The U.S. Court of Appeals for the Ninth Circuit Court appears to have handed a gift to California businesses. In its Feb. 15 decision in Chamber of Commerce v. Bonta (No. 20-15291 D.C. No. 2:19-cv-02456- KJM-DB), a three-judge panel ruled that California's AB51 could not be used to bar employers from requiring employees to sign arbitration agreements as a condition of employment.

The decision upholds a federal district court's injunction against the legislation on grounds that it is preempted by the Federal Arbitration Act (FAA). Even though AB51 would criminalize the act of forming an agreement, rather than arbitration itself, it nevertheless discriminates against arbitration in violation of federal law, according to the majority opinion written by Judge Sandra S. Ikuta.