Is the Ninth Circuit Ruling Fair?

Nurses sued Aya Healthcare for wage violations. Each nurse had signed an individual arbitration agreement. Four disputes went to separate arbitrations; two arbitrators upheld the agreements, two struck them down as unconscionable. The district court applied non-mutual offensive collateral estoppel — using the two invalidating awards to void 255 other arbitration agreements, without sending those to arbitration. The Ninth Circuit reversed, holding the FAA prohibits this approach. O’Dell, et al. v. Aya Healthcare Services, Inc., No. 25-1528 (9th Cir. 4/1/26) (Tallman, VanDyke, Tung).

Non-mutual offensive collateral estoppel, when it does apply, enables a plaintiff to use collateral estoppel as a sword rather than a shield, applying a helpful outcome from a case in which the plaintiff was not a party to the benefit of the new plaintiff. It is a form of issue preclusion used to avoid relitigating an issue. But unlike classical issue preclusion, it is not mutual because it is used by a party who was not part of the initial litigation, and it is offensive rather than defensive.

At first blush, the outcome seems unjust, because a fundamental principle of justice is that like cases should be decided alike. But here, fairness cuts both ways.

The parties’ consent to arbitrate is a fairness principle, if one can put out of mind the adhesive nature of many employment contracts. Also, two of the four arbitrations accepted the defendant’s position, and one can see a lack of symmetry if issue preclusion were only to be invoked by the plaintiffs here.