Ensambles Hyson, S.A de C.V. et al v. Sanchez

Filing 21

ORDER Denying 16 Renewed Motion for Preliminary Injunction. Signed by Judge Janis L. Sammartino on 6/6/24. (aas)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 ENSAMBLES HYSON, S.A. DE C.V.; RAIN BIRD CORPORATION; and RAIN BIRD INTERNATIONAL, INC., 13 14 15 16 Case No.: 23-CV-1887 JLS (KSC) ORDER DENYING RENEWED MOTION FOR PRELIMINARY INJUNCTION Petitioners, v. (ECF No. 16) FRANCISCO JAVIER SANCHEZ, Respondent. 17 18 Presently before the Court is the Renewed Motion for a Preliminary Injunction 19 (“Mot.,” ECF No. 16) filed by Petitioners Ensambles Hyson, S.A. de C.V. (“Hyson”); Rain 20 Bird Corporation (“RBC”); and Rain Bird International, Inc. (“RBI”) (collectively, 21 “Petitioners”). Respondent Francisco Javier Sanchez submitted an Opposition to the 22 Motion (“Opp’n,” ECF No. 18), and Petitioners filed a Reply (“Reply,” ECF No. 19). The 23 Court previously took this matter under submission without oral argument pursuant to Civil 24 Local Rule 7.1(d)(1). See ECF No. 20. Having carefully considered the Parties’ arguments 25 and the law, the Court DENIES the Motion WITHOUT PREJUDICE. 26 BACKGROUND 27 The Court provided a thorough recitation of this action’s history in its 28 February 23, 2024 Order (the “Order,” ECF No. 15). For ease of reference, the Court 1 23-CV-1887 JLS (KSC) 1 repeats the relevant details below with the addition of more recent developments. 2 I. Respondent’s Employment 3 Petitioners comprise a set of interrelated companies. RBC is a global manufacturer 4 and provider of irrigation products and services incorporated and headquartered in 5 California. Decl. Laurie Manahan Supp. Pet. (“Manahan Decl.”) ¶ 2, ECF No. 5. The 6 company has locations in multiple states and countries, including a facility in Mexico. Id. 7 RBI, also located in California, is the wholly owned subsidiary of RBC. Id. ¶ 3. RBI, in 8 turn, is the majority owner of Hyson, a company in Mexico that provides manufacturing 9 and assembly services to RBC. Id. ¶ 4. 10 Respondent was hired by RBC as a “Materials Manager” in 2005. Id. Ex. 2 at 2.1 11 With his offer letter, RBC sent Respondent a copy of the company’s “Dispute Resolution 12 Program,” id. Ex. 3 at 2–13, and an “Agreement to Arbitrate Claims,” id. at 14–17. The 13 latter document, hereinafter referred to as the “Arbitration Agreement” or “Agreement,” 14 mandates that “[a]ny and all . . . claims . . . arising out of or relating to employee’s 15 employment or its termination at the Company” be “settled exclusively by final and binding 16 arbitration pursuant to the Federal Arbitration Act” (“FAA”). Id. at 15. The Agreement 17 further specifies that the arbitration proceedings “shall be conducted in accordance with 18 the then-current arbitration rules of the American Arbitration Association (“AAA”) or the 19 Judicial Arbitration and Mediation Services” (“JAMS”), depending on which rules the 20 party initiating arbitration selects. 21 November 6, 2005. Id. at 17. 22 Id. Respondent signed the Agreement on Respondent remained employed by Petitioners for sixteen years. See Decl. 23 Francisco Javier Sanchez Supp. Opp’n to Pet. (“Sanchez Decl.”) ¶ 10, ECF No. 13-2. 24 During that time, Respondent worked almost exclusively in Mexico, where he managed a 25 plant owned and operated by Hyson. Id. ¶ 4. Respondent did, however, attend work 26 27 28 Pin citations to docketed material in this Order, including the Parties’ briefs, refer to the blue CM/ECF page numbers stamped along the top margin of each document. 1 2 23-CV-1887 JLS (KSC) 1 meetings in the United States on a regular, albeit infrequent, basis. Id. ¶ 8; Pet. & Compl. 2 (“Pet.”) ¶ 15, ECF No. 1. Respondent resided in Chula Vista, California while employed 3 by Petitioners. Manahan Decl. ¶ 8. On April 8, 2021, while on the job at Hyson’s plant in Mexico, Respondent was 4 5 fired. Id. ¶ 6; Sanchez Decl. ¶ 10. 6 II. Respondent Brings Suit in Mexico 7 Shortly after he was let go, Respondent initiated a wrongful termination action 8 against Petitioners by filing a complaint with the Local Conciliation and Arbitration Board2 9 (the “Labor Board”) in Tijuana, Mexico. Decl. Blanca Irene Villaseñor Pimienta Supp. 10 Opp’n to Pet. (“Villaseñor Decl.”) ¶ 7, ECF No. 13-1. After these proceedings (the 11 “Mexico Proceedings”) commenced, Hyson was served with process on May 19, 2021, 12 while RBC and RBI were served on February 16, 2023. Id. 13 On March 24, 2023, Hyson filed a motion challenging the Labor Board’s jurisdiction 14 over Respondent’s suit. Id. Ex. 9 at 77. Hyson argued the case involved an employment 15 relationship between Respondent and “foreign entities” RBC and RBI, so the laws of 16 Mexico could not apply. Id. at 78. The Labor Board deemed Hyson’s motion “unfounded” 17 on April 3, 2023. Id. at 79. 18 III. Petitioners Initiate the Instant Action 19 Petitioners initiated this action on October 16, 2023. They sought to compel 20 Respondent to raise his claims in arbitration proceedings conducted by the AAA. See id. 21 at 11. Petitioners also asked the Court to issue an anti-suit injunction requiring Respondent 22 to “cease the prosecution of and dismiss” the Mexico Proceedings. Id. 23 In his Opposition to the Petition (“Opp’n to Pet.,” ECF No. 13), Respondent did not 24 contest the existence of the signed Arbitration Agreement. Respondent did, however, argue 25 (1) the Court could decide whether his claims were arbitrable; (2) the Agreement was 26 27 28 2 Though the name may suggest otherwise, local conciliation and arbitration boards are not private arbitration tribunals. Rather, they are government agencies in Mexico with “exclusive and binding jurisdiction to hear all disputes involving employees and their employers.” Villaseñor Decl. ¶ 5. 3 23-CV-1887 JLS (KSC) 1 invalid and unenforceable under Mexican law, which Respondent contended should apply 2 to his wrongful termination claim; (3) Petitioners waived their right to arbitrate given their 3 years-long delay in raising the issue; (4) Hyson and RBI, as non-signatories, could not 4 enforce the Agreement; and (5) Petitioners had failed to establish their right to an anti-suit 5 injunction. See generally Opp’n to Pet. 6 After reviewing the Parties’ arguments, the Court granted the Petition to the extent 7 Petitioners sought to compel Respondent to participate in arbitration. The Court first 8 determined the Parties had clearly and unmistakably delegated questions of arbitrability to 9 the arbitrator by incorporating the AAA’s rules into the Agreement. See Order at 5–9. 10 Based on that finding, the Court concluded Respondent’s choice-of-law argument and his 11 challenges to the validity and enforceability of the Agreement as a whole had to be 12 addressed by an arbitrator. Id. at 9–10. And though Hyson’s decision to let the Mexico 13 Proceedings chug along for nearly three years before pursuing arbitration raised the Court’s 14 eyebrows, the Court rejected Respondent’s waiver contention given his failure to identify 15 any litigation conduct constituting waiver beyond mere delay. 16 Respondent’s nonsignatory argument also fell flat. See id. at 14–16. See id. at 10–14. 17 Still, the Court denied Petitioners an anti-suit injunction. The Court noted that, under 18 Ninth Circuit law, Petitioners could not secure such an injunction without establishing, 19 among other things, that the domestic proceedings were dispositive of the action in Mexico. 20 See id. at 17 (citing Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 881 (9th Cir. 2012)). 21 The Court explained that conducting this inquiry was complicated by the delegation clause 22 contained in the Parties’ Arbitration Agreement. See id. at 18. And because Petitioners 23 had not dipped so much as a toe into those murky legal waters, the Court declined to wade 24 further into the issue. Instead, the Court denied Petitioners’ injunctive relief request 25 without prejudice for failing to satisfy their burden. See id. at 18–19. 26 IV. Recent Developments 27 The Mexico Proceedings have progressed rapidly since the Parties last updated the 28 Court. On February 12, 2024—after the Petition was fully briefed but just before the Court 4 23-CV-1887 JLS (KSC) 1 issued its prior Order—a “full hearing and trial on the matter in the Mexic[o] Proceedings” 2 took place. Decl. Alberto Sanchez Lujan Supp. Opp’n (“Lujan Decl.”) ¶ 4, ECF No. 18-1. 3 Petitioners apparently participated fully in the trial without raising the Agreement as a 4 defense. Id. After trial, Respondent submitted “his final arguments” to the Labor Board. 