The Ninth Circuit confirms that arbitration is bilateral and collateral estoppel cannot be used to preclude enforcement of arbitration agreements. LinkedIn Facebook X The Ninth Circuit addressed a novel procedural question in O'Dell v. Aya Healthcare Servs., Inc., 171 F.4th 1173 (9th Cir. 2026): whether non-mutual offensive collateral estoppel can prevent enforcement of arbitration agreements under the Federal Arbitration Act ("FAA"). The answer is no. The underlying dispute arose when four former employees of Aya Healthcare Services, a travel-nursing agency, brought wage-related claims against their employer under the Fair Labor Standards Act. Each employee had signed an arbitration agreement containing a delegation clause requiring the arbitrator - not a court - to determine the validity of the arbitration agreement. As a result, the four disputes were sent to arbitration where two arbitrators upheld the agreements and two found them unconscionable and invalidated them. When 255 additional employees opted into the FSLA action, Aya moved to compel arbitration for each pursuant to the identical delegation clauses. The district court, however, gave effect to the two awards invalidating the agreements because they were more "reasoned" and "thorough," and relied on those two awards to invalidate the remaining 255 identical arbitration agreements. Id. at 1175. Stated differently, because two arbitrators found the agreements to be invalid, the district court applied the collateral estoppel doctrine to invalidate the remaining 255 agreements, rendering the separate arbitrations required by the arbitration agreements unnecessary. The Ninth Circuit rejected the district court's approach. The court emphasized that the FAA requires courts and arbitrators to enforce arbitration agreements as written, and to resolve disputes through individualized, bilateral proceedings. As the court put it: "Doing away with such bilateral proceedings between mutually consenting parties, because other arbitrators in other proceedings involving other parties have already decided the issue, is anathema to the FAA." Id. at 1174. In short, the district court's ruling undermined the principle of party consent and effectively imposed a bellwether-type proceeding where the parties had not agreed to one. Id. at 1177-78. The court further explained that non-mutual offensive collateral estoppel is not a "generally applicable contract defense" such as fraud, duress, or unconscionability, and therefore cannot serve as a basis for contract "revocation" under the FAA. The O'Dell decision confirms that arbitration is a creature of contract and proceeds in accordance with the parties' agreement. Courts may not deprive arbitrators of their ability to resolve the threshold question of arbitrability - as per the delegation clauses in those arbitration agreements - by relying on creative preclusions principles based on decisions made in other arbitration proceedings. DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising. (C) Kilpatrick 2026 Publish your content on JD Supra. * | Increased readership * | Actionable analytics * | Ongoing writing guidance Join more than 70,000 authors publishing their insights on JD Supra

At Qualivis Roundtable 2025, Jason Drucker, chief product officer at Aya Healthcare, delivered a powerful and engaging session in which he explored three essential themes: the state of the healthcare workforce, the role of emerging technology and how to build a more agile and intelligent staffing ecosystem.

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