The Ninth Circuit sent a strong message to companies considering relying on arbitration agreements introduced mid-litigation to defeat class-action litigation.  Avery v. TEKsystems, Inc., __ F.4th __, 2026 WL 218992 (9th Cir. Jan. 28, 2026)—in which the court described the defendant’s communications as “misleading,” “harmful,” “contradictory,” “disparaging,” and “inaccurate”—confirms the authority of district courts to refuse to enforce arbitration agreements that undermine Rule 23 procedures.

The Avery plaintiffs brought a putative class action alleging California wage‑and‑hour-law violations.  After class‑certification briefing closed but before the court ruled, the defendant announced a new mandatory arbitration agreement applicable to employees, including the putative class members.  All employees received an email promoting the arbitration agreement and asserting that “litigation in court—particularly class and collective actions—are wasteful, inefficient means for resolving disputes, and tend to enrich only attorneys.”  That same day, putative class members received a second email warning that they would be subject to mandatory arbitration unless they separated from the company or affirmatively opted out of the agreement.

Shortly after the district court granted class certification, the defendant moved to compel arbitration for all class members who had not opted out.  The district court denied the motion, concluding that the company’s communications “threatened the fairness of the litigation” and could be invalidated under Rule 23(d).  The Ninth Circuit affirmed this decision.

First, the Ninth Circuit held that Rule 23(d) “authorizes a district court to refuse to enforce an arbitration agreement.”  Enforcing the agreement in these circumstances, the court explained, “would subvert FRCP 23 by turning this typical Rule 23 opt‑out class proceeding into an opt‑in proceeding.”  And while the FAA generally protects arbitration agreements, Rule 23 operates as an ordinary federal procedural rule that permits courts to decline to enforce agreements—including arbitration agreements—that disrupt the class‑action process.

Second, the Ninth Circuit agreed that the defendant’s communications “threatened the fairness of the class action proceedings.”  According to the court, the defendant’s “disparaging and inaccurate framings of class actions” were particularly significant because the emails were “the first communication many putative class members received about the case.”  The communications were also internally inconsistent and confusing—sent during the winter holiday season, when many employees were less likely to see or fully process them—compounding the potential for misunderstanding.  The court also emphasized that the defendant’s statements about attorneys and attorneys’ fees were misleading, as the company “did not disclose that class members could consult with [putative class] counsel without paying out of pocket,” instead suggesting that class counsel “often charg[e] exorbitant fees.”

Third, the court affirmed the district court’s decision to assess the enforceability of the arbitration agreement itself—rather than delegate that question to an arbitrator—because the plaintiffs’ challenge to the agreement encompassed an implicit challenge to the entire agreement.

For companies considering mid‑litigation arbitration‑policy updates, Avery underscores that even facially standard agreements may not withstand judicial scrutiny if rolled out in a manner that appears to influence or distort the Rule 23 process.  Timing, tone, and clarity matter: communications that denigrate class actions, obscure access to counsel, or impose structures requiring putative class members to “opt in” to litigation risk being invalidated under Rule 23(d).