5 Id. ¶ 5. Save for Petitioners filing their own final written arguments, the Parties have 6 nothing left to do in the Mexico Proceedings but wait for the Labor Board’s decision. Id. 7 The arbitration proceedings (the “U.S. Arbitration Proceedings”) have also moved 8 forward in California.3 On March 18, 2024, the Parties held a conference call with the 9 arbitrator “wherein proceedings and scheduling issues were to be discussed.” Osuna- 10 Gonzalez Decl. ¶ 6. Respondent’s counsel anticipated that a briefing schedule regarding 11 arbitrability would issue at that time. See id. However, during the call, Petitioners argued 12 that Respondent’s chosen attorney could not represent him in the U.S. Arbitration 13 Proceedings. Id. Petitioners’ challenge was set for a hearing on April 18, 2024. See id. 14 ¶ 9. It appears the arbitrator will not make a decision on arbitrability until the matter of 15 Respondent’s representation is resolved. Id. ¶ 7. 16 Petitioners filed the instant Motion on March 20, 2024—two days after the 17 conference call in the U.S. Arbitration Proceedings took place. Interestingly, Petitioners 18 moving papers are silent regarding the above developments in the Mexico Proceedings and 19 U.S. Arbitration Proceedings. See generally Mot.; Reply. 20 LEGAL STANDARD 21 “A federal district court with jurisdiction over the parties has the power to enjoin 22 them from proceeding with an action in the courts of a foreign country, although the power 23 should be used sparingly.” Microsoft, 696 F.3d at 881 (quoting Seattle Totems Hockey 24 Club, Inc. v. Nat’l Hockey League, 652 F.2d 852, 855 (9th Cir. 1981)). Such anti-suit 25 injunctions operate in personam: “the American court enjoins the claimant, not the foreign 26 27 28 3 The Parties are presently in arbitration in an action filed with the American Arbitration Association: Ensambles Hyson, S.A. de C.V. v. Sanchez, AAA Case No.: 01-23-0004-3948. Decl. Alejandro OsunaGonzalez Supp. Opp’n (“Osuna-Gonzalez Decl.”) ¶ 4, ECF No. 18-2. 5 23-CV-1887 JLS (KSC) 1 court.” E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 989 (9th Cir. 2006). 2 The Ninth Circuit articulated its three-part inquiry for evaluating the propriety of 3 foreign anti-suit injunctions in Gallo. This test supplants “the likelihood-of-success aspect 4 of the traditional preliminary injunction” analysis. Microsoft, 696 F.3d at 884. As with 5 other forms of injunctive relief, however, the moving party bears the burden of establishing 6 that an anti-suit injunction is warranted. See Interdigital Tech. Corp. v. Pegatron Corp., 7 No. 15-CV-02584-LHK, 2015 WL 3958257, at *3 (N.D. Cal. June 29, 2015); MWK 8 Recruiting Inc. v. Jowers, 833 F. App’x 560, 562 (5th Cir. 2020). 9 Courts undertaking Gallo’s inquiry first ask whether “‘the parties and the issues are 10 the same’ in both the domestic and foreign actions, and ‘whether the [domestic] action is 11 dispositive of the action to be enjoined.’” Microsoft, 696 F.3d at 881 (quoting Gallo, 12 446 F.3d at 991). These constitute “threshold consideration[s]” that parties seeking anti- 13 suit injunctions must satisfy to proceed to the rest of the analysis. See id. at 882.; see also 14 Zynga, Inc. v. Vostu USA, Inc., No. 11-CV-02959-EJD, 2011 WL 3516164, at *3 15 (N.D. Cal. Aug. 11, 2011) (“Anti-suit injunctions are only appropriate when the domestic 16 action is capable of disposing all of the issues in the foreign action . . . .” (emphasis added) 17 (citing Applied Med. Distrib. Corp. v. Surgical Co. BV, 587 F.3d 909, 915 (9th Cir. 2009))). 18 Next, courts evaluate whether any of the “Unterweser factors” apply.4 Microsoft, These factors include “whether the foreign litigation would 19 696 F.3d at 881–82. 20 (1) frustrate a policy of the forum issuing the injunction; (2) be vexatious or oppressive; 21 (3) threaten the issuing court’s in rem or quasi in rem jurisdiction; or (4) where the 22 proceedings prejudice other equitable considerations.” Id. at 882 (alterations adopted) 23 (quoting Gallo, 446 F.3d at 990). The list is disjunctive; any of the Unterweser factors 24 may justify an anti-suit injunction. See id. at 881. 25 /// 26 27 28 4 These factors were first articulated in In re Unterweser Reederei, Gmbh, 428 F.2d 888, 896 (5th Cir. 1970), aff’d on reh’g, 446 F.2d 907 (5th Cir. 1971) (en banc), rev’d on other grounds sub nom. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972). 6 23-CV-1887 JLS (KSC) 1 Finally, courts consider “whether the impact on comity would be tolerable.” Applied 2 Med., 587 F.3d at 919 (quoting Gallo, 446 F.3d at 994). “[N]either a matter of absolute 3 obligation” nor “mere courtesy and goodwill,” id. at 920 (quoting Asvesta v. Petroutsas, 4 580 F.3d 1000, 1010–11 (9th Cir. 2009)), international comity is “a complex and elusive 5 concept” that must be approached with finesse and evaluated in context, Microsoft, 6 696 F.3d at 886 (quoting Laker Airways Ltd. v. Sabena, Belgian World Airlines, 7 731 F.2d 909, 937 (D.C. Cir. 1984)). Relevant considerations include the scope of the 8 requested injunction and whether the dispute implicates “public international law or 9 government litigants.” Id. at 887. 10 ANALYSIS 11 So far as the Court can tell, how Gallo’s tripartite test applies to cases involving 12 arbitration agreements that contain delegations of arbitrability is a question of first 13 impression in this Circuit. 14 landscape, the Court concludes Petitioners have failed to satisfy Gallo’s threshold inquiry. 15 And even were that not so, Petitioners would stumble at each of the test’s remaining steps. 16 I. After marching through this relatively untouched legal Step 1: Overlap Between the Domestic and Foreign Actions 17 “In cases like this where the parties are the same,” the remaining threshold 18 requirements—“whether the issues are the same and the first action dispositive of the action 19 to be enjoined”—are “interrelated.” Applied Med., 587 F.3d at 915. The analysis called 20 for is “functional,” not “technical or formal.” Microsoft, 696 F.3d at 882. The essential 21 question is whether “all the issues in the foreign action . . . can be resolved in the local 22 action.” Id. at 882–83 (alteration in original) (quoting Applied Med., 587 F.3d at 915). 23 How this question should be answered in this case—where the Arbitration Agreement 24 delegates arbitrability to the arbitrator—is not immediately clear. The Parties cite two 25 cases from outside of this Circuit that have tackled this issue.5 Unfortunately, neither 26 27 28 5 These cases are WTA Tour, Inc. v. Super Slam Ltd., 339 F. Supp. 3d 390 (S.D.N.Y. 2018), and Citigroup Inc. v. Sayeg Seade, No. 21 CIV. 10413 (JPC), 2022 WL 179203 (S.D.N.Y. Jan. 20, 2022). 7 23-CV-1887 JLS (KSC) 1 proves persuasive in light of Ninth Circuit precedent, and the Court is not aware of any 2 other procedurally on-point cases. Still, the Court is not without some guidance. Based 3 on a thorough review of the case law, the Court holds that an anti-suit injunction cannot be 4 granted to enforce an arbitration agreement until questions of arbitrability are settled. 5 A. 6 The Ninth Circuit most recently addressed anti-suit injunctions in three cases: Gallo, 7 Applied Medical, and Microsoft. The first two revolve around forum selection clauses, 8 while the third applies its predecessors in a different context. 9 Ninth Circuit Precedent 1. Gallo 10 In Gallo, a U.S.-based winery and an Ecuadorian distributor signed an agreement 11 containing “forum selection and choice-of-law clauses in favor of California.” 446 F.3d 12 at 987. Nevertheless, the distributor brought a breach of contract action in Ecuador, which 13 prompted the winery to ask a California district court to enjoin the distributor from 14 prosecuting the Ecuadorian suit pursuant to the forum selection clause. See id. at 988, 991. 15 The district court denied the winery’s request, concluding “the claims” in the foreign and 16 domestic actions “were not the same because the . . . cases arose from different acts.” Id. 17 at 991. On appeal, the Ninth Circuit reversed. 18 Gallo’s brief discussion of the threshold criteria for anti-suit injunctions 19 concentrated on the overlap between issues raised abroad and at home. The court found 20 that because the Ecuadorian action was for breach of contract, and the winery sought “a 21 declaration that [it] did not breach [the contract],” id., “both causes of action focused on 22 whether the distributorship agreement had been breached,” Applied Med., 587 F.3d 23 at 913–14 (summarizing Gallo). So, per Gallo, “all the issues before the court in the 24 Ecuador action [were] before the court in . . . California.” 446 F.3d at 991. 