The panel affirmed the district court’s denial of a motion to compel arbitration filed by Defendant TEKsystems, Inc. (“TEK”) in a putative class action brought by Plaintiffs Bo Avery, Jill Unverferth, Kristy Camilleri, and Phoebe Rogers (collectively, “Plaintiffs”).

Over 22 months after the commencement of the litigation, and after briefing on class certification had closed, TEK rolled out a new, mandatory arbitration agreement (the “Arbitration Agreement”) that automatically applied to putative class members unless they quit their jobs or opted out of the Arbitration Agreement. The district court granted Plaintiffs’ motion for class certification, and the class notice period began. Federal Rule of Civil Procedure (“FRCP”) 23 creates an opt-out requirement for class members because it mandates that members of a certified class must be provided with the “best notice that is practicable” and an opportunity to request exclusion during the class notice period. If class members do nothing, they are automatically members of the class. On the other hand, under TEK’s Arbitration Agreement, class members who do nothing automatically opted out of the class. In order to remain in the class, class members had to quit their jobs or affirmatively opt out of the Arbitration Agreement. Thus, the district court found that TEK subverted FRCP 23 by turning FRCP 23’s opt-out class procedures into opt in class procedures. The district court also concluded that TEK’s Arbitration Agreement roll out communications threatened the fairness of the litigation. These communications stated that class actions are “wasteful,” “inefficient,” involve “exorbitant fees,” “tend to enrich only attorneys,” and would “require” TEK “to ignore individual employee issues and concerns”; were sent and required action during the holidays; contained inconsistent statements about how and when to opt out of the Arbitration Agreement; and also implied that putative class members must consult their own attorneys at their own expense rather than class counsel. Thus, the district court denied TEK’s motion to compel arbitration.

Following U.S. Supreme Court precedent giving district courts the duty and broad authority to exercise control over a class action under FRCP 23(d), the panel held that a district court has the authority to decline to enforce a motion to compel arbitration under FRCP 23(d) to ensure the fairness of the class proceedings. The panel noted that its holding is in accord with the Fourth Circuit, Sixth Circuit, and Eleventh Circuit. The panel also held that TEK’s Arbitration Agreement roll out communications were misleading and threatened the fairness of the class action proceedings. Additionally, the panel held that the Arbitration Agreement’s delegation provision did not prevent the district court from determining the enforceability of the Arbitration Agreement. Thus, the panel affirmed the district court’s decision to decline to enforce TEK’s motion to compel arbitration.

https://cdn.ca9.uscourts.gov/datastore/opinions/2026/01/28/24-5810.pdf