The panel of the Ninth Circuit Court of Appeals that largely upheld California’s law banning mandatory arbitration agreements in the employment context just withdrew its decision. On August 22, 2022, two of the three judges on the panel decided to withdraw the panel’s prior opinion in Chamber of Commerce of the United States of America v. Bonta regarding Labor Code 432.6 which sought to prohibit mandatory arbitration as a condition of employment.

Section 432.6 prevents employers from requiring applicants to sign arbitration agreements “as a condition of employment, continued employment, or the receipt of any employment-related benefit.” The law adds criminal and civil sanctions against any employer that retaliated, discriminated, threatened, or discharged an employee who refused to consent to arbitration.

The Bonta decision was originally authored by Judge Carlos Lucero, a member of the Tenth Circuit Court of Appeals, sitting by designation, and joined by Judge William Fletcher. In that decision, the Ninth Circuit terminated the district court’s injunction that prohibited enforcement of Section 432.6 on the grounds that it ran afoul of the Federal Arbitration Act (FAA). In so doing, the Ninth Circuit held that individuals who refused to sign arbitration agreements could sue under Section 432.6’s anti-retaliation provisions because the FAA only applies to arbitration agreements and does not govern pre-formation conduct.

The panel affirmed the district court’s decision to...

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