Document ID: ./input/supremecourt_opinions/opinions/10pdf/09-893.pdf
Page Number: 18

Cite as:  563 U. S. ____ (2011) 

15 

Opinion of the Court 

Second,  class  arbitration  requires  procedural  formality.
The  AAA’s  rules  governing  class  arbitrations  mimic  the 
Federal Rules of Civil Procedure for class litigation.  Com-
pare  AAA,  Supplementary  Rules  for  Class  Arbitrations 
(effective  Oct.  8,  2003),  online  at  http://www.adr.org/
sp.asp?id=21936, with Fed. Rule Civ. Proc. 23.  And while 
parties can alter those procedures by contract, an alterna-
tive is not obvious.  If procedures are too informal, absent 
class members would not be bound by the arbitration.  For 
a class-action money judgment to bind absentees in litiga-
tion,  class  representatives  must  at  all  times  adequately 
represent  absent  class  members,  and  absent  members 
must  be  afforded  notice,  an  opportunity  to  be  heard,  and 
a  right  to  opt  out  of  the  class.    Phillips  Petroleum  Co.  v. 
Shutts,  472  U. S.  797,  811–812  (1985).    At  least  this 
amount  of  process  would  presumably  be  required  for  ab-
sent parties to be bound by the results of arbitration. 

We  find  it  unlikely  that  in  passing  the  FAA  Congress
meant  to  leave  the  disposition  of  these  procedural  re-
quirements to an arbitrator.  Indeed, class arbitration was 
not even envisioned by Congress when it passed the FAA 
in  1925;  as  the  California  Supreme  Court  admitted  in 
Discover  Bank,  class  arbitration  is  a  “relatively  recent 
development.”    36  Cal.  4th,  at  163,  113  P. 3d,  at  1110. 
And it is at the very least odd to think that an arbitrator
would  be  entrusted  with  ensuring  that  third  parties’  due
process rights are satisfied.

Third, class arbitration greatly increases risks to defen-
dants.  Informal procedures do of course have a cost: The
absence  of  multilayered  review  makes  it  more  likely  that 
errors  will  go  uncorrected.  Defendants  are  willing  to
accept  the  costs  of  these  errors  in  arbitration,  since  their 

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trating  a  class  is  more  desirable  than  litigating  one,  however,  is  not

relevant.  A State cannot defend a rule requiring arbitration-by-jury by

saying that parties will still prefer it to trial-by-jury.