Today a federal court issued a preliminary injunction prohibiting the state of California from enforcing Assembly Bill 51, the state’s new anti-arbitration law. Earlier, on December 30, 2019, the court issued a temporary restraining order prohibiting the law’s enforcement, just two days before it was scheduled to take effect.
The anti-arbitration law is being challenged in a federal lawsuit filed in December 2019 by a number of pro-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”).
In the court’s minute order issued today, Judge Kimberly J. Mueller of the U.S. District Court for the Eastern District of California indicated she will explain her reasoning in a detailed, written order to be issued “in the coming days.”
Today’s order means California employers may continue to require employees to sign mandatory arbitration agreements as a condition of employment. It also means the court continues to find the plaintiffs’ argument that AB 51 is preempted by the FAA to be persuasive.