Mass Arbitration, Consolidation, and Contractual Limits: The Ninth Circuit’s Ruling in Jones v. Starz Entertainment

Following up on the Jones v. Starz Entertainment case, written about previously, the U.S. Court of Appeals for the Ninth Circuit has now issued a significant opinion. The court’s ruling adds clarity to an increasingly common procedural conflict: how mass arbitration claims are handled when companies—and arbitration administrators—seek to avoid the skyrocketing costs of processing tens of thousands of individual disputes.

At the heart of this case was a novel legal strategy employed by consumer claimants and a set of responses by both the corporate defendant, Starz Entertainment, and JAMS, the arbitration administrator. The stakes were high—not just for the parties involved, but for the broader landscape of arbitration enforcement, procedural fairness, and consumer litigation strategy.

Background: 7,300 Claims Filed

In the first wave of what was expected to be tens of thousands of consumer claims, over 7,300 individuals filed arbitration demands against Starz. These cases were rooted in disputes over how Starz allegedly handled user subscriptions—many consumers claimed they were misled into automatic renewals or not provided clear cancellation instructions.

Ordinarily, each arbitration claim would require its own filing fee and likely its own arbitrator. In mass arbitration contexts like this one, those fees can become enormous very quickly. In fact, had each of the 7,300 cases been administered separately, the arbitration fees alone would have exceeded $12 million.

Faced with this looming administrative burden, JAMS, at the request of Starz, consolidated all the pending claims into a single arbitration proceeding and appointed just one arbitrator. JAMS also adjusted the filing fee accordingly, charging a single consolidated fee of $1,750.

The Dispute Over Arbitrator Selection

However, problems arose almost immediately. JAMS attempted to assign arbitrators, but each was rejected by the Claimants. Eventually, JAMS advised the claimants that, under its procedures and California law, they could petition the California Superior Court to appoint an arbitrator if they remained dissatisfied with the selections.

Instead of pursuing this remedy in state court, Claimants filed a federal lawsuit in the Central District of California, seeking to overturn JAMS’ consolidation decision and to compel arbitration under their preferred terms—including, presumably, the appointment of numerous arbitrators and individualized arbitration for each claimant.

The federal district court denied the petition, and the claimants appealed. The Ninth Circuit has now unanimously affirmed that ruling.

The Ninth Circuit’s Ruling: Key Takeaways

The appellate court’s opinion addressed multiple arguments raised by the claimants and laid down key precedent regarding mass arbitration, consolidation, and party obligations under the Federal Arbitration Act (FAA). Some of the major holdings include:

1. The Claimants Were Not “Aggrieved” Under the FAA

To compel arbitration under the FAA, a party must show that the opposing party has “failed, neglected, or refused” to arbitrate. The Ninth Circuit held that Starz had done no such thing. On the contrary, Starz agreed to arbitrate and merely relied on JAMS’ administrative decisions to streamline the process.

Because there was no refusal to arbitrate, the claimants had no basis to petition the court under Section 4 of the FAA. In the court’s words, the consumers were not “aggrieved” parties in the sense contemplated by the statute.

This is a critical point. It confirms that dissatisfaction with how arbitration proceeds (especially where the administrator’s rules are being followed) is not the same as a refusal to arbitrate. Attempting to involve a federal court in such disagreements runs afoul of the FAA’s structure and intent.

2. No Right to Redesign the Arbitration Agreement

The Ninth Circuit also rejected what it called the “unprecedented” attempt by the claimants to “chisel an arbitration agreement into a version that suits [Jones’] preferred contractual interpretations and then order the other party to comply with those modified terms.”

In other words, once the parties agree to arbitration and designate a provider like JAMS, they are bound not only by the agreement’s substantive terms but also by the provider’s procedural rules. Courts do not have authority to rewrite those terms to align with one side’s preferences—particularly when those preferences are advanced after a dispute arises.

3. Consolidation is Not a “Gateway” Issue for Courts

One of the most important aspects of the ruling is the Ninth Circuit’s holding that the decision to consolidate arbitrations is not a “gateway issue” that must be decided by courts. A “gateway issue” typically refers to threshold questions such as whether an arbitration agreement exists or whether a particular dispute falls within its scope. These are the types of matters courts often must resolve before compelling arbitration.

But consolidation, the court said, is not one of those issues. Instead, it is a procedural matter left to the discretion of the arbitrator or the administrator—unless the arbitration agreement clearly provides otherwise. Because the parties in this case had selected JAMS as their administrator, JAMS’ authority to manage the proceedings—including through consolidation—was upheld.

Claimants cannot seek to compel arbitration and then claim that the very arbitration terms they are invoking (such as those allowing for consolidation) are unconscionable or otherwise unenforceable. That kind of selective enforcement undermines the contractual nature of arbitration agreements.

4. Consolidated Arbitration ≠ Class Arbitration

The court also drew an important distinction between consolidated arbitration and class arbitration. In a class arbitration, a few named claimants bring claims on behalf of many others who are not directly participating in the case. Those absent class members may be bound by the outcome, even if they never appear or submit claims.

In contrast, in consolidated arbitrations—like the one at issue here—each individual claimant retains their right to pursue their own claim on the merits. Even though those claims may be heard by the same arbitrator, each one is separately adjudicated.

This distinction helped the court differentiate the Jones case from other decisions involving concerns about due process or improper representation of absent parties. Because each of the 7,300 claimants in Jones was still pursuing their individual claim (just in a consolidated fashion), there was no procedural unfairness or deprivation of rights.

To read the decision, click here.

What This Means for Mass Arbitration Going Forward

The Ninth Circuit’s decision is likely to have ripple effects throughout the world of mass arbitration, especially in consumer and employment contexts where companies often face hundreds or thousands of similar claims.

A few implications stand out:

• Consolidation is here to stay. Arbitration administrators like JAMS and AAA have strong incentives to avoid duplicative proceedings and exorbitant fees. Courts appear willing to uphold their authority to consolidate proceedings, as long as the underlying agreements do not expressly prohibit it.

• Filing mass arbitrations is not a free pass. Plaintiffs' firms hoping to leverage mass arbitration as a pressure tactic must be prepared to navigate procedural decisions made by arbitration providers—decisions that courts may not second-guess.

• Careful contract drafting matters. If parties want to limit or prohibit consolidation, class treatment, or even particular administrators, those terms need to be included clearly in the arbitration clause. Absent such limitations, arbitration providers will retain wide latitude to structure the proceedings.

• Courts are not arbiters of arbitration procedure. The federal courts will continue to respect the boundaries set by the FAA. They will not intervene in procedural disputes unless there's a clear violation of statutory rights or contract terms.

Conclusion

The Jones v. Starz Entertainment decision is a powerful reaffirmation of the contractual and procedural framework that governs arbitration. It sends a clear message: once you agree to arbitration—and to a particular provider like JAMS—you are bound by that provider’s rules, even when they allow for consolidated proceedings that may not align with your litigation strategy.

While this may frustrate some mass claimants seeking individualized proceedings, it also underscores a fundamental principle of arbitration law: courts are not there to referee every dispute about how arbitration is conducted. So long as both parties agreed to arbitrate and the rules are being followed, arbitration must proceed on those terms.

In the wake of this decision, both companies and consumers would be well-advised to review their arbitration clauses and consider how future mass arbitration campaigns might unfold.