The core dispute centered on whether non-mutual offensive collateral estoppel could give class-wide effect to a small number of adverse arbitration decisions. The Ninth Circuit held it could not. The court reasoned that the Federal Arbitration Act requires arbitration agreements to be enforced as written and that arbitration depends on consent and individualized proceedings, not broad preclusion mechanisms resembling class actions. The case originated in 2022 when former Aya employees filed a putative class action alleging pay-related claims. After the district court initially compelled arbitration for the named plaintiffs, two individual arbitrations ruled against Aya. The district court then treated those losses as binding on many others. The Ninth Circuit rejected that approach and remanded.
The decision significantly strengthens arbitration enforcement in the Ninth Circuit and forecloses a strategy plaintiffs had used to extend isolated adverse arbitral outcomes to larger groups. Employers facing wage-and-hour and employment class litigation across the circuit should expect this ruling to limit class certification efforts that rely on arbitration agreement challenges. Plaintiffs' counsel should reassess strategies dependent on collateral estoppel from arbitration outcomes and consider whether individual arbitration remains the only viable path forward for affected workers.