25 Though not acknowledged explicitly in Gallo, that the foreign-raised claims 26 centered on the parties’ contract necessarily meant the forum selection clause—requiring 27 disputes to be heard in California—applied to the issues raised in Ecuador. Gallo’s 28 treatment of the Unterweser factors reflects this conclusion, as “the district court[’s] 8 23-CV-1887 JLS (KSC) 1 h[olding] that the forum selection clause was valid and enforceable” drove the analysis. 2 Id. at 991–92. 3 2. Applied Medical 4 Applied Medical involved another distributorship agreement containing California 5 forum-selection and choice-of-law clauses. See 587 F.3d at 911. When a contract dispute 6 arose, the foreign distributor sought relief in Belgium, and the domestic supplier responded 7 by suing in federal court. See id. at 912. The supplier moved to enjoin the distributor from 8 prosecuting the Belgian suit, but the district court denied the request because “the Belgian 9 claims . . . were ‘potentially broader’ than the issues under consideration [in federal 10 court].” Id. at 913. Again, the Ninth Circuit reversed. 11 Applied Medical elaborated on Gallo’s threshold inquiry and emphasized the role 12 played by the forum selection clause in the analysis. The question was not, per the court, 13 whether the issues raised by Belgian and domestic law were identical. Id. at 914. Rather, 14 “the crux of the functional inquiry . . . is to determine whether the issues are the same in 15 the sense that all the issues in the foreign action [1] fall under the forum selection clause 16 and [2] can be resolved in the local action.” Id. at 915. 17 The first element of this test was met, as the claims in the Belgian action “[were] 18 subject to the forum selection clause.” Id. at 916. This conclusion depended on the 19 resolution of merits issues in the underlying contractual dispute (i.e., the interpretation and 20 application of the forum selection clause). The contract specified: “The federal and state 21 courts within the State of California shall have exclusive jurisdiction to adjudicate any 22 dispute arising out of this Agreement.” Id. at 911. So, to determine the threshold 23 requirements for an anti-suit injunction were met, the court had to find (and did find) that 24 the Belgian claims “s[ought] damages that occur[red] ‘only as a result of [contract] 25 termination,’ concern[ed] the applicability of [another contractual] provision, and therefore 26 [were] disputes ‘arising out of th[e] Agreement.’” Id. at 916 (emphasis added but final 27 alteration in original). 28 /// 9 23-CV-1887 JLS (KSC) 1 The “dispositive” element was also satisfied as, by function of the forum selection 2 clause, the distributor’s claims could only “be disposed of in the California forum if at all.” 3 Id. True, at the outset of the domestic case—before any choice-of-law determinations were 4 made—the distributor could feasibly have sought to vindicate rights granted only by 5 Belgian law. But the presence of foreign legal questions does not always bear on whether 6 a domestic action can “resolve” certain claims.6 The U.S.-based case in Applied Medical 7 remained “dispositive in the sense that” the district court was the only proper forum for 8 raising any claims—domestic or foreign, whether ultimately successful or meritless from 9 the start—arising from the contract. See id. at 918 (“[I]t is sufficient that the federal 10 action . . . is the proper action and forum for disposing of the [foreign] action.”). 11 3. Microsoft 12 Unlike its predecessors, Microsoft does not involve a forum selection clause. In 13 brief, Motorola had, in declarations to a third party, agreed to license certain patents “to all 14 comers” on reasonable terms. 15 approached Microsoft with an offer to license particular patents. See id. at 877. Microsoft 16 sued Motorola for breach of contract in federal court, arguing it was a third-party 17 beneficiary of Motorola’s prior commitments and that “Motorola’s proposed royalty terms 18 were unreasonable.” Id. at 878. In response, Motorola brought a patent infringement 19 action in Germany and eventually won an injunction against Microsoft. See id. at 879. 20 However, the U.S. district court “enjoin[ed] Motorola temporarily from enforcing [the 21 German] injunction.” Id. at 875. On interlocutory appeal, the Ninth Circuit affirmed. See Microsoft, 696 F.3d at 875–76. Motorola later 22 Though Microsoft presented distinct facts, the threshold inquiry did not change 23 because the focus remained on contract enforcement. Gallo and Applied Medical were 24 motivated by the same idea: “Courts should give effect to freely made contractual 25 agreements.” Id. at 885. This “broader principle” applied in Microsoft, too; though the 26 27 28 6 As Gallo explained, district courts can and do apply foreign substantive law when cases so require. See 446 F.3d at 991 (“[T]o the degree that Ecuadorian law does apply, federal courts are capable of applying it to [the distributor’s] claims.”). 10 23-CV-1887 JLS (KSC) 1 agreement at issue lacked a forum selection clause, it was still a contract. Id. So, just as 2 Applied Medical asked if “all the issues in the foreign action can be resolved in the local 3 action,” id. at 882–83 (alteration adopted) (quoting Applied Med., 587 F.3d at 915), the 4 question in Microsoft became whether “all the issues in the German patent action c[ould] 5 be resolved in the U.S. contract action,” id. at 883. 6 Microsoft’s framing highlights two important aspects of Gallo’s initial step. The 7 first, that the specific contours of the foreign and domestic actions matter, is nothing new; 8 Gallo and Applied Medical established the necessity of defining the issues at stake 9 domestically and abroad. In Microsoft, the issue in the foreign action was the enforcement 10 of an injunction prohibiting Microsoft from selling products that allegedly infringed on 11 Motorola’s German patents. See id. at 879. Meanwhile, in the States, Microsoft argued 12 the injunction was at odds with Motorola’s commitment to license its patents on reasonable 13 terms. See id. at 884–85. 14 Microsoft’s second lesson is that the merits of the underlying contractual dispute 15 cannot be ignored when considering an anti-suit injunction. The Microsoft court asked 16 whether the domestic breach-of-contract claims “would, if decided in favor of Microsoft, 17 determine the propriety of the enforcement by Motorola of the injunctive relief obtained in 18 Germany.” Id. at 885. And to answer this question, the Ninth Circuit had to evaluate the 19 district court’s ruling, made at summary judgment, that there “[was] a contract,” 20 “enforceable by Microsoft,” that “encompasse[d] . . . the patents at issue in the German 21 suit.” Id. (emphasis in original). Microsoft thus made explicit what its predecessors had 22 only implied: “the threshold anti-suit injunction inquiry” is “intrinsically bound up 23 with . . . the merits of the contract dispute.” Id. at 884. 24 4. Summary of the Relevant Principles 25 From the foregoing cases, the same-issues/dispositive inquiry can be summarized as 26 follows: courts must ask whether all the issues in the foreign action (1) are encompassed 27 by the specific contractual promise invoked in the domestic action; and (2) would be 28 resolved if the domestic action were decided in favor of the party seeking the injunction. 11 23-CV-1887 JLS (KSC) 1 The elements of this test are “interrelated” in that both are inescapably connected to 2 the merits of the underlying contract-based questions before the domestic court. This 3 makes sense given Microsoft’s emphasis on the enforcement of “freely made” contracts. 4 Id. at 885. And to give effect to such a contract—and thereby determine whether it applies 5 to and/or would dispose of issues raised in a foreign case—the court must evaluate its scope 6 and enforceability. See Applied Medical, 587 F.3d at 916 (investigating whether foreign 7 claims fell within the scope of an enforceable forum selection clause); Microsoft, 696 F.3d 8 at 884 (asking if Motorola’s agreements “created a contract that Microsoft c[ould] enforce” 9 as to patents relevant in the foreign action). 10 Conducting this inquiry may require courts to carefully define the issues at stake in 11 the domestic and foreign actions. While cases will sometimes overlap in obvious ways, 12 see Gallo, 446 F.3d at 991 (concluding central question of both cases was whether the 13 parties’ contract had been breached); Applied Med., 587 F.3d at 916–17 (similar), an anti- 14 suit injunction may be appropriate even when the foreign and domestic claims appear less 15 symmetrical on initial inspection, see Microsoft, 696 F.3d at 883–85 (affirming grant of 16 anti-suit injunction, though the case did not involve parallel U.S. patent claims and German 17 patent claims, given the link between the U.S. contract claims and German patent claims). 