As we previously reported, the American Arbitration Association has been considering changes to its rules for consumer and workplace arbitrations. In February 2025, the AAA requested public comments on proposed changes to its rules. We submitted comprehensive comments to identify ways to improve the proposed rules to ensure fairness for all while reducing the risks of abuse of the arbitration process—especially in mass arbitrations.

The AAA has published at least some of the comments it received about its proposed consumer and employment rules, although the AAA allowed a number of commentators to remain anonymous.

After considering these comments, the AAA issued the final version of its new Consumer and Employment/Workplace Arbitration Rules, which became effective on May 1, 2025. In some good news, the AAA adopted some of our suggestions. But unfortunately other aspects of the rules will not improve the fairness and efficiency of arbitrations.

The AAA’s rule changes underscore the need for businesses to consider both whether to designate the AAA as the arbitration administrator in their arbitration provisions and, if so, whether any revisions to those provisions should be made to account for the new rules. 

What’s new?

The AAA has published a blog post describing the changes to the Consumer and Employment/Workplace Rules. Here are some key changes:

  • AAA Consumer Clause Registry changes: The new Consumer rules significantly change how businesses may register arbitration clauses with the AAA and renew existing registrations. As before, the AAA will register arbitration clauses only if it concludes that the clauses comply with the AAA’s Consumer Due Process Protocol. But the AAA now has announced that an administrative finding of compliance is not final and can be revisited by arbitrators in any subsequent case. In addition, the AAA has declared that, once a clause is registered, if “[i]f a business declines to pay the annual Registry fee, . . . the AAA will decline to administer consumer arbitrations arising from that arbitration agreement,” and “[c]harging an expedited review fee as an alternative is not permissible.” 
  • Dispositive motions: The Consumer and Employment/Workplace rules include new language that may discourage arbitrators from authorizing the filing of dispositive motions. Dispositive motions are often the most efficient way to resolve or simplify an arbitration—especially if some or all claims can be resolved as a matter of law. The rules now say that arbitrators must expressly “consider the time and cost associated with the briefing of a dispositive motion in deciding whether to allow any such motion.”
  • Potential for expanded discovery: The new Consumer rules add procedures for parties to issue document requests and expand the arbitrator’s authority to order other types of discovery, including interrogatories or depositions.
  • Documents-only cases: Under the new Consumer rules, any case in which $25,000 or less is at stake will be resolved solely on the basis of documents submitted by the parties, unless “the arbitrator decides that a hearing is necessary.” Previously, a hearing would be held if requested by either party.
  • Sanctions: The new rules now expressly authorize an arbitrator to impose “appropriate sanctions” to enforce the arbitrator’s orders and the AAA rules.
  • Arbitral appeals: Some consumer arbitration agreements provide for an appeal to a three-arbitrator panel under some circumstances. The AAA’s Consumer rules now expressly permit such appeals, so long as the appellate procedure complies with the Consumer Due Process Protocol and the AAA’s consumer arbitration fee schedule applies.

Mass arbitrations

Many commenters (including us) urged the AAA to amend its Mass Arbitration Supplementary Rules and fee schedules to guard against further abuses of the arbitration process. We explained that plaintiffs’ lawyers who threaten mass arbitrations seek to leverage the AAA’s current procedures and fee schedules to coerce settlements—often regardless of the merits of the underlying claims.

Because of the coercive nature of threatened mass arbitration, few arbitrations that are part of a group of threatened mass arbitrations actually proceed to a final award. Last month, the AAA reported that, in 2024, 92 consumer and employment mass arbitrations consisting of 280,349 total cases were filed, and that arbitrators issued awards resolving 73 consumer cases and 51 employee cases—about 1% of the 9,681 mass arbitration cases that the AAA resolved in 2024. These data show that, like in mass-torts litigation in court, few cases ultimately result in a final hearing on the merits. 

Unfortunately, the AAA chose not to amend its mass arbitration rules despite this empirical reality. In a statement on its website, the AAA indicated that it is “not currently considering revisions” to “the Mass Arbitration Supplementary Rules. If we decide to revise the rules in the future, we may request public comment at that time.”

