Ninth Circuit Defers Decision on Petition for Rehearing Regarding AB 51
Last year, a divided Ninth Circuit panel found that the Federal Arbitration Act (FAA) did not completely preempt Assembly Bill (AB) 51, California’s ban on mandatory arbitration agreements. The U.S. Chamber of Commerce then filed a petition for a rehearing en banc (Petition), which has been pending before the Ninth Circuit since October 2021.
On February 14, 2022, the Ninth Circuit issued an order deferring consideration of the Petition until the U.S. Supreme Court rules on Viking River Cruises, Inc. v. Moriana. In Viking River Cruises, the U.S. Supreme Court will decide whether the FAA requires enforcement of representative action waivers in bilateral arbitration agreements, including waivers of claims brought under California’s Private Attorneys General Act (PAGA).
Although both Viking River Cruises and the legal challenge to AB 51 involve employment arbitration agreements, Judge Sandra Ikuta voted against the deferment, stating that Viking River Cruises does not raise issues relevant to the Petition.
Regardless, the wait for a decision will not be long as the U.S. Supreme Court has scheduled oral argument in Viking River Cruises for March 30, 2022. In the meantime, the preliminary injunction staying enforcement of AB 51 remains in effect pending a decision by the Ninth Circuit on the Petition, although employers should keep their eye on federal legislation awaiting President Biden’s signature that invalidates arbitration agreements and class action waivers related to sexual harassment and sexual assault claims.