Sunvalley Solar Inc v. China Electric Equipment Group Corporation, 2:15-cv-05099

Plaintiff Sunvalley Solar, Inc. contracted with Defendants SST and CSUN under a July 2008 Distribution Contract; sales were executed by subsequent Sales Contracts/purchase orders.
Distribution Contract designated California law and stated its terms govern in case of any contradiction with purchase orders.
Each Sales Contract contained an arbitration clause requiring disputes be arbitrated in China (Convention arbitration agreement).
Plaintiff sued in California state court alleging defendants delivered photovoltaic modules that failed to meet UL 1703 standards.
Defendants removed to federal court under 9 U.S.C. § 205 (the Convention removal provision); Plaintiff moved to remand, arguing §205 does not apply and removal was untimely/waived.
The district court denied remand, concluding the Sales Contracts’ arbitration clauses “relate to” the suit under §205 and removal was timely and not waived.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether 9 U.S.C. §205 (Convention removal) applies	Suit alleges breach of the Distribution Contract; arbitration clauses appear only in Sales Contracts so §205 is inapplicable	Sales Contracts governed each sale at issue and contain Convention arbitration clauses that could affect outcome	§205 applies because the arbitration agreement "relates to" the suit and may affect outcome
Whether removal was timely and whether right to remove was waived	Removal was untimely under §1446(b); defendants waived removal by litigating in state court	§205 allows removal "at any time before trial"; defendants’ pre-removal actions were defensive (answer, case management, discovery) not waiver	Removal was timely under §205 and defendants did not waive the right to remove

Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156 (federal jurisdiction/ removal principle) (explains propriety of removal depends on whether suit could originally be filed in federal court)
Gunn v. Minton, 133 S. Ct. 1059 (U.S. 2013) (federal courts are courts of limited jurisdiction)
Infuturia Global Ltd. v. Sequus Pharm., Inc., 631 F.3d 1133 (9th Cir. 2011) (interpreting §205; low ‘‘relates to’’ threshold permits removal when arbitration clause could conceivably affect outcome)
Beiser v. Weyler, 284 F.3d 665 (5th Cir. 2002) (a suit "relates to" an arbitration clause if the clause could affect disposition; challenges to arbitrability suffice for §205 removal)
Geographic Expeditions, Inc. v. Estate of Lhotka, 599 F.3d 1102 (9th Cir. 2010) (strong presumption against removal; defendant bears burden to establish removal jurisdiction)
Resolution Trust Co. v. Bayside Developers, 43 F.3d 1230 (9th Cir. 1994) (defendant’s state-court participation waives removal only when actions show intent to abandon federal forum)