Class actions—and increasingly, mass arbitrations—pursuing claims under the Video Privacy Protection Act are proliferating. My colleagues Archis Parasharami and Sophia Mancall-Bitel have recently written an article about these claims, key court decisions interpreting the VPPA, and strategies and defenses for companies facing VPPA claims.

As we previously discussed, the American Arbitration Association requested comments on proposed changes to its Consumer and Employment Arbitration Rules.

We submitted comprehensive comments on the proposed amendments on behalf of the U.S. Chamber of Commerce, the American Financial Services Association, and the Automotive Alliance for Innovation. The comments identify ways in which the proposed changes can be modified to ensure fairness for all parties while reducing the risks of potential abuse of the arbitration process. 

Notably, the comments focus heavily on the urgent need for action to curb abusive mass arbitrations. We have discussed the issue of mass arbitrations in more detail in the Chamber’s white paper and our report about the AAA’s January 2024 announcement of new mass arbitration rules and fee schedules.

We’re hopeful that the AAA takes these comments into account and updates its proposed rule changes to account for the issues we have identified.

The American Arbitration Association has announced that it has drafted potential amendments to its Consumer Arbitration Rules and Employment Arbitration Rules, and is seeking comments on those proposed revisions. The AAA has posted the proposed new Consumer and Employment Rules, charts comparing the new Consumer and Employment language to the current language, as well as summaries of the extensive revisions (one for the Consumer Rules changes and one for the Employment Rules changes).

We are evaluating the proposed changes, which are numerous. The deadline to submit comments is February 28, 2025. We anticipate working with members of the business community to submit comments on the proposed changes.

We have written before about the well-documented rise of abusive mass arbitrations, which seeks to weaponize arbitration clauses to try to extract a settlement from the targeted business, regardless of the merits of the underlying claims. The goal of these mass-arbitration filers is to inflict such high upfront costs on the targeted business—which pays most of the fees of consumer and workplace arbitrations—that it’s simply too expensive to contest the merits of any claim.  With alarming frequency, mass arbitration campaigns are reported to include claims that are obviously frivolous (such as claims filed in the names of people who are fictitious, deceased, or never purchased the product or service at issue).

Given the obvious unfairness of the practice, both arbitration providers and companies have been responding. For example, arbitration providers such as the AAA and JAMS have been adopting new mass arbitration rules and fee schedules to try to ameliorate some of the worst abuses. And companies have been revising their arbitration agreements to adopt new safeguards and new methods to ensure the efficient and fair resolution of mass claims.

One widely adopted method by companies is modeled on the multidistrict litigation process used by federal courts to address mass torts claims. Under the MDL process, courts sometimes conduct trials of a few bellwether cases to facilitate the orderly informed settlement of the remaining cases. Many companies have adopted a similar bellwether process for mass arbitrations.

The Ninth Circuit is currently considering a legal challenge to an arbitration clause that uses staged bellwether proceedings for mass arbitrations in Pandolfi v. AviaGames, Inc. In that putative class action, the plaintiffs are resisting enforcement of the arbitration clause in the company’s terms by arguing that the use of bellwether proceedings in arbitration is unconscionable under California law. After the district court accepted that argument, the company appealed the denial of its arbitration motion.

Along with our colleagues Andy Pincus and Jennifer Weinberg, we have filed an amicus brief on behalf of the Chamber of Commerce of the United States. As we explain in the brief, the district court’s unconscionability analysis failed to recognize the benefits of bellwether clauses in preventing abusive mass arbitrations and the fact that bellwether clauses are modeled after procedures commonly used in courts. In addition, we argue, the Federal Arbitration Act preempts the district court’s holding that bellwether clauses are unconscionable under California law because that reading of California law impermissibly disfavors arbitration.

We’ll be watching Pandolfi closely to see how the Ninth Circuit rules, so stay tuned for more developments.

