Hunton Employment & Labor Perspectives

Earlier today, District Judge Kimberly J. Mueller of the United States District Court for the Eastern District of California, granted a temporary restraining order that temporarily prohibits the state of California from enforcing AB 51, a law that would prohibit companies in California from requiring arbitration agreements as a condition of employment.

You can read more about AB51 here and here.

AB51 was signed into law on October 10, 2019, and was set to go into effect on January 1, 2020.  On December 6, 2019, a coalition of both national and state business organizations and trade associations filed a lawsuit in the U.S. District Court for the Eastern District of California seeking a preliminary and permanent injunction against implementation and enforcement of the California law.  On December 16, 2019, those same groups sought a temporary restraining order, which was granted today, pending resolution of the plaintiffs’ motion for preliminary injunction.

In the Court’s decision granting the TRO, Judge Mueller found that the plaintiffs “carried their burden, at this early stage on a tightly compressed timeline, by raising serious questions going to the merits and showing that the balance of hardship tips decidedly in their favor.”  The judge also found that the plaintiffs showed a likelihood of irreparable injury and that a restraining order is in the public interest.  In particular, the Court noted that, “plaintiffs have raised serious questions regarding whether the challenged statute is preempted by the Federal Arbitration Act as construed by the United States Supreme Court.”

The Court’s ruling gives a welcome, if temporary, reprieve to California employers.  The plaintiffs’ motion for preliminary injunction is set for hearing on January 10, 2020.