Jurisdiction: International Shoe Test For Minimum Contacts Does Not Apply To Foreign State Entities That Agreed To Arbitrate
A SCOTUS Case Of First Impression.
Our next case, a US Supreme Court case, shows that the Court can still issue unanimous opinions in cases that require the application of statutes and that are not politically polarizing.
In CC/Devas (Mauritius) Ltd. v. Antrix Corp. Ltd., No. 23-1201, 605 U.S. __ (6/5/25) (Justice Alito), Devas contracted with Antrix, an Indian government-owned satellite company, to lease satellite capacity. India later reclaimed the spectrum for government use, and Antrix terminated under a force majeure clause. An arbitral tribunal found Antrix liable, awarding $562.5 million plus interest. Devas sought confirmation of the award in U.S. federal court under the Foreign Sovereign Immunities Act (FSIA) arbitration exception. The District Court confirmed the award; the Ninth Circuit reversed, holding that FSIA personal jurisdiction also requires a separate International Shoe “minimum contacts” showing.
The Supreme Court unanimously held that under 28 U.S.C. § 1330(b), personal jurisdiction over a foreign state exists when (1) an FSIA immunity exception applies and (2) the defendant is properly served. There is no separate minimum-contacts requirement beyond the contacts embedded in the FSIA’s exceptions. The Ninth Circuit’s added requirement was contrary to the statute’s text and structure.
COMMENT. This was the Court’s first direct ruling on whether FSIA’s personal-jurisdiction provision independently incorporates the constitutional “minimum contacts” standard.
For Antrix, the jurisdictional test is: 1) Does the arbitration exception to immunity (§ 1605(a)(6)) apply? (Yes, because Antrix agreed to arbitrate and the award is covered by the New York Convention.) 2) Was service made under § 1608? (To be confirmed by the district court.) If both are satisfied, the federal court has personal jurisdiction.
Unconscionability: Fourth Dist. Div. 3 Agrees Arbitration Agreement Was Procedurally and Substantively Unconscionable
The Opinion Applies Established California Unconscionability Law.
In Velarde v. Monroe Operations, LLC, 111 Cal.App.5th 1009 (4/3 6/6/25) (Sanchez, Moore, Motoike), the California Court of Appeal affirmed denial of a motion to compel arbitration. Newport Healthcare required new hire Karla Velarde to sign an arbitration agreement as a condition of employment, presenting it among 31 documents to be signed immediately while an HR manager waited. Velarde expressed discomfort and lack of understanding, but the HR manager falsely assured her the agreement would resolve issues without needing or paying for lawyers. The agreement, however, mandated adversarial arbitration under the Federal Rules of Civil Procedure and Evidence, with each side bearing its own attorney fees unless ordered otherwise. The court found procedural unconscionability due to the adhesive nature, time pressure, and misrepresentations. It found substantive unconscionability because the agreement created expectations of an inexpensive, informal process but imposed a burdensome, lawyer-driven one-sided procedure favoring the employer. Taken together, these defects rendered the agreement unenforceable. The court did not reach the separate trial court finding that the agreement unlawfully barred judicial review.
Waiver: Second Dist. Div. 5 Applies Quach Standard, Which Does Not Require A Finding Of Prejudice To Find A Waiver Of The Right To Arbitrate
Activities Inconsistent With Right To Arbitrate, Without Showing Of Prejudice, Is Sufficient To Find Waiver Of Right To Arbitrate.
In Hofer v. Boladian, 111 Cal. App. 5th 1 (2/5 5/9/25) (Hoffstadt, Moor, Kim), the Califo In Hofer v. Boladian, 111 Cal. App. 5th 1 (2/5 5/9/25) (Hoffstadt, Moor, Kim), the Cali rnia Court of Appeal applied the California Supreme Court’s new waiver standard from Quach v. California Commerce Club (2024) to affirm denial of a motion to compel arbitration. Hofer and his entities sued Boladian and her new firm despite contractual arbitration clauses, vigorously litigating for six months before moving to compel arbitration. Their litigation activities included seeking injunctive relief, opposing a demurrer, propounding 734 discovery requests, demanding a jury trial, and paying jury fees—while rarely mentioning arbitration and never seeking to preserve the right early. Under Quach, waiver occurs when clear and convincing evidence shows a party knew of its right to arbitrate and intentionally relinquished or abandoned it; prejudice is no longer required. The court found Hofer knew of his right (having executed the agreements and raised arbitration pre-suit) but engaged in conduct so inconsistent with arbitration that waiver was established. The court rejected arguments that litigation was “necessary” for provisional relief or because of nonsignatory parties, noting that statutory non-waiver provisions require contemporaneous requests to stay proceedings, which Hofer did not make. Sporadic mentions of arbitration were outweighed by consistent pursuit of court litigation.
