Irony of Ironies: Corporations Seeking to Avoid their Own Arbitration Agreements when Faced with Mass Arbitration Filings

Posted on: 04-7-2020

Irony of Ironies: Corporations Seeking to Avoid their Own Arbitration Agreements when Faced with Mass Arbitration Filings

In what must be the irony of all ironies in the class action and arbitration world, the New York Times reports companies requiring their customers to pursue claims in arbitration are being hit with “mass arbitration” in which thousands of customers file individual arbitration demands at the same time.  Faced with thousands of arbitration demands and the arbitration filing fees those companies’ agreements require them to pay when a customer files an arbitration demand, the companies are balking and trying to get out of arbitrating the claims. 

This comes after years of litigation across the country and several times before the United States Supreme Court in which companies argued that class arbitration cannot be allowed unless explicitly agreed to and that contractual waivers of class actions are enforceable.[1]  Apparently companies forgot the old saying that “what is good for the goose is good for the gander.”  As a judge ruling on an attempt by one of these companies to avoid arbitration of thousands of claims said, “there is a lot of poetic justice here.”  The irony cherry on top of this irony ice cream sundae is that one of the parties hit with mass arbitration filings and seeking to avoid its own arbitration agreement is AT&T, the same company who pushed the issue of barring class arbitration all the way to the United States Supreme Court.

While we suspect that mass arbitration is not a silver bullet for dealing with the ills of arbitration—repeat players leading to conflicts of interest, lack of appellate review, increased costs hindering bringing small claims, etc.—it does represent a new avenue for holding corporate behemoths accountable when they engage in misconduct and try to shield themselves behind arbitration agreements.  Perhaps it will begin to dissuade companies from placing adhesion arbitration provisions into every consumer contract.  We know this will not be the end of the long-running war over oppressive arbitration provisions in consumer contracts, but it at least is a setback for corporations trying to avoid being held accountable for their misconduct.

[1] Directv, Inc. v. Imburgia, 136 S. Ct. 463, 466 (2015) (“The Federal Arbitration Act therefore pre-empts and invalidates [any rule that class arbitration waivers make an arbitration provision unconscionable].”); Oxford Health Plans LLC v. Sutter, 569 U.S.564, 565 (2013) (“Class arbitration is a matter of consent:  An arbitrator may employ class procedures only if the parties have authorized them.”); AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 347 (2011) (stating that Stolt-Nielsen held that “the agreement at issue, which was silent on the question of class procedures, could not be interpreted to allow them”); Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 684 (2010) (“[A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.”); Jpay, Inc. v. Kobel, 904 F.3d 923 (11th Cir. 2018); Catamaran Corp. v. Towncrest Pharmacy, 864 F.3d 966 (8th Cir. 2017); Dell Webb Communities, Inc. v. Carlson, 817 F.3d 867 (4th Cir. 2016); Opalinski v. Robert Half Intern. Inc., 761 F.3d 326 (3d Cir. 2014).

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