18 B. 19 Forum selection clauses are close cousins of arbitration agreements, which suggests 20 Gallo’s framework should translate easily from one context to the other. That said, actions 21 to compel arbitration are mechanistically distinct from suits seeking to enforce other 22 contractual provisions; arbitration agreements contemplate a division of adjudicative labor, 23 reserving some issues for arbitration that district courts would otherwise decide. The 24 degree to which this allocation of responsibilities impacts the anti-suit injunction analysis 25 turns on whether the arbitration agreement delegates issues of arbitrability to the arbitrator. 26 Problems Posed by Arbitration Agreements Containing Delegation Clauses 1. Anti-Suit Injunctions and Arbitration Agreements, Generally 27 Though the Ninth Circuit has not squarely addressed the question, the Court does 28 not doubt that anti-suit injunctions are, under the right circumstances, available to enforce 12 23-CV-1887 JLS (KSC) 1 arbitration agreements. Courts should give effect to “freely made” contracts, id. at 885, 2 and there is no obvious reason to discriminate between, say, forum-selection and arbitration 3 clauses in the context of anti-suit injunctions. Indeed, Gallo noted that arbitration, forum- 4 selection, and choice-of-law clauses all serve similar purposes: they “specify ‘in advance 5 the forum in which disputes shall be litigated and the law to be applied.’” 446 F.3d at 993 6 (quoting Scherk v. Alberto–Culver Co., 417 U.S. 506, 516 (1974)). Gallo also favorably 7 cited to a Second Circuit opinion that “affirmed an anti-suit injunction where foreign 8 proceedings breached an arbitration clause.” Id. (citing Paramedics Electromedicina 9 Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 653–55 (2d Cir. 2004)). 10 It is therefore not surprising that district courts in this Circuit have applied Gallo and 11 company in cases involving arbitration.7 12 Compared to other contractual devices, arbitration agreements are in some ways 13 unique. In many non-arbitration cases, like Applied Medical or Microsoft, a federal court 14 may, over time, perform three functions relevant here: (1) determine if a contract between 15 the parties exists; (2) determine if the parties’ claims are subject to the operative 16 provision(s) of the contract (e.g., forum selection clause); and (3) preside over the 17 resolution of the underlying claims (e.g., breach of contract). By contrast, courts deciding 18 whether to compel arbitration typically handle only the first two “gateway” tasks: deciding 19 “(1) whether there is an agreement to arbitrate between the parties; and (2) whether the 20 agreement covers the dispute.” Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 21 2015). Arbitration agreements thus separate a district court’s decision to compel arbitration 22 from an arbitrator’s jurisdiction over the merits of the underlying dispute. 23 Divvying up adjudicative duties is not inherently problematic for purposes of anti- 24 suit injunctions. Indeed, courts need only answer Brennan’s two gateway questions to 25 26 27 28 See Mastronardi Int’l Ltd. v. SunSelect Produce (Cal.), Inc., 437 F. Supp. 3d 772, 778–81 (E.D. Cal. 2020) (evaluating request to enjoin party from proceeding with foreign arbitration using the Ninth Circuit’s three-step framework); Abudawood v. Leon, No. 8:23-CV-02448-JLS-JDE, 2024 WL 1557324, at *4–5 (C.D. Cal. Apr. 10, 2024) (granting anti-suit injunction aimed at preventing party from invalidating judicially-confirmed arbitral award through foreign litigation). 7 13 23-CV-1887 JLS (KSC) 1 conduct Gallo’s threshold inquiry. An analogy to forum selection clauses illustrates this. 2 Applied Medical held that a domestic action was dispositive of the foreign one because all 3 claims in the foreign case were “subject to the forum selection clause” and thus could only 4 “be disposed of in the [domestic] forum if at all.” 587 F.3d at 916. Similarly, by finding 5 that an arbitration agreement both exists and covers the foreign dispute, a district court 6 “disposes of the [foreign] action because the [foreign] litigation concerns issues that, by 7 virtue of the . . . court’s judgment, are reserved to arbitration.” Paramedics, 369 F.3d 8 at 653 (emphasis added). That the “underlying disputes are confided to the arbitral panel 9 and will not be decided by the enjoining court” is of no consequence. Id. 10 2. Challenge Created by Delegations of Arbitrability 11 Some arbitration agreements further narrow the role courts can play. Specifically, 12 parties may “delegate” issues of “arbitrability” to arbitrators so long as they do it clearly 13 and unmistakably. See Brennan, 796 F.3d at 1130. Arbitrability is a deceptively broad 14 term; it encompasses such issues as “whether the agreement covers a particular controversy 15 or whether the arbitration provision is enforceable at all.” Caremark, LLC v. Chickasaw 16 Nation, 43 F.4th 1021, 1029 (9th Cir. 2022) (citing Rent-A-Ctr., W., Inc. v. Jackson, 17 561 U.S. 63, 68–69 (2010)). And courts may not muscle in where they are not wanted. 18 When parties decide to delegate arbitrability, “courts must respect [that] decision.” Henry 19 Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63, 71 (2019) (emphasis added). 20 An arbitrability delegation throws a spanner in the works of the threshold anti-suit 21 injunction inquiry. As an enforceable delegation clause “commits to the arbitrator nearly 22 all [arbitrability] challenges,” Caremark, LLC, 43 F.4th at 1029 (emphasis added), courts 23 faced with an arbitration agreement containing such a clause are, for present purposes, 24 limited to one job: deciding whether the agreement exists, see id. at 1030.8 These courts 25 thus lose the ability to decide questions key to Gallo’s first step, like whether issues raised 26 27 28 Courts “must also resolve any challenge directed specifically to the enforceability of the delegation clause before compelling arbitration of any remaining gateway issues of arbitrability.” Caremark, LLC, 43 F.4th at 1030. But no such challenge is currently before the Court. 8 14 23-CV-1887 JLS (KSC) 1 in a foreign action fall within the scope of the arbitration agreement or whether that 2 agreement is valid and enforceable as applied to the claims raised abroad. Petitioners’ Proposed Solution 3 C. 4 Seeking to overcome the doctrinal difficulties in this case, Petitioners contend an 5 anti-suit injunction is appropriate because, given this Court’s prior rulings on the delegation 6 of arbitrability, it is “highly probable” that Respondent’s claims will be subject to 7 arbitration. Mot. at 13. The viability of Petitioners’ argument depends on how one defines 8 the issues a domestic action “can . . . resolve[]” or “is capable of” resolving. Applied Med., 9 587 F.3d at 915 (emphasis added). There are two plausible interpretations. One 10 possibility: a domestic action is “capable” of disposing of all issues it might resolve. This 11 more relaxed take would benefit Petitioners; by ordering the Parties to arbitrate 12 arbitrability, the Court at a minimum introduced the possibility that Respondent’s claims 13 are reserved to arbitration. On the other hand, “capable” could be understood to require 14 certainty. Under this stricter approach, an anti-suit injunction would be proper only after 15 the district court became sure that the issues raised in the foreign action would be 16 resolved—one way or another—by the domestic proceedings. As a matter of precedent 17 and policy, this Court will take the latter view. 18 1. Precedent 19 In pushing for the more permissive understanding of “capable,” Petitioners rely 20 heavily on Citigroup Inc. v. Sayeg Seade, No. 21 CIV. 10413 (JPC), 2022 WL 179203 21 (S.D.N.Y. Jan. 20, 2022). When addressing the threshold requirements for an anti-suit 22 injunction in a case involving a delegation clause, the Citigroup court asked whether some 23 claims raised in the foreign action were likely subject to arbitration: 24 25 26 27 28 [T]he arbitration that this Court compels today may dispose of claims pending in the Mexican Action. If the arbitrator rules for Citigroup that the scope of arbitrability includes some of the claims brought in the Mexican Action, that means that certain claims pending in the Mexican Action “are reserved to arbitration and cannot be litigated.” And here, given that the complaint in the Mexican Action includes claims brought under 15 23-CV-1887 JLS (KSC) the [Parties’ Agreements], it seems highly probable that the arbitrator will conclude that at least some claims in the Mexican Action can be brought only in Arbitration pursuant to the arbitration provisions of the . . . Agreements. 1 2 3 4 2022 WL 179203, at *8 (emphasis added and internal citations omitted). 