Class Action Arbitration: Waivers, Rulings, and Exceptions

Class action arbitration is the resolution of group claims through a private arbitrator rather than a court, and in practice it has become rare: under a line of Supreme Court decisions interpreting the Federal Arbitration Act, companies can almost always force you to arbitrate your claims one at a time and give up the right to join a class action. If you signed an employment contract, a consumer terms-of-service agreement, or almost any standard-form contract in the last two decades, there is a strong chance you agreed to exactly that. The rule has narrow exceptions, and plaintiffs’ lawyers have found one real workaround, but the baseline is enforcement.

What the FAA Does and the One Carve-Out

The Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., tells courts that written arbitration agreements in contracts “involving commerce” are “valid, irrevocable, and enforceable.”¹ When a dispute arises, a court is generally required to send the parties to arbitration if their contract says so.

Many of those contracts also contain a class action waiver: a clause that says you can only bring your claim individually, not as part of a class or collective proceeding.² Whether these waivers are enforceable has been the central legal fight of the last fifteen years, and the Supreme Court has consistently sided with enforcement.

The statute does carve out one group. Section 1 excludes “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”¹ If you fall inside that exemption, the FAA does not reach your contract at all. The scope of the exemption has grown through recent litigation, discussed below.

The Rulings That Built the Current Rule

Six Supreme Court decisions, most of them 5–4, established the law that governs class action arbitration today. Each one answered a specific question, and together they close off most of the arguments a plaintiff might make against a class waiver.

Stolt-Nielsen (2010): Silence Means No Class Arbitration

In Stolt-Nielsen S.A. v. AnimalFeeds International Corp., the parties’ contract said nothing about class arbitration, and both sides stipulated that no agreement on the question existed. An arbitration panel authorized class proceedings anyway. The Supreme Court reversed, holding that “arbitration is a matter of consent, not coercion,” and that nobody can be forced into class arbitration without a contractual basis for finding they agreed to it.³ Individual arbitration became the default.

Concepcion (2011): State Law Can’t Save Class Rights

California had a rule, from Discover Bank v. Superior Court, that treated most class action waivers in consumer form contracts as unconscionable. In AT&T Mobility LLC v. Concepcion, the Supreme Court held 5–4 that the FAA preempts that kind of state law. Requiring class procedures, the majority reasoned, would make arbitration “more formal, cumbersome, and costly” and stand as an “obstacle” to the FAA’s purpose.⁴ The ruling knocked out the main tool state courts had used to strike down class waivers in consumer contracts.

Italian Colors (2013): “Not Worth It” Isn’t Enough

Merchants argued that enforcing a class waiver would effectively kill their federal antitrust claim because individual arbitration costs (hundreds of thousands in expert fees) dwarfed any possible individual recovery. The Court enforced the waiver anyway in American Express Co. v. Italian Colors Restaurant. The “effective vindication” exception, Justice Scalia wrote, covers only clauses that explicitly bar statutory rights or impose fees so high that arbitration is “impracticable.” The fact that pursuing a claim alone isn’t economically rational does not qualify.⁵

Epic Systems (2018): Employment Waivers Are Enforceable

Employees argued that the National Labor Relations Act’s protection of “concerted activities” gave them a substantive right to collective legal action that overrode the FAA. In Epic Systems Corp. v. Lewis, the Supreme Court disagreed 5–4. The NLRA protects the right to organize and bargain collectively, Justice Gorsuch wrote, but it does not confer a right to class litigation, and there was no “clear and manifest” congressional intent to override the FAA.⁶ Employment arbitration agreements that require individualized proceedings must be enforced as written.

Lamps Plus (2019): Ambiguity Isn’t Consent Either

If silence doesn’t authorize class arbitration under Stolt-Nielsen, what about ambiguity? The Ninth Circuit had used a California rule that construes ambiguities against the drafter to find class arbitration authorized in an unclear agreement. The Supreme Court reversed in Lamps Plus, Inc. v. Varela, holding 5–4 that ambiguity, like silence, cannot establish consent to class procedures.⁷

