Ninth Circuit Rejects SpaceX Arbitration Bid: When Can Harassment Allegations Keep a Case in Court?

Eight former employees asserted retaliation and other California employment claims after participating in an open letter addressing alleged workplace misconduct. They alleged that SpaceX terminated them for opposing conduct they asserted constituted sexual harassment. SpaceX sought to compel arbitration based on agreements signed as part of their employment contracts. ¹

On November 10, 2026, the Ninth Circuit affirmed the district court’s denial of that motion in Holland-Thielen v. SpaceX, No. 25-4811. The decision addressed where the case could proceed. It did not establish that SpaceX or Elon Musk committed harassment or unlawful retaliation, or that either owed damages. ¹

Section 401 defines a sexual-harassment dispute by reference to conduct alleged to constitute sexual harassment under applicable federal, Tribal, or state law. The majority did not import the federal pleading-sufficiency standard into that definition. Instead, the complaint must describe conduct asserted to constitute sexual harassment under applicable law. ^{1 2}

That statutory inquiry differs from deciding whether a harassment cause of action survives dismissal or ultimately succeeds. The majority distinguished assertions made before proof from established wrongdoing; rejecting compulsory arbitration was not a finding that the alleged conduct met every element of a harassment claim. ¹

Judge Tung dissented. He would require allegations of facts that, if proven, constitute sexual harassment under applicable law, and would have remanded for application of that standard. That is the dissent’s approach, not the majority’s holding. ¹

The majority found each plaintiff’s alleged retaliatory termination sufficiently connected to the asserted harassment dispute. Challenging punishment allegedly imposed for opposing sexual harassment can relate to that dispute even though retaliation is not itself harassment. All eight plaintiffs asserted the termination claim; the court examined each plaintiff’s statutory connection. ¹

Section 402 addresses a qualifying case, not only a standalone harassment claim. As Holland-Thielen explains, the Ninth Circuit’s earlier Ding v. Structure Therapeutics, Inc. decision rejected selective arbitration of other claims within a qualifying plaintiff’s entire case. Holland-Thielen applied that case-wide approach rather than originating it. ^{1 3}

The court expressly left unresolved joint actions in which not every plaintiff asserts a qualifying claim. One plaintiff’s allegations therefore should not be treated as automatically exempting every other plaintiff, much less an unrelated lawsuit. ¹

The EFAA concerns predispute arbitration agreements—agreements made before the dispute arose—and the relevant person must elect its protection. Its effective-date provision covers disputes or claims arising or accruing on or after March 3, 2022. That is not a rule based simply on when the arbitration contract was signed. ^{2 3}

Under 9 U.S.C. § 402(b), a court determines applicability even when the agreement delegates arbitrability questions to an arbitrator. The contract’s delegation language cannot transfer this statutory determination to the arbitrator. ³

A qualifying connection remains necessary. The majority rejected cursory or peripheral references: the plaintiff must seek relief on at least one claim premised on a sexual-harassment dispute. Inserting the words sexual harassment is not a reliable escape route from arbitration. The opinion also explains that relatedness must continue; dismissal of all claims premised on harassment disputes can change the arbitration analysis for remaining claims. ¹

Denial of arbitration does not eliminate ordinary defenses to the underlying claims. Questions about pleading sufficiency, timeliness, evidence, and liability remain distinct from this forum ruling. ¹

Evaluating arbitration requires examining the agreement, asserted conduct, statutory exception, and relevant chronology—not just locating a signature. Preserve the signed agreement and records showing when the dispute arose. A careful assessment separates access to court from the strength of the underlying claims.