The Ninth Circuit Saved Arbitration Agreements, But the Bigger Battle May Lie Ahead

By: Mairead Dolan & Rena Meisler

When the Ninth Circuit decided O’Dell v. Aya Healthcare in April 2026, most commentators viewed it as a significant win for employers. The court rejected an attempt to use two adverse arbitration awards to invalidate hundreds of arbitration agreements, holding that non-mutual offensive collateral estoppel is incompatible with the Federal Arbitration Act (FAA). Arbitration agreements, the Ninth Circuit emphasized, must be enforced according to their terms and evaluated on an individualized basis.

That result seemed straightforward enough. Employees could not use one-off favorable arbitration rulings as a shortcut around hundreds of separate agreements. The decision reinforced a core principle of the FAA: arbitration is a matter of consent and individualized proceedings, not aggregation.

But, as it turns out, the story may not end there.

On remand, the District Court for the Southern District of California was faced with two motions: a motion to compel arbitration and a motion to conditionally certify an FLSA collective. Instead of ruling on the arbitration agreement first, as would have been expected, the court postponed ruling on arbitration. It opted instead to conditionally certify an FLSA collective, stating that “it makes sense to proceed first with [the] motion to provisionally certify the collective” and informing the parties that it would defer ruling on the motion to compel arbitration in order to avoid “deal[ing] with the arbitration issues” one-by-one. The court reasoned that proceeding in this order would streamline the process and avoid repeated motion practice as additional plaintiffs join in.

Left unchecked, that procedural decision may prove as consequential as the Ninth Circuit’s opinion itself.

The “order of operations” chosen by the district court “irremediably interferes with Aya’s bargained-for arbitration rights.” For years, employers have viewed arbitration agreements as a mechanism for avoiding the costs, leverage, and publicity associated with FLSA collective litigation. The conventional expectation was that a motion to compel arbitration would be decided at the outset, before the court issued notice and before a collective could grow. As Aya explained in its ex parte renewed motion to compel arbitration, “Aya should not have to undertake such a massive burden nor turn over information for more than 400,000 individuals, none of whom may presently participate in this case.” But the remand proceedings in O’Dell suggest a different possibility: even where arbitration agreements may ultimately be enforceable, an employer may still find itself litigating conditional certification, collective notice, and the attendant costs of nationwide FLSA litigation before any arbitration ruling is reached. The practical consequence is that arbitration agreements may no longer function as the automatic off-ramp many employers assumed they were.

All hope, however, is not lost. Aya appealed the court’s order granting conditional certification of the FLSA collective, the court’s refusal to rule on Aya’s motion to compel arbitration, and its refusal to stay the district court proceedings pending the appeal.

Williams Weese Pepple & Ferguson’s Class and Collective Action Defense team will continue to monitor developments and provide updates as this important arbitration and collective action dispute progresses.