The U.S. Court of Appeals for the Ninth Circuit has handed employers a significant legal victory in its June 23, 2026, ruling in the Cocom case.
The court rejected a plaintiff-appellee’s argument that an employment arbitration agreement was unconscionable, finding it fully enforceable.
Central to the ruling was the fact that the agreement’s scope was limited to employment-related claims, rather than extending to all potential claims between parties.
The Ninth Circuit’s decision distinguishes itself from recent California state court rulings that had found similar arbitration agreements unenforceable based on their scope and wording.
On the question of scope, the court found that “including but not limited to” language did not make the agreement impermissibly broad, given other limiting terms within the document.
The Ninth Circuit determined the agreement’s terms were “narrowed by the subsequent list of specific terms: ‘my hiring, my employment, my compensation, and/or the end of my employment, with the Company.'”
The court also addressed the agreement’s duration, ruling that limiting arbitration to employment-related disputes imposes an inherent limitation on how long the agreement can apply.
“The fact that the [agreement] is limited to employment-related disputes imposes an inherent limitation on the agreement’s duration,” the Ninth Circuit stated in its decision.
The ruling directly contrasts with the 2024 Cook case, in which a California appellate court read an arbitration agreement to apply to all claims, even those unrelated to employment.
Because the Cocom agreement covered only employment-related claims, the Ninth Circuit found that claims “stop accruing when the employment relationship ends,” resolving the duration concern entirely.
On the question of mutuality, the court held that any asymmetry in the agreement’s coverage of related entities, officers, directors, employees, clients, and vendors did not rise to substantive unconscionability.
The Ninth Circuit further noted that arbitration agreements are not unconscionable simply because they benefit third parties, providing useful clarification for employers structuring such agreements.
The court also found the agreement’s bar on using arbitration awards for preclusive or precedential effect was not substantively unconscionable, reasoning the provision simply restated California’s existing default rule.
Regarding waivers of representative actions under California’s Private Attorneys General Act, the Ninth Circuit did not decide whether those waivers were unconscionable, but found they could be severed from the agreement if necessary.
Legal analysts at Ogletree, Deakins, Nash, Smoak and Stewart, P.C. noted the ruling provides significant clarification on the enforceability of arbitration agreements under California law and limits the reach of recent state court decisions.
Employers may now want to review their existing employment arbitration agreements to ensure they are clearly limited in scope to employment-related claims, in line with the court’s guidance.