Arbitration, Mass Arbitration, Consolidation of Similar Arbitrations, Judicial Review, 2, 2
The same law firm filed 7,300 separate, but identical arbitration demands by Starz customers who claimed Starz violated Civ. Code 1799.3 by sharing their names and the films they viewed with other internet companies. JAMS consolidated the customers’ cases since they all involved the same legal and factual issues thereby saving itself from having to hold 7,300 identical arbitrations and Starz from $12 million in arbitration fees for separate arbitrations. Individual customers then repeatedly objected to arbitrators as they were appointed to handle the consolidated proceeding, so it became stalled. One customer then moved to compel arbitration. This decision affirms denial of that motion. Under 9 USC 4, a motion to compel is proper only when the opposing party fails, neglects, or refuses to arbitrate. Starz had not done so. Though Starz urged consolidation, it was JAMS that ordered it and the customers who blocked it by recusing arbitrators. Furthermore, consolidation was an alternative provided for in JAMS’ rules which the arbitration agreement incorporated. Unlike class arbitration, in a consolidated arbitration, each claimant individually appears and pursues his own claim. Also, there is a solution to the repeated disqualification of arbitrators. A party can apply to a California state court to appoint an arbitrator, following which all parties have only one chance at disqualification. The decision whether to consolidate does not involve any ruling on whether the parties agreed to arbitrate or whether the dispute is covered by their agreement; so it is not a gateway issue that the court must determine before arbitration proceeds. Customers can’t get unconsolidated arbitrations by seeking to compel arbitration but then arguing that the very clause they seek to enforce is unconscionable in allowing consolidation.