Ninth Circuit Judge Ikuta summarized this case succinctly in his opening paragraph stating: “California enacted Assembly Bill 51 (AB 51) to protect employees from what it called “forced arbitration” by making it a criminal offense for an employer to require an existing employee or an applicant for employment to consent to arbitrate specified claims as a condition of employment. But AB 51 criminalizes only contract formation; an arbitration agreement executed in violation of this law is enforceable. California took this approach to avoid conflict with Supreme Court precedent, which holds that a state rule that discriminates against arbitration is preempted by the Federal Arbitration Act (FAA). This appeal raises the question whether the FAA preempts a state rule that discriminates against the formation of an arbitration agreement, even if that agreement is ultimately enforceable. We hold that such a rule is preempted by the FAA”. Chamber of Commerce of the United States of America v Bonga et al, 62 F.4th 473 (9th Cir. 2023).
The Ninth Circuit panel held the district court did not abuse its discretion when it granted the Chamber of Commerce’s Motion for a preliminary injunction againt enforcement of the statute.
It may be that AB 51 is still applicable to contracts not preempted by the Federal Arbitration Act. 9 U.S.C. §1 provides in part “… nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce”. This exemption has also been applied to pilots, truck drivers, and recently by the Supreme Court to a supervisor who loaded cargo onto an air plane scheduled to cross state lines.
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