Ninth Circuit Rules Federal Arbitration Act Preempts AB51, Paving Way for Mandatory Arbitration Agreements

The Ninth Circuit Court of Appeals has ruled that the Federal Arbitration Act preempts California’s AB51, a law that made it difficult for companies to require mandatory arbitration agreements. The court’s decision was based on the fact that the FAA’s language makes clear that it regulates all binding agreements to resolve disputes outside of court, not just arbitration agreements. The case against Fitbit is likely only the first in a series of similar cases against other companies that require mandatory arbitration clauses.

The Ninth Circuit Court of Appeals has ruled that the Federal Arbitration Act preempts AB51, a California law that made it difficult for companies to require mandatory arbitration agreements.

The Ninth Circuit Court of Appeals has ruled that the Federal Arbitration Act preempts AB51, a California law that made it difficult for companies to require mandatory arbitration agreements.

The court found that by allowing consumers to opt out of class action lawsuits, AB51 interfered with a company’s right to enforce its arbitration agreement and thus violated federal law.

The court’s decision was based on the fact that the FAA’s language makes clear that it regulates all binding agreements to resolve disputes outside of court, not just arbitration agreements.

The court’s decision was based on the fact that the FAA’s language makes clear that it regulates all binding agreements to resolve disputes outside of court, not just arbitration agreements.

In a case decided earlier this year, a federal judge ruled that AB51 did not preempt California’s law regulating mandatory arbitration agreements because it only applies to those terms within contracts and does not alter existing law governing those contracts.

The Ninth Circuit disagreed with this interpretation of federal law and found that AB51 does not preempt state laws regulating arbitration agreements as well as other forms of contract formation (e.g., wills).

The case against Fitbit is likely only the first in a series of similar cases against other companies that require mandatory arbitration clauses.

The case against Fitbit is likely only the first in a series Federal Arbitration Act of similar cases against other companies that require mandatory arbitration clauses. You can expect to see more lawsuits and legislation seeking to repeal forced arbitration agreements like AB51.

The Ninth Circuit decision invalidates AB51 as preempted Federal Arbitration Act  by federal law, meaning it’s now illegal for employers to enforce these contracts on their employees. The ruling also sets up an interesting precedent for future cases where other states may try to pass similar laws restricting employee rights in labor disputes.

Mandatory arbitration takes away your right to go to court.

Mandatory arbitration takes away your right to go to court.

Mandatory arbitration is a contract term that forces you into an arbitrator’s decision, regardless of whether you think it’s unfair or not. You cannot appeal the arbitrator’s decision and even if you win in court, there may be no way for other people involved in similar lawsuits against your company (or any other company) to bring their grievances before an impartial judge or jury.

In other words: If a mandatory arbitration agreement Federal Arbitration Act exists between two parties who have been sued by each other, then neither party can sue in person—they must instead hire an outside arbitrator who will decide on the case based on what both parties agree upon beforehand as a settlement option during negotiations over how much money would be awarded if either party decides not to participate with these proceedings anymore due solely due to reasons beyond their control such as illness etcetera…

Conclusion

This ruling is an important victory for consumers and employees alike. It will help ensure that companies can’t force you into a contract, use coercive tactics like class action lawsuits to intimidate people from going against them in court, and then keep the money from their settlements.

The Federal Arbitration Act court’s decision also sends a strong message to other companies who might be considering requiring mandatory arbitration agreements: They should think twice before doing so because they’ll likely be held liable if someone decides not to go along with it after reading this case law decision.