Businesses have long argued that federal courts cannot grant class certification when members of the proposed class would lack Article III standing to bring their own claims. The Supreme Court is now poised to provide an answer. Last Friday, the Court granted review in Laboratory Corp. of America v. Davis to decide “[w]hether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury.” (Rule 23(b)(3) is the provision that governs certification of virtually all damages classes.) This issue is critical to class action litigation, and one that the Supreme Court left open in TransUnion v. Ramirez and Spokeo, Inc. v. Robins. (We, along with our colleague Andy Pincus and others at the firm, represented the petitioner in Spokeo and filed an amicus brief in TransUnion.)

Continue Reading Supreme Court to decide important case on Article III standing at the class-certification stage in damages class actions

Abuse of the arbitration system by plaintiffs’ lawyers through the filing of mass arbitrations is by now well-documented, including in a paper we authored for the Chamber of Commerce’s Institute for Legal Reform. Companies have responded by revising arbitration agreements to address this abuse, and arbitral forums have adopted new default rules to govern mass arbitrations when the issue is not addressed in the arbitration agreement.

Not surprisingly, plaintiffs’ lawyers—hoping to retain the ability to coerce settlements through mass-arbitration filings—are challenging contract provisions and arbitral forum rules that address the issue.

A panel of the Ninth Circuit recently refused to enforce the arbitration agreement in Ticketmaster’s terms of service, rejecting the company’s attempt to address the problem of mass arbitration by incorporating the rules of a new arbitration provider (New Era). That decision—Heckman v. Live Nation Entertainment, Inc.—is flawed in several respects. But more important for most businesses, the decision is narrow and rests on the unique aspects of the New Era rules adopted in the Ticketmaster agreement. Plaintiffs’ lawyers are already arguing that Heckman sweeps more broadly, but that approach misreads the opinion and, in addition, contravenes Supreme Court precedent interpreting the Federal Arbitration Act (FAA).

A majority of the Heckman panel first concluded that the arbitration agreement’s use of New Era’s rules was unconscionable under California law. Second, the entire panel—both the majority and the concurring judge—held that New Era’s rules transformed mass arbitrations into a type of arbitration so unlike traditional individual arbitration that (in the panel’s view) the FAA no longer applies. And the panel went on to say that without the FAA, which (as the Supreme Court held in AT&T Mobility LLC v. Concepcion) preempts California’s Discover Bank rule against waivers of class arbitration, Ticketmaster’s arbitration agreement was invalid under Discover Bank.

This post first describes the relevant background and the Ninth Circuit decision. We then explain why that decision is limited to New Era’s unique approach to mass arbitration—and that any broader reading of the decision is barred by the Supreme Court’s holdings in Concepcion and subsequent cases.

Continue Reading Ninth Circuit holds that arbitration agreement adopting New Era’s mass-arbitration rules is unconscionable—but the decision is narrow and limited to New Era’s unique rules

In recent years, parties entering into class settlements—largely at the urging of courts—have sought to boost the rate at which class members participate in those settlements by reducing gating requirements for submitting claims. In an increasing number of cases, claims are flooding in. But all too often, a meaningful percentage of those claims are fraudulent. And the tools used to submit these improper claims are being used to subvert other parts of the legal system.

Continue Reading The implications of skyrocketing fraudulent claims in class action settlements

The Seventh Circuit’s recent decision in Wallrich v. Samsung Electronics America, Inc. is significant news in the world of mass arbitration. In recent years, businesses have faced an increasing risk of being targeted by abusive mass arbitration campaigns that seek to leverage the arbitration fees the business must pay, win or lose, to coerce a settlement of even meritless claims. In Wallrich, Samsung was facing a mass arbitration that it contended was based on meritless claims; among other things, Samsung said, some of the claimants were not really Samsung customers at all.

Continue Reading Seventh Circuit reverses order forcing Samsung to pay arbitration fees for mass arbitration

The AAA recently announced a new set of rules of mass arbitrations, as well as new fee schedules for consumer and worker arbitrations. We and some of our colleagues wrote a Legal Update about the changes, how they impact businesses, and whether the updates might help with widespread abuses in mass arbitrations.