Can Employees Use a Previous Arbitration Loss by Their Employer to Block Arbitration for Hundreds of Other Workers?

A Ninth Circuit ruling in a wage dispute involving travel nurses answers that question with a clear no — and the decision carries important lessons for California employees about how arbitration agreements work, what rights employees have to challenge them, and why the outcome of one arbitration cannot automatically protect a different group of workers from being compelled into arbitration themselves.

Case: O'Dell, et al. v. Aya Healthcare Services, Inc.

Court: United States Court of Appeals for the Ninth Circuit

Case No.: 25-1528

Get to Know the Plaintiffs: O'Dell v. Aya Healthcare

The plaintiffs in this case are former employees of Aya Healthcare Services, a travel nursing agency that places nurses and other clinicians with hospitals and healthcare facilities across the country, including in California. As a condition of employment, each had signed a mandatory arbitration agreement covering wage and hour claims and other employment disputes, which also contained a "delegation clause" specifying that an arbitrator — not a court — would decide whether the agreement itself was valid. When Aya sought to enforce those agreements, the results were mixed.

Get to Know the Defendant: O'Dell v. Aya Healthcare

Aya Healthcare Services, Inc. is a travel nursing agency that matches nurses and allied health professionals with hospital placements on a short-term basis. The company's employment agreements include mandatory arbitration clauses covering wage and hour disputes and other employment-related claims. When employees challenged whether those clauses were enforceable, Aya moved to compel arbitration — setting off a procedural chain of events that ultimately reached the Ninth Circuit.

What Are the Allegations in the Complaint?

The underlying claims involve alleged wage and hour violations by Aya Healthcare. Per the filed lawsuit:

Former travel nursing employees brought a putative class action against Aya alleging various wage-related violations under state and federal law, including California Labor Code claims and FLSA claims

As a condition of employment, each employee signed an arbitration agreement with a delegation clause, requiring an arbitrator to determine the validity of the arbitration agreement itself

The district court initially compelled four named plaintiffs to individual arbitrations; two arbitrators found the agreements valid and enforceable, while two found them invalid because of unconscionable fee and venue provisions

When Aya later sought to compel arbitration for more than 250 additional opt-in plaintiffs, the district court applied the two adverse arbitration rulings against Aya — using a legal doctrine called non-mutual offensive collateral estoppel — to block arbitration for all 255 employees

The Ninth Circuit reversed, holding that this approach is incompatible with the Federal Arbitration Act

What Was the Main Question in the Case?

The central legal question was whether a court can use two prior adverse arbitration rulings — reached in separate arbitrations involving different employees — to automatically prevent an employer from enforcing arbitration agreements with hundreds of other workers. The Ninth Circuit held that it cannot. Under the Federal Arbitration Act, each arbitration agreement is its own contract, and the question of whether it is enforceable must be evaluated individually based on the specific facts and parties involved. One employee's successful challenge to an arbitration agreement does not bind the employer as to every other employee who signed the same or a materially similar agreement. The case was remanded for further proceedings.

Why Does the Case Matter to California Employees?

While the ruling in O'Dell favored the employer on the specific legal question of collateral estoppel, it carries important educational value for California workers — particularly those in healthcare and staffing who routinely sign arbitration agreements as a condition of employment.

California workers who sign arbitration agreements should understand that those agreements can be challenged individually on grounds such as unconscionability, procedural unfairness, or violation of California public policy — but that a challenge must generally be pursued on a case-by-case basis

Employees cannot automatically benefit from another worker's successful arbitration challenge, just as they cannot automatically be bound by an unfavorable ruling against a different employee

Arbitration agreements that contain delegation clauses — which require an arbitrator rather than a court to decide whether the agreement is valid — require a specific type of challenge; simply arguing the underlying agreement is unconscionable may not be enough if you haven't specifically challenged the delegation clause itself

California workers with PAGA claims have additional protections: PAGA representative actions generally cannot be compelled to private arbitration, providing an alternative enforcement route that this ruling does not affect

A Brief Overview of the Case

Original complaint filed: Former Aya Healthcare employees file a putative class action in the U.S. District Court for the Southern District of California alleging wage-related violations

District court compels arbitration: Four named plaintiffs are sent to separate individual arbitrations; two arbitrators uphold the agreements, two find them invalid

255 opt-in plaintiffs join: Additional employees join the lawsuit under the FLSA; Aya moves to compel arbitration for all of them

District court blocks arbitration: Applying non-mutual offensive collateral estoppel, the district court uses the two adverse arbitration rulings to prevent Aya from enforcing its agreements against the 255 additional plaintiffs

April 1, 2026: The Ninth Circuit reverses, holding the Federal Arbitration Act does not permit this use of collateral estoppel; each arbitration agreement must be evaluated individually; case remanded for further proceedings

FAQs: O'Dell v. Aya Healthcare Services

Q: What is a mandatory arbitration agreement and why do employers use them?

A: A mandatory arbitration agreement requires employees to resolve workplace disputes through private arbitration rather than in court. Employers use them because arbitration is typically faster and more private than litigation, and class and collective actions are often blocked by class action waiver provisions in the same agreements.

Q: What is a "delegation clause" in an arbitration agreement?

A: A delegation clause is a provision that requires the arbitrator — rather than a court — to decide whether the arbitration agreement itself is valid and enforceable. To challenge a delegation clause, an employee must specifically argue that the delegation clause itself is unconscionable or unenforceable, not just that the broader agreement is.

Q: Can I challenge my arbitration agreement even if I signed it?

A: Yes. Employees can challenge arbitration agreements on multiple grounds, including procedural unconscionability (the way it was presented), substantive unconscionability (one-sided terms), and violation of California public policy. Each agreement must generally be challenged based on its own specific facts.

Q: What is collateral estoppel and why did the Ninth Circuit reject it here?

A: Collateral estoppel is a legal doctrine that prevents a party from re-litigating an issue that was already decided against it in a prior proceeding. The Ninth Circuit found that using collateral estoppel to block arbitration for hundreds of different employees — based on rulings involving different employees and different arbitrators — conflicts with the Federal Arbitration Act's requirement that arbitration agreements be enforced according to their own terms.

Q: Are PAGA claims in California subject to mandatory arbitration?

A: Generally, no. California's Private Attorneys General Act allows employees to bring representative actions on behalf of the state for Labor Code violations, and these claims typically cannot be compelled to private arbitration. This is an important distinction for California workers facing arbitration agreements.

Q: What should I do if I work as a travel nurse or through a staffing agency and want to understand my rights?

A: Carefully review any arbitration agreement you were asked to sign, paying close attention to delegation clauses and class action waivers. An employment attorney can evaluate whether your specific agreement may be challengeable under California law and whether alternative legal routes like PAGA may be available to you.

Questions About Your Arbitration Agreement or Wage Rights as a Healthcare Worker?

O'Dell v. Aya Healthcare Services is an important reminder that navigating arbitration agreements requires a careful, individualized approach — and that knowing your rights before a dispute arises can make all the difference. If you are a travel nurse, healthcare worker, or staffing agency employee with questions about your wage rights or your arbitration agreement, contact Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Knowledgeable employment law attorneys are ready to assist you in law firm offices located in Riverside, San Francisco, Sacramento, San Diego, Los Angeles, and Chicago.