Mass Arbitration Fees: Ninth Circuit Says the Company That Wrote the Class Action Waiver Must Pay to Arbitrate 12,000 Claims — or Face a Class Action

SAN FRANCISCO — A company that required its customers to arbitrate individually, then refused to pay the fees for the twelve thousand individual arbitrations they filed, has forfeited its right to arbitrate at all and must defend a class action in court, the Ninth Circuit held on Tuesday. The decision in Castellane v. Nimbus Fitness is the court's most direct answer yet to the question that has shaped consumer arbitration since mass filings began: whether a business can rewrite the rules once the strategy it chose turns expensive.

"A company that writes the rules of the game cannot forfeit when the other side shows up to play," the panel wrote.

The dispute

Nimbus, a connected-fitness company, sells equipment and subscriptions under terms that require every dispute to be resolved by individual arbitration before the American Arbitration Association under its consumer rules, and that waive class actions. In 2024, after Nimbus continued charging subscribers for a service it had discontinued, a plaintiffs' firm filed 12,400 identical arbitration demands. The AAA, applying its mass-arbitration fee schedule, invoiced Nimbus for several million dollars in initial fees. Nimbus declined to pay, posted revised terms on its website providing that mass claims would proceed in batches of ten through a bellwether process, and moved to compel arbitration under the revised terms. The AAA closed the cases for non-payment. The consumers sued in district court as a putative class; the court denied the motion to compel and Nimbus appealed.

What the court held

1. The revised terms are not the contract. Under Douglas v. U.S. District Court (9th Cir. 2007), a party cannot change a contract by posting new terms on a website; the consumers were never notified of the revision and never assented. The agreement was the one in force when they filed, which incorporated the AAA's consumer rules without batching provisions.
2. The fee schedule is part of the bargain. The Federal Arbitration Act requires courts to enforce arbitration agreements according to their terms, and Nimbus's terms delegated procedure and fees to the AAA. The AAA's mass-arbitration schedule, adopted in 2024, was the provider's rule in force and applied by its own terms; a company that incorporates a provider's rules takes the fee schedule that comes with them. The court distinguished Wallrich v. Samsung (7th Cir. 2024), in which the Seventh Circuit declined to order a company to pay AAA fees where the claimants had not proved that each of them had an arbitration agreement; here Nimbus conceded that each claimant was a subscriber bound by its terms.
3. Refusal is forfeiture. Under Brown v. Dillard's (9th Cir. 2005), a party that refuses to participate in arbitration it has agreed to cannot later compel it, and after Morgan v. Sundance (2022) no showing of prejudice is required. Nimbus's refusal to pay was a material breach, and the AAA's termination of the cases was the consequence the rules prescribed.
4. The class waiver does not travel to court. The waiver provided that claims "in arbitration" would proceed individually; it did not purport to waive class procedures in court, and the court declined to read the severability clause as rewriting it. The consumers may seek certification under Rule 23.

The broader fight

Mass arbitration emerged around 2019 as plaintiffs' firms realized that fee rules written for individual consumers become a weapon when thousands file at once; in Abernathy v. DoorDash (N.D. Cal. 2020) a court ordered a company to pay roughly $10 million in fees to arbitrate claims it had insisted be arbitrated. Companies responded by moving to new providers with batching rules, adding bellwether procedures and shifting fees. The Ninth Circuit struck one such arrangement in Heckman v. Live Nation (2024) as unconscionable; California enacted a statute requiring the drafting party to pay fees within thirty days or forfeit arbitration, which the state supreme court upheld against preemption in 2025; and both the AAA and JAMS issued reduced fee schedules for mass filings in 2024. Castellane adds a rule of timing: whatever procedures a company wants must be in the contract before the demands arrive.

A company that writes the rules of the game cannot forfeit when the other side shows up to play.

From the opinion

What it means

• For companies. Batching, bellwether and fee provisions are enforceable only if consumers assented to them and only if they survive unconscionability review; a provider's fee schedule, once incorporated, is a cost of the clause. Refusing to pay converts individual arbitration into a class action.
• For consumers. A company's non-payment of fees is grounds to proceed in court, and the class waiver may not follow. Claimants should preserve the provider's termination notice.
• For the circuit split. Castellane and Wallrich can be reconciled on their facts, but the Seventh Circuit's skepticism of provider fee determinations and the Ninth Circuit's deference to them will be argued as a conflict if Nimbus seeks certiorari.

What happens next

Nimbus has said it will seek rehearing en banc. The class action proceeds in the district court, where the consumers will move for certification; the company's exposure, on its own filings, exceeds the arbitration fees it declined to pay by an order of magnitude.

The Counsel will report the rehearing petition and the certification ruling. Consumers whose arbitrations were closed for a company's non-payment should keep the provider's notice; it is the document that opens the courthouse door.

This report is for general information only and is not legal advice. Readers should consult a licensed attorney about their own circumstances. Docket numbers and citations are to the official reporters unless otherwise stated.