SACRAMENTO, CA — The California Chamber of Commerce today hailed a ruling by the United States Court of Appeals for the 9th Circuit in Chamber v. Bonta that invalidates AB 51 (Lorena Gonzalez; D-San Diego) and ensures that arbitration can continue to be used as an efficient forum to resolve disputes by employees and employers in California.
AB 51 prohibited employers from requiring employees to sign agreements to arbitrate any disputes arising from the employee’s employment.
“This is a win for all Californians,” said CalChamber President and CEO Jennifer Barrera. “Until there is meaningful reform to our litigation environment – including PAGA – arbitration remains an efficient, cost-effective way to resolve disputes in a timely and fair manner for both employers and employees.”
CalChamber led a large coalition of employers in challenging AB 51, arguing that it conflicted with federal law. If allowed to remain in effect, AB 51 would have resulted in more litigation, imposed significant delays in California’s justice system and increased costs for businesses and workers alike. Further, as stated in the legislative analysis of AB 51 and in the complaint itself, the Supreme Court has repeatedly held that state laws singling out arbitration agreements for disfavored treatment are preempted. This is the primary reason that a predecessor bill to AB 51, AB 3080 (Lorena Gonzalez; D-San Diego), was vetoed by Governor Jerry Brown in 2018.
CalChamber and the employer coalition filed their initial motion to invalidate and stop enforcement of AB 51 on December 6, 2019. On December 30, 2019, Judge Mueller issued a temporary restraining order, halting enforcement of AB 51 until the matter could be resolved.
A recent study comparing employment arbitrations and litigation found that employee-claimants were greater than three times more likely to win in arbitration, more likely to receive high monetary awards in arbitration, and more likely to spend less time in arbitration than in litigation. Maintaining arbitration as a manner to resolve disputes is a benefit to employees and employers.
The California Chamber of Commerce (CalChamber) is the largest broad-based business advocate to government in California. Membership represents one-quarter of the private sector jobs in California and includes firms of all sizes and companies from every industry within the state. Leveraging our front-line knowledge of laws and regulations, we provide products and services to help businesses comply with both federal and state law. CalChamber, a not-for-profit organization with roots dating to 1890, promotes international trade and investment in order to stimulate California’s economy and create jobs. Please visit our website at www.calchamber.com.
AB 51 Lawsuit Chronology and Documents
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)).
Read more and listen to The Workplace podcast discussion on how the Viking decision affects employers and arbitration agreements.
AB 51 Lawsuit Documents
- Ninth Circuit Panel Votes to Rehear Case (8/22/22)
- Ninth Circuit Order Vacating Preliminary Injunction (9/15/21)
- Order Granting Preliminary Injunction (pdf-02/07/20)
- Plaintiffs’ Supplemental Brief (pdf – 01/24/20 )
- Defendants’ Supplemental Brief (pdf – 01/17/20)
- Order Granting Temporary Restraining Order and Setting Expedited Hearing on Preliminary Injunction (pdf – 12/30/19)
- Chamber of Commerce of the United States of America et al. v. Becerra et al. (pdf – 12/6/19)
(Case Number 2:19-at-01142, in the U.S. District Court for the Eastern District of California)
