9th Circuit reverses decision to bar arbitration: Case of the overreaching jurist

Arbitration agreements can generally preclude class actions, but parties often agree to resolve arbitrations involving hundreds of people by streamlined processes. This is sometimes known as a bellwether process, where the parties agree that a determination in a few arbitrations can be a “bellwether” determining the outcome of the issue in others. The process keeps intact the basic concept behind an arbitration—that it is a creature of agreement between the parties. But what happens when a judge steps in and declares that a decision in one arbitration will have a binding “collateral estoppel” effect on the same issue in all the other 250 arbitrations raising the same issue? It’s efficient. But is it right? 

Split decision on validity of the agreement 

Aya Healthcare Services offers work to traveling nurses by pairing them with hospitals. The nurses and other supporting clinicians are employed by Aya, and as a condition of employment, they each sign an agreement with the company to resolve any employment-related disputes by arbitration rather than in court. If a dispute arises over the validity of the arbitration agreement, a “delegation clause” in the agreement provides that an arbitrator (rather than a court) will decide whether the arbitration agreement is valid.