Rethinking Mass Arbitration: Building on MDL’s Proven Blueprint

May 27, 2025 | Ken Hagen

Mass arbitrations are an important new way for customers to protect their legal rights. Unfortunately, arbitration was designed for individualized disputes—not mass actions involving thousands of nearly identical claims. Yet legacy ADR providers keep trying to force mass arbitrations into an individualized approach that it was never built to support.

The result? Massive filing fees, procedural gridlock, and rising dissatisfaction on all sides. A stark example is the Sega mass arbitration where JAMS issued a $39 million invoice for 20,000 individual filings. Sega, arguing JAMS’ system was unmanageable and ill-equipped, responded by suing JAMS for lack of infrastructure and arbitrator availability.

Recently many ADR institutions have layered on batching protocols, imposed fee caps, and appointed “process arbitrators.” But these fixes are cosmetic at best or self-defeating at worst. The underlying structure remains unchanged—a traditional arbitration model forced to carry the weight of mass litigation. It’s a square peg in a round hole.

There’s a better blueprint — MDL. The federal courts have built and refined its multidistrict litigation process over several decades. MDL is a mature, battle-tested framework that has governed complex, high-volume litigation for decades. It consolidates related cases, appoints experienced judges, filters out weak claims, and ensures consistent, principled rulings. In short: it works.

Utilizing the advantages of an MDL process, can minimize concerns about substantive and procedural unconscionability. Here’s how:

1. Early Case Filtering Before Fees

One of the most destabilizing aspects of mass arbitration today is that filing fees are triggered and cases are assigned –- sometimes by hundreds or thousands –- before the respondents can file a motion to dismiss and challenge the claims. This invites abuse and creates leverage that can distort outcomes.

We need a system that empowers respondents to file a pre-filing fee Rule 12(b)(6) to allow all parties to move forward. Respondents need this early review to assess claims properly, which benefits everyone. If claims are valid, petitioners gain stronger leverage to negotiate fair settlements. Kicking the can down the road to hundreds of arbitrators in batch proceedings leads to greater cost, delay and inconsistent results.

The benefits are clear: meritless claims are dismissed upfront, valid ones proceed, and the cost of arbitration becomes proportionate to the value of the case.

2. Consolidation of Common Issues

Mass arbitration shouldn’t require the same legal issue to be argued 5,000 times. That’s not justice — it’s redundancy.

Instead, mass arbitration should adopt the consolidation principles of MDL. Shared legal or common issues should be resolved one time for all cases. Procedural consistency not only increases efficiency but also ensures fairness.

The Ninth Circuit’s Jones v. Starz Entertainment offers a roadmap: it affirmed that arbitration providers can consolidate cases with common elements, which aligns with the principles of equity and due process. Watch our video about the Jones v. Starz Entertainment decision.

Consolidation also expedites the arbitration process and reduces the risk of inconsistent outcomes—a major concern when thousands of arbitrations are handled separately.

3. Strengthened Affirmation Standards

The barrier to entry for mass claims is often low—a few clicks on a Tik-Tok or other social media solicitation is the fodder for thousands of filings, many of which lack verification or provide any customer information.

Borrowing from Rule 11 of the Federal Rules of Civil Procedure, most institutions now require claimants in mass arbitration to affirm the accuracy and legitimacy of their claims. Affirmation standards protect all parties— especially genuine claimants—by ensuring that the system isn’t hijacked by volume-driven tactics. However, none of the legacy providers empower respondents to bring an action for sanctions to dismiss some or all of the claims and recoup attorneys’ fees. Instead, this must await individual or batch arbitrations—or the respondent must seek the (unlikely) consent to have a process arbitrator hear a Rule 11 type motion.

Stronger affirmation standards would protect all parties—including genuine claimants—by ensuring that the system is not hijacked by volume-driven tactics.

4. Fee Structures Aligned with Merits

Legacy arbitral institutions have fees that force companies to pay millions in filing fees before any neutral has reviewed the case. This not only skews incentives but can also pressure settlements in ways that have little to do with the merits of the dispute.

A more balanced approach would tie fees to initial claim validation. Options could include:

Deferring filing fees until after a preliminary motion to dismiss is resolved.
Requiring plaintiffs’ firms to front filing costs, which are reimbursed only if claims survive threshold review.
Scaling fees based on categories of claims or outcomes of initial assessments.

These models would better reflect the true value of arbitration: resolving real disputes efficiently and fairly.

5. Opt-In vs. Opt-Out Clauses

Much of the controversy surrounding mass arbitration stems from mandatory arbitration clauses embedded in consumer agreements. Most users are unaware they’ve agreed to them, which fuels mass filings and backlash.

Some legal scholars and practitioners have proposed opt-in models, where arbitration requires active consent. While such a change may not be practical or advisable in every context, it does prompt a broader reflection: how do we ensure that arbitration remains a legitimate, consent-based mechanism?

At a minimum, companies should revisit the design and transparency of their arbitration clauses. Clear, accessible terms serve everyone’s interest.

Conclusion: Don’t Patch the Process. Transform It.

Arbitration is an alternative to litigation. However, that does not mean that we should abandon the best practices of a well-devised system. While arbitration was designed to be 1:1, using that system becomes brittle and too often breaks when it is twisted to accommodate what is really a consolidated procedure.

Mass arbitration is not going away. It reflects deeper shifts in consumer behavior, technology, and legal strategy. It is critical to ensure that consumers and employees have a method to protect their legal rights.

What we need is structural change to protect the integrity of the process, not surface fixes. If we continue jamming it into a traditional arbitration mold, the system will continue to break under judicial criticism.

In short: Both sides deserve a system that filters weak claims early. That consolidates common issues. That balances costs and due process. That treats arbitration not as a tool for leverage, but as a platform for resolution. The MDL framework offers a proven guide. Let’s build an ADR process that’s modern, scalable, and fair—one that protects access to justice while preserving arbitration’s original promise.

That’s how we fix mass arbitration. Not with patches. But with purpose.

Learn more about how FedArb has implemented these principles. Our MDL-inspired framework empowers companies to manage claims efficiently, reduce exposure to frivolous filings, and achieve faster, fairer outcomes—guided by the judgment of our unmatched panel of former federal judges.

Kennen D. Hagen is the president and CEO of FedArb.