Courts Considering New Defense To Mass Arbitrations

In recent years, large companies have faced an onslaught of "mass arbitrations," a tactic used by the plaintiffs' bar to leverage against valid class-action waivers and arbitration provisions in consumer agreements. Specifically, the plaintiffs' bar tries to regain the posture of large-scale litigation by filing tens of thousands of cookie-cutter, individual arbitration demands against a single corporate defendant, forcing the defendant to front millions of dollars in arbitral fees and thus creating pressure for a windfall settlement.

Defendants have found little recourse in the courts or legislatures—in fact, California recently passed laws that set strict penalties for nonpayment of arbitration fees. See Cal. Code Civ. P. §§ 1281.97–1281.99. But defendants have started hitting back, and several courts are currently weighing the validity of new defense strategies.