5 The Court doubts, however, whether Citigroup’s tentative inquiry into arbitrability 6 (i.e., whether claims were likely arbitrable) is compatible with Gallo and its descendants.9 7 True, the Ninth Circuit has not explicitly addressed this issue. Still, the court has repeatedly 8 asked if “the issues in the foreign action [do] fall under the [contract] and can be resolved 9 in the local action,” Applied Med., 587 F.3d at 915 (emphasis added), not whether those 10 issues are probably subject to the agreement and might be amenable to resolution locally. 11 Likewise, the Ninth Circuit has premised anti-suit injunctions on definitive rulings 12 regarding the scope of the parties’ agreement and legal claims. See id. at 916–17 (reversing 13 denial of injunction where “the district court already held that [the parties’] disputes” were 14 subject to the contract (emphasis added)); Microsoft, 696 F.3d at 878, 883–84 (affirming 15 injunction based on lower court’s findings, made at summary judgment, that Motorola had 16 entered into a contract that was enforceable and reached the at-issue patents).10 2. 17 Policy 18 The Court is also persuaded to take the narrower view of the capable-of-resolving 19 inquiry as a matter of policy. Explaining why requires a brief detour into the roots of 20 21 22 23 24 25 26 27 28 9 Citigroup also clashes with Ninth Circuit authority by asking if one action is dispositive of some—rather than all—issues raised in another. See Applied Med., 587 F.3d at 915 (evaluating whether “the domestic action is capable of disposing of all the issues in the foreign action” (emphasis added); Nike, Inc. v. Cardarelli, No. 3:14-CV-01690-BR, 2015 WL 853008, at *5 (D. Or. Feb. 26, 2015) (“A close reading of [Gallo, Applied Medical, and Microsoft] indicates . . . that in order to satisfy the first prong of the antisuit injunction analysis in this Circuit, Plaintiff must show this action is capable of resolving the entire [Foreign] Action.” (emphasis added)). Microsoft includes language that might appear to endorse Citigroup’s test. See 696 F.3d at 884 (explaining the need for “a ballpark, tentative assessment of the merits”). But Microsoft was discussing the typical bounds of an interlocutory appeal, not the district court’s initial decision. See id. (explaining the court could not decide “whether the district court’s partial summary judgment . . . was proper,” but instead was limited to evaluating the lower court’s decision for “fundamental[] legal[] error[]”). 10 16 23-CV-1887 JLS (KSC) 1 Gallo’s threshold inquiry, which are found in Seattle Totems. See Gallo, 446 F.3d at 991 2 (introducing the threshold inquiry and citing district court case that had “inferr[ed] such a 3 test from . . . Seattle Totems”). 4 In Seattle Totems, the Ninth Circuit connected the same-issues-and-same-parties 5 question to the consequences of vexatious parallel proceedings. The court concluded that 6 “[a]djudicating th[e] [same] issue in two separate actions [was] likely to result in 7 unnecessary delay and substantial inconvenience and expense,” and could also “result in 8 inconsistent rulings or even a race to judgment.” Seattle Totems, 652 F.2d at 856. 9 Notably, Seattle Totems’ focus on vexatious litigation does not directly translate to 10 the modern version of Gallo’s first step. While Seattle Totems implies it is necessary to 11 compare the foreign and domestic suits at the outset of the anti-suit injunction analysis, see 12 Gallo, 446 F.3d at 991, the court discussed the topic only in relation to the Unterweser 13 factors, see Seattle Totems, 652 F.2d at 856. And since Seattle Totems, the Ninth Circuit 14 has continued to examine concerns regarding inefficient litigation in the second step of the 15 anti-suit injunction test. See Gallo, 446 F.3d at 992–93; Applied Med., 587 F.3d at 918–19; 16 Microsoft, 696 F.3d at 886. 17 Nevertheless, Seattle Totems remains instructive. As courts have observed, the 18 factors Seattle Totems considered are also implicated by the doctrine of forum non 19 conveniens. See, e.g., Laker, 731 F.2d at 928 & n.55 (citing Seattle Totems, 652 F.2d 20 at 856). And case law on anti-suit injunctions and forum non conveniens motions share 21 another policy concern: ensuring parties are not inadvertently left without recourse. As 22 one commentator explains in an article cited with approval by the Ninth Circuit, 11 “The 23 traditional view expressed in the American cases . . . [(]that courts will not consider issuing 24 anti-suit injunctions” absent “parallel local and foreign actions between the same parties 25 26 In Gallo, the Ninth Circuit cited favorably to Bermann’s article in its discussion of the initial step of the anti-suit injunction test. See 446 F.3d at 991. Other circuit courts have also done so. See Quaak v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren, 361 F.3d 11, 18 (1st Cir. 2004); Canon Latin Am., Inc. v. Lantech (CR), S.A., 508 F.3d 597, 601 (11th Cir. 2007)). 11 27 28 17 23-CV-1887 JLS (KSC) 1 over the same claim”[)] is informed by the idea that “an anti-suit injunction ought not issue 2 if it would result in depriving the plaintiff of his or her only remedy.” George A. Bermann, 3 The 4 J. Transnat’l L. 589, 626 & n.142 (1990) (emphasis added). Use of Anti-Suit Injunctions in International Litigation, 28 Colum. 5 This brings the Court back to the more limited understanding of the can/capable 6 inquiry, which the Court will adopt here. By determining the issues raised in a foreign 7 action must be handled in arbitration, a court confirms the plaintiff in the foreign case has 8 a forum to pursue her claims. See id.; see also Applied Med., 587 F.3d at 918 (finding 9 district court ruling “dispositive of [foreign] claims” in part as “those claims . . . could have 10 been asserted in the district court, whether or not they have any merit”). By contrast, 11 Petitioners’ approach would not have the same protective effect. Accordingly, the Court 12 respectfully declines to follow Citigroup’s lead. 13 D. 14 Applying the above understanding of Gallo and its progeny, the Court now asks 15 whether all issues raised in the Mexico Proceedings (1) are subject to the Parties’ 16 Agreement; and (2) would be resolved if the domestic action were to be decided in 17 Petitioners’ favor. The answer to both questions is no for the same reason: arbitrability 18 determinations are indispensable to the same-issues/dispositive inquiry’s “interrelated” 19 requirements. Discussion 20 Petitioners argue Respondent’s “wrongful termination claim in the Mexico 21 Proceedings” falls within the Parties’ “broad” Agreement. Mot. at 13. And indeed, the 22 Arbitration Agreement purports to cover “[a]ny and all controversies or claims . . . arising 23 out of or relating to employee’s employment or its termination at the Company.” Manahan 24 Decl. Ex. 3 at 15. So, on first blush, Petitioners’ argument seems like a slam dunk. 25 Petitioners fail to recognize, however, that the Ninth Circuit’s threshold inquiry also 26 considers enforceability and validity. Take Microsoft, for instance. There, the court 27 grounded its analysis in part on the “compelling reasons” for effecting “freely negotiated 28 private international agreement[s]” that are “unaffected by fraud, undue influence, or 18 23-CV-1887 JLS (KSC) 1 overweening bargaining power.” 696 F.3d at 884–85 (emphasis added) (quoting M/S 2 Bremen, 407 U.S. at 12–13); see also Applied Med., 587 F.3d at 918 (relying in part on 3 lower court’s decision—which was not appealed—that the contract was enforceable). This 4 Court has difficulty imagining similarly compelling reasons for enjoining foreign litigation 5 based on a potentially unenforceable agreement. Put differently, not all disputes covered 6 by an arbitration clause’s terms are in fact “subject” to arbitration.12 7 Similarly, given the importance of arbitrability to Gallo’s threshold inquiry, the 8 Court cannot conclude that this case can dispose of all issues raised by the wrongful 9 termination claim brought in the Mexico Proceedings. The instant action has required the 10 Court to make only two findings relevant here: (1) a written agreement to arbitrate existed; 11 and (2) said agreement contained a valid delegation clause. See Order at 5, 9. No other 12 issues pertaining to the Parties’ underlying employment dispute currently await—or are 13 guaranteed to later require—this Court’s attention. And neither ruling confirms that 14 Respondent’s wrongful termination claim is in fact arbitrable; the arbitrability question will 15 remain unanswered until the arbitrator acts. In other words, while ruling on the arbitrability 16 of issues raised in a foreign action may establish that claims raised abroad must be 17 arbitrated, see Paramedics, 369 F.3d at 653, concluding the Parties must arbitrate 18 arbitrability yields no such clarity. 