Caitlin Capriotti – Class Action Defense

By Gerald L. Maatman, Jamar D. Davis, and Caitlin Capriotti

Duane Morris Takeaways: On April 1, 2026, in Laura O’Dell et. al. v. Aya Healthcare Services, Inc., No. 25-1528, 2026 U.S. App. LEXIS 9420 (9th Cir. Apr. 1, 2026), a panel for the Ninth Circuit held that the U.S. District Court for the Southern District of California erred in relying on non-mutual offensive collateral estoppel to preclude the enforcement of hundreds of arbitration agreements based select arbitral awards from unappointed arbitrators for different parties. This decision reaffirms the principle of consent set forth in the Federal Arbitration Act (“FAA”) and the Ninth Circuit’s preference (in line with the FAA) for enforcement of valid arbitration agreements in individualized proceedings.

Case Background

Aya Healthcare Services, Inc. (“Aya”) is an agency the pairs traveling nurses and other supporting clinicians with hospitals in need. In 2022, four former employees filed a putative class action against Aya for allegedly reducing their pay mid-contract, asserting breach of contract, fraudulent inducement, state wage-and-hour violations, and violations under the Fair Labor Standards Act (FLSA). As a condition of employment, all employees signed arbitration agreements to resolve any employment-related disputes outside of the court system. Aya moved to compel arbitration, and the U. S. District Court for the Southern District of California (the “District Court”) granted the motion and compelled all four named plaintiffs to arbitration.

Aya proceeded to arbitrate with each of the four plaintiffs in four separate arbitrations. Each plaintiff challenged the validity of the arbitration agreements, and the delegation clause assigned the arbitrator (rather than the court) authority to decide whether the arbitration agreement was valid. Two arbitrators ruled the arbitration agreements were unconscionable, and two arbitrators ruled the arbitration agreements were valid. By the time the parties moved the District Court to confirm their respective arbitral awards, 255 additional plaintiffs had opted-in to the case pursuant to a collective action procedure under the FLSA. Aya moved to compel each of these plaintiffs to arbitration. In response, a newly assigned district judge raised sua sponte the issue of whether collateral estoppel barred Aya from enforcing the additional arbitration agreements against the opt-in plaintiffs. Ultimately, the District Court denied Aya’s motion to compel arbitration.

The District Court applied the doctrine of non-mutual offensive collateral estoppel to preclude the enforcement of the arbitration agreements between Aya and the 255 employees. This doctrine was “non-mutual” because a party different from the party in the original action is seeking preclusion and “offensive” because the new party is using a prior award as a sword (rather than a shield). However, the District Court only gave the collateral estoppel effect to the two decisions finding the arbitration agreements unconscionable, and awarded no such power to the decisions holding the arbitration agreements as valid. The Ninth Circuit reviewed the motion to compel arbitration de novo.

The Ninth Circuit’s Decision

The Ninth Circuit held that the District Court’s novel application of an equitable preclusion doctrine did not preclude the enforcement of the arbitration agreements because application of the doctrine runs contrary to FAA’s intention to enforce the agreed upon terms of valid arbitration agreements in individualized proceedings. “Precluding an arbitration that the parties had agreed to – because a different arbitrator in a different proceeding had concluded that an agreement between different parties was unconscionable – would render the parties’ consent meaningless,” wrote U.S. Circuit Judge Eric C. Tung (emphasis in original). This goes against the fundamental requirement that each arbitration agreement requires individualized resolution. The Ninth Circuit also stated that “the application of non-mutual offensive issue preclusion would also violate the principle of consent that the [Federal Arbitration Act (“FAA”)] incorporates.” Id. at *8. When parties enter arbitration agreements, the FAA serves to have those agreements enforced. Further, even when the validity of an arbitration agreement is at issue, the issue-preclusion doctrine is not a “generally applicable contract defense.” Id.

Further, the Ninth Circuit determined that the District Court’s order effectively transformed individual arbitration proceedings into a bellwether class action to which the parties never agreed. This also goes to the issue of consent. The Ninth Circuit cited the U.S. Supreme Court’s decisions in Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018), and Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010), as holding that imposing a class action without the parties’ consent (or adequacy of representation) and where the parties had agreed to individual arbitration is a violation of the FAA. Allowing one arbitration proceeding to preclude hundreds or thousands of arbitration agreements, as the logic of the District Court suggests, regardless of adequacy of representation, would strip the resulting class action from all its important protective features.

As a result, the Ninth Circuit reversed the District Court’s judgment and remanded for further proceedings.

Implications For Employers

This decision reaffirms the strength of the FAA and reiterates the Ninth Circuit’s preference for enforcing arbitration agreements on an individualized basis.

