A travel-nursing firm's arbitration agreements were thrown out after split rulings – until an appeals court stepped in
A federal appeals court handed employers a big arbitration win, blocking a tactic that threatened to wipe out hundreds of agreements at once.
On April 1, 2026, the U.S. Court of Appeals for the Ninth Circuit reversed a lower court decision in a wage-and-hour case involving Aya Healthcare Services, a large travel-nursing agency. The ruling matters for any HR leader whose company relies on standard arbitration agreements for employees, especially across large workforces.
Aya hires traveling nurses and other clinicians and pairs them with hospitals. As a condition of employment, workers sign agreements saying that any employment-related disputes will be resolved in arbitration rather than in court. Those agreements also include what is known as a delegation clause, which sends questions about the validity of the arbitration agreement itself to an arbitrator instead of a judge.
Four former employees sued Aya, alleging that the company cut their pay in the middle of their assignments and asserting claims for breach of contract, fraudulent inducement, state wage-and-hour violations and violations of the Fair Labor Standards Act. The district court originally sent each of their cases to separate arbitration proceedings, following the terms of the agreements.
The four arbitrations produced a split result. Two arbitrators decided that the arbitration agreements were invalid because the fee and venue provisions were too one-sided against employees. The other two arbitrators found that the agreements were valid, pointing to a savings clause in the contracts that they believed fixed any unfairness. The district court later confirmed three of the four awards and declined to confirm the fourth because Aya had apparently not paid required arbitration fees.
While these proceedings were playing out, 255 additional employees opted in to the case under the FLSA’s collective action mechanism. Aya moved to compel each of those workers to arbitrate under their own agreements, just as it had with the original plaintiffs.
At that point, a new district judge stepped in and raised, on the court’s own initiative, whether Aya should be blocked from enforcing the arbitration agreements against the opt-in plaintiffs. The judge used a doctrine known as non-mutual offensive collateral estoppel, which, in simple terms, allows a party to rely on an earlier decision against someone else to avoid relitigating the same issue.
The court gave binding effect only to the two earlier arbitration decisions that had found Aya’s agreements invalid. It declined to treat the two decisions upholding the agreements the same way, considering them less detailed. On that basis, the court ruled that Aya could not enforce any of the 255 arbitration agreements at all, effectively shutting down hundreds of individual arbitrations before they started.
The Ninth Circuit said that move went too far. The panel held that the Federal Arbitration Act requires courts to enforce arbitration agreements according to their terms, except where standard contract defenses like fraud, duress or unconscionability apply. The doctrine the district court used is not a contract defense; it is a procedural rule about when past decisions control new cases. Using it to sidestep arbitration, the panel concluded, conflicts with the statute.
The court also focused on the central idea of consent in arbitration. Employees and employers had agreed that their disputes would go to arbitration, and that an arbitrator would decide any challenge to the agreements themselves. Letting the outcome in a few earlier, separate cases between different parties prevent hundreds of other employees and Aya from arbitrating would, in the court’s view, ignore that consent.
The panel added that the lower court’s approach turned what were supposed to be one-on-one arbitrations into something like a binding bellwether or class proceeding, without the usual protections of class actions. Under that logic, a single early case could decide the fate of thousands of agreements that no arbitrator ever reviewed individually.
The appeals court reversed the district court’s denial of Aya’s motion to compel arbitration and sent the case back for further proceedings. The underlying pay and wage claims are not resolved; they will now move forward consistent with the appellate ruling.
For HR and HR leaders, the message is twofold. First, large-scale arbitration programs are safer from being undone by a handful of early, unfavorable awards in the Ninth Circuit. Second, the content of arbitration agreements still matters greatly. The provisions that two arbitrators found unconscionable, including fees and venue, remain red flags that can invite challenges and need careful attention in drafting and review.
