We previously blogged about an Illinois federal district court order requiring Samsung to pay about $4 million in arbitration fees in connection with 35,000 individual arbitration demands filed as part of a “mass arbitration.”  By way of update, Samsung is pursuing an appeal to the Seventh Circuit, which recently granted Samsung’s motion for a stay of the district court’s order pending appeal. 

Samsung initially asked the district court for a stay pending appeal.  It refused to do so, stating in relevant part:

Samsung asserts that it declined to pay the arbitration fee, but it stands ready to arbitrate.  The plaintiff suggests that’s irony.  It seems to me it almost sets up or does set up a Catch 22.  Here Samsung drafts an arbitration agreement, establishes the AAA as the arbitrator, and the arbitrator must — and then asserts that the arbitrator must determine the fee issues.  But in order to determine the fee issues, the arbitrator demands a fee deposit in advance to determine the arbitrability.  Samsung refuses to pay the fee but will arbitrate.  The arbitrator will not consider the issue to arbitrate without the payment of the fee.  So it seems to me this is a perfect Catch 22 that Samsung seeks to impose on the plaintiffs.

However, Samsung argued to the Seventh Circuit that the issue of arbitration fees was a matter for the AAA, not a court, to determine both under the AAA Rules and applicable law and that it would suffer irreparable harm if a stay was not granted.

The Seventh Circuit expedited the appeal, at Samsung’s request.  Briefing is scheduled to be completed by December 22, 2023, and oral argument will be held on February 15, 2024.   

The Seventh Circuit also asked the parties to brief the issue of whether appellate jurisdiction exists.  Samsung contends that the Seventh Circuit has jurisdiction under Section 16(a)(3) of the Federal Arbitration Act (FAA), which provides that an “appeal may be taken from … a final decision with respect to an arbitration that is subject to” the FAA.  The consumer plaintiffs argue that appellate jurisdiction is lacking because under Section 16(b)(3), an “appeal may not be taken from an interlocutory order … compelling arbitration ….”

We will continue to keep you updated on this important mass arbitration appeal.

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