19 Petitioners’ reference to WTA Tour, Inc. v. Super Slam Ltd., which dispatches the 20 question at issue here with little discussion, does not alter the Court’s conclusions. See 21 339 F. Supp. 3d 390, 405 (S.D.N.Y. 2018). After finding an arbitration agreement existed 22 and that questions of arbitrability were reserved for the arbitrator, the WTA Tour court 23 acknowledged Paramedics’ holding: “A ruling that certain claims are arbitrable is 24 dispositive of any foreign suits concerning those claims.” Id. at 402, 405 (citing 25 26 27 28 For example, an arbitration agreement can be rendered unenforceable on “such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. So, as with forum selection clauses, “generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements.” Martinez-Gonzalez v. Elkhorn Packing Co. LLC, 25 F.4th 613, 620 (9th Cir. 2022) (quoting Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1268 (9th Cir. 2006)). 12 19 23-CV-1887 JLS (KSC) 1 Paramedics, 369 F.3d at 653). The court then seems to have assumed, without explanation, 2 that Paramedics applies equally to rulings on the delegation of arbitrability. See id. This 3 Court’s review of Ninth Circuit precedent indicates, however, that rulings on arbitrability 4 delegations and rulings on arbitrability are not fungible in the anti-suit injunction context. 5 By seeking an anti-suit injunction in this posture, Petitioners invite the Court to 6 overlook a catch-22 of their own making. As Petitioners successfully argued that the 7 Agreement contains an enforceable delegation clause, this Court cannot rule on whether 8 Respondent’s claims are subject to arbitration. Order at 5–10; see also Caremark, LLC, 9 43 F.4th at 1030 (“[I]f the parties did form an agreement . . . containing an enforceable 10 delegation clause, all arguments going to the scope or enforceability of the arbitration 11 provision are for the arbitrator . . . .”). 12 determine whether this action can resolve all the issues in the Mexico Proceedings. But 13 Petitioners now ask for an anti-suit injunction on the grounds that Respondent’s claims 14 must be arbitrated and thus can be disposed of by this Court. Petitioners may not have their 15 cake and eat it too. Consequently, the Court remains unable to 16 E. 17 Given the above, the Court concludes that, as the arbitrability of the claims raised in 18 the Mexico Proceedings remains unsettled, Petitioners have failed to satisfy the threshold 19 requirements for attaining an anti-suit injunction. Petitioners’ Motion is thus DENIED. Conclusion 20 The Court nevertheless pauses to acknowledge a policy argument underlying much 21 of Petitioners’ briefing. Petitioners repeatedly complain that refusing to grant an anti-suit 22 injunction based on a delegation clause would, contrary to public policy, dramatically 23 undermine arbitration agreements. See generally Mot. But there are several reasons, 24 beyond the fact that few cases like this one appear to exist, to discount Petitioners’ bluster. 25 First, Petitioners’ appeal to the policy favoring the enforcement of freely made 26 contracts cuts both ways. Gallo’s threshold inquiry applies more cleanly to arbitration 27 agreements that lack delegation clauses. See supra Section I.B. And while contracting 28 parties may delegate arbitrability, they may just as easily decide not to. Parties are free to 20 23-CV-1887 JLS (KSC) 1 weigh the costs and benefits of both approaches and craft their agreements according to 2 their preferences. If the availability of a foreign anti-suit injunction is important, the parties 3 can presumably factor that into their decision. 4 delegation clause that provides an exception for courts undertaking the anti-suit injunction 5 analysis.13 In any event, the Parties here signed an agreement with a broad delegation 6 provision, and they—along with the Court—must live with that choice.14 Perhaps parties could even build a 7 Second, Petitioners forget that, in the land of contracts, arbitration agreements are 8 not special. The FAA’s policy favoring arbitration “make[s] ‘arbitration agreements as 9 enforceable as other contracts, but not more so.’” Morgan v. Sundance, Inc., 596 U.S. 411, 10 418 (2022) (quoting Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 11 404 n.12 (1967)). The FAA thus creates “a bar on using custom-made rules” to “tilt the 12 playing field in favor of (or against) arbitration.” Id. at 419. The Ninth Circuit has created 13 a test for evaluating the propriety of enforcing a contract by way of an anti-suit injunction, 14 and this Court has endeavored to faithfully employ that test here. Yes, the Court’s 15 approach, if taken elsewhere, could complicate the enforcement of arbitration agreements 16 containing delegation clauses (which, in this Court’s experience, are not uncommon).15 17 18 13 19 20 21 22 23 24 25 26 27 28 Parties may delegate some gateway questions of arbitrability without delegating others. See AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011) (“[P]arties may agree to limit the issues subject to arbitration.”). For example, broad delegation clauses do not necessarily delegate the issue of waiver, even though waiver is an arbitrability question. See Martin v. Yasuda, 829 F.3d 1118, 1122–24 (9th Cir. 2016). 14 The Court also notes that, while Respondent previously contended arbitrability was a matter for this Court, see Opp’n to Pet. at 11–12, Petitioners argued vehemently and successfully that the Court had to keep its hands off the issue, see Reply Supp. Pet. at 3–4; Order at 9. Presumably, Petitioners could have waived the delegation provision if they wanted to prioritize an anti-suit injunction. No psychic abilities were needed to foresee the quandary Petitioners’ conflicting positions now land them in; Petitioners made their delegation and anti-suit injunction arguments in the same filing. See Reply Supp. Pet. at 3–4, 10–11. 15 The Court is not blind to the fact that delegations of arbitrability, though not to be implied blithely from ambiguous terms, are not difficult to insert into an arbitration agreement. Indeed, this Court has joined several others in concluding that Ninth Circuit case law allows parties—whether sophisticated or not—to clearly and unmistakably delegate arbitrability simply by incorporating the AAA’s rules by reference. See Fischer v. Kelly Servs. Glob., LLC, No. 23-CV-1197 JLS (JLB), 2024 WL 382181, at *9–10, *14 n.16 (S.D. Cal. Jan. 31, 2024). 21 23-CV-1887 JLS (KSC) 1 One could even argue Gallo’s framework is not a perfect fit for cases such as this one. But 2 this Court cannot ignore Ninth Circuit decisions and craft a new rule simply because this 3 case involves an arbitration agreement. See id. at 418 (“[A] court may not devise novel 4 rules to favor arbitration . . . .”). 5 In any event, the Court’s approach would likely make little difference in most 6 arbitration-related cases. Arbitration allows parties to pursue the “speedy and efficient” 7 resolution of disputes. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1985); see 8 also AT&T Mobility LLC, 563 U.S. at 344 (“The point of affording parties discretion in 9 designing arbitration processes is to allow for efficient, streamlined procedures . . . .”). 10 Arbitrability is a threshold issue that must typically be decided at the outset of a case. So, 11 parties initiating arbitration proceedings can generally expect to learn whether their claims 12 are arbitrable relatively quickly. Conversely, the lengthy limbo in this action is unique and 13 was avoidable. Had Petitioners not waited years to enforce the delegation clause, the 14 arbitrability of Respondent’s claims would almost certainly have been decided long ago. And even had Petitioners’ Motion survived the threshold inquiry, it would still fail 15 16 upon consideration of Gallo’s remaining factors for the reasons explained below. 17 II. Petitioners contend all four Unterweser factors16—any one of which might justify 18 19 Step 2: The Unterweser Factors an anti-suit injunction, Microsoft, 696 F.3d at 881—apply here. The Court cannot agree. 20 A. 21 Petitioners point out that the FAA “establishes ‘a liberal federal policy favoring 22 arbitration agreements.’” Epic Sys. Corp. v. Lewis, 584 U.S. 497, 505 (2018) (quoting 23 Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Some 24 courts have concluded this policy “applies with particular force in international disputes.” Frustration of Forum Policy 25 26 For ease of reading, the Court repeats these factors here: “whether the foreign litigation would (1) frustrate a policy of the forum issuing the injunction; (2) be vexatious or oppressive; (3) threaten the issuing court’s in rem or quasi in rem jurisdiction; or (4) where the proceedings prejudice other equitable considerations.” Microsoft, 696 F.3d at 882 (alterations adopted) (quoting Gallo, 446 F.3d at 990). 