Mass Arbitration: AAA Looks to Reign in Administrative Costs

Mass arbitration is a recent phenomenon created by enterprising plaintiffs as a direct result of a string of Supreme Court decisions that endorsed the use of class action waivers in arbitration agreements and precluded class-wide arbitration absent a specific agreement. Mass arbitration has targeted some of the largest corporations in America, as well as numerous financial services companies.

Designed to weaponize arbitration agreements against these companies, mass arbitration, in large part, exploits the asymmetries in the administrative fees and costs required to commence an arbitration. Those administrative costs can be staggering. In one example, Uber was forced to pay nearly $91 million dollars in administrative fees to AAA just to start the arbitration process with over 31,000 claimants. Claimants have successfully leveraged these significant and mandatory fees to extract large settlements from businesses at the outset of cases.

The American Arbitration Association (AAA) recently released Supplementary Rules and Fee Schedules for Consumer Mass Arbitrations that, on their face, appear to substantially reduce the administrative costs borne by businesses and also streamline the mass arbitration process.

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