Viking River (2022): California’s PAGA Workaround Closed

California’s Private Attorneys General Act lets employees sue on behalf of the state for labor code violations, in a structure that resembles but is not technically a class action. California had barred arbitration agreements from splitting individual PAGA claims from representative ones. In Viking River Cruises, Inc. v. Moriana, the Supreme Court held that the FAA preempts that rule. An individual PAGA claim can be sent to arbitration, and because PAGA requires an individual claim for standing, sending it to arbitration knocks out the representative claims in court too.⁸

How Many People This Affects

The scale is large. The Economic Policy Institute found that 56.2% of private-sector nonunion employees are subject to mandatory arbitration, about 60.1 million workers. Roughly 24.7 million of them are also bound by class action waivers.⁹

Few of those workers actually file. Based on American Arbitration Association data, about 1,880 mandatory employment arbitration cases are filed nationally per year, or roughly 1 in 32,000 covered employees in any given year.⁹ Of those who do, few win. In 2020, only 82 employees won monetary awards through arbitration, and the five-year consumer win rate was 5.3%.¹⁰ Attorneys are less willing to take arbitration cases because success rates and award sizes are both smaller than in court.

When Arbitration Can’t Be Forced on You

A few situations fall outside the general rule. If any of these fit, you may be able to stay in court or avoid arbitration entirely.

Sexual Assault and Sexual Harassment Claims

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, signed into law on March 2, 2022, amended the FAA to void predispute arbitration agreements in cases involving sexual assault or sexual harassment, as long as the plaintiff objects to arbitration.¹¹

A New Jersey appellate court clarified in December 2025 that if a lawsuit includes even one adequately pled claim of sexual harassment or assault, the entire case stays in court, including otherwise arbitrable claims like wage disputes or breach of contract. The court read Congress’s use of “case” rather than “claim” to signal that broader exemption.¹¹ There is a limit: the Act is embedded in the FAA, so it does not apply where the FAA itself does not reach, including Section 1–exempt workers and disputes governed by state arbitration law.¹²

Transportation Workers

The Section 1 exemption for “workers engaged in foreign or interstate commerce” has been widened across four consecutive Supreme Court decisions. The most recent is Flowers Foods, Inc. v. Brock, decided unanimously on May 28, 2026. The Court held that a worker who makes only local deliveries as part of an interstate supply chain can qualify for the exemption, even without personally crossing state lines. Justice Gorsuch rejected a bright-line rule that would have limited the exemption to workers who cross state borders or interact with vehicles that do.¹³ The ruling joined New Prime, Saxon, and Bissonnette in pulling more delivery and logistics workers out of the FAA’s reach.¹⁴ Workers who fall inside the exemption cannot be compelled to arbitrate under federal law at all.

Arbitration Agreements Imposed Mid-Lawsuit

Companies sometimes try to roll out arbitration agreements after a class action has already been filed, hoping to shrink the class. The Ninth Circuit rejected one such effort in Avery v. TEKsystems, decided January 28, 2026. The employer introduced a mandatory arbitration agreement after class certification briefing was complete, requiring employees to opt out or leave their jobs to remain in the class.¹⁵

The court refused to enforce the agreements, calling the employer’s communications “misleading,” “disparaging,” and “contradictory.” The company had described class actions as “wasteful” and “inefficient,” sent the communications during the holiday season, and failed to mention that class certification was imminent or that class counsel was available at no cost.¹⁶ The decision confirmed that district courts can use Federal Rule of Civil Procedure 23(d) to invalidate arbitration agreements that threaten the fairness of class proceedings.¹⁷

Mass Arbitration: The One Workaround That Worked

Starting around 2018, plaintiffs’ lawyers began using companies’ own arbitration clauses against them. The strategy, called mass arbitration, recruits thousands of claimants and files individual arbitration demands all at once. Because most arbitration agreements require the company to pay per-case filing and administrative fees, a flood of demands generates enormous upfront costs for the defendant, which creates settlement pressure before anyone reaches the merits.