16 27 28 22 23-CV-1887 JLS (KSC) 1 See Paramedics, 369 F.3d at 654. In the analogous context of forum selection clauses, this 2 Unterweser factor weighs heavily in the movant’s favor if “the forum selection clause 3 [would] effectively become[] a nullity” absent an anti-suit injunction. Gallo, 446 F.3d 4 at 992. The same is undoubtedly true for arbitration agreements. See id. at 993 (explaining 5 policies favoring both forum-selection and arbitration clauses are motivated by the same 6 considerations); see also Mastronardi Int’l, 437 F. Supp. 3d at 782 (citing Gallo to support 7 existence of “policy in America of upholding arbitration clauses”). 8 However, the record does not suggest allowing the Mexico Proceedings to continue 9 at this time would frustrate this pro-arbitration policy sufficiently to justify an anti-suit 10 injunction. Per Petitioners, as “the parties have agreed to arbitrate . . . , the Court must 11 require them to do so to give the parties the benefit of the bargained-for agreement.” Mot. 12 at 15. This is true, which is why the Court has ordered the Parties to sort out arbitrability 13 in the U.S. Arbitration Proceedings. See Order at 19. As the Court understands it, those 14 arbitration proceedings have been ongoing for some time. See generally Osuna-Gonzalez 15 Decl. As the arbitrator has yet to rule on arbitrability—a decision apparently delayed 16 further by Petitioners’ own actions, see id. ¶¶ 6–9—whether the Parties’ Agreement will 17 require more to be done in arbitration is not yet clear. So, in contrast to Gallo, this is not 18 presently a case where “[a]n anti-suit injunction is the only way” to “effectively enforce 19 the [arbitration agreement].” 446 F.3d at 993; see also LAIF X SPRL v. Axtel, S.A. de C.V., 20 390 F.3d 194, 200 (2d Cir. 2004) (declining to grant anti-suit injunction against litigant 21 seeking a ruling from a Mexican court as the litigant was also participating in arbitration). 22 Of course, if the arbitrator eventually finds Respondent’s claims are arbitrable, and 23 Respondent refuses to drop his case in Mexico, the Court might reach a different 24 conclusion. But at present, Petitioners have not shown this factor weighs much in their 25 favor, if at all.17 26 27 28 17 Though the Unterweser factors are disjunctive, that one factor might apply to some degree does not automatically justify an antisuit injunction. See Gallo, 446 F.3d at 990 (“[I]f any of the four elements is present, an anti-suit injunction may be proper.” (emphasis added)). 23 23-CV-1887 JLS (KSC) 1 B. 2 Next, Petitioners unconvincingly argue the Mexico Proceedings are vexatious. 3 “Vexatious” is defined as “without reasonable or probable cause or excuse; harassing; 4 annoying.” Microsoft, 696 F.3d at 886 (quoting Black’s Law Dictionary 1701 (9th ed. 5 2009)). Here, Respondent began pursuing his claims in Mexico well before Petitioners 6 sought to resolve the dispute in arbitration. “Thus, this action is not like other cases where 7 the foreign litigation was filed after the original lawsuit was brought in a court in the United 8 States which raises the spectre of forum-shopping and/or vexatious litigation.” Citigroup 9 Inc. v. Villar, No. 2:19-CV-05310-GW-FFM, 2019 WL 4565175, at *3 (C.D. Cal. 10 June 19, 2019); Huawei Techs., Co. v. Samsung Elecs. Co., No. 3:16-CV-02787-WHO, 11 2018 WL 1784065, at *10–11 (N.D. Cal. Apr. 13, 2018) (finding foreign action not 12 vexatious where “timing concerns present in Microsoft [were] not present”). Vexatious or Oppressive 13 Moreover, Respondent maintains he initiated the Mexico Proceedings in good faith, 14 and nothing in the record contradicts him. See Opp’n at 11–12. So, to the extent “any 15 duplication [is] evident in the U.S. action[] and foreign action[],” the Court finds it “is not 16 so ‘unreasonable’ that it suggests motive to harass or annoy.” Apple Inc. v. Qualcomm 17 Inc., No. 3:17-CV-00108-GPC-MDD, 2017 WL 3966944, at *13 (S.D. Cal. Sept. 7, 2017). 18 Similarly, Petitioners cannot rely on cases like Gallo, where the foreign litigant’s conduct 19 was “potentially fraudulent,” as no hint of fraud exists here. See 446 F.3d at 984. 20 Petitioners’ alternative argument, that the Mexico Proceedings are “a delay tactic,” 21 Mot. at 15, is so absurd that the Court dignifies it with analysis only reluctantly. It bears 22 repeating: The Mexico Proceedings—and Petitioners’ involvement therein—began years 23 before Petitioners sought to compel arbitration (either before this Court or in Mexico).18 If 24 the resolution of the Parties’ dispute has been delayed, Petitioners have been the cause. 25 The Court is therefore unwilling to label the Mexico Proceedings “vexatious.” See Villar, 26 27 28 18 At least as of April 16, 2024, Petitioners had never raised the issue of the Arbitration Agreement in the Mexico Proceedings. See Lujan Decl. ¶ 3. 24 23-CV-1887 JLS (KSC) 1 2019 WL 4565175, at *3 (denying injunction where “Plaintiffs ha[d] been aware of 2 Defendant’s Mexican lawsuit since 2013 and took no action to stop that proceeding at that 3 time”); Mastronardi Int’l, 437 F. Supp. 3d at 782 (concluding foreign case not vexatious 4 in part as “[plaintiff] waited eighteen months to move for the anti-arbitration injunction”). 5 C. 6 Petitioners contend “allowing the Mexico Proceedings to continue would undermine 7 [1] this Court’s jurisdiction to compel Sanchez’s claims to arbitration for an arbitrator to 8 determine arbitrability, [2] the arbitrator’s jurisdiction to determine arbitrability, and 9 [3] the Court’s jurisdiction to enforce or vacate the arbitrator’s award.” Mot. at 16. In Rem or Quasi in Rem Jurisdiction 10 Petitioners exclusively cite cases from other circuits, and it shows. In the Ninth 11 Circuit, the question is whether the foreign litigation “threaten[s] the issuing court’s in rem 12 or quasi in rem jurisdiction.” Microsoft, 696 F.3d at 882 (emphasis added) (quoting Gallo, 13 446 F.3d at 990). Neither type of jurisdiction is at issue here,19 so this Unterweser factor 14 does not apply. See Po-Hai Tang v. CS Clean Sys. AG, No. 11-CV-00212 BEN RBB, 15 2011 WL 4073653, at *2 (S.D. Cal. Sept. 13, 2011) (denying anti-suit injunction in part 16 because “Plaintiff d[id] not allege that in rem or quasi in rem jurisdiction exist[ed]”); 17 SynCardia Sys., Inc. v. MEDOS Medizintechnik, A.G., No. CIV 06-515-TUC-CKJ, 18 2008 WL 11339957, at *3 (D. Ariz. Jan. 28, 2008) (similar). 19 D. 20 Under the last Unterweser factor, “[f]oreign litigation may be enjoined when it 21 [1] causes substantial inconvenience, unnecessary expense, and duplication of efforts”; or 22 “[2] threatens inconsistent rulings or a race to judgment.” Other Equitable Considerations Mastronardi Int’l, 23 24 25 26 27 28 Whereas in personam jurisdiction “is the power of a court to enter judgment against a person,” United States v. Obaid, 971 F.3d 1095, 1098 (9th Cir. 2020) (quoting SEC v. Ross, 504 F.3d 1130, 1138 (9th Cir. 2007)), “in rem jurisdiction is the court’s power to adjudicate rights over property,” id. Meanwhile, a quasi in rem action is one that “involves the assertion of a personal claim against the defendant of the type usually advanced in an in personam action,” but with the added layer of “the attachment or garnishment of some or all of the property the defendant may have in the jurisdiction.” Id. at 1098–99 (quoting Ventura Packers, Inc. v. F/V Jeanine Kathleen, 424 F.3d 852, 860 n.4 (9th Cir. 2005)). 19 25 23-CV-1887 JLS (KSC) 1 437 F. Supp. 3d at 783 (citing Seattle Totems, 652 F.2d at 855–56). Neither applies here. 2 To the extent the Mexico Proceedings have inconvenienced Petitioners or increased 3 expenses unnecessarily, the damage is done. In no small part due to Petitioners’ 4 lackadaisical pursuit of arbitration, the Mexico Proceedings are in their final stages. And 5 even if Petitioners might be further inconvenienced by the Mexico Proceedings, Petitioners 6 have not explained why such hypothetical inconvenience is “so extraordinary or substantial 7 that [it] justif[ies] equitable injunctive relief.” Apple Inc., 2017 WL 3966944, at *14. 8 Relatedly, Petitioners are, by their own hands, already losing any “race to judgment” 9 threatened here. Petitioners allowed the Mexico Proceedings to plod along for years before 10 lacing up their running shoes. Petitioners cannot cry foul now because the Mexico 11 Proceedings have edged closer to the finish line. 12 inconsistent rulings could not support Petitioners’ Motion on its own, particularly as 13 Petitioners dedicate only one sentence to the issue and no other Unterweser factors apply. 