Ins and Outs of Class Action Arbitration

Class action arbitration is typically contracted for as part of signing an employment agreement or buying a product. It can also be ordered by the court. Recently, the United States Supreme Court ruled that employees who signed arbitration agreements that contain class action waivers are required to pursue such disputes through an arbitrator instead of becoming part of a class. In some cases, multiple cases may be brought through the same arbitration avenue.

When arbitrating through the AAA, there are several rules regarding how these cases will be processed. For example, there may need to be an arbitrator selected from a roster of class action arbitrators. The arbitrator may have the authority to determine whether action proceeds as a final class.

Just like with other class action claims, there must be notice provided to ascertainable class members. This notice must often meet specific requirements, including providing a summary of the claim, notifying the potential member of this status and providing instructions on how to be excluded from the class.

If the action proceeds under arbitration, the arbitrator hears testimony and examines the evidence that is presented to him or her. If there were potential members who were not included in the class action, they may still be able to pursue their claim separately and the arbitrator can make a partial final award to those individuals who are part of the class. This decision may be evaluated by the court if a party asks for such a review or the review is required per the arbitration agreement.