{"id":2917,"date":"2026-05-04T17:16:37","date_gmt":"2026-05-04T21:16:37","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=2917"},"modified":"2026-05-04T17:16:37","modified_gmt":"2026-05-04T21:16:37","slug":"seventh-circuit-holds-that-refusing-to-register-an-arbitration-agreement-with-the-aaa-is-not-a-refusal-to-arbitrate-under-the-faa","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2026\/05\/04\/seventh-circuit-holds-that-refusing-to-register-an-arbitration-agreement-with-the-aaa-is-not-a-refusal-to-arbitrate-under-the-faa\/","title":{"rendered":"Seventh Circuit Holds That Refusing To Register An Arbitration Agreement With The AAA Is Not A \u201cRefusal To Arbitrate\u201d Under The FAA"},"content":{"rendered":"
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By Gerald L. Maatman, Jr., Jennifer A. Riley, and Hayley Ryan<\/strong><\/p>\n\n\n\n

Duane Morris Takeaways:<\/em><\/strong> On May 1, 2026, in Bernal et al. v. Kohl\u2019s Corporation et al., No. 24-2806, 2026 WL 1193991 (7th Cir. May 1, 2026), the U.S. Court of Appeals for the Seventh Circuit affirmed<\/a> a federal district court\u2019s denial of a petition to compel arbitration, holding that the defendant\u2019s refusal to register its arbitration agreement with the American Arbitration Association (\u201cAAA\u201d), which caused the AAA to close the arbitration proceedings, did not constitute a \u201crefusal to arbitrate\u201d under the Federal Arbitration Act (\u201cFAA\u201d). The Seventh Circuit reasoned that because the parties had delegated that procedural question to the AAA, the district court had no authority to compel arbitration.<\/em><\/p>\n\n\n\n

This decision is a significant win for businesses facing mass arbitration campaigns, particularly where arbitration agreements incorporate the AAA\u2019s Consumer Arbitration Rules. The decision offers a concrete mechanism to avoid the steep filing fees such campaigns generate. <\/em><\/em><\/p>\n\n\n\n

Background<\/strong><\/p>\n\n\n\n

Plaintiffs purchased products through Kohl\u2019s website in 2020 and 2022 and agreed to arbitration provisions that required all disputes to be resolved through binding arbitration before the AAA under its rules, including the AAA\u2019s Consumer Arbitration Rules. Id<\/em>. at * 1.  The arbitration agreement also delegated to the arbitrator exclusive authority \u201cto resolve any dispute related to the interpretation, applicability, enforceability or formation of\u201d the arbitration agreement. Id<\/em>.<\/p>\n\n\n\n

In December 2022, Plaintiffs\u2019 counsel initiated the pre-arbitration process by serving Kohnl\u2019s with approximately 10,000 notices of dispute, followed by an additional 44,656 notices in April 2023. These claims alleged that Kohl\u2019s marketing practices violated California\u2019s consumer protection laws. Id<\/em>. at *2. This is a classic mass arbitration strategy in which plaintiffs\u2019 firms file thousands of individual demands to exploit mandatory per-claim filing fees paid by corporate defendants.<\/p>\n\n\n\n

On May 22, 2023, while settlement discussions were ongoing, Kohl\u2019s modified its terms and conditions to designate the National Arbitration and Mediation tribunal (rather than the AAA) as the arbitration forum for all claims. That same day, Plaintiffs filed formal individual demands with the AAA and paid all applicable filing fees. Id<\/em>. Under AAA Consumer Arbitration Rule R-12, however, a business must register its arbitration clause and pay administrative fees for the AAA to administer consumer arbitrations. Kohl’s declined to do so. As a result,  the AAA exercised its discretion to decline administration, closed the cases, and refunded Plaintiffs’ filing fees. Id<\/em>. at *3.<\/p>\n\n\n\n

Plaintiffs then filed suit in the U.S. District Court for the Central District of California, which was later transferred to the U.S. District Court for the Eastern District of Wisconsin pursuant to the forum selection clause,  petitioning the court to compel Kohl\u2019s to register its arbitration agreement with the AAA, pay all necessary filing fees, and proceed to arbitration. Id<\/em>.<\/p>\n\n\n\n

The <\/strong>District Court\u2019s Ruling<\/strong><\/strong><\/p>\n\n\n\n

The U.S. District Court for the Eastern District of Wisconsin denied the petition. Relying on Wallrich v. Samsung Elecs. Am., Inc.<\/em>, 106 F.4th 609 (7th Cir. 2024), the district court found that the parties had bargained for the AAA to apply and interpret its own Consumer Arbitration Rules. Id<\/em>. at *3. When the AAA exercised that discretion by closing Plaintiffs\u2019 cases upon Kohl\u2019s non-registration, the court concluded it lacked authority to override that decision. Id<\/em>.<\/p>\n\n\n\n

Plaintiffs filed an interlocutory appeal, arguing that Kohl\u2019s refusal to register its agreement constitutes a refusal to arbitration in violation of the Federal Arbitration Act (\u201cFAA\u201d). Id<\/em>.<\/p>\n\n\n\n

