District Court Should Have Enforced Individualized Arbitration Agreements

O’Dell v. Aya Healthcare Servs., Inc., 171 F.4^th 1173 (9^th Cir. 2026)

This case arose from unpaid wage claims brought by former employees of Aya Healthcare, a travel‑nursing agency. The district court initially compelled four cases to individual arbitrations without ruling on the enforceability of the agreement because the agreement contained a delegation clause which provided that an arbitrator would decide the validity of the agreement. The results in arbitration were split: two arbitrators upheld the arbitration agreements while two struck them down. When Aya later sought to enforce the same arbitration agreement against different employees, the district court disregarded the valid delegation clause in the agreement and issued its own ruling on the enforceability of the arbitration agreement. In doing so, the district court relied exclusively on the unfavorable arbitration rulings—giving them preclusive effect while refusing to enforce the agreement for over 250 other former employees. The Ninth Circuit reversed.

The court emphasized that the district court’s approach clashed with the Federal Arbitration Act (FAA), which strongly favors enforcing arbitration agreements. Nothing in the FAA allows courts to invalidate such agreements based on how individual arbitrators rule in separate proceedings involving different parties. By treating a handful of arbitration decisions as binding on hundreds of other parties and claims, the district court effectively transformed an individual arbitration proceeding into a de facto class action without the parties’ consent. That approach, the Ninth Circuit made clear, is fundamentally incompatible with the FAA because it suggests “the sort of ‘judicial hostility to arbitration’ that the FAA was enacted to prevent.” See also Toothman v. Redwood Toxicology Laboratory, Inc., 2026 WL 1228477 (Cal. Ct. App. 2026) (employee hired through placement agency was not required to arbitrate claims against direct employer, which was not a party to the arbitration agreement).

District Court Should Have Enforced Individualized Arbitration Agreements