14 III. For similar reasons, the risk of Step 3: Impact on Comity 15 In Gallo’s final step, courts evaluate whether an anti-suit injunction’s “impact on 16 comity [would be] tolerable.” 446 F.3d at 991. Had Petitioners not already faltered at 17 steps one and two of the anti-suit injunction test, their luck would have run out here. 18 One could forgive Petitioners for thinking they had a strong comity hand to play. 19 Comity “is ‘the recognition which one nation allows within its territory to the legislative, 20 executive or judicial acts of another nation, having due regard both to international duty 21 and convenience, and to the rights of its own citizens, or of other persons who are under 22 the protection of its laws.’” Id. at 994 (quoting Hilton v. Guyot, 159 U.S. 113, 164 (1895)). 23 Typically, “where two parties have made a prior contractual commitment to litigate 24 disputes in a particular forum, upholding that commitment by enjoining litigation in some 25 other forum is unlikely to implicate comity concerns.” Microsoft, 696 F.3d at 887. In fact, 26 allowing a party “to evade the enforcement of an otherwise-valid” contract by “rush[ing] 27 to another forum” could negatively affect international comity. Gallo, 446 F.3d at 994. 28 /// 26 23-CV-1887 JLS (KSC) 1 Nevertheless, questions of comity demand a fact-intensive and case-specific inquiry. 2 See Microsoft, 696 F.3d at 887 (“[C]ourts must in their discretion evaluate whether and to 3 what extent international comity would be impinged upon by an anti-suit injunction under 4 the particular circumstances.”). Here, the facts are unique. While Gallo contemplated an 5 “otherwise-valid forum selection clause,” the validity and enforceability of the Parties’ 6 Arbitration Agreement as applied to Respondent’s claims is up in the air. And over the 7 last few years, the Mexico Proceedings have neared their end. Halting the Mexico 8 Proceedings after the Labor Board has expended its resources and almost reached a 9 resolution, but before the arbitrability of Respondent’s claims has even been confirmed, 10 would have a distinctive and—in this Court’s view—intolerable impact on comity. 11 IV. Next Steps 12 As the Court herein denies Petitioners’ Motion, the only questions remaining are 13 whether the denial is with or without prejudice and, if without prejudice, what the next 14 steps in this action should consist of.20 15 As to the first issue, it is notable that the key element in the Court’s analysis—that 16 the arbitrability of Respondent’s claims remains an open question—is subject to change at 17 any time. If the arbitrator were to deem Respondent’s claims arbitrable, and Petitioners 18 again sought an anti-suit injunction, the Court might reach a different conclusion than the 19 one it arrives at today. As the Court’s reasoning hinges on an undefined variable, rather 20 than on a decision set in stone, the Court is inclined to deny the Motion without prejudice. 21 22 Petitioners also seek the alternative remedy of a temporary injunction “enjoining the Mexico Proceedings while the Arbitrator determines the enforceability of the Arbitration Agreement.” Mot. at 19. Petitioners contend such an injunction is warranted because they would “suffer irreparable harm” should they be “forced to litigate [Respondent’s] claims” and thereby “los[e] the ‘very benefit of the arbitration clause’ that the [P]arties bargained for.” Id. (quoting WTA Tour, 339 F. Supp. 3d at 406). The same argument was not persuasive when made regarding the Unterweser factors, see supra Section II, and it is no more compelling here. Moreover, Petitioners do not cite Ninth Circuit authority supporting the availability of their requested temporary injunction, explain whether Respondent could stay his claims in Mexico without dismissing them pending an arbitrability decision, nor identify what framework the Court would use to evaluate such an injunction if not Gallo’s (which Petitioners have already failed). Therefore, the Court will not grant Petitioners’ alternative request. 20 23 24 25 26 27 28 27 23-CV-1887 JLS (KSC) 1 Not surprisingly, Respondent seeks a different outcome. Unlike arbitrability’s 2 unanswered status, the fact that Petitioners waited years to pursue an injunction will not 3 change with time. Respondent argues this delay is an insurmountable obstacle that would 4 prevent Petitioners from securing an anti-suit injunction even if his claims were ultimately 5 found to be arbitrable. See Opp’n at 14–15. Respondent thus asks the Court to deny the 6 Motion with prejudice. 7 Though not without some merit, the Court rejects Respondent’s position. An 8 unexplained delay in seeking injunctive relief “undercut[s] [a litigant’s] claim of 9 irreparable harm” and thus weighs against the issuance of an injunction. Garcia v. Google, 10 Inc., 786 F.3d 733, 746 (9th Cir. 2015). “Usually,” however, “delay is but a single factor 11 to consider in evaluating irreparable injury,” and “courts are ‘loath to withhold relief solely 12 on that ground.’” Arc of Cal. v. Douglas, 757 F.3d 975, 990 (9th Cir. 2014) (emphasis 13 added) (quoting Lydo Enters., Inc. v. City of Las Vegas, 745 F.2d 1211, 1214 (9th Cir. 14 1984)). As other aspects of the irreparable harm calculus could be impacted by a decision 15 from the arbitrator on arbitrability, the Court is reluctant to hold that Petitioners are 16 permanently ineligible for injunctive relief at this stage.21 17 Moving on to matters of case management, the Court notes that Petitioners initiated 18 this action seeking to compel Respondent’s participation in arbitration and to secure an 19 anti-suit injunction. With the former matter decided and the latter disposed of for the time 20 being, there are no pending matters for the Court to resolve in this dispute.22 Still, as the 21 22 21 26 The Court does not mean to suggest a future anti-suit injunction motion will necessarily succeed so long as it is filed after the arbitrator has decided Respondent’s claims are arbitrable. The Court expresses no opinion on the viability of such a motion. Here, the Court declines only to take the possibility of an antisuit injunction off the table entirely given the outstanding questions in—and somewhat unique posture of—this case. And though it would seem that bouncing between the arbitrator and federal court might take away from the efficiency so often touted as a benefit of arbitration, the Court also expresses no opinion on whether the Parties should or could address future requests for injunctive relief to the arbitrator. 27 22 23 24 25 28 That said, the Court could be called on in the future to, for example, “enforce[e] subpoenas issued by the arbitrator[]” or “facilitate[e] recovery on an arbitral award.” Smith v. Spizzirri, 144 S. Ct. 1173, 1178 (2024). So, had the Parties asked the Court to stay this action pending the completion of arbitration, the 28 23-CV-1887 JLS (KSC) 1 Court today leaves the door open to an anti-suit injunction, an entry of final judgment, 2 absent additional input from the Parties, would not be appropriate. Cf. Bank of Am., N.A. 3 v. Micheletti Fam. P’ship, No. 08-02902 JSW, 2008 WL 4571245, at *7 (N.D. Cal. 4 Oct. 14, 2008) (entering judgment where “there [was] no federal action pending involving 5 the disputes at issue” and plaintiff “ha[d] obtained all relief it sought” from the court). The 6 Court will thus give the Parties the chance to weigh in before taking additional action. 7 CONCLUSION 8 In light of the foregoing, the Court DENIES Petitioners’ Motion (ECF No. 16) 9 WITHOUT PREJUDICE to Petitioners’ filing a renewed motion seeking an anti-suit 10 injunction after the arbitrator has ruled on the arbitrability of Respondent’s claims. Within 11 twenty-one (21) days of the date of this Order, the Parties MAY FILE a motion, either 12 jointly or individually, asking the Court to stay this case, close the case and enter judgment, 13 or take any other procedural action that may be appropriate. Should no Parties file such a 14 motion, the Court will enter an order administratively closing this case. If administratively 15 closed, the Parties will remain able to move to reopen this matter when appropriate, such 16 as for judicial consideration of an anti-suit injunction in accordance with this Order. 17 18 IT IS SO ORDERED. Dated: June 6, 2024 19 20 21 22 23 24 25 26 27 28 Court would likely have been required to do so. See id. Neither side, however, requested a stay or otherwise voiced an opinion on the future of this case beyond the possibility of an anti-suit injunction. 29 23-CV-1887 JLS (KSC)

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