AB 51 Lawsuit Chronology and Documents

A coalition of businesses led by the California Chamber of Commerce filed a lawsuit on December 6, 2019 to stop a California law that precludes employers from enforcing arbitration agreements made as a condition of employment—and making it a crime for businesses to do so, even if workers may opt out of arbitration. That incoming law — AB 51 (Lorena Gonzalez; D-San Diego) — the complaint stated, is preempted by the Federal Arbitration Act (FAA) and should be declared invalid. U.S. District Court Judge Kimberly J. Mueller acknowledged the concerns of the CalChamber coalition and issued a temporary restraining order on December 30, 2019, followed by a ruling on January 31, 2020 halting enforcement of AB 51 and invalidating the law. In a split decision on September 15, 2021, the U.S. Court of Appeals for the Ninth Circuit reinstated the law by vacating the preliminary injunction that prohibited California from enforcing AB 51. On August 22, 2022, a majority of the entire Ninth Circuit panel voted to rehear the case, making moot the CalChamber request for the entire court to hear the case. The arbitration ban was stayed again.

On February 15, 2023, the Ninth Circuit upheld the preliminary injunction, thereby invalidating AB 51 and its attempt to ban arbitration.

The Ninth Circuit had previously decided to defer consideration of the CalChamber en banc petition until the U.S. Supreme Court ruled on another arbitration agreement case, Viking River Cruises v. Moriana. In a win for California employers, the U.S. Supreme Court ruled on June 15, 2022 that individual claims under the Private Attorneys General Act (PAGA) can be compelled to arbitration if the employee signed a valid arbitration agreement to that effect (Viking River Cruises v. Moriana, 596 U.S. __ (June 15, 2022)).

The Workplace podcast discussion in June 2022 explained how the Viking decision affects employers and arbitration agreements.