In a surprising move, the Ninth Circuit has withdrawn its previous ruling in a closely watched case involving AB 51, the California law banning arbitration, and pending a panel rehearing, is expected to issue a new ruling in the next few months.
Following the sua sponte order late last month, the court may be reviewing its earlier 2-1 ruling based on the U.S. Supreme Court’s subsequent decision in Viking v. Moriana, which also addressed California law and arbitration agreements, Mia Farber, a principal with Jackson Lewis PC, said in an email response to the Northern California Record.
“It is not uncommon for the Circuits to grant rehearing, usually in response to a petition for rehearing en banc,” Farber said. “It is more unusual for the panel of its own accord to withdraw its opinion and essentially unilaterally grant a panel rehearing.”
The Ninth Circuit's split decision a year ago found for the state in Chamber v. Bonta, after which the Chamber petitioned for the en banc hearing.
Farber noted the significance of the Ninth Circuit’s withdrawn opinion comes from what has happened previously in the case.
“Last year, the panel found that the Federal Arbitration Act (FAA) did not completely preempt Assembly Bill (AB) 51, California’s ban on employment-related mandatory arbitration agreements,” Farber said. “The Chamber of Commerce had sought a rehearing en banc, meaning the full Ninth Circuit would review the decision and hopefully provide a different opinion. Instead, the original three-judge panel will rehear the decision.”
Farber noted that while the panel didn’t provide any details about their decision, previously the Ninth Circuit had stayed the decision on the Chamber's request for a rehearing en banc pending the Viking decision.
“Rather than deciding the petition for rehearing en banc, the Ninth Circuit withdrew its opinion and granted a panel rehearing,” Farber said. “It has to be assumed that this is due to the decision in Viking River Cruises, which is also related to FAA preemption.”
The SCOTUS 8-1 decision, issued on June 15, found California’s PAGA (Private Attorneys General Act) subject to federal arbitration rules.
“We assume based on the timing of the decision after the issuance of the opinion in Viking River Cruises, that the panel is revisiting their conclusions about FAA preemption of AB 51," said Farber, who handles employment litigation at Jackson Lewis. “Whether that means that the panel finds the FAA fully preempts AB 51 or simply extends the preemption more than their prior opinion is difficult to predict at this point. The panel may have specific questions that they ask the parties to address. If so, that potentially would shed more light on the issue.”
The rehearing briefing and argument schedule is expected in the coming weeks.
“We assume time for additional briefs and potentially further oral arguments will proceed, however, no schedule has been released or indicated by the court to date,” Farber said. “We are assuming we won’t know anything for at least a couple of months, and potentially not until the start of 2023.”