The first paragraph of the Ninth Circuit’s decisions says it all:
“California enacted Assembly Bill 51 (AB 51) to protect employees from what it called “forced arbitration” by making it a criminal offense for an employer to require an existing employee or an applicant for employment to consent to arbitrate specified claims as a condition of employment. But AB 51 criminalizes only contract formation; an arbitration agreement executed in violation of this law is enforceable. California took this approach to avoid conflict with Supreme Court precedent, which holds that a state rule that discriminates against arbitration is preempted by the Federal Arbitration Act (FAA). This appeal raises the question whether the FAA preempts a state rule that discriminates against the formation of an arbitration agreement, even if that agreement is ultimately enforceable. We hold that such a rule is preempted by the FAA.”
The decision was originally issued in 2021. Rather than hold a rehearing en banc, the Ninth Circuit made a surprise decision to withdraw its prior opinion and grant a panel rehearing. The quotation above is from today’s panel decision.