Conflicting 9th Circuit Opinion Disfavors Arbitration Agreements
CJAC filed an amicus brief on November 1 urging the Ninth Circuit
Court of Appeals to grant en banc review of
its 2-1 panel opinion in Chamber of Commerce, et al. v.
Bonta, et al., 20-15291.
The opinion from the Ninth Circuit upholds California Law AB 51,
which explicitly targets arbitration agreements for disfavored
treatment in clear violation of the FAA. This opinion upholding
AB 51 (Cal. Labor Code § 432.6) conflicts with opinions from the
U.S. Supreme Court, California Supreme Court, and other federal
circuits.
The issue: can Labor Code § 432.6 constitutionally bar
employers from requiring employees to waive their rights to a
judicial forum and instead resolve by arbitration any disputes
over the terms of their employment?
In reversing the district court opinion, the majority panel here
answered “yes.” That opinion is not only at odds with the Supreme
Court teachings on the preemptive sweep of the FAA, but if left
intact creates confusion over the scope and application of the
FAA in the face of legislative restrictions hostile to
contractual arbitration. Specifically, the statute violates
the FAA by treating arbitration agreements differently from other
contracts. It fails to put arbitration contracts on an “equal
footing” with other contracts and interferes with the fundamental
attributes of arbitration. It foists on employers’ duties hinging
on the primary characteristic of an arbitration agreement – a
waiver of the right to go to court and receive a jury trial.
No matter how artfully crafted the opinion is to argue that it
only regulates the behavior of employers – preventing them from
forcing employees to waive rights and protections afforded them
under law – it cannot avoid being construed as law that in effect
discriminates against arbitration agreements.