Chamber of Commerce of the United States v. Becerra

California Assembly Bill 51 (AB 51) was signed into law in 2019. The law prohibited California employers from requiring prospective and current employees to waive any right, forum, or procedure for a violation of California employment and labor laws. The law contradicted the Federal Arbitration Act (FAA), which strongly favored arbitration and provided that arbitration agreements were valid, irrevocable, and enforceable save for grounds available in law or equity for all contracts. The Supreme Court expansively interpreted the FAA to preclude any state efforts to interfere substantively or procedurally to void arbitration agreements. The Chamber of Commerce of the United States of America and other parties (collectively, Chamber) (plaintiffs) filed a motion to preliminarily enjoin the AB 51 law from taking effect on grounds that it was preempted by federal law. The State of California and others (state) (defendants) opposed the motion on grounds the court did not have jurisdiction and, alternatively, that the AB 51 law was not preempted by federal law. The state contended that the AN 51 law did not target arbitration so as to bring it within the FAA preemption. Rather, the state contended, the AB 51 law applied to other types of employment agreements. The court rejected these arguments and granted the Chamber’s motion for preliminary injunction.