FAQs: Mass Arbitration vs. Class Action Lawsuits

What Is Mass Arbitration?

Mass arbitration is when significant numbers of consumers (typically hundreds or even thousands) file arbitration claims against the same company for the same issue. This is similar to class action lawsuits and is a way for consumers to seek redress and resolve a dispute that affects many people.

Arbitration is considered an alternative dispute resolution method and is used in place of taking a case to court for litigation. Arbitration takes place before a neutral third-party arbitrator (or sometimes a panel of arbitrators), and the decision made by the arbitrator is generally binding. Arbitration has grown in popularity as a dispute resolution method that can save time and money compared to traditional litigation.

When it comes to large, class-action-style cases, mass arbitration has increased in popularity in recent years. Many corporations have turned to mass arbitration as a way to keep cases out of court, saving them money and resolving disputes with consumers much faster. Additionally, many corporations that enter into contracts with consumers have included arbitration clauses as part of their contracts.

Primary Differences Between Class Action & Mass Arbitration Cases

While mass arbitration and class action cases are similar, they have some fundamental differences that are important to be aware of, especially if you are considering joining one. The primary difference is that those who participate in mass arbitration must file their own individual arbitration claim. Meanwhile, in a class action lawsuit, only one person (“lead plaintiff”) files a lawsuit, and that lawsuit and the lead plaintiff represent the larger group. In many cases, with a class action case, the covered consumers within the class do not even need to do anything to join the lawsuit.

Another major difference is how mass arbitration and class action cases are resolved. In class action lawsuits, all the class members typically receive the same (or very similar) relief or compensation. Meanwhile, with mass arbitration, every case result may be different. That said, in large-scale mass arbitration cases, many corporations will settle all cases at once or in the same way to save the time and money associated with arbitrating every single case.

Is Mass Arbitration Better than Filing a Class Action Suit?

Generally speaking, arbitration tends to benefit corporations more than consumers. This is because it can reduce the number of claims brought against the company for a given dispute. Because arbitration can cost consumers significant legal fees, they may be disinclined to file a case if their damages are relatively low compared to the costs of bringing an arbitration claim.

Some issues associated with mass arbitration:

  • It can limit your legal options when dealing with a dispute
  • Can prohibit you from bringing or joining a class action lawsuit
  • Can prevent one person from representing a larger group, as is done in class action cases
  • Mass arbitration can slow down the process for individual consumers if a large number of arbitration cases are filed
  • It may not be financially feasible for some consumers who cannot afford legal counsel and who would have otherwise been covered by a class action case

Most corporations that include mandatory arbitration clauses in their contracts are betting on the fact that relatively few people will ever bring an arbitration claim against them. However, some high-profile cases, such as the 75,000+ arbitration claims brought against Amazon recently, have caused companies to change their policies due to the sheer expense of handling thousands of arbitration cases. In this instance, Amazon has stated that it has removed its mandatory arbitration clause from its online terms of service.

As you can see, mass arbitration has its benefits and its drawbacks. If you are involved in a legal situation where joining a mass arbitration case is an option, we recommend consulting with an attorney to be sure that you understand your rights and how filing an arbitration claim will affect them. For example, our law firm has experience handling both consumer class action lawsuits and arbitration claims. Contact us online to schedule a consultation with Golomb Legal.