Introduction

In Frazier v. X Corp., No. 24-1948 (2d Cir. Sept. 2, 2025), the U.S. Court of Appeals for the Second Circuit addressed a recurring flashpoint in modern “mass arbitration” practice: whether a court, under Section 4 of the Federal Arbitration Act (FAA), may compel a party to pay ongoing arbitration fees once an arbitration has begun but is stalled over fee allocation. The answer, the court held, is no. Disputes over payment of ongoing arbitral fees in an already-initiated arbitration are procedural matters for the arbitrator or the administering forum—not Article III courts—to resolve.

The case arises from thousands of individual arbitrations filed by former Twitter (now X Corp.) employees under Dispute Resolution Agreements (DRAs) requiring JAMS-administered, bilateral arbitration. JAMS invoked its Employment Arbitration Minimum Standards—incorporated by reference into the DRAs—to require the employer to pay all arbitration fees beyond the employee’s initial filing fee. X Corp. refused to pay, asserting the DRAs contemplated a pro-rata split and that, in any event, the DRAs delegated fee disputes to “the Arbitrator” rather than to JAMS. Because JAMS would not appoint arbitrators without the required payments, the proceedings stalled. The employees petitioned in the Southern District of New York to compel arbitration under FAA § 4 by ordering X Corp. to pay. The district court granted the petition. The Second Circuit reversed.

Summary of the Judgment

• The Second Circuit (Lynch, J., joined by Park and Robinson, JJ.) reversed the district court’s order compelling X Corp. to pay JAMS-assessed fees during the pendency of the arbitrations.
• Under FAA § 4, courts may compel arbitration only to the extent of ensuring that parties arbitrate “in the manner provided for in [their] agreement,” not to adjudicate intra-arbitration procedural disputes.
• Payment of ongoing arbitral fees is a “procedural” matter entrusted to arbitrators or the arbitral administrator; courts are not to intervene midstream to interpret or enforce forum rules or allocations.
• The DRAs themselves direct “any disputes [over arbitration fees]” to the arbitrator, reinforcing the presumption that fee issues are for the arbitral process, not the courts, to resolve.
• The court left open that if an arbitral forum ultimately terminates administration due to nonpayment, different remedies—such as allowing litigation to proceed—may become available, as other circuits have suggested.
• Disposition: Reversed and remanded with instructions to deny the petition to compel fee payment under § 4.

Analysis

Precedents Cited and Their Influence

The decision harmonizes with Supreme Court and circuit authority distinguishing “questions of arbitrability” for courts from “procedural” issues for arbitrators:

• Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) and John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964): The Court reaffirmed that procedural questions—those that “grow out of the dispute and bear on its final disposition,” including forum-specific, rule-based conditions—are presumptively for arbitrators, not courts. The Second Circuit relied heavily on this allocation to treat fee-payment issues as procedural.
• Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019): Courts must honor delegations and enforce arbitration agreements according to their terms. This underpins the Second Circuit’s refusal to step into questions the parties (and incorporated rules) assign to arbitrators or the forum.
• American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013): Reinforces the mandate to enforce arbitration agreements as written, including forum selection and governing rules.
• Dealer Computer Services, Inc. v. Old Colony Motors, Inc., 588 F.3d 884 (5th Cir. 2009): Directly on point. The Fifth Circuit held that payment of arbitration fees is a procedural “condition precedent” within the arbitrators’ purview; courts should not compel payment mid-arbitration under § 4. The Second Circuit expressly aligned with this reasoning.
• Hernandez v. MicroBilt Corp., 88 F.4th 215 (3d Cir. 2023) and Bedgood v. Wyndham Vacation Resorts, Inc., 88 F.4th 1355 (11th Cir. 2023): Both courts refused to review AAA’s decision to decline administration under its due process protocols. They concluded compliance with forum policies is an administrative decision for the forum, not an adjudicative matter for courts.
• Lifescan, Inc. v. Premier Diabetic Services, Inc., 363 F.3d 1010 (9th Cir. 2004): Nonpayment of AAA fees during an ongoing arbitration did not constitute a refusal to arbitrate under § 4.
• Wallrich v. Samsung Electronics America, Inc., 106 F.4th 609 (7th Cir. 2024) and Sink v. Aden Enterprises, Inc., 352 F.3d 1197 (9th Cir. 2003): These decisions indicate that once an arbitral forum terminates administration because a party refuses to comply (including by not paying fees), courts may treat the arbitration obligation as exhausted—often permitting litigation to proceed. The Second Circuit flagged this line without deciding it.
• Jacobs v. USA Track & Field, 374 F.3d 85 (2d Cir. 2004): Parties cannot use § 4 to obtain judicial review of an arbitral forum’s internal decisions on how to proceed with arbitration—an important intra-circuit anchor for the Second Circuit’s approach here.
• Daly v. Citigroup Inc., 939 F.3d 415 (2d Cir. 2019), Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840 (2d Cir. 1987), and Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985): These underscore the limited judicial role under the FAA and the obligation to compel arbitration only on threshold issues about agreement, scope, and arbitrability.
• Brown v. Peregrine Enters., Inc., No. 22-2959, 2023 WL 8800728 (2d Cir. Dec. 20, 2023) (summary order): The court noted—without deciding—that a district court may consider compelling fee payment under § 4. Frazier provides the definitive, precedential answer in the Second Circuit: it may not when the arbitration is already underway.

