below.
| AAA | JAMS | |
| Definition of Mass Arbitration | 25 or more similar demands for arbitrations filed against or on behalf of the same party or related parties where representation of all parties is consistent or coordinated across arbitrations | 75 or more similar demands for arbitrations, or such other amount as specified in the parties’ agreement, filed against the same Party or related Parties by individual claimants represented by either the same law firm or law firms acting in coordination |
| Applicability of the Rules | “whenever” the threshold for mass arbitration is met | only when the parties have opted into the application of the rules in a pre- or post-dispute written agreement |
| Filing Requirements | each demand must include complete contact information for all parties and representatives, and an affirmation that the information provided for each individual case is true and correct to the best of the representative’s knowledge | each demand must include the first and last name, physical address and email address of the claimant, representative information, and a sworn declaration from counsel that the information in the demand is true and correct to the best of the representative’s knowledge |
| Fees | business to pay (1) a flat initiation fee of $8,125; (2) for cases that proceed beyond initiation, per case fees of $325 per case for the first 500 cases, $250 per case for cases 501 to 1,500, $175 per case for cases 1,501 to 3,000, and $100 per case for case 3,001 and beyond; (3) arbitration appointment fee of at least $450 per case; (4) final fee; and (5) arbitrator and mediator compensation | business to pay (1) a flat filing fee of at least $5,000 and up to $7,500; (2) for cases that proceed beyond initiation, arbitrator appointment fee of at least $2,000 per arbitrator appointed; (3) arbitrator compensation; and (4) case management fee assessed at 13% of arbitrator compensation |
| Sanctions | arbitrator may allocate compensation, including filing and hearing fees, if the arbitrator finds a party’s claim was filed for purposes of harassment or is patently frivolous | arbitrator may order appropriate sanctions for a party’s failure to comply with the rules or with an order of the arbitrator; sanctions may include assessment of arbitration fees and expenses, and/or attorneys’ fees, exclusion of certain evidence, drawing adverse inferences, or adverse determination in extreme cases |
| Stay of Arbitration Pending Court Ruling | automatic stay of the mass arbitration for 60 days pending a court ruling if the party seeks judicial intervention within 30 days of the commencement of the arbitration | no automatic stays; the Process Administrator, after consulting with the parties’ representatives, may determine whether and for how long to suspend administration pending a court ruling |
| Mediation | even when one or both parties opt out of mediation, the AAA may, in its sole discretion, appoint a mediator to facilitate discussions between them on processes to improve efficiency | no mandatory mediation; “[w]hile mediation is always encouraged, the impetus of these Procedures is to enable the Process Administrator to work with the Parties to design a reasonable process so that cases can be heard as soon as practicable” |
These differences underscore the importance of carefully comparing and considering potential arbitration providers when drafting arbitration agreements. As the legal landscape around mass arbitrations continues to evolve, it will also be important for companies to stay up to date on new developments and to review their arbitration agreements on a regular basis.