Avery v. TEKsystems, Inc., 165 F.4th 1219 (9th Cir. 2026)
More than 22 months after the commencement of a putative class action alleging various wage and hour law violations, TEK rolled out a new, mandatory arbitration agreement that automatically applied to putative class members unless they quit their jobs or affirmatively opted out of the Agreement. The district court declined to enforce the agreement after determining that TEK had subverted FRCP 23 by substituting a presumption of opt-out of litigation/opt into the arbitration agreement rather than the federal rule’s presumption of opt-into litigation/opt out of arbitration. The district court also concluded that TEK’s roll out communications threatened the fairness of the litigation by characterizing class actions as “wasteful,” “inefficient,” involving “exorbitant fees,” and tending “to enrich only attorneys,” among other things. The Ninth Circuit affirmed the district court’s order denying TEK’s motion to compel arbitration on similar grounds and also held that notwithstanding the agreement’s delegation provision requiring a determination of arbitrability by the arbitrator, the district court could determine arbitrability if there was a challenge to the entire agreement. Compare Sandler v. Modernizing Medicine, Inc., 2026 WL 773099 (9th Cir. 2026) (presence of a severability clause in an arbitration agreement does not render delegation clause unenforceable; district court erred by relying upon state law for contrary result).