DoorDash faced about 5,879 courier claims alleging misclassification. When the company refused to pay the arbitration fees, Judge William Alsup ordered it to commence arbitration for 5,010 workers at a cost of roughly $9.5 million, noting that DoorDash had “forced arbitration clauses upon workers” to avoid court but then “blanches at the cost” when workers invoked those clauses.¹⁸¹⁹ Amazon faced about 75,000 arbitration demands over allegations that Alexa devices recorded customers without consent, with potential fees in the tens of millions. In 2021, Amazon dropped its mandatory arbitration clause for consumer disputes and allowed customers to sue in court.²⁰ The replacement terms require litigation in King County, Washington courts, under Washington law, with a jury trial waiver.²¹

The arbitration providers have since reworked their rules to dull the financial weapon. The American Arbitration Association’s Mass Arbitration Supplementary Rules, effective January 2024, apply when 25 or more similar demands are filed. Per-case filing fees were replaced with a flat $11,250 initiation fee, split $8,125 for the business and $3,125 for the claimant. Cases that survive the initiation stage face smaller per-case fees on a sliding scale, dropping as low as $100 per case for the business when more than 3,000 claims are involved.²² The rules also require global mediation within 120 days and give “process arbitrators” authority to vet claims before the merits stage.

JAMS followed in May 2024 with Mass Arbitration Procedures that apply to 75 or more claimants represented by the same or coordinated counsel. JAMS uses a single nonrefundable $7,500 filing fee, with $5,000 borne by the business, and a designated process administrator who can challenge baseless demands.²² Both providers now require counsel to submit sworn declarations verifying case information, with potential sanctions for noncompliance.²³

Legislation to Watch

Broad reform has not passed. The Forced Arbitration Injustice Repeal Act, which would prohibit mandatory predispute arbitration in consumer, employment, antitrust, and civil rights disputes, has been reintroduced in the 119th Congress as S.2799 and H.R. 5350.²⁴²⁵ At the state level, New York’s Assembly Bill A93A would declare mandatory arbitration agreements in consumer and employment disputes “contrary to the established public policy” of the state. The bill remains in committee as of mid-2026.²⁶

For the tens of millions of workers and consumers already bound by arbitration agreements with class action waivers, the practical reality has not changed much: pursuing an individual claim is expensive, rare, and statistically unlikely to succeed. The Supreme Court has shown no appetite for revisiting its pro-enforcement line. What is moving is the perimeter, in the transportation-worker exemption, in mass-filing tactics, and in lower courts policing how and when companies can impose arbitration on people who are already suing them.

1
Every CRS Report. The Federal Arbitration Act: Background and Recent Developments
2
LegiStorm. The Federal Arbitration Act and Class Action Waivers
3
Justia. Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662
4
Justia. AT&T Mobility LLC v. Concepcion, 563 U.S. 333
5
Justia. American Express Co. v. Italian Colors Restaurant, 570 U.S. 228
6
Supreme Court of the United States. Epic Systems Corp. v. Lewis, No. 16-285
7
Supreme Court of the United States. Lamps Plus, Inc. v. Varela, No. 17-988
8
Justia. Viking River Cruises, Inc. v. Moriana, 596 U.S. ___
9
Economic Policy Institute. The Growing Use of Mandatory Arbitration
10
American Association for Justice. Forced Arbitration in a Pandemic
11
Buchanan Ingersoll & Rooney. New Jersey Appellate Division Clarifies Scope of Ending Forced Arbitration Act
12
Yale Law Journal. The Limits of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act
13
Supreme Court of the United States. Flowers Foods, Inc. v. Brock, No. 24-935
14
Husch Blackwell. Supreme Court Expands Scope of FAA Transportation Worker Exemption
15
Ninth Circuit Court of Appeals. Avery v. TEKsystems, Inc., No. 24-5810
16
Inside Class Actions. Ninth Circuit Declines to Enforce Misleading Arbitration Agreement Mid-Litigation
17
Public Justice. Avery v. TEKsystems
18
FindLaw. Abernathy v. DoorDash, Inc.
19
Courthouse News Service. DoorDash Ordered to Pay to Arbitrate 5,000 Labor Disputes
20
The New York Times. Amazon Drops Arbitration Requirement for Customer Disputes
21
UWW ADR. Amazon Quietly Makes It Easier to Sue
22
American Bar Association. Evolution of Mass Arbitration
23
Duane Morris. 2024 Newly Enacted AAA and JAMS Arbitration Rules
24
Congress.gov. S.2799 – Forced Arbitration Injustice Repeal Act
25
Congress.gov. H.R. 5350 – FAIR Act of 2025
26
New York State Senate. NY Assembly Bill A93A