On Friday, January 10, 2020, Chief United States District Judge Kimberly Mueller of the Eastern District of California heard oral argument on plaintiffs’ motion for preliminary injunction. As a result of clarifications made at the oral argument, the temporary restraining order (TRO) has been modified from its broad applicability to only enjoin defendants from enforcing AB 51 to the extent it applies to arbitration agreements covered by the FAA. The revised TRO will remain in effect until January 31, 2020, at which point we might have a ruling on the preliminary injunction. Judge Mueller concluded the oral argument by providing both parties the opportunity to submit supplemental briefing on two issues: (1) jurisdiction/standing; and (2) severability. As to the latter issue, Judge Mueller indicated she would accept specific proposals related to how the arbitration-related sections of the statute might be severed if she decided to grant the injunction on FAA preemption grounds.
As we previously reported on here, California Governor Gavin Newsom signed AB 51 on October 10, 2019. AB 51 was scheduled to go into effect on January 1, 2020, but, as we reported on here, Judge Mueller granted a temporary restraining order that put enforcement on hold. While the legal challenge is pending, employers should continue to review their arbitration agreements carefully and consult with legal counsel before making changes. Stay tuned for updates!