Legal Reasoning

The Second Circuit’s analysis proceeds in three steps:

1. FAA § 4 tightly cabins the court’s role. Section 4 empowers courts to decide whether parties are bound to arbitrate, whether the dispute is within the scope of the agreement, and to compel arbitration “in the manner provided for” in the contract. Once those gateway determinations favor arbitration, “procedural questions” are for the arbitrator or the arbitral forum.
2. Fee-payment disputes in ongoing arbitrations are procedural questions. Who pays what, when, and under what forum rules are “forum-specific procedural gateway matters” under Howsam. JAMS’s own rules confirm that:
   • JAMS Rule 2(a) permits party-designed procedures only if consistent with JAMS policies, including the Employment Arbitration Minimum Standards.
   • JAMS Minimum Standards (B)(6) require an employer, when arbitration is a condition of employment, to pay all arbitration costs beyond the employee’s initial filing fee.
   • JAMS Rule 31 allocates fees and allows the arbitrator to reallocate if a party advances the other’s share.
   • JAMS Rule 6(c) authorizes suspension or termination for nonpayment.
   The court emphasized that these are precisely the kinds of internal, procedural determinations that arbitrators and arbitral institutions are “comparatively more expert” to make and administer.
3. The DRAs reinforce arbitral—not judicial—resolution of fee disputes. The DRAs provide that “any disputes [over arbitration fees] will be resolved by the Arbitrator.” That language forecloses court involvement and validates JAMS’s and arbitrators’ authority to handle the allocation and consequences of nonpayment. The court added that contracts do not bind nonparties: even a requirement that “the arbitrator, not the administrator” decide fees cannot compel JAMS to administer contrary to its own policies; JAMS retains discretion to suspend or terminate administration.

Applying those principles, the court held that X Corp.’s nonpayment, coupled with JAMS’s decision to pause proceedings pending compliance, did not amount to a “failure, neglect, or refusal” to arbitrate under § 4. X Corp. repeatedly stated it was willing to arbitrate; the impasse concerned who would pay the ongoing fees, which is for the arbitral process to sort out.

Impact and Practical Consequences

1) Immediate doctrinal impact in the Second Circuit

• No court-ordered fee payments midstream. Litigants in the Second Circuit may not use § 4 to compel a counterparty to pay ongoing arbitral fees once the arbitration has begun before the selected forum. Fee allocation and enforcement are internal arbitral procedural issues.
• Deference to arbitral administration. Courts will not second-guess an arbitral forum’s application of its own policies—whether about fee schedules, due process protocols, or minimum standards—within an ongoing proceeding.
• Arbitrator versus administrator sequencing. Even if a DRA says “the arbitrator” decides a fee dispute, the forum may decline to appoint an arbitrator until its policies are satisfied; courts will not override that administrative gatekeeping.

2) Strategy in mass arbitrations

• For claimants:
  • If the administrator pauses for nonpayment, consider promptly requesting termination. Termination (as opposed to a stay) can be pivotal; several circuits treat termination for nonpayment as exhausting the agreement to arbitrate, opening the door to litigation.
  • Alternatively, claimants can advance fees to keep the case alive and seek reallocation in the final award under forum rules (e.g., JAMS Rule 31(c)). That is a cost-benefit judgment, especially in mass filings.
  • Evaluate state-law tools where available (e.g., in some jurisdictions, statutes impose penalties or consequences for employers’ nonpayment in employment/consumer arbitrations). Applicability varies by forum and governing law.
• For respondents (employers/companies):
  • Fee standoffs will not trigger judicial compulsion under § 4. But if the forum terminates for nonpayment, the respondent risks conversion to court litigation and potential forum-loss.
  • Where DRAs incorporate administrator rules by reference, ensure internal consistency and anticipate nonwaivable policies. If you want a different allocation, choose a different forum or adjust the agreement; administrators need not administer contrary to their policies.

