Seyfarth Synopsis: After granting a
temporary restraining order days before AB 51 was to go into
effect, the Eastern District of California granted a motion for a
preliminary injunction on January 31, 2020. An order detailing the
court's reasoning will follow.
As we expected, AB 51—codified as Labor Code section
432.6 and forbidding employers to require employees to enter into
arbitration agreements as a condition of employment—was
promptly challenged on grounds of unconstitutionality and
preemption by the Federal Arbitration Act.
The lawsuit, brought by the U.S. and California Chambers of
Commerce, as well as several trade organizations, sought
declaratory relief and a preliminary injunction to stop the State
of California from enforcing the new law with respect to
arbitration agreements governed by the FAA.