The <\/strong>Seventh Circuit<\/strong>\u2019s Decision<\/strong><\/p>\n\n\n\n

The Seventh Circuit affirmed. Id<\/em>. at *7. It held that the AAA\u2019s exercise of discretion in closing Plaintiffs\u2019 cases \u201cflowed directly from the parties\u2019 agreement granting AAA that power, leaving nothing for the district court to compel under the Federal Arbitration Act.\u201d Id.<\/em><\/p>\n\n\n\n

Under the FAA, a party seeking to compel arbitration must establish: (1) an enforceable written arbitration agreement; (2) a dispute falling within the scope of the agreement; and (3) a refusal to arbitrate. Id<\/em>. at *4 (citing Wallrich, Inc.<\/em>, 106 F.4th at 617-18).  The Seventh Circuit\u2019s analysis centered on the third element, i.e. whether Kohl\u2019s non-registration constituted a refusal to arbitrate. Id<\/em>. <\/p>\n\n\n\n

The Seventh Circuit characterized the AAA\u2019s registration requirement as a \u201cforum-specific procedural gateway\u201d matter \u2013 the kind of matter parties implicitly delegate to the arbitration provider when they agree to arbitrate under its rules. Id<\/em>. at *6 (citing Howsam v. Dean Witter Reynolds, Inc., <\/em>537 U.S. 79, 85\u201386 (2002)).  Citing Howsam<\/em>, 537 U.S. at 85, the Seventh Circuit reasoned that, absent contrary language in the arbitration agreement, parties who agree to AAA arbitration intend to withhold registration disputes from judicial review. Id<\/em>. Because the AAA exercised its own discretion (consistent with the parties’ agreement) in closing the cases, there was “nothing for the district court to compel” under the FAA.  Id<\/em>. at *7.<\/p>\n\n\n\n

The Seventh Circuit also relied on its prior decision in Wallrich<\/em>, which held that a defendant\u2019s failure to pay AAA fees, which resulted in termination of the arbitration, did not constitute a refusal to arbitrate where the outcome flowed from the parties\u2019 agreed-upon procedures.<\/p>\n\n\n\n

The Dissent<\/strong><\/p>\n\n\n\n

Judge Joshua P. Kolar dissented.  In his view, Kohl\u2019s non-registration \u201cwas a conscious step to depart from its agreement to arbitrate,\u201d not a procedural question delegated to the AAA. Id<\/em>. at *8.  Judge Kolar warned that the majority\u2019s reasoning stretches Wallrich<\/em>\u2019s holding too far and effectively converts \u201cany bilateral agreement to arbitrate under AAA\u2019s Consumer Rules into something of a unilateral option-to-arbitrate for business.\u201d Id<\/em>. at *9.  Judge Kolar would have compelled Kohl\u2019s to register so that the AAA could initiate proceedings. Id<\/em>.<\/p>\n\n\n\n

Implications for Companies<\/strong><\/p>\n\n\n\n

Bernal <\/em>has immediate practical significance for companies facing mass arbitration exposure under AAA arbitration agreements. By simply declining to register its arbitration agreement with the AAA, a company can cause the AAA to close the proceedings without judicial recourse, at least in the Seventh Circuit. Businesses with AAA arbitration clauses in their consumer-facing agreements should assess whether this strategy is available and appropriate given their specific contractual language and forum.<\/p>\n\n\n\n

That said, the dissent’s warning deserves attention. If other circuits adopt Judge Kolar’s reasoning, or if the AAA amends its rules in response, the window this decision opens may narrow. Companies should monitor developments carefully and consult counsel before relying on non-registration as a mass arbitration defense.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Hayley Ryan Duane Morris Takeaways: On May 1, 2026, in Bernal et al. v. Kohl\u2019s Corporation et al., No. 24-2806, 2026 WL 1193991 (7th Cir. May 1, 2026), the U.S. Court of Appeals for the Seventh Circuit affirmed a federal district court\u2019s denial of a petition … <\/p>\n

Continue reading “Seventh Circuit Holds That Refusing To Register An Arbitration Agreement With The AAA Is Not A \u201cRefusal To Arbitrate\u201d Under The FAA”<\/span><\/a><\/p>\n","protected":false},"author":575,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[41],"tags":[],"ppma_author":[7,9,145],"class_list":["post-2917","post","type-post","status-publish","format-standard","hentry","category-arbitration-issues"],"authors":[{"term_id":7,"user_id":575,"is_guest":0,"slug":"gmaatman","display_name":"Gerald L. Maatman, Jr.","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2022\/09\/maatmangerald-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":9,"user_id":576,"is_guest":0,"slug":"jariley","display_name":"Jennifer A. Riley","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2023\/08\/rileyjennifer-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":145,"user_id":740,"is_guest":0,"slug":"hhryan","display_name":"Hayley Ryan","avatar_url":{"url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2025\/09\/ryanhayley.jpg","url2x":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2025\/09\/ryanhayley.jpg"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/2917","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/users\/575"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=2917"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/2917\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=2917"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=2917"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=2917"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=2917"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}