3) Drafting implications for employment and consumer arbitration agreements

• Align fee provisions with forum policies. If selecting JAMS for employment cases, assume the Minimum Standards will apply whenever arbitration is a condition of employment—even if there is an opt-out—unless an arbitrator rules otherwise. Avoid ambiguous “apportionment” language that clashes with forum rules.
• Specify a fallback path. Consider adding a failsafe if the chosen forum declines administration (e.g., a second-choice administrator or a court litigation fallback) and clarify who decides any re-filing logistics.
• Provide advance-and-reallocate mechanisms. Agreements can authorize either party to advance fees to avoid suspension, with the arbitrator empowered to reallocate as part of the award.
• Clarify the initial decision-maker. If you want the arbitrator to decide threshold fee disputes, say so—but recognize administrators can condition appointment on compliance with their policies. The agreement cannot compel an administrator to proceed.

4) Judicial economy and forum competence

The ruling reinforces a national trend: courts avoid micromanaging arbitration. By channeling fee disputes to arbitrators/administrators, the decision advances arbitration’s efficiency goals and keeps federal courts out of iterative, mid-arbitration enforcement skirmishes.

Complex Concepts Simplified

• FAA § 4 (“petition to compel arbitration”): A statute allowing a party to ask a federal court to order arbitration where another party has “failed, neglected, or refused” to arbitrate under a written agreement. It is aimed at compelling arbitration to commence or proceed on gateway arbitrability questions—not at adjudicating procedural minutiae once arbitration is underway.
• Questions of arbitrability vs. procedural arbitrability:
  • Arbitrability (for courts unless clearly delegated): Did the parties agree to arbitrate this dispute? Does the clause cover these claims? Is there any nonarbitrable claim?
  • Procedural arbitrability (for arbitrators/administrators): Compliance with filing prerequisites, timeliness, fee payment, forum rules, discovery management—issues that arise after the decision to arbitrate is made.
• Incorporation by reference: A contract technique by which an agreement adopts external rules (e.g., JAMS Rules and Minimum Standards) as part of the parties’ bargain. Those incorporated rules guide procedure—but do not transform the administrator into a party bound to administer contrary to its own policies.
• JAMS Minimum Standards of Procedural Fairness: Baseline, nonwaivable policies JAMS applies in employment cases where arbitration is a condition of employment. They generally require the employer to pay all arbitration costs beyond an initial filing fee. If not satisfied, JAMS may refuse to administer.
• Condition precedent: A prerequisite that must be satisfied before a process can proceed. In arbitration, payment of required fees is often treated as a procedural condition to moving forward.
• Stay vs. termination by an administrator:
  • Stay/suspension pauses proceedings pending compliance (e.g., fee payment); the arbitration remains “alive.”
  • Termination/closure ends administration. Some courts treat termination for nonpayment as exhausting the arbitration obligation, permitting litigation on the merits.

Conclusion

Frazier v. X Corp. clarifies—and limits—the role of federal courts in fee disputes within ongoing arbitrations. The Second Circuit joins a growing consensus that mid-arbitration nonpayment of fees is a procedural matter for arbitrators and administering institutions, not a judicial trigger for compulsion under FAA § 4. The ruling has immediate consequences for mass arbitration strategy: claimants cannot use § 4 to force an employer to advance fees while an administrator’s case remains open, but they may either advance fees and seek reallocation or request termination and pursue litigation if termination occurs. For drafters, the opinion underscores the need to align fee provisions with the selected forum’s nonwaivable policies, provide fallbacks if administration is declined, and empower arbitrators to reallocate costs at the end of the case.

In the broader legal context, the decision reinforces arbitration’s core architecture: courts decide whether to send parties to arbitration; arbitrators and arbitral forums manage the process once there. By hewing closely to Howsam’s procedural/substantive divide, the Second Circuit promotes predictability, respects institutional competence, and reduces opportunities for collateral judicial contests that frustrate the efficiency arbitration is meant to deliver.