Dec. 30, 2019 Federal Court Issues Temporary Restraining Order Prohibiting Enforcement of California’s Anti-Arbitration Law

Today a federal court issued a temporary restraining order prohibiting the state of California from enforcing Assembly Bill 51, the state’s new anti-arbitration law, at least until another hearing scheduled for January 10, 2020.  The new law was scheduled to take effect January 1, 2020.

The temporary restraining order was issued in the federal lawsuit filed earlier this month by a number of business organizations seeking a permanent injunction against enforcement of AB 51.  The business groups argue that AB 51 is preempted by the Federal Arbitration Act (“FAA”).  Our December 11, 2019 E-Update provides additional information about the lawsuit.

In the order, the U.S. District Court for the Eastern District of California found the “plaintiffs have raised serious questions regarding whether the challenged statute is preempted by the Federal Arbitration Act” and that allowing the new law to take effect even temporarily could “cause disruption in the making of employment contracts” in California. 

Today’s order means California employers can continue, at least until January 10, 2020, to require employees to sign mandatory arbitration agreements as a condition of employment.  It also means the Court found the plaintiffs’ argument that AB 51 is preempted by the FAA to be persuasive.

PPSC will monitor the status of this litigation and will provide further updates as events warrant.

This E-Update was authored by Aaron Buckley. For more information or for assistance with employee privacy policies, please contact Mr. Buckley, or any other Paul, Plevin attorney, by calling (619) 237-5200.