Chamber of Commerce of the US v. Rob Bonta

FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT CHAMBER OF COMMERCE OF No. 20-15291 THE UNITED STATES OF AMERICA; CALIFORNIA D.C. No. CHAMBER OF COMMERCE; 2:19-cv-02456- NATIONAL RETAIL KJM-DB FEDERATION; CALIFORNIA RETAILERS ASSOCIATION; NATIONAL ASSOCIATION OF OPINION SECURITY COMPANIES; HOME CARE ASSOCIATION OF AMERICA; CALIFORNIA ASSOCIATION FOR HEALTH SERVICES AT HOME, Plaintiffs-Appellees, v. ROB BONTA, in his official capacity as the Attorney General of the State of California; LILIA GARCIA- BROWER, in her official capacity as the Labor Commissioner of the State of California; JULIE A. SU, in her official capacity as the Secretary of the California Labor and Workforce Development Agency; KEVIN RICHARD KISH, in his official 2 CHAMBER OF COMMERCE V. BONTA capacity as Director of the California Department of Fair Employment and Housing of the State of California, Defendants-Appellants. Appeal from the United States District Court for the Eastern District of California Kimberly J. Mueller, Chief District Judge, Presiding Argued and Submitted December 7, 2020 Submission Withdrawn August 22, 2022 Resubmitted August 22, 2022 San Francisco, California Filed February 15, 2023 Before: Carlos F. Lucero,* William A. Fletcher, and Sandra S. Ikuta, Circuit Judges. Opinion by Judge Ikuta; Dissent by Judge Lucero * The Honorable Carlos F. Lucero, United States Circuit Judge for the U.S. Court of Appeals for the Tenth Circuit, sitting by designation. CHAMBER OF COMMERCE V. BONTA 3 SUMMARY ** Civil Rights Affirming the district court’s grant of a preliminary injunction in favor of plaintiffs, a collection of trade association and business groups (collectively, the Chamber of Commerce), the panel held that the Federal Arbitration Act (FAA) preempted California’s Assembly Bill 51 (AB 51), which was enacted to protect employees from “forced arbitration” by making it a criminal offense for an employer to require an existing employee or an applicant for employment to consent to arbitrate specified claims as a condition of employment. The panel explained that Assembly Bill 51 criminalizes only contract formation; an arbitration agreement executed in violation of this law is enforceable. California took this approach to avoid conflict with Supreme Court precedent, which holds that a state rule that discriminates against arbitration is preempted by the Federal Arbitration Act. Under Section 433 of the California Labor Code, an employer who violates AB 51 has committed a misdemeanor. See CAL. LAB. CODE § 433. But to avoid preemption by the FAA, the California legislature included a provision ensuring that if the parties did enter into an arbitration agreement, it would be enforceable. See Cal. Lab. Code § 432.6(f). This resulted in the oddity that an employer subject to criminal prosecution for requiring an ** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. 4 CHAMBER OF COMMERCE V. BONTA employee to enter into an arbitration agreement could nevertheless enforce that agreement once it was executed. The panel stated that Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 683 (1996), and Kindred Nursing Ctrs. Ltd. …

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