Deadlines: Second Dist. Div. 7 Holds When Employer Fails To Pay Arb Fees In 30 Days, Employee May Withdraw And Proceed In Court
Bright Line Still Applies To The Deadline Employers Have To Pay For Arbitration Cost Or Lose Ability To Arbitrate, But Wait For California Supreme Court Ruling.
In Mone Yvette Sanders v. Superior Court, 110 Cal.App.5th 1304 (2/7 5/6/25) (Feuer, Martinez, Stone), the court held Code Civ. Proc. § 1281.98 is not preempted by the FAA; when an employer fails to pay arbitration fees within 30 days, the employee may withdraw and continue in court, and the trial court—not an arbitrator—decides whether default occurred. The court granted Sanders' writ, directing the trial court to allow her to proceed in court and to consider her request for sanctions under § 1281.99.
COMMENT: The decision aligns with established California appellate precedent grappling with fee-default withdrawal under § 1281.98. But wait for a definitive ruling from the California Supreme Court, which is reviewing the issue in Hohenshelt v. Superior Court, docket no. S284498.
Consumers, Internet Commerce: Ninth Circuit Holds Sign-In Wrap Did Not Result In Binding Arbitration
Judge Ryan Nelson Writes Majority Opinion And Concurring Opinion.
In Godun v. JustAnswer LLC, No. 24-2095 (9th Cir. 4/15/24) (R. Nelson, Paez, Ikuta), plaintiffs alleged that JustAnswer deceptively enrolled them in costly recurring subscriptions after paying $1–$5 for answers online. JustAnswer moved to compel arbitration under Terms of Service containing an arbitration clause, arguing plaintiffs were on inquiry notice and assented via “sign-in wrap” agreements. Applying California law, the Ninth Circuit affirmed the district court’s denial of arbitration, finding no mutual assent. Some payment pages failed the Berman step-one “reasonably conspicuous notice” requirement; others failed step-two because advisals lacked explicit language (e.g., “By clicking…” clauses) linking user action to contractual assent. Neither subsequent texts, emails, nor disclaimers cured the defect. No plaintiff agreed to arbitrate.
Judge Nelson authored the majority to apply binding precedent but wrote separately to signal disagreement with aspects of that precedent—particularly Berman’s explicit advisement rule and certain visual conspicuousness interpretations—urging reconsideration in future cases.
Federal Arbitration Act, Jurisdiction: No Jurisdiction Under Diversity To Confirm A Zero Award
US Supreme Court Rule That One Cannot Look To Underlying Dispute To Establish Jurisdiction Compels Result.
"Vacating the district court’s order granting Tesla, Inc. and Elon Musk’s petition to confirm an arbitration award, the panel held that the district court lacked subject matter jurisdiction to confirm the award pursuant to Badgerow v. Walters, 596 U.S. 1 (2022), which prohibits looking past the face of a petition under 9 U.S.C. § 9 to establish jurisdiction." Tesla Motors Inc.; Elon Musk v. Cristina Balan, No. 23-16045 (9th Cir. 4/14/25) (VanDyke, Collins, Mendoza).
Tesla and Musk sought to confirm a zero dollar arbitration award resulting from a defamation claim brought by Balan, an automotive design engineer who had been a Tesla employee. The district court affirmed the arbitration award.
However, as the Court of Appeals opinion explains, the district court lacked diversity jurisdiction to confirm the award, because on its face the petition to confirm stated the award was zero, that is, below the $75,000 threshold necessary to establish diversity jurisdiction. And under Badgerow v. Walters, a party relying on 9 U.S.C. § 9 to confirm an award cannot make the court look beyond the petition to the nature of the underlying dispute.
Tesla argued that the district court coulda shoulda issued a stay, in which case it would have retained federal jurisdiction. Maybe the district court shoulda, but the matter was dismissed without objection. The district court could not have issued a stay after dismissing the case.
So the order confirming the award was vacated, and the case was remanded to the district court with instructions to dismiss for lack of jurisdiction.