SACRAMENTO – A legal battle is likely to ensue in the wake of a federal judge's ruling that temporarily blocked a new anti-arbitration bill before it was set to go into effect on Jan. 1.
District Judge Kimberly Mueller of the U.S. District Court for the Eastern District of California noted earlier this month that one of the state's most influential business organizations, CalChamber, had raised enough “serious questions” regarding the new bill for her to take action.
An attorney with nonprofit California Employment Law Counsel (CELC) says he anticipates an appeal of the ruling.
“I anticipate a preliminary injunction and then I anticipate a merit ruling by the federal judge, which probably will be on summary judgment, and then I anticipate an appeal to the 9th Circuit,” Paul Grossman, general counsel for CELC, said.
Grossman said the legal battle could stop there, depending on the 9th Circuit panel.
“Depending on who you draw in the 9th Circuit – if you draw an average panel on the 9th Circuit – they’ll enforce the Federal Arbitration Act and that’ll be the end of it, the Supreme Court will have no interest," Grossman said. "But if one draws an extreme panel of 9th Circuit judges and they rule that AB51 is enforceable then I think the Supreme Court will take the case and rule as the trial judges rule.”
Authored by Assemblywoman Lorena Gonzalez (D-San Diego), Assembly Bill 51 set out to ban employers from requiring arbitration in employment contracts, and, by writing the law into the existing labor code, potentially exposing business owners to criminal liability.
Last month, the Chamber-led coalition of businesses and organizations filed a lawsuit to stop enforcement of AB 51. The complaint states that the law is “preempted by the Federal Arbitration Act (FAA) and should be declared invalid.”
“It doesn’t make sense to place businesses at risk for criminal penalties for a practice that has been favored by California and federal law, and consistently upheld by the courts,” Allan Zaremberg, president and CEO of the California Chamber of Commerce, said in a statement. “While it may not serve the best interests of the trial lawyers, expeditious resolution through the arbitration process serves the interests of employees and employers.”