District court judges who may have personal preferences against arbitration cannot destroy the FAA with novel doctrines inconsistent with the FAA.

By Gerald L. Maatman, Jr., Eden E. Anderson, and Caitlin Capriotti

Duane Morris Takeaways: On September 4, 2025, the Washington Supreme Court issued its highly anticipated decision in Branson, et al. v. Washington Fine Wine & Spirits, LLC, et al., Case No. 103394-0 (Wash. Sept. 4, 2025), holding that job applicants are not required to prove they are a “bona fide” or a “good faith” applicant to obtain remedies under the EPOA in class action litigation. The Washington Supreme Court acknowledged, but declined to address, other open issues under the EPOA, which means that state and federal courts in Washington will now be called upon to rule on other unresolved issues under the statute, including whether the EPOA even grants a private right of action to applicants in the first instance.

Case Background

Washington state’s Equal Pay and Opportunities Act (“EPOA”) was amended in 2022 to require employers to include wage or salary range information in job postings. Soon thereafter, a torrent of class action lawsuits followed, some filed by applicants who had legitimately sought employment, but far more filed by serial plaintiffs seeking recovery of staggering amounts of statutory damages and attorneys’ fees. Before it was further amended in 2025, the EPOA provided for $5,000 in statutory damages per job applicant.

Plaintiffs Lisa Branson and Cherie Burke submitted applications for retail positions with defendant and the job postings to which they applied did not contain the required salary or wage range information. Branson interviewed for the position for which she applied and discussed pay during that interview, but did not accept the position she was offered.

Subsequently, Branson and Burke filed a class action lawsuit invoking their right to statutory damages under the EPOA. Although Branson seemingly was a bona fide job applicant, the defendant filed a motion to bifurcate discovery, arguing that plaintiffs were not the type of “job applicants” the EPOA was intended to protect and that the statute only applies to “bona fide” applicants. The U.S. District Court for the Western District of Washington certified the following question: “What must a Plaintiff prove to be deemed a ‘job applicant’” under the EPOA? The Washington Supreme Court accepted certification to resolve that question.

The Decision

Relying first on the dictionary definition of “applicant,” as “one who applies for something,” the Supreme Court noted that the definition does not rely on the subjective intent of the individual to determine whether a person is an applicant. Thus, the plain meaning of the term means only “one who applies” irrespective of their intent in doing so. The Supreme Court noted that elsewhere in the EPOA the legislature used the phrase “bone fide,” but it did not do so in reference to job applicants, further confirming no such limitation.

The Supreme Court also found telling the fact that the legislature originally considered conferring remedies broadly to “individuals,” but then amended the statute to confer remedies on applicants and employees, suggesting the legislature specifically considered who could obtain remedies and yet did not include any further words of limitation such as “bona fide.” Additionally, the Supreme Court highlighted that although the agency charged with adopting rules implementing the statute, Labor & Industries, originally promulgated draft rules which defined a job applicant as a “good faith” applicant, that definition was withdrawn and never implemented.

The Supreme Court repeatedly noted in the decision that, if the EPOA is to be limited to bona fide or good faith job applicants, the Washington legislature will need to act to make this change.

Three of the nine justices issued a sharply worded dissent disagreeing with the majority’s ruling and expressing their view that the EPOA was not designed to “give bounty seekers an incentive to trawl the internet for noncompliant job postings to obtain a statutory damages award unrelated to any personal harm.” Dissenting Opinion, at 2.

Although the outcome is not what employers were hoping for, there are silver linings in the Branson decision and, in particular, in the Supreme Court’s numerous footnotes. Principally, although it declined to rule on the issue because the argument was not made by the defendant, the Supreme Court chose to highlight in footnote 3 that the EPOA may only confer a private right of action on employers, and limit applicants to filing claims with Labor and Industries. The Supreme Court also chose to emphasize another argument made in amicus briefing in footnote 6 of the decision wherein it highlighted that the remedies available under the EPOA may be too severe and unconstitutional. It declined to rule on that issue too as it also was not an argument made by the defendant. Thus, these issues and many others remain unresolved and may soon be addressed by Washington state and federal courts as the legions of EPOA cases, all stayed pending the Branson ruling, are now litigated.

Implications of the Decision:

The Branson decision is an unfortunate ruling for Washington state employers. An unharmed plaintiff who never had any legitimate interest in a posted job position and whose only goal is to collect money through legal proceedings now has the green light to seek remedies under the EPOA. That said, the Branson decision highlights other defense arguments that can and should be made in all pending EPOA cases. The decision suggests that a private right of action is limited to employees, and that applicants can only seek remedies under the EPOA through administrative proceedings before Labor & Industries.