Aya Healthcare Services is a travel-nursing agency that pairs nurses with hospitals. As a condition of employment, each nurse signs an arbitration agreement requiring that any employment-related disputes be resolved through arbitration rather than in court. The agreements also contain a delegation clause providing that an arbitrator — not a court — will decide any challenge to the validity of the arbitration agreement itself.
Four former Aya employees — Laura O’Dell, Holly Zimmerman, Lauren Miller, and Hannah Bailey — filed a putative class action against Aya, alleging that the company reduced their pay mid-contract. Their claims included breach of contract, fraudulent inducement, state wage-and-hour violations, and violations of the Fair Labor Standards Act. Aya moved to compel arbitration, and the district court granted that motion. The four cases were sent to separate arbitrations, where each arbitrator first had to decide whether the underlying arbitration agreement was enforceable. The results were split down the middle: two arbitrators found the agreements unconscionable due to one-sided fee and venue provisions, while the other two found the agreements valid, reasoning that a savings clause cured any unconscionability.
Meanwhile, 255 additional plaintiffs opted into the case under the FLSA’s collective-action provision, 29 U.S.C. § 216(b). Aya moved to compel each of these new plaintiffs to arbitrate under their own individual agreements.
Rather than send the 255 opt-in plaintiffs to individual arbitrations, the district court — now presided over by a different judge — raised the issue of collateral estoppel on its own initiative. After briefing, the court applied the doctrine of non-mutual offensive collateral estoppel: it gave preclusive effect to the two arbitral awards that had found the agreements unconscionable, while declining to credit the two awards that had upheld the agreements, reasoning that those favorable awards were not as “reasoned” or “thorough.” The practical result was sweeping — all 255 separate arbitration agreements were declared unenforceable without any of those employees ever going to arbitration.
The Ninth Circuit Court of Appeals reversed in the published case of O’Dell et al. v. Aya Healthcare Services, Inc., No. 25-1528 (9th Cir. April 2026). Writing for the panel, Judge Tung held that non-mutual offensive collateral estoppel cannot be used to preclude enforcement of arbitration agreements under the Federal Arbitration Act.
The panel grounded its reasoning in the text and structure of the FAA, along with a line of Supreme Court precedent warning against judicial devices that undermine arbitration.
First, the court looked to Section 2 of the FAA, which provides that arbitration agreements “shall be valid, irrevocable, and enforceable” except on grounds that exist for the revocation of any contract — such as fraud, duress, or unconscionability. The panel concluded that non-mutual offensive issue preclusion is not a “generally applicable contract defense” and does not constitute a “revocation” of a contract within the meaning of the statute. It is a procedural doctrine about relitigation, not a doctrine about defects in contract formation.
Second, the court emphasized that Sections 3, 4, and 10 of the FAA envision a scheme in which agreements are enforced according to their terms, arbitrations proceed without interference, and awards are confirmed unless the process was tainted by fraud or corruption. Nowhere in that framework, the court found, did Congress contemplate that a non-mutual preclusion doctrine could derail an arbitration the parties had agreed to undertake.
Third, the panel held that applying the doctrine violated the FAA’s foundational principle that arbitration rests on consent. As the Supreme Court has stated, arbitration “is a matter of consent, not coercion.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 681 (2010). Binding Aya and 255 employees to the conclusions of arbitrators in separate proceedings involving different parties rendered their own mutual consent meaningless.
Finally, the court observed that the district court’s approach effectively created a binding bellwether class action without any of the procedural safeguards that class certification requires — including adequate representation. Under the district court’s logic, a single arbitral award could foreclose hundreds or thousands of individually negotiated arbitration agreements. The panel found this result “fundamentally at war” with the FAA, echoing Stolt-Nielsen, 559 U.S. at 684, and consistent with the Supreme Court’s holdings in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018), and Lamps Plus, Inc. v. Varela, 587 U.S. 176 (2019). The panel also rejected the plaintiffs’ argument that Section 13 of the FAA — which gives confirmed arbitral awards the force of a court judgment — authorized the use of non-mutual preclusion, noting that incorporating a doctrine of non-mutuality that did not exist when the FAA was enacted in 1925 would effectively cause “the act to destroy itself.”