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PCA9306: PCA9306 design issue

Part Number: PCA9306

I am using PCA9306 in my design (ASR9K Blackbolt RP). I notice strange behavior. I2C2 signals have 1.45V when device is disabled, and 2V when device is enabled. Is that expected? Is the following circuit correct? Note that I2C2 is pulled up to 3.3V_AUX and I2C1 is pulled up to 1.8V. Please share your comment asap.

 PCA.docx