Ninth Circuit issues first published opinion addressing mass arbitration

The US Court of Appeals for the Ninth Circuit issued its first published opinion addressing mass arbitration on February 28, 2025, following the court’s decision in Heckman v. Live Nation Entertainment, et al., 120 F.4th 670 (9th Cir. 2024).

In Jones v. Starz Entertainment, LLC, a unanimous panel of the Ninth Circuit affirmed the district court’s rejection of petitioner Kiana Jones’ attempt to use the Federal Arbitration Act (FAA) to override arbitration provider JAMS’ decision to consolidate 7,300 individual arbitrations into a single proceeding before a single arbitrator. In so doing, the Ninth Circuit distinguished its ruling in Heckman – in which the court rejected the mass arbitration bellwether framework through New Era ADR – and provided a potential path for cost-effective management of mass arbitrations.

DLA Piper, led by partners Jeff Tsai (San Francisco), Angela Agrusa (Los Angeles), and David Horniak (Washington, DC), represented Starz.

Background

Jones began as a mass arbitration. A national law firm representing plaintiffs in mass actions and mass arbitrations (Representing Law Firm) sent tens of thousands of demands for arbitration to Starz alleging violations of the Video Privacy Protection Act (VPPA). It then sought to initiate a tranche of 7,300 arbitrations, which, if administered individually, would have potentially incurred over $12 million in arbitration initiation fees. Starz argued to JAMS that the individual arbitrations should be consolidated, and JAMS agreed over the Representing Law Firm’s opposition.

As a consolidated proceeding, JAMS invoiced Starz a filing fee of $1,750 to open the arbitration. Following several arbitrator appointments by JAMS, the Representing Law Firm disqualified each one. At no point did Starz disqualify an appointed arbitrator. JAMS then informed the Representing Law Firm that it could petition the California Superior Court for an arbitrator appointment.

Instead of petitioning the Superior Court for appointment, the Representing Law Firm filed a petition to compel arbitration in the Central District of California on behalf of one of the Representing Law Firm’s claimants, Kiana Jones (petitioner). The petitioner argued that she was an “aggrieved” party under Section 4 of the FAA because Starz had failed to arbitrate with her in an “individual, bilateral arbitration.” Jones argued that JAMS’ decision to consolidate her arbitration denied her a right to choose her own arbitrator, which she averred was guaranteed by California law. She also argued that the Supreme Court’s decision preempting a California rule prohibiting class action waivers in most consumer contracts does not apply in consolidated arbitrations. As a result, Jones argued that the class action waiver in the Starz terms of use was unconscionable and that she should be allowed to bring her claim as a class action. Judge Kenly Kiya Kato rejected the petitioner’s argument that Starz refused to arbitrate, which resulted in an appeal.

The decision

The unanimous Ninth Circuit panel affirmed. Writing for the panel, Judge Richard Clifton’s opinion made three key holdings:

• Consolidation is not a “gateway” issue for a court. The Jones panel ruled that consolidation is almost certainly not a “gateway” issue to be decided by a court – instead, it is a “procedural” issue that could be determined by an arbitration provider’s administrators before appointment of an arbitrator. This reinforces the power of arbitration providers like JAMS, American Arbitration Association, and others to efficiently manage mass arbitrations.


• Not an aggrieved party. The petitioner was “not aggrieved under the [FAA] because Starz never failed, neglected, or refused to arbitrate.” Starz paid the invoice issued by JAMS and participated in the arbitrator selection process. The court also held that Starz’s decision to argue for consolidation of the arbitrations did not make the petitioner an “aggrieved” party under the FAA.


• Distinction between representative arbitration and consolidated arbitration. The court distinguished between class/representative arbitrations and consolidated arbitrations. In class and representative proceedings, the named claimants bring a case on behalf of absent class members. In consolidated proceedings, each claimant still pursues their own claims on the merits, even though each claim may be heard by the same arbitrator. The Ninth Circuit held that consolidation was a key factor distinguishing “defects” identified in the Heckman arbitration procedure, where absent claimants could be bound by prior merits decisions involving other claimants.

The panel also rejected the petitioner’s attempt to bring an unconscionability challenge as part of a petition to compel arbitration. The panel rejected the “unprecedented” effort to “chisel an arbitration agreement into a version that suits [the petitioner’s] preferred contractual interpretations and then order the other party to comply with those modified terms.”

Key takeaways

The Jones decision charts a potential path forward for mass arbitration as a cost-effective dispute-resolution option. DLA Piper has represented Starz throughout this litigation, and our team can assist with any questions you may have about how mass arbitration may impact your business.

For more information, please contact the authors.